Chapter I

THE PROBLEM

This chapter presents the introduction, background of the study, statement

of the problem, and the theoretical framework. It also includes statement of the

hypothesis, the study’s importance, and the study’s scope and limitations. This

also entails the definition of terms used, which are essential for further

understanding of the study.

The increasing number of fast-food restaurants in the Philippines keep on

surging, different expertise and themes are all over the place. Many localities

keep on adopting different varieties to offer even though it may be risky knowing

that the competitors in the market keep on growing. Most of the restaurants find it

difficult to survive especially during their first year of existence. Failure to

consider financial factors as their basis towards business financial decisions is

one of the causes. To further learn this subject matter, the researchers will focus

on the fast-food chains in Rosario, Batangas that have more than five years of

existence.

Introduction

Financial decisions are the decisions that managers take with regard to

the finances of a company. These are crucial decisions for the financial well-

being of the company. These decisions can be in terms of acquisition of assets,

financing and raising funds, day-to-day capital and expenditure management,

etc. Financial decisions, therefore, affect both the assets and liabilities of a

company. They can lead to profits, revenue generation, and receipt of funds and
 2

assets for the company. They can also be in terms of expenditure, the creation of

liabilities, and an exodus of funds for a company. The reality is that every

business venture can, at some point, be exposed to financial instability. Lack of

sufficient and timely access to finance is typically a leading reason for business

failures. The consequences of becoming illiquid can have a detrimental effect on

business operations, forcing them to declare insolvency. The increasing numbers

of exits and failures exacerbated by the COVID-19 worldwide pandemic

emphasize the importance of understanding the reasons that could lead to this

extreme outcome.

Recognizing how to manage and deal with unforeseen financial events is

essential for every owner-manager. According to Mariya Yesseleva-Pionka

(2021), the crucial elements of the financial decision-making process include

financial decisions, investment decisions, operating decisions to either reinvest

profits back into a business and or distribute profits back to the owners.

A business’s success depends on many factors and the economic

environment in which the business operates creates the path for the future

direction. At times of economic growth, there is an increase in business activity

which is supported by strong consumer spending. During recessions, economic

contracts and consumers tend to stay on the safe side and become very cautious

with their spending plans. Economic indicators such as unemployment rate,

inflation rate, gross domestic product (GDP), stock market index performance,

exchange rates, government regulations, and support suggest its future direction.

Understanding and then applying in practice elementary economic indicators will

 3

help you think like an economist/financier when making financial decisions. The

budgeting process allows the owner-manager to plan for the future and create

strategic business plans in order to sustain business stability. This is the time for

owner-managers to make sound business decisions related to revenue sources,

spending, saving, investing, and, if necessary, pivoting towards new business

ideas.

But according to Hemant More (2019), there are some factors affecting

financial decisions this includes the nature of the business, the size of business,

expected return, the cost and risk involved, the asset structure of the business,

the structure of ownership, the expectations of investors, the age of the firm, the

liquidity in company funds and its working capital requirements, and the attitude

of the management.

This study on financial factors towards financial decisions among fast-food

restaurants in Rosario, Batangas determined its financial factors as their basis

towards business making financial decisions is one of the causes of other

restaurants face difficulty to survive especially during its first-year existence.

Background of the Study

In today’s competitive restaurant businesses, an increase in restaurant

business competition implies that customers nowadays have more dining choices

to choose from than ever before, ranging from fast food to fine dining restaurants.

Customer expectations of restaurant offerings are ever-increasing. As a result,

 4

they are now more demanding in choosing better restaurant choices based on

what they are craving for and what they can get from their decision.

In the increasing number of restaurants, Filipinos are confused about what

restaurant they are going to. The first thing that comes to their mind is fast food.

Fast food gets more and more popular every year despite the rising concerns

about health in society. This particular industry goes higher and higher each

year. One of the main reasons for fast food’s popularity is the convenience factor

that instead of having to spend time in your kitchen and at a grocery store

preparing a meal you can spend mere minutes at a fast-food restaurant and get a

full meal.

With the increasing number of fast-food restaurants, some are left behind.

The possible causes are they failed to achieve or consider some possible

financial factors that may affect the financial decision of the restaurant. According

to The Staff of Entrepreneur Media, Inc. (2019), there are eight factors to

consider to determine the financial health of a business, these are; excessive or

insufficient inventory, the lowest level of inventory the business can carry,

accounts receivable, net income, working capital, sales activity, fixed assets, and

the operating environment because building a business from the ground up is no

easy feat. And when an owner is ready to step aside and enjoy a well-earned

retirement, there’s still some work to get through, thoroughly planning for the

transition and succession.

For this study, the researcher focused on the financial factors towards

financial decisions among fast-food restaurants in Rosario, Batangas. Moreover,

 5

the results of this study will serve as a lesson to all businessmen/women who

planned to start or invest in a fast-food restaurant. For this reason, the study will

be pursued.

Statement of the Problem

This study aims to know the financial factors towards financial decision

fast-food restaurants in Rosario, Batangas.

Specifically, it sought to answer the following questions:

1. What is the profile of the restaurant in terms of:

1.1. number of years in operation;

1.2. number of employees;

1.3. estimated revenue; and

1.4. capitalization?

2. How may the financial status of restaurants be described in terms of

2.1. net profit;

2.2. return on investment capital (ROIC); and

2.3. cash flow?

3. How may the elements of financial decision making be described relative

to

3.1. investment decision; and

3.2. operating decision?

4. Is there a significant difference on the financial status of restaurants when

grouped according to profile?

 6

5. Is there a significant relationship between the financial status and financial

decisions?

6. Based on the findings, what affirmative action plan may be proposed?

Research Hypotheses

To evaluate the financial factors towards financial decisions among the

fast-food restaurants in Rosario, Batangas the null hypothesis was posted:

Ho1: There is a significant difference in financial status and financial

decisions of fast-food restaurants in Rosario, Batangas.

Ho2: There is a significant difference in the respondent’s assessment

grouped according to the profile of each fast-food restaurant in accordance with

financial status towards financial decisions.

Theoretical Framework

This part presents the discussion of the related concepts and theoretical

framework of the study. For better understanding of the study this part presents

the financial factors and financial decisions.

Financial factors are important to recognize in every business, it includes

accounts that affect the financial performance of a business. According to

Goldratt, Eliyahu (2012), the three most important financial factors in business

must be recognized and considered, these are; net profit, the return on

investment capital (ROIC), and the cash flow.

 7

The researchers adopt Goldratt’s (2012), Three Financial Factors

framework to assess the financial factors towards financial decisions among fast-

food restaurants in Rosario, Batangas, since it holistically provides a deeper

understanding of how various components of financial factors contribute as

important predictors for making financial decisions.

Net profit is not as simple as how many small businesses operate their

finances, it refers to many other factors to consider, such as depreciation,

discount rate, cost of goods sold, and so forth. The objective of this is to tell the

business health and the available cash, this also helps the investors to assess if

the firm is generating enough profit rather than loss.

On the other hand, return on investment capital (ROIC) is a financial

statistic that compares a company’s profitability and value-creating potential to

the amount of money invested by the shareholders. By measuring this, the

business will sense if they are allocating their capital efficiently and profitability to

generate profit.

Lastly, cash flow refers to the movement of cash and cash equivalents in

and out of a business for a specific time, while the cash flow statement contains

the summary of this movement. By doing this the business will know if they are

going the wrong way or not – considering the in and out of the CCE flows that

may lead to either positive or negative effects.

Using Goldratt’s Three Financial Factors, the researcher is able to

evaluate the key factors of financial factors of a business such as net profit,
 8

return on investment capital (ROIC), and cash flow associated with making

financial decisions.

Financial decision is yet another important function that financial

managers must perform. It is important to make wise decisions about when,

where, and how a business should acquire funds.

According to Mariya Yesseleva-Pionka (2021), Every owner-manager

needs to know how to manage and cope with unpredictable financial situations.

Financial decisions are choices whether to use equity or debt funds and the cost

associated with each. There are two crucial elements of the financial decision-

making process, these are investment decisions and operating decisions.

The researchers adopt Pionka’s (2021), Framework to assess the financial

factors towards financial decisions among fast food restaurants in Rosario,

Batangas, since it holistically provides a deeper understanding of how these

various components contribute as important predictors for doing financial

decisions.

The term investment decisions refer to whether to buy long-term assets.

These decisions are made based on the finding of analysis tools based on data

available about the companies. Investors commonly perform investment analysis

by making use of fundamental analysis, technical analysis and gut feel.

On the other hand, operating decisions are such as whether to reinvest

profits back into the business or distribute profits to the owners. These are

decisions that are adjusted more frequently in correspondence to the current

 9

external and internal conditions, which usually have impacts for no longer than a

year or even a day.

Using Pionka’s Framework, the researcher is able to evaluate the crucial

elements to consider before making financial decisions such as the investment

decisions and operating decisions.

Conceptual Framework

The conceptual framework justifies the study and explains the structure or

design of the research. It provides essential support to the study components

and also clarifies the context of the study. This study is guided by the input-

process-output model. IPO model is viewed as a series of boxes connected by

which contains summarized content of input and output that directly guided the

researchers for the series of actions while conducting the study.

First, the input box contains the business profile of the fast-food

restaurants in Rosario, Batangas. The researchers consider the profile of the

fast-food restaurants for a better understanding of the financial factors that affect

the financial decisions. The main variables under this analysis are the number of

years in operation, number of employees, estimated revenue, and capitalization.

Also, this includes the financial factors which are the net profit, return on

investment capital; and financial decisions to consider like investment decision

and operating decision.

Then, the process box includes the measurements and instruments used

in the study, therefore, the process paradigm. The researchers used a survey
 10

questionnaire to collect the data needed. Through the used of different statistical

tools the data are gathered, analyzed, and interpreted.

Lastly, the output box shows the researchers proposed affirmative action

plan.

INPUT PROCESS OUTPUT

PROFILE
VARIABLES

Num
ber of years in
Operations
Num
ber of
Employees
Esti
mated SURVEY
Revenue QUESTIONNAIRE
Capit
alization PROPOSED
FINANCIAL DATA ANALYSIS AFFIRMATIVE
FACTORS ACTION PLAN

Net
INTERPRETAION
Profit
 Retu

11

Figure 1
Conceptual Paradigm
Scope and Limitations of the Study

The study focused on how financial factors affect financial decisions

among fast-food restaurants in Rosario, Batangas which highlights the indicators

of financial factors with regards to net profit, return on investment capital (ROIC),

and cash flow while financial decisions include investment decision and operating

decision. This likewise identifies the profile of the restaurants in terms of the

number of years in operation, the number of employees, estimated revenue, and

capitalization. The researcher will develop an affirmative action plan based on

the result of the study. The respondents of the study are the owners and or

managers of the fast-food restaurants in Rosario, Batangas. Owners and

managers were chosen as respondents because of their expertise in the

restaurant's performance. Due to the fact that managers are in charge of the day-

to-day operations of the company and communicate them to the owners who are

in charge of making decisions. In absence of supervisors, front-end customer

service, cashiers, crew members, and staff.

The study is limited only to the fifty (50) registered fast-food restaurants

located in Rosario, Batangas with more than five years of existence. This

likewise, excluded other business entrepreneurs, and big and small enterprises

in Rosario, Batangas. The researchers will collect data through a self-made

questionnaire that is divided into (3) parts. First is the profile of the fast-food

restaurants. Second, are the questions regarding the financial factors. And lastly,

the third part which are the questions concerning financial decisions. The
 12

questionnaire did not include open-ended response items to ensure that the

obtained data could be managed. Statistical treatments will be used in data

analysis including mean, percentage, and one-way analysis of variance.

Significance of the Study

This study, which focused on the financial factors towards financial

decisions among fast-food restaurants in Rosario, Batangas, is significant for the

following reasons:

To the Fast-Food Restaurants in Rosario, Batangas. This study may

be a reference to assist them in handling financial factors by making financial

decisions. The result will give proper guidance on decision making when it comes

to their finances and keep their businesses exist through the help of financial

factors while having a good financial decision.

To the Community. The result of this study helps the community to reach

out and explore more techniques and strategies in decision-making when it

comes to their finances. It also provides learnings and key concepts on how to

build a better and develop community by having good decisions considering all

the factors in financing.

Start-up Businesses. The result of the study will help the other beginners

to provide knowledge and ideas to have well-planned and strong financial

decisions. This may also increase their competency and keep their businesses

to have a good profit.

 13

Business Minded Personnel. The result of the study may provide an

assessment of the financial factors that affect the financing decision-making

whether it is effective or not. This may also encourage the business-minded

personnel to think of other strategies in maintaining good decision-making in

financing their business that will make them stand up when problems exist in

their businesses.

To the Batangas State University. This study will be beneficial to be

their primary source of literature and frameworks that will be useful in their future

studies.

Other Researchers. The result of the study will help the other

researchers to feel secure and knowledgeable on the possible financial factors

towards its financial decisions in maintaining the proper budgeting for their

finances. It may also provide a good basis for having the right decision-making

when it comes to their finances and future business. They may continue

researching the financial factors towards financial decisions to keep their

respective business alive and profitable.

Definition of Terms

To further explain the idea of this study, the following terminologies are

defined theoretically and operationally.

Cash Flow. Is a measure of how much cash a business brought in or

spent in the total period (Scwartz, 2022). In this study, it refers to the movement

and transparency of the money flows in and out of the business.

 14

Fast-food Restaurants. Usually operated in chains or as franchises and

heavily advertised, offer limited menus—typically comprising hamburgers, hot

dogs, fried chicken, or pizza and their complements—and also offer speed,

convenience, and familiarity to diners who may eat in the restaurant or take their

food home (Britannica, 2021). Pancit is also considered as fast-food as the word

“pancit” is borrowed from Hokkien, a popular Chinese dialect on the islands. In

Hokkien, “pian i sit” means “something conveniently cooked fast” that has risen to

comfort food status. (Chopstick Alley, 2020). In this study, it used the as

respondents to identify financial factors for financial decisions.

Financial Decisions. These are the amount of investment capital to

allocate to various opportunities in a financial market (MacLean L. and Ziemba,

W., 2013). In this study, financial decisions primarily focus on making decisions

in accordance with what will be its effect on business finances.

Financial Factors. Type of funding sources that commit to paying a

corporation the invoice value less a commission and fee discount (Barone,

2022). In this study, financial factors are the indicators that affect financial

performance.

Investment Decisions. This is an investor’s action to invest funds in

several investment options, both in the financial and real assets (Hilton and

Cheng, 2014). In this study, investment decisions are one of the variables of

financial decisions.
 15

Net Profit. The term refers to the outcome after deducting all the

expenses from revenues (Bragg, 2021). In this study, net profit is the money

derived from subtracting the depreciation, discount rate, cost of goods sold, and

other factors that are all taken into account.

Operating Decisions. It considered medium-term decisions versus

strategic long-term decisions. Like strategic decisions, they're focused on growth

but they target the production process. They're “the how” of meeting your

strategic goals. (LD Withaar 2019). In this study, operating decisions are used in

determination made in regard to routine, such as day-to-to activities and ongoing

activities of restaurants.

Return on Investment Capital (ROIC). It is a widely used financial metric

for measuring the probability of gaining a return from an investment (Beattie and

James, 2022). In this study, it pertains to the amount return in business income

depreciating expenses.
 16

Chapter II
REVIEW OF RELATED LITERATURE

This chapter deals with the conceptual and research literature which

includes related reading from books, magazines, journals, and internet. This also

includes discussion of the studies related to studies for the enrichment and better

understanding of the study. Similarities and differences of the present study to

the cited readings and studies are presented.

Conceptual Literature

To provide a clear explanation of the concepts needed in the study,

several references were consulted from the articles, books, and reliable sources

that reflect the opinions, experiences, theories, and ideas of different authors for

further understanding of the study.

Concepts of Financial Factors

Mendoza (2016), give the proper meaning of financial factors of business

restaurant in his research study entitled Impacts of Financial Factors on

Emerging Market Business Cycle Fluctuations, that financial factors of business

restaurant is a report card on your company's financial performance that shows

when sales are made and when expenses are incurred. It uses data from

previous financial models to calculate revenue, expenses, capital (in the form of

depreciation), and cost of goods. The financial factor influencing the financial

behavior and goals of companies is financialization. Financialization is described

as the growing role of financial markets, participants and institutions in both the
 17

global and domestic economies. It can be measured as the value added of the

financial sector in terms of GDP (Zhang, 2015).

Xiao, Hailian, and Zhou, Ying and Zhou, Meihu (2022), looks at the

individual and macro financial factors that influence debt leverage convergence

in enterprises. This study compares the debt leverage of food business share

non-financial listed businesses from 1998 to 2017 using a nonlinear time-varying

factor model, and finds two company groups: big club and non-big club. It stated

that individual and macro financial factors are represented by internal funds such

as total return on assets, free cash flow, cash holding, and cash dividend

payment, and monetary policy, respectively. With accordance with this,

Muhammad (2015), define business profit or net income and net cash flow or

cash flow as determinants of financial factors; wherein a business profit after tax

(or net income) is a completely arbitrary figure that is calculated based on

particular accounting assumptions about expenses and revenues. Cash flow, on

the other hand, is an objective metric, a single number that is unaffected by

personal preferences. Moreover, the study of Ross (2017), identifies financial

capital as the biggest determinant of financial factors as it encompasses much

more than economic capital. In certain ways, anything can be considered

financial capital if it has a monetary worth and is utilized to generate future

revenue. The majority of investors come across financial capital in the form of

debt and equity. Capital is most usually used to refer to a company's assets that

are needed to deliver goods or services and are quantified in terms of money

worth.
 18

Also, Tang and Zhang (2019), analyzed how the risk of investing in

financial and fixed capital assets and the gap between returns affect the

financialization ratio in their journal entitled Financial Liberalization, Private

Investment and Portfolio Choice: Financialization of Real Sectors in Emerging

Markets. The developed model is based on the investment behavior of non-

financial companies, where the company must make a decision whether to invest

in financial or non-financial assets. In this case, fixed assets refer to tangible

assets that the enterprise manages, uses and receives its income. These are

illiquid assets used for more than one year.

The historical evidence linking financial factors to business fluctuations is

compelling. The Great Depression provides the most prominent example.

