Financial Plan

List of Financial Assumptions

General
 The maximum number of incorporators is 5 members
 The term of existence of the company is for 10 months
depending on the date of the General Assembly called
by the Practicum Coordinator at the start of the term
 For 10 months of business operations, 9 months will be
used for production / operations and marketing. 1 month
for Auditing and Dissolution
 Full subcontracting is allowed from the start of business
operations
 No maximum capital contribution
 Accrual Basis of accounting

Project Cost Statement/Start up capital statement

 Cost Covered will be for the first two month of
operations
 Fixed capital outlay consists of tools, equipment and
machines purchased
Budgets
 Worker’s wages are P _____ / hour (use the actual
worker’s minimum wages – see minimum wage law and
should be based on the industry they belong to)
 8 hours of production in a week (if not full
subcontracting)
 Overtime rate is P _____ / hour (+ 25 % of minimum
worker’s wages) (If you use P 10 / hour as your worker’s
wage, then overtime rate is P 12.50 / hour – if not full
subcontract)
 Number of group members (partners or incorporators)
will remain constant for the entire life of the firm
 Inflation rate is ______ (applied to materials or supplies)
 If the group would use one of the proponent’s residence
as their plant site, the plant site/office site rent is P 300 /
month (Inclusive of Utilities). It not, plant site / office site
rent is P ____/ month (The group should use the actual
rental fee of their plant area). Inclusive of utilities (Note :
It should depend upon the contract, if it’s not inclusive,
then they have to pay the electricity and water bill.)
 Equipment rental fees are P _____ / month. (Use the
actual rental cost)
 Depreciation expense (if applicable) is computed using
the straight line method across 10 months with zero
salvage value
 Factory overhead consists of plant site / office site rent,
equipment rent, depreciation expense, transportation
expense (for purchasing materials), and maintenance
expense. – Should be consistent with Accounting
Manual

Income Statement
 PRCENT companies are required to participate in
PRCENT Bazaar from PRCENT1, PRCENT2, PRCENT
3.
 Administrative salary scale: (Please use the actual
minimum administrative salary. Research on real
salaries of President, Managers, and Officers of similar
sized / same business organizations.)
President P ____ / week (minimum P 30 / week)
Managers P ____ / week (minimum P 25 / week)
Officers P ____ / week (minimum P 20 / week)
 Compensation for corporate officers : (if form of
ownership adopted is corporation)
Chairman of the Board P 15 / board meeting
Corporate Secretary P 10 / board meeting
Treasurer P 10 / board meeting
 Registration Fees : (Please use the fees in actual
government registration – Research on figures for
application, we should also advise them as to which
 government office to register given the nature of the
business)
Barangay Permit P _______
BFAD/Sanitary Permit P _______ (if necessary)
SEC P 1,670.00
BIR P 500.00
Mayor’s Office P 2,997.50
DTI P 165.00
 Auditing fee of P700.00 will be paid in PRCENT3 (on
the last month of operations). However, if the group
wishes to hire external auditor, they have to pay the
compensation of their hired auditor.
 Computation of tax rate is as follows :

GRADUATED INCOME TABLE (For Individual Taxpayers)

INCOME BEFORE TAXES TAX RATE
 Over P 500,000 = P 125,000 + 32% of the excess over
P 500,000
 Over P 250,000 but not over P 500,000 = P 50,000 +
30% of the excess over P 250,000
 Over P 140,000 but not over P 250,000 = P 22,500 +
25% of the excess over P 140,000
 Over P 70,000 but not over P 140,000 = P 8,500 + 20%
of the excess over P 70,000
 Over P 30,000 but not over P 70,000 = P 2,500 + 15% of
the excess over P 30,000
 Over P 10,000 but not over P 30,000 = P 500 + 10% of
the excess over P 10,000
 Not over P 10,000 = 5%
Source: http://www.bir.gov.ph/taxcode/1577.htm

 Taxes will be paid in PRCENT3 (on the last month of

operations)
 FIFO method shall be used in valuing sales
 Bazaar fee (inside DLSU campus) is based on gross
sales made during the week

 Use actual bazaar fees for external bazaars

 Gross Sales Bazaar fee
More than P 49,999 6 % of Gross Sales
40,001 – 49,999 5 % of Gross Sales
30,001 – 40,000 4 % of Gross Sales
20,001 – 30,000 3 % of Gross Sales
10,001 – 20,000 2 % of Gross Sales
5,001 – 10,000 1 % of Gross Sales
Less than 5,001 ½ of 1 % of Gross Sales
0r P 50 whichever is
higher

Cash Flow Statement

 All purchases shall be on a cash basis
 All expenses are paid in cash when they are incurred

Balance Sheet
 No liabilities nor any account receivable shall be
incurred
 No sources of funds except the incorporators
 No dividends shall be declared until dissolution
 All profits are retained with the company and used as
part of operating capital
 The number of owner/stockholders shall remain the
same throughout the Practicum
 Organization Cost includes : Registration fees, stock
certificate, financial books (Accounting Kit), and other
expenses incurred establishing the business