Bernanke (2013), details the breakdown in credit flows of restaurant business

that likely amplified the downturn over the period from 2007 to 2012. There were

two main causes: first, the collapse of the banking system; and second, the

precipitous decline in borrower net worth. Regarding the former, nearly half of the

banks existing in 2010 ceased operating by 2012, and many of the surviving

ones suffered large losses. This had the effect of reducing credit flows to

borrowers who did not have easy access to non-intermediated funds. Regarding

the latter, the ratio of debt service to national income more than doubled. The

combined effect of declining output and deflation sharply deteriorated borrower

balance sheets, shrinking their collateral, thus constraining their ability to obtain

further credit.
 19

The financial factor based on research by Davis (2018), entitled Financial

Factors Determining the Investment Behavior of Lithuanian Business Companies

that argue that a decrease in profitability can affect a company’s investments.

The choice of the financialization factor was determined by Tang and Zhang

(2019), which analyzes how the risk of investing in financial and fixed capital

assets and the gap between returns affect the financialization factor. Moreover,

in the research of Davis (2018), where the changes in the investment behavior of

non-financial companies and the impact of financialization are analyzed.

There exist nonfinancial theories capable of explaining qualitatively why

firm volatility declines with size. However, there is also considerable reason to

believe financial factors are at work as well. To begin with, firms differ

systematically in how they finance investment. These differences are related to

firm size in a way that suggests they reflect varying abilities to obtain credit."

Small firms tend to rely more heavily on internally generated funds than do large

firms, and the use of non-bank debt is important only for large firms. Commercial

banks are an important source of credit for small and medium-sized firms, which

lack access to impersonal centralized securities markets (Jovanovic, 2013; and

Mills and Schumann, 2015).

In relation to this, Nick French (2020), the coronavirus pandemic is

showing us the many ways in which the relentless drive for profit can be deadly.

The measures necessary to slow the spread of the coronavirus mean that most

businesses need to suspend operations, and many workers will lose their jobs or

find their hours drastically reduced. In relation to the statement, Georgev (2021),
 20

stated that all businesses are there to make profits. However, whether they

thrive, or cease depends on external circumstances as much as internal.

Although such factors as economy, politics, legislation and technology are often

beyond your control, they have a major influence on your company’s prosperity

and should not be neglected when preparing your business development

strategy. However, 2020 has reminded us that we should never underestimate

the power of global events that may occur unexpectedly.

J. B Maverick (2021) states to be successful and remain in business, both

profitability and growth are important and necessary for a company to survive

and remain attractive to investors and analysts. Profitability is, of course, critical

to a company's existence, but growth is crucial to long-term survival. Profitability

and growth go hand-in-hand when it comes to success in business. No business

can survive for a significant amount of time without making a profit, though

measuring a company's profitability, both current and future, is critical in

evaluating the company. Although a company can use financing to sustain itself

financially for a time, it is ultimately a liability, not an asset. Meanwhile Kris

Roberts (2018) stated, profitability and sustainability analysis come into play. For

this article, profitability means just that…do you realize the maximum financial

gain based on your business’s efforts and revenues. Sustainability refers to

having your business be profitable for the long-haul. There are a few key areas of

any business that should be looked at if the business is under-performing.

Although each area impacts both the profitability and sustainability of a business,

the depth of the impact will vary from business to business. There are many
 21

areas of a business that can and should be reviewed when considering a

profitability and sustainability analysis. Which areas are more important will

depend upon the industry and the individual business? How to address and

correct any shortcomings will also vary. The key is to be looking at these areas

all the time. A vibrant, profitable and sustainable business will go through cycles

and changes. Therefore, it is recommended to review these areas often. This is

not a “one and done” situation. As the business changes, so will the variables

which impact its profitability and sustainability.

Return on investment, better known as ROI, is a key performance

indicator (KPI) that’s often used by businesses to determine profitability of an

expenditure. It’s exceptionally useful for measuring success overtime and taking

the guesswork out of making future business decisions. The ability to calculate

return on investment is extremely valuable for any business, regardless of size or

industry. After all, knowing if you’re getting your money’s worth is a basic concept

that both individuals and businesses need to understand in order to strengthen -

rather than hinder-financial success. By calculating ROI, you can better

understand how well your business is doing and which areas could use

improvement to help you achieve your goals Erica Hawkins (2020). Based on the

article of Shark Finesse (2022), if a company’s return on sales is increasing after

each time it is calculated this shows the company is being efficient and making

more profit, whereas if this figure is decreasing this may show that the company

is having financial difficulties. If you are presenting a return on sales figure that is

increasing across different time periods this is important to show your

 22

stakeholders as this could lead to more potential reinvestments helping to grow

your business further

Meanwhile, Steven Nickolas (2022), stated that Budgeting and financial

forecasting are tools that companies use to establish a plan for where

management wants to take the business—budgeting—and whether it is heading

in the right direction—financial forecasting. Although budgeting and financial

forecasting are often used together, distinct differences exist between the two

concepts. Budgeting quantifies the expected revenues that a business wants to

achieve for a future period. In contrast, financial forecasting estimates the

amount of revenue or income achieved in a future period. In addition, reviewed

by Amy Drury (2022), stated that Budgeting represents a company's financial

position, cash flow, and goals. A company's budget is typically re-evaluated

periodically, usually once per fiscal year, depending on how management wants

to update the information. Budgeting creates a baseline to compare actual results

to determine how the results vary from the expected performance. While most

budgets are created for an entire year, that is not a hard-and-fast rule. For some

companies, management may need to be flexible and allow the budget to be

adjusted throughout the year as business conditions change. While Financial

forecasting estimates a company's future financial outcomes by examining

historical data. Financial forecasting allows management teams to anticipate

results based on previous financial data. 

This could be aligned with the statement of Remington Hall (2020), that

business forecasting consists of tools and techniques used to predict changes in

 23

business, such as sales, expenditures, profits and losses. The goal of business

forecasting is to develop better strategies based on these informed predictions;

helping to eliminate potential failure or losses before they happen. Past data is

aggregated and analyzed to find patterns, used to predict future trends and

changes. Forecasting allows your company to be proactive instead of reactive.

With that Steve Milano (2019), stated Projecting your revenue has a variety of

benefits that help you beyond knowing how much money you can expect from

your operations. Forecasting revenue can help you discover the why, where,

when and how of your sales activities, helping you make better strategic

management decisions to maximize profits. Revenue forecasting should include

determining where your money is coming from, not just how much. Forecasting

revenue goes hand-in-hand with forecasting sales. If you sell more than one

product or service, revenue and sales forecasting will help you determine each

one’s profit margin and contribution to your gross profits. You might decide to

drop profitable products or services because the margins are too low to justify the

effort. You might drop items with high profit margins because sales are too low to

produce enough gross profits, or because selling these items reduces your

opportunity to sell more low-margin items that might produce a bigger gross

profit.

Moreover, Article by Ashish Kumar Srivastav, reviewed by Dheeraj

Vaidya, CFA, FRM (2022), said that the next step for the organizations after the

break-even platform where the revenue from the sales is only able to cover fixed

& variable overhead without any profit. Still, in the target profit analysis, the
 24

company’s target is to earn the targeted profit over and above the expenditures.

It provides less variation in the actual results compared to the budgeted profit. It

tends to be more reliable. As well as the target profit gets updated as per actual

results, it becomes more feasible and reliable to use. In relation Tom Zacks

(2017), stated, A specific profit target can be a powerful catalyst for improvement

throughout your company. A minimum goal to start should be to attain the

average profitability for your industry. Then you can reach higher. Closely

monitor your progress in implementing the items in your action plan and adjust as

necessary.

Additionally, article CFI (2022), stated return on investment is a very

popular financial metric due to the fact that it is a simple formula that can be used

to assess the profitability of an investment. ROI is easy to calculate and can be

applied to all kinds of investments. Return on investment helps investors to

determine which investment opportunities are most preferable or attractive. ROI

can be used for any type of investment. The only variation in investments that

must be considered is how costs and profits are accounted for. expressed as a

percentage and is commonly used in making financial decisions, comparing

companies’ profitability, and comparing the efficiency of different investments.

Also, (Pokorná, Krejčí & Šebestová, 2019), several methods can be selected to

evaluate investments and profit reinvestment. In general, these methods can be

divided into two groups as static and dynamic methods (Altshuler & Magni, 2012;

Kislingerová et al). Static methods are typically used for less significant projects

or for projects where specific factors do not play a significant role, for example
 25

short-term projects. There are various methods but the one mainly used to be

Return on Investment (ROI), Net Investment Income. In contrast to that, dynamic

methods calculate with time factor depreciation.

In connection, when a business generates excess cash, the decision

about how to best use that cash will often determine the future success of the

business. While the entrepreneur may be inclined to take the money as salary or

a bonus, often the more prudent choice is to carefully reinvest the funds to help

propel growth. Your first step should be to project your daily and emergency cash

needs for the next year. What was your minimum cash balance last year? If you

haven't recorded the daily balance reports from your bank, find the lowest

balance reported on the monthly statements. Is that excess cash a temporary

occurrence, or is your company going through a boom that will last a while? If

you anticipate needing cash within the next year, park your money in Certificates

of Deposit with maturity dates timed to free the cash as it is needed. If CDs are

not reasonable because the timing of need for cash cannot be predicted, at least

move the available cash from your savings account to a money market account

to earn more interest. Otherwise consider investing in projects that will help your

company grow into the future. (Eric Vines and Richard Blue, 2022), likewise Greg

Mcbrdide (2022), stated that before you invest your money, you’re likely

wondering how much you’re going to earn. However, numbers don’t always tell

the full story. You’ll also need to think about how long you plan to keep the

money invested, how your investment options have performed historically and

how inflation will impact your bottom line. Cash investments often trail, or at best,
 26

keep pace with inflation. If you keep all your money in CDs and a savings

account for decades, the amount of money in your account will increase, but the

buying power of that money will likely shrink.

According to Emily Guy Birken (2022), Return on investment (ROI) is a

metric used to understand the profitability of an investment. ROI compares how

much you paid for an investment to how much you earned to evaluate its

efficiency. According to conventional wisdom, an annual ROI of approximately

7% or greater is considered a good ROI for an investment stock because this is

an average, some years your return may be higher; some years they may be

lower. But overall, performance will smooth out to around this amount. That said,

determining the appropriate ROI for your investment strategy requires careful

consideration rather than a simple benchmark. But ROI cannot be the only metric

investors use to make their decisions as it does not account for risk or time

horizon, and it requires an exact measure of all costs. Using ROI can be a good

place to start in evaluating an investment, but don’t stop there. Wesley Gray,

PhD (2016), stated that, showed that tactical asset allocation. if the expected

return on the market were known to be a constant for all time, it would take a

very long history of returns to obtain an accurate estimate. And, of course, if this

expected return is believed to be changing through time, then estimating these

changes is still more difficult. One might say that to attempt to estimate the

expected return on the market is to embark on a fool’s errand. As our

understanding of return predictability changes, so will the stigma associated with

market-timing strategies. Anybody who claimed to implement a “market-timing”

 27

strategy in the past 30 years would have been considered irresponsible; as such

a strategy was thought to underperform the buy-and-hold strategy. In the

upcoming 30 years, it is likely that it will be considered irresponsible to not

engage in informed market-timing. Investors should change their asset allocation

as estimates for expected returns change. In relation to support the statement

Katelyn Peters (2021), stated market timing is the act of moving investment

money in or out of a financial market—or switching funds between asset classes

—based on predictive methods. If investors can predict when the market will go

up and down, they can make trades to turn that market move into a profit. Timing

the market is often a key component of actively managed investment strategies,

and it is almost always a basic strategy for traders. Predictive methods for

guiding market timing decisions may include fundamental, technical, quantitative,

or economic data. Many investors, academics, and financial professionals

believe it is impossible to time the market. Other investors—in particular, active

traders—believe strongly in market timing. Whether successful market timing is

possible is a matter for debate, though nearly all market professionals agree that

doing so for any substantial length of time is a difficult task. Market timing is not

impossible to do. Short-term trading strategies have been successful for

professional day traders, portfolio managers, and full-time investors who use

chart analysis, economic forecasts, and even gut feelings to decide the optimal

times to buy and sell securities. However, few investors have been able to

predict market shifts with such consistency that they gain any significant

advantage over the buy-and-hold investor. Market timing is sometimes

 28

considered to be the opposite of a long-term buy-and-hold investment strategy.

However, even a buy-and-hold approach is subject to some degree of market

timing as a result of investors shifting needs or attitudes. The key difference is

whether or not the investor expects market timing to be a pre- defined part of

their strategy. Additionally, Keith Speights (2021), stated you have one goal

when you invest: to make money. And every investor wants to make as much

money as possible. That's why you'll want to have at least a general idea of what

kind of return you might get before you invest in anything. Return on investment,

or ROI, is a commonly used profitability ratio that measures the amount of return,

or profit, an investment generates relative to its costs. ROI is expressed as a

percentage and is extremely useful in evaluating individual investments or

competing investment opportunities. here isn't just one answer to this question. A

"good" ROI depends on several factors. The most important consideration in

determining a good ROI is your financial need. These different historical rates of

return underscore a key principle to understand: The higher the risk of a type of

investment, the higher the ROI investors will expect. Most investors would view

an average annual rate of return of 10% or more as a good ROI for long-term

investments. In support of this Ankur Pramod (2022), stated you start off by

wondering: What is a good return on investment? But you have to get down to

the meaning first. The phrase “return on investment,” often shortened to ROI, has

achieved buzzword status. Driving the best ROI is a goal often thrown around by

companies, but as we’ve seen, the meaning behind buzz is not always as clear

cut as it may seem. In the pure and traditional sense of the term, when asking,
 29

“What is good ROI percentage?” people really wanted to know, “what is a good

rate of return on investments?” In this case, they were talking about a success

metric for literal investors only. In this case, good ROI means exactly what it

sounds like. In short, it’s a calculation of the return that investors receive on the

investments they make. But what is a good ROI percentage outside of the realm

of investors? It’s definitely grown to be more widely applicable. Most businesses

around the globe now use good ROI as an integral metric to analyze the

efficiency of an investment of money (or other resources) over time to decipher

whether the strategy behind the decision was productive. Using these findings,

businesses can make a decision on whether to follow the same strategy in the

future and compare different options to determine the one that will yield the

highest return on investment.

However, although the two terms are used interchangeably, profit and

profitability are not the same. According to James Chen (2021), the expected

return is the amount of profit or loss an investor can anticipate receiving on an

investment. Expected returns cannot be guaranteed. The expected return for a

portfolio containing multiple investments is the weighted average of the expected

return of each of the investments. The expected return is usually based on

historical data and is therefore not guaranteed into the future; however, it does

often set reasonable expectations. Therefore, the expected return figure can be

thought of as a long-term weighted average of historical returns.

Elements of Financial Decisions

 30

Rationality is ideally a normative perspective. Costa (2019), Research

Article: A Comprehensive Financial Decision-Making Literature Review shares it

is a methodology for faultless decision-making as a perfect example of

individuals in the financial sector. Clear the period rationality as a way and skill of

behaviors that is appropriate for attainment of specified areas. It works within the

limits of firm circumstances and restraints. Metawa (2019) described it as the

term rationality includes multiple concerns in this regard. First, when the investor

will get updates, then surely, he will update and renew their principles functionally

and actively. So, in this way, it is also definite by Bayes’ law. Then, as indicated

and given in the Savage's conception of subjective analysis of finances, it is a

projected effectiveness, investors make normatively acceptable choices.

Behavioral patterns are playing an important role in decision-making. Rational

planning may discourage the use of other tendencies for decision-making (Braun,

2019).

In standard finance, decision-making is an essential consideration. Here,

the role of rationality becomes stronger. It may tell the decision-maker how to

weigh the power of a working decision. The decision will not be abrupt and fast.

The decision-maker in the standard finance plan will reconsider the opinions

before taking the final order regarding a point (Braun, 2019).

Rationality is a support feature in the process of decision-making. It is a

genuine and helpful plan to enhance the working of the firms and take the proper

and timely decisions for the progress of the business. Still, there is an opinion

that it isn't possible in a world where human beings have emotions to take the
 31

decision wholly by rational behaviors. So, it is a considered opinion that the

decisions are impacted by the emotions and the feelings of the decision-maker at

the specific time (Challoumis, 2019).

Zahera, (2018), identified a couple of shared and recurrent investment

behaviors. It is also regarding asset decision taking. Individual savers reveal

damage in the relevant behavioral pattern. Most of the time, the investors may

nose dive to partake upon the economic asset categories in the market. It is just

because the investors tend to employ too antagonistically. In this way, they are

working on share purchase decisions and investors planning. This is often used

in the historical presentation of stocks. It is practical, to assess the act of

theories. Here, the investors behave parallel to each other for improved decision

planning. The developed level of effect of historical high or low interchange

stocks is the outcome.

Mainly, behavioral money stabs to classify and clarify the influence of

reasoning errors and feelings on the monetary decision taking of companies

(Challoumis, 2019). Braun (2019) labeled behavioral economics as a schoolwork

of people. It is how people appreciate and react to information to make

investment decisions in companies and firms. In general, there are two main

constituents for decision-making. They are studied in the behavioral finance

literature as the main concerns. The opening documentation of variances in the

Efficient Bazaar Hypothesis and the last one is the understanding and analysis of

investor behaviors. The second one is also called biases which are not available

in agreement with the classical economic plus financial theories of rational

 32

behaviors (Braun, 2019). Here are some theories. They focus on how investors

interpret the decisions. It is like how to do with the information generously

available to them for a particular decision pattern. In regards with that, Valaskova

(2019), read about some theories critically. He focused on some, such as

reactions in specific herding behavior. They are following the pattern of thrust

policies. They show that they are linking in the trading rules. They are some Well-

organized Marketplace analysis and make the representations and theories of

outmoded finance. They are unsuitable for specific related investment risk and

returns. It offers a better understanding of the depositors' behavior. It is also

reading its applications in the actual market practices. Behavior is playing a role

in applying the process of decisions in the finances. The emotions cannot be

discriminated against human beings so it is sure that they will be functional in this

regard. People might be using them as the main tools and they will have some

impact upon the financial decision-making plans. As a result, there are three

melodies in behavioral money. They are named as heuristics, inclosing, and

market disorganizations for financial decision-making. Heuristics means

stockholders often make asset decisions by using planning. They are indeed

based on rules of thumb. It should be without subsequent rational surveys and

analysis patterns. As, people have limited memory width, so the specific info

dispensation capability and computational skill are only to solve complex issues.

This is the main reason focuses are required for multifaceted problems that may

exceed people's intellectual capacities while making decisions. Secondly, framing

means a special and planned way so, a problematic point or situation presented
 33

to a person's determination affects the financial behavioral decision. Lastly, the

market inefficiencies are following the plan to discuss the final consequences in

the marketplace. They are not in contract with rational outlooks. They are also

away from market competence. In a nutshell, all of these features comp

rise non-rational in the process of decision-making designs. They might

include mispricing and return anomalies in this record (Zahera, 2018).

However, according to Mariya Yesseleva-Pionka (2021), recognizing how

to manage and deal with unforeseen financial events is essential for every

owner-manager. The crucial elements of the financial decision-making process

include financial decisions, – choice between equity or debt funds and associated

costs; investment decisions – choice of purchasing long term assets; and

operating decisions to either reinvest profits back into a business and/or

distribute profits back to the owners. In general, there are five fundamental

principles to starting a new business: evaluate your current financial conditions;

state your financial goals; develop an action plan to achieve your goals;

implement your financial goals for your business, and monitor and control the

progress and introduce changes where necessary. It shows that it is vital to plan

for the business’s financial success and, when making decisions, always assess

costs versus benefits and implied risks. Financial information has a significant

impact on many business decisions. Financial statements report on the past,

which is not necessarily going to indicate future prospects with 100% accuracy,

but it can be very important in examining and evaluating your past financial

decisions. In order to perform the financial statement analysis, every owner-

 34

manager needs to investigate past and current financial information of the

business, industry benchmarks and competitors’ key financial indicators.

Similarly, according to Business Jargons (2022) the investment decision

refers to the decision taken by investors or senior management regarding the

amount of money to be invested in various investment possibilities. Simply put,

the investment decision refers to the choice of assets in which the corporation

will invest its capital. Long-term assets and short-term assets are the two types of

assets. Capital Budgeting refers to the decision to invest funds in long-term

assets. As a result, capital budgeting is the process of picking an asset or

investment plan that will generate long-term profits. Also, the judicious allocation

of money to long-term assets is one of the most critical financial functions.

Capital budgeting is another name for this process. It is critical to invest funds in

long-term assets in order to maximize future returns. The two components of an

investment decision are: evaluating a new investment in terms of profitability and

comparing the cut-off rate to new and existing investments. (Prachi Juneja,

2015).

On the other hand, operational decisions based on the article of Prachi

Juneja (2015), are technical decisions which help the execution of strategic

decisions. Cost reduction is a strategic decision that is reached through

operational decisions such as reducing the number of staff, and how these

reductions are carried out is an administrative decision. Similarly, operational

decision can be considered as strategic planning where it is a methodical long-

range planning exercise that an organization does to set priorities, strengthen

 35

operations, determine objectives, and focus on the resources needed and

allocated to pursue the strategy and achieve the objectives (Business Jargons,

2022).

Meanwhile, investment decisions based on the article of Roy Ferman

(2021), business can benefit greatly from investing in your workforce through

organizational changes, the creation of practical training materials, the promotion

of a positive workplace culture, and the assurance that each person is fairly paid,

praised, and held accountable. Any forward-thinking leader in the finance

industry would want to invest in their team at least as much as they would in

other areas of their organization, if not more. Improve productivity (keep a high-

development culture), raise your bottom line (increase business performance and

profit), draw in new talent, and lower turnover are some of these. Likewise, the

importance of employee development for retaining top talent, building an internal

talent pipeline, and keeping employees engaged is now becoming clear to many

organizations. The evidence supports it. According to a Deloitte survey of

millennials, 63% of them believe that their leadership abilities are not being

completely developed, and 71% of workers who are planning to quit their current

jobs in the next two years are unhappy with the way their leadership skills are

being developed. These figures are still increasing. These statistics alone

demonstrate how detrimental it can be for a business to neglect employee

development, and how challenging it can be to gain support for spending time

and money on effective programs (Joe Singson, 2021).

 36

With connection to investment decisions based on James Chen (2022),

asset allocation is a type of investment strategy that seeks to strike a balance

between risk and reward; by allocating a portfolio's assets in accordance with a

person's objectives, risk tolerance, and investment horizon. Equities, fixed-

income, and cash and equivalents are the three basic asset classes. Because

each has a varied level of risk and reward, it will perform differently over time.

There is no easy formula that can determine an individual's optimal asset

allocation. However, the majority of financial experts concur that asset allocation

is one of the most crucial choices that investors must make. In other words, the

allocation of assets among stocks, bonds, cash, and equivalents will ultimately

determine the outcomes of your investments, not the choice of specific products.

An investor can guard against substantial losses by including asset classes with

investment returns that fluctuate in a portfolio under various market conditions.

The returns of the three main asset categories haven't fluctuated simultaneously

in the past. When market conditions favor one asset class, it's common for

another to perform below average or poorly. You can lower your chance of

becoming broke and increase the total investment returns on your portfolio by

making investments across a variety of asset classes. If the investment return for

one asset category declines, you will be able to offset your losses in that asset

category with higher investment returns in another asset category. By including

asset classes in a portfolio that have investment returns that change depending

on market conditions, an investor can protect himself from big losses. The three

major asset categories' returns haven't historically changed at the same time. It is
 37

typical for another asset class to perform below average or poorly when market

conditions favor one. By diversifying your investments over several asset

classes, you can reduce your risk of going bankrupt and raise the overall portfolio

returns. has a simpler time riding. You will be able to balance your losses in that

asset category with better investment returns in another asset category if the

investment return for one asset category declines (U.S. Security and Exchange

Commission, 2019).

According to Gltman, et. al. (2017), financial managers continuously work

to strike a balance between the potential for profit and loss. Return is the

financial phrase for the potential for profit; risk, or the possibility that an

investment won't provide the anticipated amount of return, is the term for the

potential for loss. A fundamental tenet of finance is that the needed return

increases with risk. The risk-return trade-off is a widely recognized idea. When

making decisions about investments and financing, financial managers take a

variety of risk and return considerations into account. Changes in interest rates,

market conditions, overall economic conditions, and social issues are a few of

them (such as environmental effects and equal employment opportunity policies).

Similarly, in order to create a portfolio with the right balance of risk and return,

time is also crucial. In contrast, if an investor can only invest for a short period of

time, the same stocks carry a higher risk of loss. For instance, if an investor has

the ability to invest in equities over the long term, this gives the investor the

potential to recover from the risks of bear markets and participate in bull markets

(Chen, J. 2020).
 38

Technology offers clear benefits to small business owners, both

established and startup; nevertheless, with limited funds and ambitious

objectives, it can be challenging to choose how to invest in the technology that

would give your company the highest return on investment. Technology that

improves customer service is an example of an investment where business areas

where technology gives the best ROI. Customers are starting to want a more

personalized, hassle-free experience from companies they believe in as

technology continues to be the best instrument for enabling global

communication. In order to move prospects through the pipeline more quickly,

increase sales, and provide a distinctive customer experience, it's critical to

employ technology that automates tasks and provides insight into customer

behavior (Lauren Wingo, 2021). John Papiewski (2019), however, elaborates that

technology has both incredible benefits and excruciating drawbacks. On the one

hand, payments and orders can be fulfilled instantly; on the other, costs and

vulnerabilities can appear without warning. Any business person would benefit

from taking an honest look at the drawbacks of any technology. Some examples

of the costly and bad effects of technology investments include tech expenses,

training and retraining costs, dependency on technology, hacking, and data loss.

Technology is disruptive and does not discriminate. While a competitor's

technology might significantly benefit your own business one day, the next, it

might have a negative impact on you. Because technology develops and

disseminates so quickly, significant disruptions might occur suddenly.

 39

You can more effectively analyze and prepare for the financial risks that

could affect your company by implementing an effective risk management

strategy. Effective financial risk mitigation techniques help you manage and

reduce risks to your success and growth. The lifeblood of your company is cash

flow, or the money that comes in through accounts receivable and leaves through

accounts payable. Certain financial risks that could result in rapid losses that

would make it difficult or impossible for you to manage your business's financial

obligations have an impact on cash flow. These dangers can include, among

others, customers who fail to pay you, shifting market conditions that may have

an impact on how you run your firm, and poor management or technological

issues that may have an impact on your revenue. Financial risks are those that

have an impact on your cash flow and the management of money within the

company. Market risk, credit risk, liquidity risk, operational risk, and currency risk

are the five main types of risk that may occur. Making company decisions based

on your identification and analysis of the inherent risks involved is known as

financial risk management. As part of the decisions, you make about your

business investments, you will either accept the risks or look for ways to reduce

them. Your objective is to strategically mitigate the risks using financial

instruments or market techniques, regardless of whether they are quantitative or

qualitative. Prioritizing risks based on their severity and weighing the costs and

benefits of risk mitigation are two strategies for managing financial risk.

Implementing risk accountability throughout the company and providing workers

with the necessary training. using a foreign exchange contract to make a

 40

currency risk hedge. Putting trade credit insurance into place to guard against

credit risk brought on by client bankruptcy. And calculating liquidity risk by

looking at financial ratios and making the necessary operational changes (Euler

Hermes, 2019). Thereby an organization's long-term performance depends on its

ability to recognize, assess, and manage financial risk. Financial risk may impede

a business from successfully achieving its financial goals, such as timely loan

repayment, maintaining a healthy level of debt, or on-time product delivery. A

corporation will most likely experience improved operating performance and

produce better returns by comprehending what causes financial risk and putting

safeguards in place to prevent it (Adam Hayes, 2022).

Finally, financial analysis according to Alicia Tuovila (2022), is used to

assess economic trends, establish financial guidelines, create long-term

corporate activity plans, and pinpoint potential investment opportunities. This is

accomplished by combining financial data with numbers. A financial analyst will

carefully go over the income statement, balance sheet, and cash flow statement

of a corporation. Both corporate finance and investment finance environments

are suitable for conducting financial analysis. Then, you can locate the greatest

businesses to invest in – with the aid of investment analysis. It has a big impact

on your investment choices and is one of the ways used most frequently to

assess a company's financial health. Investment analytics is a difficult procedure,

but it will make sure that your investment proposition is thoroughly researched

and deserving of funding. Regarding the company's financial sector, there are a

few important considerations to keep in mind: debt, interest coverage, current

 41

and quick ratios, and off-balance sheet liabilities. A company's insolvency, which

would waste your investment, can be caused by debt. It is safe to conclude that a

company's financials are among the most important aspects when deciding

whether to make an investment (Andrius Ziuznys, 2022).

Restaurant customer service management is an art. Dealing with

difficulties relating to restaurant services with your personal touch and care can

convert dissatisfied consumers into repeat customers, from addressing difficult

clients who are never satisfied no matter what to making sure the service is up to

par. Customer happiness is one of the most important factors in the restaurant

sector, and good customer management in restaurants results in satisfied

consumers. Unhappy customers frequently register their grievances with

customer review registries or forums and discuss them with other unhappy

customers. Therefore, regardless of how busy you are, you need to be extra

careful when addressing and resolving their problems. By addressing their

grievances, you may be able to keep them coming back for more (Posist, 2018).

Similarly, as stated by Ula Kamburov-Niepewna (2022), on his article customer

feedback is information that customers give regarding their general experience

with a business as well as whether they are satisfied or dissatisfied with a

product or service. Customer feedback can be used to enhance the customer

experience and tailor your actions to suit their demands. Surveys can be used to

acquire this data (prompted feedback). Top-performing businesses are aware of

how important client feedback is to their operations. They pay close attention to

what their customers have to say. They look for comments that their customers
 42

post on social media and reviews that they post on websites specialized for

gathering input (e.g., TripAdvisor). They purposefully solicit input using several

survey types. Never stop paying attention to client input, whether it's positive or

negative, requested or unrequested, if you want to stay ahead of the competition.

The following are the top seven reasons why gathering customer feedback is

crucial for businesses: customer feedback helps you measure customer

satisfaction, customer feedback improves products and services, customer

feedback helps you create the best customer experience, customer feedback

helps you improve customer retention, and finally, customer feedback is a

trustworthy source of information for other consumers.

Stock availability as stated by Alicia Tuovila (2022), is a crucial success

factor for merchants and e-commerce businesses. By helping merchants to

satisfy consumer demand while lowering inventory expenses, stock availability

optimization can boost revenue, cut costs, and improve customer happiness.

Problems with stock availability can be quite harmful for retailers. Supply chain

problems or demand fluctuations that are not anticipated and addressed can

have a disastrous effect on stock availability, lowering sales, profit, and customer

satisfaction. Stockouts, or running out of popular products, can harm a

company's sales and brand reputation by sending customers to rival brands.

However, holding large stock levels of each stock keeping unit (SKU) merely to

satisfy demand is not a wise course of action. Overstocking can raise the risk of

excess and obsolete inventory as well as tie up capital in carrying costs (the

costs related to keeping inventory at a warehouse, distribution facility, or store).

 43

There is a significant risk that a corporation would waste money on inventory that

would be better used elsewhere in the company. Moreover, the foundation of a

satisfying shopping experience and the basis for a reliable revenue stream and

devoted patrons is consistent product availability. If you don't offer the correct

products at the proper time and price, your direct competitors can steal some of

your customers. That's because you may anticipate a decline in the entire

purchasing experience when things become unavailable. The key to your retail

company' success is consistent product availability since it gives you the

framework for your merchandising and attracts your target market by giving them

the things, they need to meet their demands (Brown, et. al., 2021).

According to research from Contact Babel, consumers identified getting an

answer fast as one of the most crucial elements of effective customer service.

Self-service makes this possible by offering customers control and quick access

to information and solutions. Greater customer satisfaction results as a result of

routine queries not needing to be escalated, saving customers time and effort

(Helen Billingham, 2020). While according to Service Now (2022), self-service

seems to go against everything we know about what customers want: more value

without having to put in a lot of work. Businesses aren't delivering less and

asking for more when they give users control over customer support again.

Customer self-service, in actuality, satisfies a different demand and offers quicker

satisfaction – that’s why there is an increasing demand for self-service in the

industry. It takes time to reach out to customer support and wait for a response. It

is annoying to have to wait on hold or continuously checking your inbox for

 44

emails when you need a solution to a problem or an answer to a question. The

expectation among customers is that traditional customer care just cannot meet

their desire for a prompt resolution. Self service offers businesses a special

chance to enhance customer service while cutting costs and stress on support

staff.

According to research by McKinsey & Company, 45% of jobs we are paid

to do can be automated by making changes to technology that is already

available. Many businesses will take advantage of this finding to reduce costs

and provide more convenience for customers. Automation has had an impact on

many industries, including the food industry. Restaurants have automated

different aspects of their business to remain competitive and to boost innovation.

The following tasks are some of the ways that restaurants use automation:

ordering food and making payments, scheduling employees, training employees,

automated menus, and self-service kiosks. The benefits of operating an

automated restaurant include increased accuracy, economic savings (from

reduced salaries), increased efficiency, and better customer service. The

disadvantages of technology, on the other hand, can result in a loss of emotional

connection since, as several studies have shown, it is difficult to use, makes it

difficult to address complex problems, and is expensive (Katie Sawyer, 2019).

Contrarily, based on Avla Jacob (2018), technology only has positively impacted

every aspect of our civilization. from enhancing how we conduct our daily

activities to especially how we produce, prepare, and purchase our food.

Additionally, it has finally satisfied our unquenchable need for convenience.

 45

There is no denying that technology is improving the food and beverage sector.

Customers are given the utmost comfort they desire through it, and restaurateurs

are assisted in expanding their operations. It's an exciting moment to be a part of

as new technological advancements emerge as the digital age progresses and

help shape the future of the business.

Meanwhile, based on Iryna Viter (2021) on her book How to Improve

Operational Efficiency: A Start-to-Finish Guide, future operations in the

professional services industry will focus more on resource allocation and

efficiency than workforce reduction or cost-cutting. In this e-book, we've compiled

the most important advice that could guide businesses into the sustainable and

intelligent future. Automation of work, an accountable culture, a sound financial

plan, and technology all contribute significantly to optimizing your operations.

Operational effectiveness can be increased provided that no effort is spared

because it is a synergy of all processes. Therefore, every firm needs operations

management to function properly. It acts as an organization's "engine room." An

organization's operations and how well they are handled are the only factors that

determine success. Operations managers need to increase productivity,

efficiency, and profit since these three factors are crucial to a business' existence

in a market that is continuously changing. It is not surprising that some

businesses employ a large number of people in operations and give that division

a sizable budget. According to 2011 research by Forbes, three-quarters of CEOs

have experience in operations. This underlines the crucial role that managing

and comprehending a company's operations play in its success. Operation

 46

management helps you achieve: quality of product and services, customer

satisfaction, productivity, competitive advantage, and reduced cost of operations

that later on will help your business in the long-term decisions (Laura Varon,

2021).

Corporate objectives are stages and procedures that must be followed in

order to accomplish a bigger business goal within a given time frame. Although

business objectives and goals are distinct from one another, both concepts work

to improve a firm. To achieve a goal, business objectives must be developed. All

staff participating need to have a clear, concise understanding of the objectives.

The other component of a business plan, setting objectives, shows that the

company is moving in the right path toward reaching its objectives. Setting short-

term goals for a firm is crucial in order to see a return on investment and finish

easier-to-manage activities. They are useful for breaking down bigger corporate

objectives into more manageable chunks. Setting shorter time frames like weeks

or months is an excellent idea for short-term objectives. Implementing a loyalty

program for repeat customers, increasing community involvement, posting on

social media three times per week, collaborating with a charity to support

charitable efforts, and planning and hosting an employee appreciation week are

typical examples of short-term goals for an organization (Laura Stiffler, 2021).

Similarly, to the study of Sarah Laoyan (2022), setting company goals is a

popular practice in business, and for good reason. Clarity in corporate goals

affects employee motivation and improves output. Strong business goals

increase your chances of success whether you work for a small business, a
 47

major corporation, or yourself. Short-term goals in particular assist you in

organizing and carrying out actions for activities that can be finished soon. It can

also be applied to deconstruct bigger, more broad goals. They provide you with a

way to achieve these large, broad aims rather than replacing them.

Nature of Fast-food Restaurants in Rosario, Batangas

Within the industry, a fast-food restaurant, often known as a quick service

restaurant, is a specialized type of restaurant distinguished by its fast-food

cuisine and little table service (Freebase API, 2015). However, fast food is no

longer just sloppy cheeseburgers and greasy French fries. Instead, according to

Darren Triston (2012), consumers seeking quick, high-quality menu items at a

reasonable price are redefining it in modern dining rooms across the quick-

service industry. Today's restaurant owners are selling to a consumer that has

suffered a financial setback, and as a result, this client is looking for two things in

particular: convenience and value. In accordance with this new definition of fast

food, quick-service marketers should showcase their brand's assets to

consumers in a compelling, value-oriented manner (Kevin Moll, 2012). Also, fast

food restaurants are quick-service restaurants that are becoming much more

strategic in how they look at their menus and how they take elements of their

menu to adapt to that consumer. For them, the whole package is important. It

isn't just about the food. It's not just about the looks; it's also about the mindset

(Davis, 2012).

Fast-food restaurants were defined as those where customers ordered

and paid at the counter, and were categorized as chains if they offered franchise
 48

options or had a corporate headquarters (Marinelloa, S., Pipitob, A., Leiderb, J.,

Pugachb, O., and Powella, L., 2020). As to Brawley, W. (2011), it doesn't matter

if you have a trendy restaurant, a cool bar, or the best chef in the world in fast-

food restaurants and its industry. You must engage the customers who come into

your establishment day after day after day, and remember who they are and why

you're here.

Synthesis

The conceptual literature shows readings regarding the subject of the

present study to conduct a comparative study of financial factors towards

financial decisions among Fast-food Restaurants in Rosario, Batangas. The

conceptual framework covers a deep understanding and sufficient information

about financial factors and financial decisions. This also covers the nature of a

fast-food restaurant.

As the study focused on financial factors and financial decisions, different

determinant factors were considered and presented that affect the financial

factors and financial decisions. To furtherly compare the financial factors toward

financial decisions among fast-food restaurants, the study used elements of

financial factors which includes the net profit, return on investment capital

(ROIC), and cash flow. While in the financial decisions investment decisions and

operating decisions.

Moreover, to discuss further about how financial factors toward financial

decision affects the fast-food restaurant, several literatures were collected,

 49

especially in terms of net profit, return on investment capital (ROIC), and cash

flow; investment decisions and operating decisions. Financial factors in

consideration with the book and journal articles presented from different authors

shows how financial factors can help the business to function its operation such

as investments and expenses. Aside from that, financial decision is also relevant

to help the businesses as it is a vital process that measures the businesses’

financial success, it helps the businesses to decide between to invest in equity or

to pay debt funds and its associated costs.

Finally, the concepts and discussions were established to clearly define

the structure of the present study that focused on the financial factors towards

financial decisions among fast-food restaurants in Rosario, Batangas.

Research Literature

This part of the study discussed the completion of different studies

previously conducted by past researchers with topics regarding fast-food

restaurants, financial factors, and financial decisions which was truly great help in

the success of this study.

  According to Castillo, M. and Deheza, J. (2016), businesses serve as a

stimulator in the particular city which triggers a positive effect on the economy of

a country. These businesses are the reason why most of the places grow and get

industrialized rapidly. However, there are various financial factor which may

affect businesses specifically restaurants such as: a business plan, getting

business assistance and training, choosing a business location, financing your

 50

business name, determining the legal structure of your business, registering your

business name, registering state and local taxes, obtaining business license

permit, understanding employer responsibilities and find local assistance. We

argue here that financial factors are important, but probably only when financial

instability becomes a dominant force in the economy. In this respect financial

factors operate much in the same way as the foreign trade regime: unless it is

very distorted indeed, it probably does not make much difference to the level of

per capita GDP. This view is supported by Edward Denison's guesstimate

Denison (2015), that all trade restrictions in the Philippines 2017 accounted

perhaps for a as much as 1.5 percent of the level of GNP. The impact on the

growth rate, by implication, may be almost negligible. Of course, an extra 1.5

percent of GNP is well worth having, but it would be misplaced. Emphasis to put

in most cases the trade regime or finance on a par with capital accumulation,

technology, scale economies or education. Financial factors have been assigned

strategic importance in economic development. But very different factors have

been isolated in the respective experiences: in Asia unrepressed financial

markets in mobilizing saving and allocating investment have been given

prominence. In some case the central question is the role of inflationary finance,

the scope for deficits to enhance growth and, increasingly, the feedback from

high and unstable inflation to poor economic performance. This paper reviews

and contrasts the two approaches and concludes that the strong claims for the

benefits of financial liberalization are not supported by evidence. Financial factors

 51

are important, but probably only when financial instability becomes a dominant

force.

Davis (2018), examined changes in the investment behavior of financial

factors using data from U.S. companies since the 1970s and stated the impact of

financialization. The method of regression analysis was used in the study by

including the following variables: the level of investment of enterprises, capacity

utilization, profitability, financial assets, debt, and coefficient of variation of return

on equity. It has been concluded that more and more companies are investing in

their financial instruments as they can bring higher returns than investing in

capital. Documenting the significance of financial factors for contemporary

business restaurants is less straightforward, due to the absence of events as

pronounced as the Depression. Nonetheless, there is a pattern of evidence

which, at a minimum, is sufficient to justify further pursuit of this topic. The

pattern is roughly as follows: First, small firms' sales and investment (per dollar of

assets) are more volatile than large firms. Second, there is evidence that capital

market imperfections may be an important determinant of this added volatility.

Third, small firms are a nontrivial component of GNP, using various measures of

"smallness" (see below). Beyond this, there are several recent episodes in which

it is clearly possible to identify important financial influences on investment (we

elaborate below).

As a stylized fact, sales, employment, financial factors, and investment are

more volatile in small firms than large firms. These patterns are well known.

Hymer and Pashigian (2012), and Evans (2017), find that the variability of firm
 52

growth decreases with firm size, and finds that the probability of firm failure

decreases with age. Greater variability of earnings and sales in smaller firms is

true historically as well.

A financial factor is an intermediary agent that provides cash or financing

to companies by purchasing their accounts receivables. A factor is essentially a

funding source that agrees to pay the company the value of an invoice less a

discount for commission and fees. Factoring can help companies improve their

short-term cash needs by selling their receivables in return for an injection of

cash from the factoring company. The practice is also known as factoring,

factoring finance, and accounts receivable financing. Although the terms and

conditions set by a factor can vary depending on its internal practices, the funds

are often released to the seller of the receivables within 24 hours. In return for

paying the company cash for its accounts receivables, the factor earns a fee.

Typically, a percentage of the receivable amount is kept by the factor; however,

that percentage can vary, depending on the creditworthiness of the customers

paying the receivables. If the financial company acting as the factor believes

there's an increased risk of taking a loss due to the customers not being able to

pay the receivable amounts, they'll charge a higher fee to the company selling

the receivables. If there's a low risk of taking a loss from collecting the

receivables, the factoring fee charged to the company will be lower here) factors

that influence the decision-making process (Evans, 2017).

Financial decision is a crucial area where the critical decisions are

considered as the most powerful. It isn't the decision of a single individual;

 53

indeed, decision-making is a process that may lead to the final point by

considering the opinions of people linked to the relevant field. The behavioral

theory of financial decision-making involves the use of rational and unbiased

decision-making power. It is said that the financial decision-makers are non-

emotional and critically rational while applying the decisions in the functioning of

firms. However, the behavioral impacts are observed in the decision-making in

the monetary arena. Behavioral financial decision-making is discussing the effect

of decision making without the involvement of the mathematical and calculation

tools. It is simply the use of human behavior in motivating the role of decisions of

a financial sector of a firm. The study shows that a new era of understanding of

human emotions, behavior and sentiments has been started which was earlier

dominated by the study of financial markets. Moreover, this area is not only

attracting the, attention of academicians but also of the various corporates,

financial intermediaries and entrepreneurs thus adding to its importance. The

study is more inclined toward the study of individual and institutional investors

and financial advisors 'investors but the behavior of intermediaries through which

some of them invest should be focused upon, narrowing down population into

various variables, targeting the expanding economies to reap some unexplained

theories. (Zahera, 2018).

According to Subramaniam, Antony, and Joseph (2017), the expected

utility theory is involved in the standard finances. Here, the investors are entirely

rational as they can contract with multifaceted selections. They come under-

occupied risk-averse so they need to make the most of their prosperity. Investors
 54

are intending to exploit their well-being in this way. They have given their

favorites and constraints to the business planners. It is by amassing the

probability-weighted results in the proper form of quantified terms of utility. One

may say that the investors select the portfolio in such a way that improves their

expected helpfulness. It is also unhurried in rapports of expected return but the

concern is to diminish all the possible risks or losses that in the current day

business plans, an efficient financial market is needed. The vital hypothesis of

the Competent Bazaar Suggestion is also picking the same opinion. It says that

investors are exclusively rational and can value securities sensibly. It also implies

that the current investors can finalize the fundamental assessment of

safekeeping and security for the firms. Thus, they are bound to accept defective

decision-making actions or confusions. Human ruling and judging plan are

additional factors. They may take experiential shortcuts that steadily deviate from

the focused decisions.

As presented by Chataway (2020) and Bollen (2015), there is also a clear

correlation between financial decision making and behavioral factors that should

also be taken into account in the process of investment. To predict future stock

prices and their changes based on publicly available information is not possible

in an efficient market. Many early violations of this principle had no explicit link to

behavior. So, it was reported that small firms and “value firms” (those with a low

price to earnings ratio) earned higher returns than other stocks with the same

risk. These authors found in their work that some customers and investors were

more likely to sell a stock that had increased value than one that had decreased.
 55

There is a field in finance in which a behavioral approach was least likely to

succeed. The savings had to be the most promising. The standard life cycle

model of savings abstracts from both bounded rationality and bounded willpower,

but savings is both a complex cognitive problem and a difficult self-control

problem. So, it is less surprising that a behavioral approach has been valuable

here. The results in the decision-making process, the managerial problem can be

solved through analytical and quantitative methods. These include various expert

methods (brainstorming, discussion), exact methods (mathematical statistics,

analysis), decision trees. Managers use some of these methods to make

decisions. However, they sometimes prefer their experience and intuition.

Bollen (2015) and Shotton (2018), confirmed that behavioral finance is

focused on the influence of psychology on the behavior of managers, investors

and financial analysts. It includes the subsequent effect on the markets, and it

focuses on the fact that managers and investors are not always rational, have

limits to their self-control, and are influenced by their own biases. Psychological

and sociological factors have a great effect on the financial decision-making of

managers. Sometimes, they are highly optimistic and self-confident during

solving particular projects within teamwork. Their higher optimism can lead to

wrong and irrational decisions. It is typical for behavioral finance that it enables

us to learn from mistakes and experiences. Managers in various managerial

levels can be influenced by their own optimism, and further, they can

overestimate particular future incidents.

 56

According to Nguyen (2020), investment decision is defined as investment

activity or activity, while an investor is a person or legal entity with the money to

invest or invest. Investment is the placement of a fund that we have today,

hoping that it will bring benefits in the future. When we invest, at least we have

planned to have a better life in the future. Investments are classified into two

categories: investment in financial assets and investment in real assets. The

capital market has a critical role in investment because transactions occur

between owners of capital and companies that issue investment products.

Investment products, such as stocks, can provide substantial returns but are

always directly proportional to considerable risks. Investors should first know

some of the information needed before investing, such as information about

stock prices. This is important because when investors do not see any

information about investments, especially stocks, it could be an investor’s loss.

Moreover, stocks do have a significant risk, so a lot of accurate information is

required before making investments. Similarly, investment decision is a complex

process that involves risk. All decisions made by investors should be concerned

about the level of risk they are willing to tolerate. The level of risk they are willing

to absorb will lead to their investment strategy they should go for, aggressive,

moderate or conservative. For that reason, the factors affecting investors'

investment strategy should be taken into consideration. This study attempts to

develop a conceptual framework in relation to factors determining investors'

investment strategy. In the first part, the paper will describe the development of
 57

the theories, and then review previous literature that provides empirical evidence

on factors affecting investors' decisions (Noryati Ahmad, 2012).

Also, investment is a number of funds issued in the hope of gaining profits

in the future. Investment according to the time dimension is divided into two,

namely long-term investments with instruments on real assets such as land,

buildings, office equipment, vehicles, investments in stocks and bonds. While

short-term investments are investments in current assets such as cash, accounts

receivable, inventory, and securities. Before investors decide to invest in short-

term or long-term investments, there are certain considerations that underlie that

decision. Investment decision making is often influenced by intuitive thoughts or

emotions rather than logic. Investment decisions are closely related to financial

management decisions. Financial management is part of financial literacy.

Creating financial literacy intervention is an obvious and a common-sense

response to the increased complexity of the financial world. Financial literacy is

an important issue at all income levels. The consumers that had higher income

level could be prey to predatory advisers and older people with significant wealth

could have communication disabilities and may not understand the current rules

(Hassan, 2018).

Cooper (2014), suggest that someone who has a high level of education,

investment experience, and financial literacy tends to prefer risk in investing.

Experience is a factor for forecasting investment decisions according to risk

preferences and investment duration (Gambetti and Giusberti, 2012). People

who have more investment experience will be more tolerant of risk. High-risk
 58

portfolios are more relative with less experienced investors. If someone is

anxious, he has a negative relationship with experience and little opportunity to

take experience and knowledge when making investment decisions.

The most common type of repeatable decision is the operational decision.

These involve the daily business decisions that are done in high-volume by every

business. When a customer contacts your business, places an order, or does

any form of interaction, it involves operational decisions. This type of decision is

essential to every organization, no matter what size, because of how often they

are made. When taken individually, their value isn’t as high as the other

decisions because it usually involves a single transaction or customer. But when

gathered, this data becomes extremely valuable. When you consider a decision

that’s been made thousands of times a year, its value increases and often

exceeds that of the other types of decisions. It’s in the nature of operational

decisions to be easily repeatable, because one of its primary characteristics is

being consistent at following defined rules or guidelines. Another characteristic is

that these decisions should often be made as quickly as possible and sometimes

they are made while clients are waiting. While these decisions are often made

about customers, they can also involve suppliers, employees and products.

Thanks to the Internet of Things, more and more physical objects are wired to the

Internet, expanding both the amount of data and the number of operational

decisions that can be managed and improved to increase business value (DMS,

2015). Similarly, according to D. Yue, F and You (2016), operational decisions in

the supply chain are typically made weekly, daily, or even hourly, based on the
 59

type and characteristics of the chain. Unlike the strategic decisions, operational

decisions can be altered and revised more frequently with regard to different

internal and external factors influencing the performance of the supply chain.

Also, Hitesh Bhasin (2017), operational decisions or operating decisions are

decisions made to manage day to day business. Any firm which is into any kind

of business is faced with 100 decisions they have to take in a day. These will be

as mundane as refilling the water cooler, to as stressful as fulfilling a customer's

order within minutes. Naturally, operational decisions have to be taken care of by

a manager in charge of the operations. However, it is not as easy as it sounds

because the number of operations can be mind boggling. On any normal day,

McDonald’s sells 75 burgers a second, or 64 million burgers a day across the

world. Overall, calculating the time spent on operations is important for any

organization as don’t want to waste your resources. And hence, MBA’s generally

have a subject known as operations management, which emphasizes the

importance of time and how to achieve a task in as few steps as possible. As a

business grows, the operational decisions needed to manage the day-to-day

activities increases. Hence, the business needs to hire employees, or an

organization needs to hire managers to manage such operational decisions.

Fast Food Restaurants, are example of widely distributed fast food sector

in industry. It should have a unique marketing strategy to keep customers happy

so that it can generate sales and compete with other businesses in the same

industry (N. Limakrisna and H. Ali, 2016). Similarly, fast food restaurants (also

referred to as "table service" and "full-service" restaurants) is one the major

 60

contributors to the industry's away-from-home meals. Fast food businesses are

known for providing low-cost meals to those who are on a budget (Kim and

Leigh, 2016). Additionally, fast-food restaurant service quality is a key success

component. Managers of fast-food restaurants must constantly assess and

improve their service quality (Salami, C. and Ajobo, R., 2015). Correspondingly,

fast food restaurant falls under the category of a service business. In order to

compete in the business world, a fast-food restaurant must monitor and improve

its service quality, as explained in the preceding paragraph. Furthermore,

empirical studies have shown that the quality of fast-food restaurant service

influences customer happiness, revisit intention, and purchasing choice (Tat,

H.H., Sook-Min, S., Ai-Chin, T., Rasli,A., and Abd Hamid,A.B., 2015).

A fast-food restaurant is one that serves fast food and is either in its own

building or in a neighborhood with other fast-food restaurants. Fast food, on the

other hand, is defined as "meal that can be cooked and served rapidly." As a

result, it can be classified as a fast-food restaurant (Sumaedi S, and Yarmen, M.

2015).

Synthesis

The research literature comprised related readings with regards to the

subject of the present study. It includes past researches about the financial

factors towards financial decisions among Fast-food Restaurants. The

information gathered helped the proponents to formulate the framework and

recommendations that served as an idea on how to analyze and interpret the

findings of the study.

 61

The present study is similar to the study of Limakrisna and Ali which also

highlights how vital financial factors and financial decisions in fast-food

restaurants are. Also, it is supported by Kim and Leigh's study, which

emphasized fast-food restaurants as one of the major contributors to the industry

in providing low-cost meals to those who are on a budget. Then, Sumaedi and

Yarmen defined it as a meal that can be cooked and served rapidly. However,

the study of Salami and Ajobo; and Tat et al. highlighted the significance of

assessing and improving fast-food restaurants as it might be the key to success

and the way to influence customer happiness, revisit intention and purchasing

choice.

Meanwhile, financial factors in the study of Castillo et al. are related to the

study in terms of assessing various financial factors that may affect businesses

specifically restaurants. Though the variables used may differ in names but all of

the said variables in the study are included under the present study’s defining

variables which are the net profit, return on investment capital (ROIC), and cash

flow. This is also, supported by Deniso's guesstimate in 2017 Philippines trade

restrictions as financial factors have been assigned strategic importance in

economic development.

The study of Davis is related to the present study in terms of emphasizing

the financial factors that may mainly affect the businesses’ assets and financial

stability these are the level of investment of enterprises, capacity utilization,

profitability, financial assets, debt, and coefficient of variation of return on equity.

It has been concluded that more and more companies are investing in their
 62

financial instruments as they can bring higher returns than investing in capital.

Whereas, Hymer et al. recognized factors such as years in operation, sales, and

employees as vital factors of it.

The study of Evans is similar to the present study because they both

recognized asset accounts under financial factors that will affect the financial

decisions of the businesses, also they both aimed to determine how financial

factors towards financial decisions among businesses. But they differ in their

subject matter, the former study focused on businesses such as big firms and

companies while the present study focused on fast-food restaurants particularly

in Rosario, Batangas.

On the other hand, financial decisions in the study of Zahera is related to

the present study it is involves the use of rational and unbiased decision-making

power which is considered the most powerful and crucial part since is a process

that may lead to the final point by considering the opinions of people linked to the

relevant field.

The study of Subramaniam et al. is similar to the present study it claims

that financial decision making is a vital part of any business that may take the

business into the safekeeping and security of the businesses, Meanwhile, this

former study is different from the present study because it did not test the

financial decisions of the respondents in terms assert pricing and equilibrium

pricing. Differences are also observed in terms of respondents because the

former focus is investors' perspectives towards the firms while the present study

deals with the fast-food restaurants themselves, owners, and or managers.

 63

The study of Chataway et al. is considered important to the present study

because it also deals with how businesses and small firms value financial factors

in their decision-making. It also discusses the effect of behavioral factors that

should be taken into account prior to the process of investment and saving –

since these two are more likewise to affect the financial decisions considering the

value of risks afterward. In regards to this, the study of Bollen and Shotton

confirmed that behavioral finance includes the subsequent effect on the markets,

and it focuses on the fact that managers and investors are not always rational,

have limits to their self-control, and are influenced by their own biases.

Meanwhile, the study of Ngugyen is considered important to the present

study because it tackles one of the elements of the financial decisions that used

in this study which is the investment decisions wherein it has a critical role in the

businesses since it deals with the future for investing financial assets and real

assets. Similarly, to Ahmad’s study investment decisions has to dealt with risks.

On the other hand, the study of Hassan suggest that investment decision

making is often influenced by intuitive thoughts or emotions rather than logic. It

has something to do with financial literacy. Likewise, to the study of Cooper; and

Gambetti and Giusberti study wherein the educational level, achievements, and

investment experiences has something to do with it – since it will help the

individual to tolerate risks furthermore.

Meanwhile, the study DMS is considered important on the present study

since it tackles about the operational decisions which is one of the elements used

in the study. It said that it is the most common type of repeatable decision is the
 64

operational decision. These are the daily business decisions that every company

makes in large quantities. Likewise, according to D. According to Yue, F, and

You (2016), supply chain operational choices are often made weekly, daily, or

even hourly, depending on the network's kind and characteristics. Unlike

strategic decisions, operational decisions can be changed and revised more

frequently in response to various internal and external factors affecting supply

chain performance. Also, it is supported by the study of Basin, where it deals with

day-to-day transactions.
 65

Chapter III
RESEARCH METHODOLOGY

This chapter represents the research design and the population of

respondents used in the study. It also includes sampling design that helped the

researchers to systematically choose the respondents as sample size.

Furthermore, it consists of the data gathering instrument, dating gathering

procedure, and the statistical treatment analysis of data which assessed the

result of the study.

Research Design

The proponents used a descriptive survey research in conducting the

study to be able to determine furthermore about the subject matter and to

achieve the research objectives. The design can be useful in determining the

characteristics of variables or testing research hypotheses, it is also ideal for the

study to come up with more reliable conclusions. Descriptive study seeks to

characterize a population, circumstance, or phenomena properly and

systematically. A descriptive research plan can study one or more variables

using a range of research methods. Unlike experimental research, the researcher

does not influence or change the variables; instead, they are observed and

measured. Survey research allows you to collect enormous amounts of data and

analyze it for frequencies, averages, and patterns (McCombes, 2022).

The research design fits the objective of the study because instead of

focusing on one or the other, there is a heavy emphasis on explaining both

differences and similarities. Using a validated questionnaire developed by the

 66

researchers, it compares and contrasts the demographic profile of fast-food

restaurants in Rosario, Batangas and their condition in terms of net profit, return

on investment capital, and cash flow; investment decision and operating decision

using the validated researcher-made questionnaire. Likewise, the relationship of

the respondent's demographic profile and its financial factors and financial

decisions were also synthesized.

Respondents of the Study

The respondents of the study were the owners of fast-food restaurants in

Rosario, Batangas. The fast-food restaurants have a total population of fifty (50)

restaurants. The respondents of the survey are the owners of fast-food

restaurants who have five years and above of existence. The study is limited to

the responses of fast-food restaurants in Rosario, Batangas that have five years

and above of existence.

Sampling Design

To determine the financial factors towards financial decision and its effect

on the fast-food restaurants in Rosario, Batangas, the proponents used total

population sampling method wherein it is a type of purposive sampling, a type of

non-probability sampling where the whole population of interest is studied.

There were no sampling techniques utilized since the main target of the

proponents was the total population of the respondents based on the list from the

municipality of Rosario and on the qualification of the study.

 67

Data Gathering Instrument

As the proponents pursued the study of financial factors towards financial

decisions among fast-food restaurants in Rosario, Batangas the quality of the

instrument is measured based on the information gathered in the survey

questionnaire. In the study, construction, validation, administration, and scoring

will be used for data gathering.

In the construction of the researcher-made questionnaire that served as a

main instrument in the study. The instrument was conceptualized by the

researcher based on the ideas obtained from books, internet sites, journals, and

other related readings. The questionnaire will consist of three parts. The first part

aims to gather the profile of the restaurants in terms of number of years in

operation, number of employees, estimated revenue, and capitalization. The

second part gathered data regarding how the financial status of a fast-food

restaurant be described in terms of net profit, return on investment capital, and

cash flow. The third part will be focusing on how the elements of financial

decision making of fast-food restaurants can be described relative to investment

decisions and operating decisions.

The proponents used a constructed questionnaire in the study after the

approval and distributed it to the respondents of the study. The first draft of the

questionnaire is checked by the researcher’s adviser and the grammarian

provides their suggestion, comments, and improvement on the questions. Other

questions or items that are unrelated to the study are ignored, changed, and
 68

revised. After revision, the finalized draft of the questionnaire is submitted for

approval by the consultant and panelist.

Distributions of the questionnaire followed upon the go signal of the

adviser. After collecting the questionnaire, proponents tallied, classified, and

tabulated the data. Afterward, interpretation of the result from the survey

consisting of the items that were found in the questionnaire takes place.

The proponents used the Likert Scale for the respondents to assess the

financial factors towards financial decisions among those fast-food restaurants.

This is used to indicate the degree of agreement and disagreement of the

respondents with the statements by checking the scales. The highest rate was 4

and the lowest would be probably 1. The answers on the scale were assigned to

the number values analysis.

Table 1
Scoring and Interpretation

SCALE RANGE VERBAL INTERPRETATION

4 3.50 – 4.00 Strongly Agree (SA)
3 2.50 – 3.49 Agree (A)
2 1.50 – 2.49 Disagree (D)
1 1.0 – 1.49 Strongly Disagree (DS)
 69

Data Gathering Procedure

In the data gathering procedure, the proponents used different materials in

the e-libraries of different universities and e-books to gather some information

needed in the study. Hence, the researchers searched for different legitimate

books, articles, dissertations and thesis which all provided information about the

research.

The researcher gathered the relevant information needed and related to

the present study. The first thing that researchers did was provide a letter signed

by the adviser to get the list of all fast-food restaurants in Rosario, Batangas.

After that, the researcher comes up with the number of respondents based on

the list.

Furthermore, in the approval of the research, the proponents constructed

a questionnaire based on the study and passed it to the adviser for verification

revisions. In distributing the questionnaire, the researcher constructed a letter of

request to the business owner or manager in the selected fast-food restaurants in

Rosario, Batangas to have formalities. The letter asks permission from the

respondent in terms of gathering information to them through a survey

questionnaire.

Finally, when the survey questionnaires are retrieved from the

respondents, the researchers tallied and interpreted it.

 70

Statistical Treatment of Data

The data were retrieved and treated statistically using various formulas.

Statistical treatment was significant to the study to have the interpretation of data

and testing the null hypotheses of the proposed study. The researcher used the

following statistical tools:

Percentage and Frequency. It indicates the ratio of the number of

observations in statistical copy to the total number of observations. It is used to

determine the profile of the fast-food restaurants in terms of years of operation,

number of employees, capitalization, and estimated revenue.

Weighted Mean. This is used in this study to analyze and interpret the

data gathered, to simplify and distinguish the number and distribution of

respondents that reflects the financial factors towards its financial decision of the

respondents.

F-test/ One-way ANOVA ranking. This is used to determine the

significant differences on the financial factors and financial decisions when

grouped according to the profile variables. ANOVA test procedure produces an

F-statistic, which is used to calculate the P-value. If p<.05, it means, reject the

null hypothesis. And if p>.05, it means, fail to reject the null hypothesis.
 71

Pearson Product Moment Correlation. This is used to determine the

relationship between the financial factors and financial decision of the fast-food

restaurant in Rosario Batangas.

 72

CHAPTER IV
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents, interprets and analyzes the data gathered by the

researchers utilizing various statistical treatments such as frequency and

percentage, weighted mean, one-way analysis of variance, and pearson

correlation.

1. Profile of the Restaurants

This describes the demographic profile of the respondents in terms of

number of years in operation, number of employees, estimated revenue, and

capitalization.

1.1 number of years in operation;

Table 4.1.1
Frequency Distribution of the Profile of the Restaurants in terms of
Number of Years in Operation
Number of Years in Operation Frequency Percentage

5 years 22 44.0

6-7 years 8 16.0

8-9 years 8 16.0

10 years and above 12 24.0

Total 50 100

From the table, it can be observed that most of the fast-food restaurant

responses have been in business for 5 years, which received a frequency of 22

or 44 percent. This is followed by the business having 10 years and above in

operation with a frequency of 12 and a percentage of 24 percent. 6-7 years of

 73

operation has been the response of 8 respondents with a percentage of 16

percent. Same number of respondents answered 8-9 years in operation.

From the responses above, fast food restaurants from Rosario, Batangas

are generally starting their operations inside the 5-year bracket. The span of the

operational movement of a business can be perceived based on the accessibility

of it to the public. Fast-food restaurants are known to have a quick service

business that serves their products in the ease of the customers. With that being

said, restaurants continue their operations from years with their vision of serving

a larger market and mission of continuously meeting customer needs as their

way to operate longer on the public.

1.2 number of employees;

Table 4.1.2
Frequency Distribution of the Profile of the Restaurants in terms of
Number of Employees
Number of Employees Frequency Percentage

4 and below people 32 64.0

5-9 people 13 26.0

10- 14 people 5 10.0

15-19 people 0 0

20 above people 0 0

Total 50 100

From the table, it can be observed that most of the fast-food restaurant

responses have 4 employees and below which received a frequency of 32 or 64

percent. This is followed by the business having 5-9 people with a frequency of
 74

13 and a percentage of 26 percent. There are also businesses that have 10-14

employees with a frequency of 5 and a percentage of 10 percent. Meanwhile, no

fast-food restaurants responded, having 15 employees and above.

Having a fast-food restaurant needs a workforce that can lean on. This will

be the initiator of actions and response from the public market. Number of

employees determines how a restaurant operates and works together in a

workplace. Small fast-food restaurants attain less than 4 employees to balance

small tasks from different restaurant sections. A larger restaurant attains up to 10

employees with its delivery of serving larger markets. Some adjust more and

extend their business to no higher than 15 manpower. However, due to the

pandemic and other problems they are experiencing, the majority of restaurants

have had to let go of some of their staff in order to maintain business profitability.

Some restaurants, moreover, are high-end establishments with a history of

successful operations and are, of course, well-known for having a large staff. A

restaurant's influence on the people inside the business will determine the

quantity of workers in the restaurant.

 75

1.3 estimated revenue;

Table 4.1.3
Frequency Distribution of the Profile of the Restaurants in terms of
Estimated Revenue
Estimated Revenue Frequency Percentage

4,000 below 7 14.0

5,000- 9,999 8 16.0

10,000-14,999 10 20.0

15,000-19,999 7 14.0

20,000- 29,999 5 10.0

30,000 and above 13 26.0

Total 50 100

From the table, it can be observed that most of the fast-food restaurant

responses are earning an estimated revenue of above 30,000, which received a

frequency of 13 or 26 percent. This is followed by the fast-food restaurants

earning 10,000-14,999 with a frequency of 10 and a percentage of 20 percent.

5,000- 9,999 of estimated revenue has been the response of 8 respondents with

a percentage of 16 percent. Meanwhile, fast-food restaurants who earn an

estimated revenue of 4,000 and below received a total frequency of 7 tabulated

with a percentage of 14 percent. Same number of respondents answered with

15,000-19,999 estimated revenues. Finally, least of the fast-food restaurant

responses are earning an estimated revenue of 20,000- 29,999, which received a

frequency of 5 or 10 percent.

In this case, some respondents provide estimates of their respective

revenues after deducting costs. The total monthly revenue foresees the collective
 76

response of the restaurant to the factors affecting their business. Revenue is

more than just a lifeline; it may also help you gain important business

information. You must grow your revenue if you want to boost your company's

earnings. You may boost your profitability by monitoring your revenue and

concentrating on increasing it.

1.4 capitalization

Table 4.1.4
Frequency Distribution of the Profile of the Restaurants in terms of
Capitalization
Capitalization Frequency Percentage

29,999 and below 30 60.0

30,000- 39,999 4 8.0

40,000-69,999 3 6.0

70,000- 99,999 7 14.0

100,000 and above 6 12.0

Total 50 100

Based on the table, most of the fast-food restaurants have a starting

capital monthly amounting to 29,999 and below which obtained the frequency of

30 and got the percentage of 60 percent (60%). This is followed by the

capitalization amounting to 70,000-99,999 which received the frequency of 7 and

a percentage of 14 percent (14%). Next, most of the fast-food restaurants have a

capitalization amounting to 100,000 and above which receive the frequency of 6

and get the percentage of 12 percent (12%). Meanwhile, some restaurants have

capitalization amounting to 30,000-39,999 which obtained a frequency of 4 and

has the percentage of 8 percent (8%). Lastly, least of the fast-food restaurants
 77

have a capitalization amounting to 40,000-69,999 which received the frequency

of 3 and got a percentage of 6 percent (6%).

Based on the survey's findings, the majority of fast-food outlets had capital

of 29,999 or less. This is so because most restaurants are informal eateries,

which don't necessarily need to upgrade their space or ambiance or anything

else. This entailed spending money on the venue, buying meal ingredients,

paying taxes to the municipality of Rosario, as well as other incidental costs.

While others have considerable capital because they prefer to invest in the

ambiance of their places and others are expensive eateries. The type of eateries

people frequent also depends on the capital. The amount of capital also

influences the kind of restaurants that are operated by the business.

2. Financial Status of Restaurants

This study was intended to assess the financial status of restaurants in

terms of net profit, return on investment capital (ROIC), and cash flow. The

succeeding tables showed the financial status of restaurants classified by each

variable.

2.1 Net Profit. Table 4.2.1 represents the respondent’s financial status in

terms of net profit, which refers to assessing the financial status of fast-food

restaurants. It obtained a composite mean of 2.81 and was verbally interpreted

as agreeing with the restaurants.

 78

Table 4.2.1
Financial Status of Restaurants in terms of Net Profit
Statement Weighte Verbal
The net profit of a fast-food restaurant … d Mean Interpretation
Earns 10% net profit after cost and operating 2.76 Agree
expenses are taken out
Exceeds targets compared to the forecast profit 2.48 Disagree

Lessens due to the economic crisis and other 3.56 Strongly Agree
factors such as pandemics and environmental
problems (storms, floods)

Determines the sustainability of the business 2.96 Agree

profitability

Achieves its financial profit target 2.62 Agree

Gets a better return on sales, demonstrating the 2.94 Agree

success of the business

Increases by using finance strategies such as 2.34 Disagree

financial and strategic planning as well as
budgeting and forecasting

Composite Mean 2.81 Agree

This table illustrates the respondent’s assessment on the financial status

of the fast-food restaurants in terms of net profit. Based on the results given, the

net profit of a fast-food restaurant lessens due to the economic crisis and other

factors such as pandemics and environmental problems (storms, floods) got the

highest weighted mean of 3.56 and obtained a verbal interpretation of strongly

agree. This means that the net profit was affected by the existence of an

economic crisis and environmental problems. As a result of the economic crisis,

business income is declining, and poverty and unemployment are increasing. All

commercial enterprises may be impacted by this. Given that, it can be said that

the economic crisis and other variables have had a significant effect on the 50
 79

fast-food respondents from Rosario, Batangas because some fast-food

restaurants are being shut down, employees being laid-off, and their income is

low.

In relation to this, Nick French (2020), the coronavirus pandemic is

showing many ways in which the relentless drive for profit can be deadly. The

measures necessary to slow the spread of the coronavirus mean that most

businesses need to suspend operations, and many workers will lose their jobs or

find their hours drastically reduced. In relation to the statement, Georgev (2021),

stated that all businesses are there to make profits. However, whether they

thrive, or cease depends on external circumstances as much as internal.

Nevertheless, 2020 has reminded us that we should never underestimate the

power of global events that may occur unexpectedly.

On the other hand, the net profit of a fast-food restaurant determines the

sustainability of the business profitability when it comes to the second highest

mean of 2.96 and interpreted as agree. Despite the fact that each and every

business has an impact on a business' profitability and sustainability, the extent

of that impact differs from firm to business. This might be connected to fast-food

restaurants whose profitability is rising and whose sustainability is appearing to

be strengthening. To support this statement, J. B Maverick (2021), states no

business can survive for a significant amount of time without making a profit,

although a company can sustain itself by making a profit. Meanwhile, Kris

Roberts (2018), stated that profitability and sustainability analysis come into play.

Sustainability refers to having your business be profitable for the long-haul.

 80

Although each area impacts both the profitability and sustainability of a business,

the depth of the impact will vary from business to business. As the business

changes, so will the variables which impact its profitability and sustainability.

Next statement, the net profit of a fast-food restaurant gets a better return

on sales, demonstrating the success of the business and according to the

survey, with a total weighted mean of 2.96 interpreted as agree received the third

highest answer.

In order to assess if a business activity is effective and contributing to your

bottom line, return on sales is an essential statistic. Considering factors like the

success of the firm and all sources of income, having a reasonable return on

sales guarantees that your business has enough profit. To support the statement,

it is stated that Return on sales is one of the most straightforward figures for

determining a company’s overall performance. A solid return on sales indicates

that your company is likely operating efficiently, making sound decisions, and

indicates the business is successful (Jay Fuchs, 2021). Based on the article of

Shark Finesse (2022) If a company’s return on sales is increasing after each time

it is calculated this shows the company is being efficient, making more profit and

shows the business success.

Meanwhile, statements, net profit of a fast-food restaurant increases by

using finance strategies such as financial and strategic planning as well as

budgeting and forecasting got the lowest response from the results with a total

weighted mean of 2.34 interpreted as disagree. A strategic plan that was devised
 81

more than a generation ago, yearly plans and budgets are still the basis of many

businesses' strategies today. However, businesses are learning that plans,

budgets, predictions, and forecasts regularly are not effective anymore. Based on

the survey's findings, these techniques are not working out as well as the

business owners had hoped. According to Amy Drury (2022), budgeting can

sometimes contain goals that may not be attainable due to changing market

conditions. Although budgeting and financial forecasting are often used together,

it doesn't mean it can maximize a profit. In relation to the statement, John Galt

(2020), stated it’s hard to predict the future. Even if it has a great process in

place and forecasting experts on payroll, forecasts will never be spot on. Some

products and markets simply have a high level of volatility. In addition, it’s not

uncommon for processes to be manual and labor-intensive, thus taking up a lot

of time. Fortunately, if you have the right technology in place, this is much less of

an issue.

Following this statement, net profit of fast-food restaurants exceeds

targets compared to the forecast profit and got the second lowest response with

a general weighted mean 2.48 interpreted as disagree.

Forecasts are created in a company to assist in managing operations,

cash flow, and expectations. Forecasting is fundamentally based on risk and

uncertainty. On the other hand, a target is an objective that is set in order to

motivate or track the performance of a person or a team. When creating budgets,

it might be difficult to distinguish between forecasts and targets. When the two

are mixed up, there may be a tendency to remain with an outdated aim (budget)
 82

instead of updating it to reflect the most recent knowledge about the situation and

forecasting new results. This could be aligned with the statement of Remington

Hall (2020), that business forecasting consists of tools and techniques used to

predict changes in business, such as sales, expenditures, profits and losses but

it doesn’t signify that it can achieve the target profit of the business. In relation to

this Steve Milano (2019), many small-business owners make the mistake of

seeing sales and revenues as synonymous, which can lead to less effective

planning and results tracking. Sales have more to do with the volume of business

transacted, while revenues are the amounts of money generated from sales.

Neither gives you an exact picture of profits or margins, but they are tools you

can use to analyze your marketing efforts.

Finally, with a weighted mean of 2.62 interpreted as agree, the statement

net profit of fast-food restaurants achieves its financial profit target came in fifth

overall. Profits must be consistently made for a business to succeed. For a

business to grow and expand its activities, it must be profitable. You can start

new businesses and grow existing ones if you make a profit. The goal of

business growth is to boost earnings even further. meeting the financial profit aim

is unstable for the business that's why the business must step up. To support the

statement, Article by Ashish Kumar Srivastav, reviewed by Dheeraj Vaidya, CFA,

FRM (2022), the company’s target profit is to earn the targeted profit over and

above the expenditures. It tends to be more reliable. As well as the target profit

gets updated as per actual results, it becomes more feasible and reliable to use.

In relation Tom Zacks (2017), stated, A specific profit target can be a powerful
 83

catalyst for improvement throughout the company. A minimum goal to start

should be to attain the average profitability for the industry.

2.2 return on investment capital (ROIC). Table 4.2.2 represents the

respondents of the financial status of restaurants in terms of return on investment

capital. It pertains to how the return of investment capital affects the fast-food

restaurant. The variable got a composite mean of 2.70 which is agreed to by the

respondents.

Table 4.2.2
Financial Status of Restaurants in terms of Return on Investment
Capital
Statement Weighte Verbal
The return of investment on capital of a fast- d Mean Interpretation
food-restaurant…
Is above average cost when it pays for its debt 2.84 Agree
and equity capital
Goes through weak correlation between 3.12 Agree
profitability and re- investment

Engages in market timing (tactical asset 2.38 Agree

allocation) of their return-forecasting model to
maximize their short-term return

Is greater than the established expectation 2.50 Agree

Allows the business to identify which marketing 2.70 Agree

tactics are successful and where changes should
be made

Is approximately 7% or greater (annually) which 2.48 Disagree

is considered a good ROI

Represents of your total savings and investment 2.90 Agree

include all the money you have in cash savings

Composite Mean 2.70 Agree

 84

This table shows the respondents on how the financial status of the fast-

food restaurants in terms of return on investment. Based on the results given, the

statement the return of investment on capital of a fast-food restaurant goes

through weak correlation between profitability and re- investment got the highest

response with a total weighted mean 3.12 interpreted as agree.

The business needs to earn profit to be successful. But there’s just a time

that business cannot always maximize the profit. It is common that the business

goes through weakness especially in this time of pandemic. The business

profitability can increase intuitively and just as destruction and reinvestment in

the business can cause a downfall of the business. The survey results measure

investment that goes beyond retained earnings to figure out the relationship

between profitability and reinvestment. In supporting the statement according to

Jason Fernando (2022), reinvestment risk refers to the possibility that an investor

will be unable to reinvest cash flows received from an investment, it is the

potential that the investor will be unable to reinvest cash flows at a rate

comparable to their current rate of return. In relation to this, the reinvestment

predicts that a firm’s expected return is increasing in its expected profitability and

increasing its reinvestment rate (Hou, Xue, Zhang, 2015, Zhang, 2017).

Following this, the statement the return of investment on capital of a fast-

food restaurant represents your total savings and investment including all the

money you have in cash savings has accumulated the second highest response

with a total weighted mean 2.90 interpreted as agree. Your investments in

business are the time and money you invest to enhance the business. While the
 85

business operates and has an ability to make profit it is advisable to save. Saving

is an act of putting money aside, typically into bank accounts. This serves as

your total savings and investment from the return of investment because the

business is making profit This also shows how much of your income is in cash

savings. In connection with the statement, when a business generates excess

cash, the decision about how to best use that cash will often determine the future

success of the business. If anticipate needing cash within the next year, park the

money in Deposit with maturity dates timed to free the cash as it is needed. Eric

Vines and Richard Blue, (2022). Likewise, Greg Mcbrdide (2022), stated that

succession of the business is keeping all the money in cash deposits and a

savings account for decades, the amount of money in your account will increase,

but the buying power of that money will likely shrink.

In addition to the statement, the statement that the return of investment on

capital of a fast-food restaurant is above average cost when it pays for its debt

and equity capital got the third highest responses in the survey with a total

weighted mean of 2.84 interpreted as agree.

Usually there is money left over after covering all business costs for the

businesses to use. In the survey results, most fast-food restaurants maximize

their profit after deducting all operating costs. After deducting all operating costs

and other expenses, fast-food restaurants agree that their net profit is above

average because they tend to need less staff, use less expensive equipment,

ingredients also (frozen food). According to Emily Guy Birken (2022) in a

conventional wisdom, an annual ROI of approximately 7% or greater is

 86

considered a good ROI. Because this is an average, some years your return may

be higher; some years they may be lower. But overall, performance will smooth

out to around this amount

Meanwhile, the statement the return of investment on capital of a fast-food

restaurant engaging in market timing (tactical asset allocation) of their return-

forecasting model to maximize their short-term return statement got the lowest

response with a total weighted mean of 2.38 interpreted as agree. Market timing

is a type of investing in which the investor looks for the perfect periods to enter

and exit the market. Respondents believe that predicting the market's peaks and

valleys accurately can produce larger profits than other approaches. Market

timing is used to increase profits and counteract the risks involved with small gain

and some fast-food restaurants agree because some of them are making profit.

To support the statement, Wesley Gray, PhD (2016), stated that attempting to

estimate the expected return on the market timing is not foolish statements, it is

likely that it will be considered responsible to engage in informed market-timing.

In relation to support the statement Sushant Deoskar (2021), stated that when

performed with good command of timing, market transactions generate high

returns. It can be considered good market timing if it has earned returns, High

gains may offset the risks in such strategies.

Next statement the return of investment on capital of a fast-food restaurant

is approximately 7% or greater (annually) which is considered a good ROI and

got a second to the lowest with an overall weighted mean of 2.48 interpreted as

disagree.
 87

ROI, or return on investment, is a common business term used to identify

past and potential financial returns. Owners look to the ROI of a project or

endeavor because this measure indicates how successful a venture will be.

Often expressed as a percentage or a ratio, this value describes anything from a

financial return to increased efficiencies. In the survey it is stated that most fast-

food restaurants in Rosario, Batangas cannot achieve a good return on

investment. Keith Speights (2021), stated you have one goal when you invest: to

make money. ROI is expressed as a percentage and is extremely useful in

evaluating individual investments or competing investment opportunities. A

"good" ROI depends on several factors. The higher the risk of a type of

investment, the higher the ROI investors will expect. Most investors would view

an average annual rate of return of 10% or more as a good ROI for long-term

investments. In support of this Ankur Pramod (2022), stated that It just depends

on the industry and the advertising channel that is engaging in. In some

industries, a positive ROI can be as high as 10 to 15% and for others, a 1 to 2%

return is sufficient.

Finally, the statement the return on investment on capital of a fast-food

restaurant is greater than the established expectation and got a fifth placed in

overall responses with a total weighted mean 2.50 interpreted as agree. A

standard for how much money will enter a business is typically established.

Some fast-food restaurants agreed that their return on investment capital is

greater than their expectation. It is because some restaurants set standards,

resulting in more efficiency and greater return. The needed rate of return is
 88

defined as the basic minimum return the business will accept for carrying out its

operations. Some returns are less than we anticipated, but some are more than

we expected. This statement got a fifth place in overall responses. According to

James Chen (2021), expected returns cannot be guaranteed. When expected

return is greater than it’s expected for a portfolio containing multiple investments

is the weighted average of the expected return of each of the investments. The

expected return is usually based on historical data and is therefore not

guaranteed into the future; however, it does often set reasonable expectations.

Therefore, the expected return figure can be thought of as a long-term weighted

average of historical returns.

2.3 Cash Flow. Table 4.2.4 contains responses on the financial status of

the fast-food restaurants in terms of cash flows. Cash flow refers to the

measurement of how much cash a business brought in or spent in the total

period. As reflected in the table, cash flow has a composite mean of 2.73 which

is verbally interpreted as agree. This indicates that cash flow affects the financial

status of the restaurant in Rosario, Batangas. One of the most important factors

in a business' ability to survive is "cash flow." It may be either good or negative,

which is obviously the worst-case scenario.

 89

Table 4.2.3
Financial Status of Restaurants in terms of Cash Flow
Statement Weighte Verbal
d Mean Interpretation
The cash flow of fast-food restaurants…
Is rapidly moving in terms of its cash outflows 3.58 Strongly Agree
such as payrolls, expenses, etc.
Is always shifting upwards when it comes to the 2.78 Agree
cash inflows, such as account receivables,
money made from selling, and financing

Shows the changes in assets, liabilities, and even 2.80 Agree

capital equity.

Regularly summarize the amount of cash taken/ 2.52 Agree

taken out and cash equivalents received

Secured financial security in the business 2.72 Agree

operations

Has seen an overall increase in its sales and 2.96 Agree

investment-related cash inflows

Relies on huge clients paying a high cost to get 1.76 Disagree

by during difficult times

Composite Mean 2.73 Agree

The table shows that the cash flow of fast-food restaurants is rapidly

moving in terms of its cash outflows such as payrolls, expenses, etc. and got the

highest responses with a total weighted mean of 3.58 verbally interpreted as

strongly agree. This just means that cash outflows greatly affect their financial
 90

status due to their expenses such as operating expenses as the prices of food

items continuously increase. This is because it is essential for any restaurant to

pay bills, buy equipment, pay the staff, buy the raw materials and handle all the

other costs necessary to keep the tables filled with customers.

According to Adam Hayes (2022), cash flow refers to money that goes in

and out. Having a positive cash flow means there's more money coming in while

a negative cash flow indicates a higher degree of spending. The latter isn't

necessarily a bad thing because it may mean that you're investing your money in

growth. But if your spending becomes excessive, you won't have enough for a

rainy day and you won't be able to pay your suppliers or lenders. Whether you're

running a business or a household, it's important to keep on top of your cash

flow.

Next statement, the cash flow of fast-food restaurants has seen an overall

increase in its sales and investment-related cash inflows got the second highest

responses having 2.96 and obtained a verbal interpretation of agree. One of the

sections on the cash flow statement that details how much money was made or

spent on various investment-related activities during a given period is the cash

flow from investing activities (CFI). Buying tangible assets, investing in securities,

or selling securities or assets are all examples of investing activity. The fast-food

restaurant in Rosario, Batangas, despite economic factors that affect the sale of

the business, is still experiencing an increase in sales. Cash flow from investing

activities involves long-term uses of cash. The purchase or sale of a fixed asset

like property, plant, or equipment would be an investing activity. Companies look

 91

to generate positive cash flow. Increasing its sales proceeds of a division or cash

out as a result of a merger or acquisition would fall under investing activities (Lisa

Smith, 2021).

In addition, the statement the cash flow of fast-food restaurants shows the

changes in assets, liabilities, and even capital equity got the third highest

responses in the survey with a total weighted mean 2.80 interpreted as agree.

This crucial business tool assesses the overall stability and financial

health of the company. Positive equity is a sign of solid finances and the

capacity to pay obligations. Negative equity could be a sign of impending

insolvency or an inability to pay payments. According to the survey's findings,

fast food outlets in Rosario, Batangas, tend to remain competitive since they can

track changes in their bottom line. In support of the statement Bryce Warnes

(2021), states that cash flow statements are an essential part of financial analysis

because they show you changes in assets, liabilities, and equity in the forms of

cash outflows, cash inflows, and cash being held. When the venture have a

positive number at the bottom of the statement, it got positive cash flow for the

month. But as a positive outcome inflow it can generate negative liabilities.

Meanwhile, the statement the cash flow of fast-food restaurants relies on

huge clients paying a high cost to get by during difficult times and got an overall

lowest response with an overall weighted mean 1.76 interpreted as disagree.

Both a frequent customer and a high-paying customer are beneficial to the firm

because the company can benefit the customer. If you position yourself correctly,

you have a greater chance of landing a contract with a high-paying client, but it is
 92

not advisable to rely on this in a fast-food restaurant setting as these clients are

infrequent. To support this article Purple Cow digital marketing (2022), states

upon launching a business, the firm is keen to keep revenue, attract high-paying

clients, and maintain them for the long-term. Business owners tend not to be too

finicky on who the clients are. In relation to support this statement Dean Seddon

(2022), stated it got to sort its own head out about money. Consider the current

and potential customers. Don’t end up trying to raise clients who pay a big

amount and then appeal to people who won’t pay higher prices.

In addition, the statement cash flow of fast-food restaurants regularly

summarizes the amount of cash taken/ taken out and cash equivalents received

got the second lowest responses with a total weighted mean 2.52 interpreted as

agree.

Summarizing the money brought in and taken out, as well as the cash

equivalents you have, is secure and appropriate in business. Financial

summaries can show a company's successes and failings. The summaries

compile information from accounting records to assess a company's overall

financial health and make judgments regarding profit, loss, and cash flow. Tim

Stobierski (2020), stated that the purpose of a cash flow statement is to provide a

detailed picture of what happened to a business’s cash during a specified period,

known as the accounting period. It demonstrates an organization’s ability to

operate in the short and long term, based on how much cash is flowing into and

out of the business.

 93

Finally, statement cash flow of fast-food restaurants secured financial

security in the business operations placed as fifth placed in overall responses

with a weighted mean 2.72 interpreted as agree. Financial stability has a big

impact on how satisfied you are. Once you have enough money to cover both

your current expenses and future savings, a whole new opportunity opens up to

you. You stop freaking out when there is a financial setback. In relation to the

survey result, most of the fast-food establishments in Rosario, Batangas, are

financially stable due to the demand for customer satisfaction, the years they are

operating and the venture being known. To support the statement, it states that It

should be noted that most scholars entertain an idea that security is a state of a

company's safety from all threats or a state when a company can survive and

expand despite threats that affect it. However, others think that security means

companies' ability to create a system of self-protection and growth under threats.

(Medvedyeva I., Pohosova M., 2014).

3. Elements of Financial Decision Making

This study was intended to assess how the element of financial decision

making affects the respondents’ decisions relative to investment decision

operation decision. The succeeding tables showed the financial decision of

restaurants classified by each variable.

3.1 Investment decision. This pertains to the Fast-food restaurants

understanding about investment decisions and the application of such knowledge

to invest and enhance their ability to save. This assessment will analyze the

assurance on investing decisions of the fast-food restaurants. Table 4.3.1 shows

 94

the Financial Decision Making in terms of investment decision. As reflected in the

table Financial Decision Making in terms of investment decision has a composite

mean of 3.09 which is verbally interpreted as agree. This level signifies that

financial decision making has a big impact on the investment decision of the fast-

food restaurant in Rosario, Batangas.

Table 4.3.1
The Elements of Financial Decision Making in terms of Investment
Decision
Statement Weighte Verbal
The fast-food restaurant makes financial d Mean Interpretation
decisions by…
Careful allocation of financial resources to obtain 3.56 Strongly agree
the highest possible return
Investing in technological equipment to produce 1.80 Disagree
quality services
Selecting good and well-trained personnel/staff in 3.76 Strongly agree
the restaurant

Looking forward to the sustainability and 3.20 Agree

profitability of the business

Calculating financial risk associated with 2.56 Agree

employment, economic activity, and economic
growth that can be carefully evaluated to
determine financial risk and investment potential

Careful selection of assets in which fund will be 3.60 Strongly agree

invested

Discovering investment analysis based on current 3.12 Agree

financial status

Composite Mean 3.09 Agree

The responses regarding how the components of financial decision-

making may be described in relation to investment decisions are shown in the

table. The fast-food restaurant makes financial decisions by considering the

outcomes, selecting good and well-trained personnel/staff in the restaurant got

 95

the highest responses with the weighted mean of 3.76 interpreted as strongly

agree. As we all know, one of the internal benefits that a business can only

provide for itself is the selection of competent and qualified personnel for the job,

as doing so would enable the organization to reduce waste management costs.

According to Roy Ferman (2021), your business can benefit greatly from

investing in your workforce through organizational changes, the creation of

practical training materials, the promotion of a positive workplace culture, and the

assurance that each person is fairly paid, praised, and held accountable.

Likewise, the importance of employee development for retaining top talent,

building an internal talent pipeline, and keeping employees engaged is now

becoming clear to many organizations. The evidence supports it, based on

Deloitte survey of millennials, 63% of them believe that their leadership abilities

are not being completely developed, and 71% of workers who are planning to

quit their current jobs in the next two years are unhappy with the way their

leadership skills are being developed. These figures are still increasing. These

statistics alone demonstrate how detrimental it can be for a business to neglect

employee development, and how challenging it can be to gain support for

spending time and money on effective programs (Joe Singson, 2021).

The fast-food restaurant makes financial decisions by careful selection of

the assets in which the fund will be invested came in second with a weighted

mean of 3.60, which is also considered to be strongly agreed. As the assets and

fund are interchangeable cash funds or running the business, careful selection of

this will help the business to avoid risks and if risks occur it may be minimal.
 96

Based on James Chen (2022), majority of financial experts concur that asset

allocation is one of the most crucial choices that investors must make. In other

words, the allocation of assets among stocks, bonds, cash, and equivalents will

ultimately determine the outcomes of your investments, not the choice of specific

products. By including asset classes in a portfolio that have investment returns

that change depending on market conditions, an investor can protect himself

from big losses. The three major asset categories' returns haven't historically

changed at the same time. It is typical for another asset class to perform below

average or poorly when market conditions favor one. By diversifying your

investments over several asset classes, you can reduce your risk of going

bankrupt and raise the overall portfolio returns. has a simpler time riding. You will

be able to balance your losses in that asset category with better investment

returns in another asset category if the investment return for one asset category

declines (U.S. Security and Exchange Commission, 2019).

Additionally, the fast-food restaurant makes financial decisions by careful

allocation of financial resources to obtain the highest possible return received the

third-highest response rate, with a weighted mean of 3.56 read as strongly agree.

The allocation of financial resources should be carefully considered for higher

return because the gain and loss will be later delivered by those resources that

the businesses selected to spend with.

According to Gltman, et. al. (2017), financial managers continuously work

to strike a balance between the potential for profit and loss. Return is the

financial phrase for the potential for profit; risk, or the possibility that an
 97

investment won't provide the anticipated amount of return, is the term for the

potential for loss. A fundamental tenet of finance is that the needed return

increases with risk. The risk-return trade-off is a widely recognized idea. When

making decisions about investments and financing, financial managers take a

variety of risk and return considerations into account. Changes in interest rates,

market conditions, overall economic conditions, and social issues are a few of

them (such as environmental effects and equal employment opportunity policies).

Similarly, in order to create a portfolio with the right balance of risk and return,

time is also crucial. In contrast, if an investor can only invest for a short period of

time, the same stocks carry a higher risk of loss. For instance, if an investor has

the ability to invest in equities over the long term, this gives the investor the

potential to recover from the risks of bear markets and participate in bull markets

(Chen, J. 2020).

On the other hand, the fast-food restaurant makes financial decisions by

investing in technological equipment to produce quality services got the least

responses with a weighted mean of 1.80 interpreted as disagree. This is due to

the fact that the majority of small and medium-sized restaurants thought that the

cost of technical equipment was prohibitive for their operation. Customers are

starting to want a more personalized, hassle-free experience from companies

they believe in as technology continues to be the best instrument for enabling

global communication as studied by Lauren Wingo, (2021). Technology offers

clear benefits to small business owners, both established and startup;

nevertheless, with limited funds and ambitious objectives, it can be challenging to

 98

choose how to invest in the technology that would give your company the highest

return on investment. It improves customer service is an example of an

investment where business areas where technology gives the best ROI. John

Papiewski (2019), however, elaborates that technology has both incredible

benefits and excruciating drawbacks. Payments and orders can be fulfilled

instantly; on the other, costs and vulnerabilities can appear without warning. Any

business person would benefit from taking an honest look at the drawbacks of

any technology. Some examples of the costly and bad effects of technology

investments include tech expenses, training and retraining costs, dependency on

technology, hacking, and data loss. Technology is disruptive and does not

discriminate. While a competitor's technology might significantly benefit your own

business one day.

Next, the fast-food restaurant makes financial decisions by calculating

financial risk associated with employment, economic activity, and economic

growth that can be carefully evaluated to determine financial risk and investment

potential got the second lowest responses with the weighted mean of 2.56

interpreted as agree. Since there is no such thing as a constant in business and

many barriers might appear at any time, evaluating risk is one of the ways to deal

with uncertainty. It is thought that this sector of risk falls under financial risk.

Euler Hermes (2019), claimed that effective financial risk mitigation

techniques help the business to manage and reduce risks for its success and

growth. Market risk, credit risk, liquidity risk, operational risk, and currency risk

are the five main types of risk that may occur. The objective is to strategically
 99

mitigate the risks using financial instruments or market techniques, regardless of

whether they are quantitative or qualitative. Prioritizing risks based on their

severity and weighing the costs and benefits of risk mitigation are two strategies

for managing financial risk. Moreover, calculating liquidity risk by looking at

financial ratios and making the necessary operational changes thereby an

organization's long-term performance depends on its ability to recognize, assess,

and manage financial risk. Financial risk may impede a business from

successfully achieving its financial goals, such as timely loan repayment,

maintaining a healthy level of debt, or on-time product delivery. A corporation will

most likely experience improved operating performance and produce better

returns by comprehending what causes financial risk and putting safeguards in

place to prevent it (Adam Hayes, 2022).

Lastly, the fast-food restaurant makes financial decisions by discovering

investment analysis based on current financial status got the third lowest

responses with the weighted mean of 3.12 interpreted as agree. Due to pressure,

entrepreneurs frequently invest without adequate understanding. Analyzing the

company's existing financial situation, usually referred to as financial analysis, is

the first step in finding investments. According to Alicia Tuovila (2022),

entrepreneurs can locate the greatest businesses to invest in – with the aid of

investment analysis. It has a big impact on your investment choices and is one of

the ways used most frequently to assess a company's financial health.

Investment analytics is a difficult procedure, but it will make sure that your

investment proposition is thoroughly researched and deserving of funding.

 100

Regarding the company's financial sector, there are a few important

considerations to keep in mind: debt, interest coverage, current and quick ratios,

and off-balance sheet liabilities. A company's insolvency, which would waste your

investment, can be caused by debt. It is safe to conclude that a company's

financials are among the most important aspects when deciding whether to make

an investment (Andrius Ziuznys, 2022).

3.2 Operation Decision. This refers to the financial decision making in terms of

operating decisions to have smooth and good operating hours to maintain the

standard and speed of service of the restaurants. This identifies if financial

factors affect the respondents’ investment decision to save and expand their

profits as well as their business. Table 4.3.2 depicts the financial decision making

in terms of operating decisions of fast-food restaurants. The table shows the

obtained composite mean of 3.09 which was being interpreted as agreeing to the

respondents’ investment decision.

Table 4.3.2
The Elements of Financial Decision Making in terms of Operation
Decision
Statement Weighte Verbal
The fast-food restaurant makes financial d Mean Interpretation
decisions by…
Ensuring the availability of products in business 3.60 Strongly agree
operations
Accommodating all the customers concerns and 3.82 Strongly agree
feedback inside the restaurant during business
operations
Considering their policies such as self-service or 3.40 Agree
table service

Determining short-term objectives such as the 3.22 Agree

daily profit of the business operations
 101

Proper monitoring of the cost volume of the 3.36 Agree

customer over a certain period

Using technological advancement to help the 1.68 Disagree

control processes and system of the restaurant

Having quarterly assessment of improvement of 2.00 Disagree

operations efficiency, productivity, and internal
process that affects the long-term operating
decisions

Composite Mean 3.09 Agree

The responses regarding how the components of financial decision-

making may be described in relation to operation decisions are shown in the

table. The fast-food restaurant makes financial decisions by considering the

outcomes, accommodating all the customers' concerns and feedback inside the

restaurant during business operations got the highest responses with the

weighted mean of 3.82 which was verbally interpreted as strongly agree. We can

all agree that client feedback is crucial for any organization since it helps those

companies improve by receiving constructive criticism from customers.

As stated by Ula Kamburov-Niepewna (2022), in his article customer

feedback can be used to enhance the customer experience and tailor your

actions to suit their demands. Surveys can be used to acquire this data

(prompted feedback). Top-performing businesses are aware of how important

client feedback is to their operations. They pay close attention to what their

customers have to say. The following are the top seven reasons why gathering

customer feedback is crucial for businesses: customer feedback helps you

measure customer satisfaction, customer feedback improves products and

services, customer feedback helps you create the best customer experience,
 102

customer feedback helps you improve customer retention, and finally, customer

feedback is a trustworthy source of information for other consumers. Similarly,

Posist (2018), claimed restaurant customer service management is an art.

Dealing with difficulties relating to restaurant services with your personal touch

and care can convert dissatisfied consumers into repeat customers, from

addressing difficult clients who are never satisfied no matter what to making sure

the service is up to par. Customer happiness is one of the most important factors

in the restaurant sector, and good customer management in restaurants results

in satisfied consumers. Unhappy customers frequently register their grievances

with customer review registries or forums and discuss them with other unhappy

customers. Therefore, regardless of how busy you are, you need to be extra

careful when addressing and resolving their problems.

Next, the fast-food restaurant makes financial decisions by ensuring the

availability of products in business operations got the second to the highest with

the weighted mean of 3.60 also interpreted as strongly agree. Product availability

is one of the positive traits of restaurants, regardless of their demands – the

convenience of it leaves a good impression on the customers. According to Abby

Jenkins (2022), stock availability is a crucial success factor for merchants and e-

commerce businesses. By helping merchants to satisfy consumer demand while

lowering inventory expenses, stock availability optimization can boost revenue,

cut costs, and improve customer happiness. Problems with stock availability can

be quite harmful for retailers. Supply chain problems or demand fluctuations that

are not anticipated and addressed can have a disastrous effect on stock
 103

availability, lowering sales, profit, and customer satisfaction. Stockouts, or

running out of popular products, can harm a company's sales and brand

reputation by sending customers to rival brands. However, holding large stock

levels of each stock keeping unit (SKU) merely to satisfy demand is not a wise

course of action. Overstocking can raise the risk of excess and obsolete

inventory as well as tie up capital in carrying costs (the costs related to keeping

inventory at a warehouse, distribution facility, or store). There is a significant risk

that a corporation would waste money on inventory that would be better used

elsewhere in the company. Moreover, the foundation of a satisfying shopping

experience and the basis for a reliable revenue stream and devoted patrons is

consistent product availability. If you don't offer the correct products at the proper

time and price, your direct competitors can steal some of your customers. That's

because you may anticipate a decline in the entire purchasing experience when

things become unavailable. The key to your retail company' success is consistent

product availability since it gives you the framework for your merchandising and

attracts your target market by giving them the things, they need to meet their

demands (Brown, et. al., 2021).

Additionally, the fast-food restaurant makes financial decisions by

considering their policies such as self-service or table service got the third

highest responses with the weighted mean of 3.40 interpreted as agree.

Self-service is one of the components of marketing promotions in the

digital era since it allows customers convenience. Examples of self-service ready

tools include kiosks, in-app tools like food panda, and restaurant-owned apps.
 104

While a server oversees table service, both work toward increasing customer

pleasure. Based on the research from Contact Babel, consumers identified

getting an answer fast as one of the most crucial elements of effective customer

service. Self-service makes this possible by offering customers control and quick

access to information and solutions. Greater customer satisfaction results as a

result of routine queries not needing to be escalated, saving customers time and

effort (Helen Billingham, 2020). According to Service Now (2022), self-service

seems to go against everything we know about what customers want: more value

without having to put in a lot of work. Businesses aren't delivering less and

asking for more when they give users control over customer support again.

Customer self-service, in actuality, satisfies a different demand and offers quicker

satisfaction – that’s why there is an increasing demand for self-service in the

industry. It takes time to reach out to customer support and wait for a response. It

is annoying to have to wait on hold or continuously checking your inbox for

emails when you need a solution to a problem or an answer to a question. The

expectation among customers is that traditional customer care just cannot meet

their desire for a prompt resolution. Self service offers businesses a special

chance to enhance customer service while cutting costs and stress on support

staff.

On the other hand, the fast-food restaurant makes financial decisions by

using technological advancement to help the control processes and system of

the restaurant got the least responses with a weighted mean of 1.68 interpreted

as strongly disagree. Small and medium-sized restaurants find it expensive to

 105

invest in, as was stated in the investment decision. Additionally, they find it

difficult to invest in operational areas here, so they option not to. Small

restaurants with a capacity of 1–30 tables are the ones who frequently respond

to this. According to research by McKinsey & Company, 45% of jobs we are paid

to do can be automated by making changes to technology that is already

available. Many businesses will take advantage of this finding to reduce costs

and provide more convenience for customers. Automation has had an impact on

many industries, including the food industry. Restaurants have automated

different aspects of their business to remain competitive and to boost innovation.

The following tasks are some of the ways that restaurants use automation:

ordering food and making payments, scheduling employees, training employees,

automated menus, and self-service kiosks. The benefits of operating an

automated restaurant include increased accuracy, economic savings (from

reduced salaries), increased efficiency, and better customer service. The

disadvantages of technology, on the other hand, can result in a loss of emotional

connection since, as several studies have shown, it is difficult to use, makes it

difficult to address complex problems, and is expensive (Katie Sawyer, 2019).

Contrarily, based on Avla Jacob (2018), technology only has positively impacted

every aspect of our civilization. from enhancing how we conduct our daily

activities to especially how we produce, prepare, and purchase our food.

Additionally, it has finally satisfied our unquenchable need for convenience.

There is no denying that technology is improving the food and beverage sector.

Customers are given the utmost comfort they desire through it, and restaurateurs
 106

are assisted in expanding their operations. It's an exciting moment to be a part of

as new technological advancements emerge as the digital age progresses and

help shape the future of the business.

Next, the fast-food restaurant makes financial decisions by having

quarterly assessment of improvement of operations efficiency, productivity, and

internal process that affects the long-term operating decisions got the second

lowest responses with the weighted mean of 2.00 interpreted as disagree. A

quarterly evaluation is crucial for large-scale eateries. However, concerning the

result given, it is noted as having the fewest responses and conflicting claims

because some restaurants didn't have to carry it out because they claimed that

the company is operated by family members, peers, and others.

Based on Iryna Viter (2021), on her book How to Improve Operational

Efficiency: A Start-to-Finish Guide, every firm needs operations management to

function properly. It acts as an organization's "engine room." An organization's

operations and how well they are handled are the only factors that determine

success. Operations managers need to increase productivity, efficiency, and

profit since these three factors are crucial to a business' existence in a market

that is continuously changing. It is not surprising that some businesses employ a

large number of people in operations and give that division a sizable budget.

According to 2011 research by Forbes, three-quarters of CEOs have experience

in operations. This underlines the crucial role that managing and comprehending

a company's operations play in its success. Operation management helps you

achieve: quality of product and services, customer satisfaction, productivity,

 107

competitive advantage, and reduced cost of operations that later on will help your

business in the long-term decisions (Laura Varon, 2021).

Lastly, the fast-food restaurant makes financial decisions by determining

short-term objectives such as the daily profit of the business operations got the

third lowest responses with the weighted mean of 3.22 interpreted as agree.

Setting short-term goals, particularly quotas for daily operations, is a typical

practice in company operations. Short-term investing goals enable a higher level

of leverage and liquidity for the company. Corporate objectives are stages and

procedures that must be followed in order to accomplish a bigger business goal

within a given time frame. Although business objectives and goals are distinct

from one another, both concepts work to improve a firm. To achieve a goal,

business objectives must be developed. All staff participating need to have a

clear, concise understanding of the objectives. The other component of a

business plan, setting objectives, shows that the company is moving in the right

path toward reaching its objectives. Setting short-term goals for a firm is crucial in

order to see a return on investment and finish easier-to-manage activities. They

are useful for breaking down bigger corporate objectives into more manageable

chunks. Setting shorter time frames like weeks or months is an excellent idea for

short-term objectives. Implementing a loyalty program for repeat customers,

increasing community involvement, posting on social media three times per

week, collaborating with a charity to support charitable efforts, and planning and

hosting an employee appreciation week are typical examples of short-term goals

for an organization (Laura Stiffler, 2021). Similarly, to the study of Sarah Laoyan
 108

(2022), setting company goals is a popular practice in business, and for good

reason. Clarity in corporate goals affects employee motivation and improves

output. Strong business goals increase your chances of success whether you

work for a small business, a major corporation, or yourself. Short-term goals in

particular assist you in organizing and carrying out actions for activities that can

be finished soon. It can also be applied to deconstruct bigger, more broad goals.

They provide you with a way to achieve these large, broad aims rather than

replacing them.

4. Significant Difference on the Financial Status of Restaurants when

Group According to Profile.

The study aimed to determine the significant difference between the

financial status of restaurants when it is grouped according to profile in terms of

number of years in operation, number of employees, estimated revenue, and

capitalization.

Table 4.4.1
Significant Difference between the Financial Status of Restaurants
and the Profile of Respondents in terms of Number of Years in
Operation
Variables p- Computed Decision on Verbal
values f-values Ho Interpretation
Net profit .933 .144 Failed to reject Not significant

Return on Investment .325 1.117 Failed to reject Not significant

Capital (ROIC)

Cash flow .997 .015 Failed to reject Not significant

 109

The table 4.4.1 presented that there is no significant difference between

the financial status of the restaurants and the profile of respondents in terms of

the number of years in operation.

The table revealed that the net profit got p-values of .933 and f-values

of .144. Meanwhile, return on investment capital (ROIC) got p-values of .325 and

f-values of 1.117. Then, cash flow got p-values of .997 and f-values of .015.

Thus, the data provided demonstrates that factors like net profit, return on

investment capital (ROIC), and cash flow were interpreted as not important since

they failed to meet the criteria for rejection.

Therefore, the number of years in operations really doesn’t affect the

financial status of the fast-food restaurants including net profit, return on

investment capital and cash flow. Based on the result, the number of years in

operating the restaurants is not the basis of business growth due to the new

restaurants that exist nowadays.

Table 4.4.2
Significant Difference between the Financial Status of Restaurants
and the Profile of Respondents in terms of Number of Employees
Variables p- Computed Decision on Verbal
values f-values Ho Interpretation
Net profit .107 2.341 Failed to reject Not significant

Return on Investment .053 3.126 Failed to reject Not significant

Capital (ROIC)

Cash flow .043 3.368 Reject Significant

 110

The table 4.4.2 presented the significance difference between the financial

status of the restaurants and the profile of respondents in terms of the number of

their employees.

The table revealed that the net profit and return on investment capital

(ROIC) got the percentage of .107 and .053 and f-value of 2.341and 3.126

respectively. Thus, results indicated that there is no significant difference

between the financial status of the restaurants and the profile of the respondents

in terms of the number of their employees. Also, the table shows that the cash

flow got the percentage of .043 and the f-value of 3.368. It indicates that cash

flow has a significant difference between the financial status of restaurants and

the profile of the respondents in terms of the number of employees.

The table explains that the number of employees is not significant in the

financial decision of the restaurant specifically in terms of net profit and return on

investment capital (ROIC). Furthermore, this result explains that the number of

employees affects the cash flow of the business. The more employees, the more

the expenses of the business restaurants. Also, cash flow is significant when it

comes to the financial factors to make a better financial decision to sustain the

profitability of the restaurant.

According to DeMarco (2017), the real scenario in fast-food restaurants is

the financial statement such as cash flows are not too needed, investments and

savings are not existing, and cost cutting of employees is one of their main

solutions to gain profit and maximize their assets. Fast-food restaurants

 111

underestimate the amount of time needed to implement tasks, especially while

they are now not familiar with the work that needs to be performed. Moreover,

Glendenning (2017), stressed that to be accurate and precise at work is what

enables a business enterprise to develop, earnings, and feature efficiently.

Piewak (2015), supports this hypothesis as well. According to his empirical

study, utilizing the cash flow statement to estimate the status of a company’s

financial health yields more accurate predictions than both models that favors

straightforward methods of calculating flows and models with only accrual ratios

as input. Similar findings are reached by Barua and Saha (2019), who conclude

that cash flow information has explanatory value. The indicators proposed in this

study will provide a better picture of an entity’s financial strength and weakness

when combined with the conventional balance sheet and income statement.

Table 4.4.3
Significant Difference between the Financial Status of Restaurants
and the Profile of Respondents in terms of Estimated Revenue
Variables p- Computed Decision on Verbal
values f-values Ho Interpretation
Net profit .025 2.865 Reject Significant

Return on Investment .396 1.059 Failed to reject Not significant

Capital (ROIC)

Cash flow .123 1.851 Failed to reject Not significant

The table 4.4.3 shows the significance difference between the financial

status of restaurants and the profile of the respondents in terms of estimated

revenue monthly.
 112

The estimated revenue has a significant difference in the net profit.

Estimated revenue and net profit are both good signs for your business, but

they're not interchangeable terms. Both represent an important way to

understand your business. Revenue describes income generated through

business operations, while profit describes net income after deducting expenses

from earning sees.

The table revealed the variables net profit, return on investment capital

and cash flow got the percentage of 0.025, 0.396, and 0.123 in terms of the

estimated revenue of the respondents, and f-value of 2.865, 1.059 and 1.851

respectively. Thus, results indicated that two variables are not significant which

are the return on investment capital and cash flow while net profit has its own

verbal interpretation that is significant and related to the financial status of

restaurants and the profile of the respondents in terms of estimated revenue. The

estimated revenue is one of the bases to check and verify the business success

and to sustain their existence.

At present where the organizations are operating in order to survive in a

dynamic and unstable environment, they are highly focusing on their profits.

Even the quality and efficiency of managers depend on their ability to identify the

elements that can lead to increased profitability (Alarussi & Alhaderi, 2018). In

general, profitability is defined as the earnings of a restaurant that are generated

from revenue after deducting all expenses incurred during a given period

(Alarussi & Alhaderi, 2018). According to Bekmezci (2015), it is one of the most

important factors that signal management’s success, shareholders’ satisfaction,

 113

attraction for customers and the business sustainability (Alarussi & Alhaderi,

2018). Undoubtedly, the ultimate goal of any firm is to maximize the wealth of its

shareholders by increasing the value of its services and products (Alarussi &

Alhaderi, 2018). Thus, it is important to have an insight in measurements of

profitability. From all the measurements since operating profit and net profit are

the commonly used measurements, it is aimed to find what they are and the

relationship between them.

Table 4.4.4
Significant Difference between the Financial Status of Restaurants
and the Profile of Respondents in terms of Capitalization
Variables p- Computed Decision on Verbal
values f-values Ho Interpretation
Net profit .001 5.396 Reject Significant

Return on Investment .230 1.460 Failed to reject Not significant

Capital (ROIC)

Cash flow .174 1.666 Failed to reject Not significant

The table 4.4.4 explains the significance difference between the financial

status of the restaurants and the profile of the respondents in terms of

capitalization.

The table reveals that there were no significant differences found on the

return on investment capital and cash flow regarding the financial status of

restaurants and the profile of the respondents in terms of capitalization. This was

observed on return on investment capital (p-value = 0.230), f-value 1.460 and

 114

cash flow (p-value =0.174),f-value is 1.666. This mean that the responses differ

significantly and it was found out from the owners of the fast-food restaurants

that those net profits are truly maximizing the capitalization of the restaurant with

a p-value of 0.001 and its f-value is 5.396.

In line with this, the business capitalization has a significant relationship to

the net profit. Net profits retained in the business will increase capital and losses

will decrease capital. The accounting equation will always balance because the

dual aspect of accounting for income and expenses will result in equal increases

or decreases to assets or liabilities.

To support the table, capitalization is a crucial source of funding for

businesses to support their various operations. If a business has made a loss in

a financial period, then capital will have decreased over the same period. Always

remember that capital (or the owner's interest) increases with profits and

decreases with losses (Buchuk et al., 2014).

Additionally, it says the importance of a company’s value to its financial

health and ability to make wise business decisions are often intertwined. Polk

and Sapienza (2019), explained the difference between capitalization and

restaurant net incomes. Testing the capital theory, they documented a positive

relationship between net profit and owner’s capital, indicating the significance of

the profits in investment-capitalization decisions. Thus, the study is an early

attempt to explore this relationship. There exists a positive and significant

connection between capitalization and financial status of the restaurant.

 115

Table 4.5.1
Significant Relationship between the Financial Status and Financial
Decisions in terms of Investment Decision
Variables p- Compute Interpretati Decision Verbal
values d r-values on on Ho Interpretation
Net profit .001 .466 Moderate Reject Significant
Positive
Return on Investment relationship
Capital (ROIC)
.013 .349 Moderate Reject Significant
Cash flow Positive
relationship

.000 .581 Strong Reject Significant

Positive
relationship

Coefficient of correlation (r): +1.0 (Perfect relationship), +.76 to .99 (Very

Strong relationship), +.51 to .75 (Strong relationship), +.26-.50 (Moderate
Relationship, +.11 to .25 (Weak relationship), +.01 to .10 (Very weak
relationship), .00 (No relationship)
It can be gleaned on table 4.5.1 that all variables such as net profit, return

on investment capital and cash flow shows significant relationship between

financial status and financial decision in terms of the investment decision of the

respondents. Clearly from the table that all variables under the financial status

which are the net profit, return on investment capital and cash flow got the p-

value of 0.001, 0.003, and 0.000 respectively are lower than the 0.05 level of
 116

significance. Then it rejects the null hypothesis with the computed r-values 0.466,

0.349, and 0.581 which were found to be significant.

The results suggested that there is a significant positive relation between

investment and profitability so that we can infer that as investment increases

profitability also increases. Investment decisions are one of the functions of

financial management regarding the allocation of funds, both funds sourced from

within and from outside the company in various forms of investment decisions to

obtain greater profits than the cost of funds in the future (Kurniasih and Ruzikna

2017). An investment decision is a long-term investment decision that concerns

the expectation of the return on profits obtained by shareholders. The company is

expected to grow by increasing high growth, meaning that companies that have

good prospects usually have a high price earnings ratio.

Based on the outcome, business owners’ decisions to invest are arbitrary.

His choice is based totally on his perception of danger, which is a completely

subjective aspect, the anticipated expenditures, and his understanding of the

improved approaches. In order to decide if they will actually make the investment

expenditure or not, businessmen want to know the off period (Harcourt et al.,

2017). In order to make a wise investment choice, the investor must fully

comprehend and accurately assess the available prospects. Additionally, this

choice should not be hastily made. A poor investment choice may even cause a

company to go bankrupt. In order to get the most out of the assessment process,

it is essential to comprehend the fundamental concepts underlying investment

decisions. The indicators for investment appraisal should be chosen. In

 117

investment evaluation, the indicators should be chosen regarding the specific

nature of the project and the information held by the decision maker (Avram et

al., 2019).

Expected outcomes are unpredictable because of how net profits, return

on investment capital affect investments decisions. Investment decisions are

made following a thorough review of the investment project (Avram et al., 2019).

The investment’s risk level is one of the fundamental elements affecting the

choice. This risk exists since it’s not certain whether the investment’s initial outlay

will be recouped and a profit made.

Table 4.5.2
Significant Relationship between the Financial Status and Financial
Decisions in terms of Operating Decision
Variables p- Compute Interpretati Decision Verbal
values d r-values on on Ho Interpretation
Net profit .000 .588 Strong Reject Significant
Positive
Return on Investment relationship
Capital (ROIC)
.025 .317 Moderate Reject Significant
Cash flow Positive
relationship

.000 .599 Strong Reject Significant

Positive
relationship

Coefficient of correlation (r): +1.0 (Perfect relationship), +.76 to .99 (Very

Strong relationship), +.51 to .75 (Strong relationship), +.26-.50 (Moderate
Relationship, +.11 to .25 (Weak relationship), +.01 to .10 (Very weak
relationship), .00 (No relationship)

Table 4.5.2 shows the significant relationship between the financial status

and financial decisions in terms of operating decisions. It can be gleaned from

the table that all variables under financial status which are the net profit, return
 118

on investment capital and cash flow obtained the percentage of 0.000, 0.25, and

0.000 respectively not higher than 0.5 level of significance. Then it fails to reject

the null hypothesis with the computed r-values of 0.588, 0.317, and 0.,599 which

were found to be significant and have strong positive relationships with one

another, except the return on investment capital variables which have moderate

positive relationships.

Based on the result there is no negative relationship between the

variables and the financial status and financial decision in terms of operating

decisions. It explains that having operating decisions really affect those financial

status and make a great impact on the decision of the restaurants.

According to Gartner (2019), 65% of business decisions involve more

owners of the restaurants and choices than they did two years ago. This means

that traditional approaches to decision-making are increasingly becoming

obsolete. Generally, operational managers and other staff members make

operational decisions by considering the daily profits, thinking of some

investments and savings and making the cash flow statement. An operational

decision influences day-to-day activity and only has a short-term impact on a

business when it comes on its financial factors. These include scheduling and

creating a concrete cash flow listing the net profit and possible savings for an

investment.

Budgeting the income is frequently part of operational decisions.

According to Forbes (2022), operations management experts have a

 119

responsibility to provide their staff with the tools they need to succeed. Some

employees can require cross-training to get ready for work with new tools or in

new roles when operations are changed and summarized the changes of cash

flow to quickly identify its errors. Managers must consider the skills and

qualifications of the individuals participating in the transition when making

decisions, and any newly established roles must be given clear responsibilities.

6. Proposed Infographic for Financial Decisions and Profit Maximization

Guidelines for Fast-food Restaurants

The focus of the study is to inform the respondent that making decisions

is one of the most crucial parts of stepping into the business process. In

connection with that, financial factors are greatly important just as how we think

thoroughly on building decisions. From the points taken, the researchers

identified that business owners of fast-food restaurants, especially the small

ones, need some resources of in-depth information with regards to the

importance of decisions turned into business processes that will lead to profit

maximization.

Infographic for Financial Decisions and Profit Maximization

Guidelines. This presents the following information and guidelines in graphical

form with regards to the importance of financial factors towards financial

decisions that will lead to profit maximization.

 120

This part presents the possible solutions that may be recommended to

help business owners on managing their business finances, specifically

regarding their financial decision by thinking of the financial factors to maximize

the profit and reduce its business cost. Based on the results, the proponents

arrived at some techniques and guidelines that fast-food restaurants may

consider in making better business financial decisions to achieve smooth and

successful food business.

Based on the results of the data that was gathered from the respondents,

it can be observed that all the variables really affect its financial decision when it

comes to finances and sustaining its business growth. However, analyzing the

results of the data, it can be gleaned that the effects of cash flows obtained the

lowest composite mean among the other variables. This makes the proponents

conclude that even if 5 years and above existence of the restaurants experience

difficulties on making a cash flow and budgeting their revenues for their personal

and business use to have a sustainable business.

The proponents crafted these brochures together with simple guidelines

that fast-food restaurants owners should look into managing their restaurants

before, during and after operating time. The first plan of action created was the

guidelines to explain what they need to do to sustain the profits of the business.

Sustainable profitability for a business means that an organization provides a

service or product that is both profitable and environmentally friendly. These

guidelines proposed some of the things that the business should consider in

assessing their business finances in which the proponents aim, that through
 121

these simple guidelines, fast-food restaurants can understand their finances and

make smart financial decisions toward business growth, profitability, and stability.

Another guideline was proposed by the researchers to also help the proponents

in managing their business finances. Earning a profit is important to a business

because profitability impacts whether a company can secure financing from a

bank, attract customers to fund its operations and grow its business. Restaurants

cannot remain in business without turning a profit.

Financial Decisions and Profit Maximization Guidelines presented

by Infographics

The figure below presents the researchers proposed action regarding the

financial decisions considering the financial factors to enhance its profitability

guidelines. Provided below the illustration of the outside and inside view of the

said brochures. The output includes different guidelines and points to consider in

maximizing and sustaining its profitability.

122
123
 124

CHAPTER V
SUMMARY, FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

This chapter represents the summary, findings, conclusions, and

recommendations based on the result that this study revealed. A summary of the

research is presented, and the findings of the study are discussed and

interpreted. Recommendations for further research end this chapter.

Summary

This research study was conducted to assess financial factors towards

financial decisions among Fast-food Restaurants in Rosario, Batangas. It

covered the demographic profile of restaurants in terms of number of years in

operation, number of employees, estimated revenue, and capitalization. This

study determined their financial status in the variables of net profit, return on

investment capital (ROIC), and cash flow. The research study also determined

their financial decision making in the variable of investment decision and

operating decision. The study deemed to know if financial factors affect financial

decisions; interchangeable. Educational tools aimed to be developed to

understand more about financial factors and financial decisions that may serve

as a basis in developing strategies on the areas of the finances. The proposed

financial decisions and maximizing profit guidelines presented by a brochure is

for further enhancement of the level of profit maximization and financial decisions

making among fast-food restaurants in Rosario, Batangas.

The research used a descriptive method of research using survey

questionnaires. The respondents of the study were composed of fifty (50) fast-

food restaurants in Rosario, Batangas that are operating five (5) and more years.
 125

These responses were used to determine the financial factors towards financial

decisions of the restaurants.

The statistical technique was used in the assessment of the study. It was

composed of frequency and percentage, weighted mean, one-way analysis of

variance, and person correlation.

Findings

Based on the data that were gathered and analyzed, the following are the

important findings that were found out. These findings are essential in developing

conclusions and recommendations as well as in answering the objective of the

research study.

1. Most of the fast-food restaurants responded in the survey that their

business had been operating for about 5 years. Almost all of them

respond that they have 4 and below number of employees. In relation to

their respective estimated revenue there are few of them responses that

their estimated revenue is amounting to Php 30,999 followed by Php

10,000-14,999 estimated revenue with responses of 10. Most respondents

say that their capitalization in the business is amounting to Php 29,999

below with the responses of 30.

2. The study exposed how the financial status of fast-food restaurants affect

the net profit of the business. It comes out of the study that due to the

economic crisis and other factors such as pandemic does really affect the

business.
 126

3. The study revealed that there’s no significant difference between the

financial status of restaurants and the profile of respondents in terms of

number of years in operation with the variables of net profit, return on

investment and cash flow.

4. The study found out that there’s significant relationship between the

financial status and financial decisions in terms of Investment decisions

with the variables of net profit with the p-value .001, return on investment

with the p-value .013 and cash flow with the p-value .000.

5. In assessing the financial status of restaurants in terms of cash flow most

of the respondents despite the factors affecting their business they still

operate and their income is always shifting upwards and some

respondents respond that there’s still changes in their assets even the

sales of the business.

6. Propose an action plan containing a strategy to maximize net profit by

reducing its cost and expenses of the business through making an

infographic brochure that serves as a guideline to better and successful

business.

Conclusions

Based on the given findings the researcher has drawn the following

conclusions:

1. Most of the fast-food restaurants responded that they are 5 years of

existing and operating with a starting capital of Php 29,999 and below.

Also, respondents responded that they had 4 and below number of

 127

employees with their respective estimated revenue per month amounting

to Php 30,999 and above.

2. The result explains the existence of pandemic and environmental

problems affecting the net profit on the business operating of the

restaurants. Also, most of the fast-food restaurants do not engage in re-

investments and savings due to the shortage of income. Lastly, the cash

flow of the restaurants is rapidly moving in terms of its cash outflows such

as payrolls and expenses.

3. Based on the result, fast-food restaurants always select good and well-

trained personnel/staff in the restaurant to produce quality services and

quick products. Also, the respondents responded that careful selection of

assets in which funds will be invested can help them to choose good

investments. Additionally, the fast-food restaurants ensure the availability

of products in business operations to continue serving products and also

accommodating all the customers' concerns and feedback inside the

restaurant during business operations help to patronize their businesses.

4. The study exposed fast-food restaurants that have bigger capitalization

produce a higher amount of income and number of years on their

operations doesn’t affect the net profit and some of them are on

developing business. The study reveals that the financial status has a

significant relationship on the demographic profile of the respondents.

 128

5. Fast-food restaurants that have higher net profits can put up investment

decisions. The study reveals that there’s a significant relationship between

financial status and financial decisions.

6. Lastly, the research proposed infographic guidelines to maximize the profit

of the business.

Recommendation

Based on the given conclusions, the following recommendations are

offered:

1. Fast-food management teams may attend seminars and workshops to

handle the business more efficiently.

2. Fast-food restaurants may focus on product and service innovation by

improving the quality they are offering through healthier choices of food

and more environment-friendly materials.

3. Fast-food owners may save and invest for the long-term investment in

the most tax-efficient way possible.

4. Fast-food staffs may provide other services and activities, and focus on

advertising and product branding that can enhance their turn-over rate

and profitability rate.

5. The owner/managers of the fast-food restaurants may provide brief

cash flow statements for their cash outflows such as expenses and

other withdrawals of the money as well as the cash inflows to list the

daily revenues.
 129

6. Future researchers may widen their subject to other forms of financial

factors or even to other financial decisions to have more knowledge on

how to sustain the profitability and maximize the strengths and factors

to enhance their finances in their business.