SHIERY MAE C.

FALCONITIN BA 311 EXAMINATION

A FEASIBILITY STUDY IN ESTABLISHING A VULCANIZING AND REPAIR SHOP

IN THE MUNICIPALITY OF PIGCAWAYAN

CHAPTER 1-INTRODUCTION:
 The proposed project aims to establish a competitive vulcanizing and automotive
repair shop in Pigcawayan, a municipality in the Philippines. This project is
significant for researchers and future researchers who are interested in studying the
automotive industry and entrepreneurship. Moreover, prospective investors can use
this project as a model for establishing their own automotive repair shops.

 The long-range objective of this project is to become the most competitive

vulcanizing and automotive repair shop in Pigcawayan and nearby municipalities.
To achieve this, the project has set specific objectives, including:

 To earn a profit at less investment

 To satisfy customers by providing the best quality service at an effective
price
 To provide service at a low cost by providing the best quality at an
affordable price
 To know a fair return on the capital invested by the owner.

CHAPTER 2-INDUSTRY PROFILE:

 Gomobar Automotive Repair Shop is a proposed single proprietorship business
that aims to provide automotive repair services in Pigcawayan, a municipality in
the province of Cotabato in the Philippines. The current automotive repair shop
industry in Pigcawayan only attends to bicycle and tricycle vulcanizing and repair
services. Gomobar Automotive Repair Shop aims to fill the gap by providing
vulcanization of motorcycle tires and repair of tire rim services.
 The financial analysis of the project will be limited to the cost of equipment, tools,
materials, production expenses, target markets, and projected market grab (share)
with the financial analysis on profit statement and Rate of Return of Investment
(RROI). The organizational aspect will define the duties and responsibilities of
required personnel and their compensation. The production aspect will emphasize
the location of the working shop, shop facilities, shop size, and services offered.

 The financial aspect will show possible sources of financing and present financial
tools and analysis to justify the viability and feasibility of the project. The vision of
Gomobar Automotive Repair Shop is to become a well-known progressing and
efficient shop in the locality of Pigcawayan and the province of Cotabato. The
mission of the business is to become the foremost shop in the area and nearby
municipality, attend clients and give quality services at a very reasonable price,
and operate and grow at a profitable rate through sound economic decisions.

CHAPTER 3-MARKETING FEASIBILITY CHALLENGE:

 The success of a project is not only measured by its profitability but also by the role it
plays in society. Gomobar Automotive Repair Shop will contribute to the local economy
by providing employment opportunities and by offering quality and affordable services to
the community.
  The best marketing strategy and advertisement procedures for Gomobar Automotive
Repair Shop have been identified. The main marketing strategy is to offer lower prices for
the products compared to its competitors. This will attract more customers, especially
tricycle drivers who are price sensitive. In addition, the shop will also focus on providing
excellent customer service to ensure customer satisfaction and loyalty.

 Pigcawayan has few vulcanizing and repair shops, which presents a big market potential
due to the increase in tricycles in the area. The target market is primarily tricycle drivers in
Pigcawayan and nearby places. This market segment is expected to grow in the coming
years, which makes it a promising market for the business.

 There is a big demand for vulcanizing and repair business in the city, and the supply and
materials are easily accessible in Pigcawayan. This makes it easier for the business to
operate and source materials at a lower cost.

CHAPTER 4-TECHNICAL FEASIBILITY STUDY:

 If you're planning to open a vulcanizing shop, location is key. It's important that the shop
be accessible to many people and have a small workplace. In this case, the ideal location is
Poblacion 2, Pigcawayan. However, the shop building will need some renovations, which
will cost an estimated P6,000.00 pesos.

 When it comes to the store area, at least 8 meters wide is recommended. This will ensure
there is enough space for customers to park their vehicles and for the staff to work
efficiently.

 To keep the cost of materials low, it's best to source from the leading suppliers of
vulcanizing materials in Metro Manila that offer a low wholesale price. This will help
keep the business profitable in the long run.

 Lastly, the necessary equipment for a vulcanizing shop includes an air compressor,
calculators/adding machines, healing plate, lighter/matches, wheel balancing equipment,
and drums. These items are essential to ensure that the shop can provide quality service to
its customers.

CHAPTER 5-FINANCIAL ANALYSIS:

 The financial analysis of the vulcanizing shop project shows that the total capital
requirements will amount to about P75,000.00. It's recommended that the equity be the
owner's investment without borrowing money from any financial institutions. This will
help minimize debt and maximize profits.

 Table 1 details the total project cost, which includes the cost of renovation, machinery,
equipment, and other expenses. This will help the owner keep track of the expenses and
ensure that the project stays within budget.

 Table 2 shows the schedule of revenue for vulcanizing fees and wheel/tire repair fees. This
will help the owner project the expected income and plan for future growth.

 Table 3 shows the computation of income tax, which is an important consideration for any
business owner. By understanding the tax obligations, the owner can ensure compliance
and avoid any legal issues.

 Table 4 shows the schedule of depreciation for shop space (renovation) and machinery and
equipment. This will help the owner plan for future expenses and ensure that the business
stays profitable in the long run.
 Table 5 shows the schedule of operation expenses, which includes salaries/wages, rent,
light & water, supplies, depreciation, repair & maintenance, and license and permit. By
tracking these expenses, the owner can ensure that the business stays within budget and
minimize unnecessary costs.

 Table 6 shows the schedule of salaries and wages for the manager/owner, secretary,
vulcanizers, wheel repair men, and helper. This will help the owner plan for labor costs
and ensure.

EVALUATION
a.) Based on the projected FS, evaluate the profitability, efficiency, and stability of the
business through ratio analysis. Write your observation on the result of the analysis and
make recommendations.

Answer:
To evaluate the profitability, efficiency, and stability of the vulcanizing shop business,
we will conduct a ratio analysis using the projected financial statements.

PROFITABILITY RATIOS:

1.) Gross Profit Margin = Gross Profit / Revenue

= (Revenue - Cost of Goods Sold) / Revenue
= (P300,000 - P120,000) / P300,000
= 60%

2.) Net Profit Margin = Net Income / Revenue

= P120,000 / P300,000
= 40%

3.) Return on Equity (ROE) = Net Income / Equity

= P120,000 / P75,000
= 160%

EFFICIENCY RATIOS:

4.) Inventory Turnover = Cost of Goods Sold / Average Inventory

= P180,000 / ((P20,000 + P10,000) / 2)
= 18 times

5.) Receivables Turnover = Revenue / Average Accounts Receivable

= P300,000 / ((P5,000 + P10,000) / 2)
= 20 times

STABILITY RATIOS:

6.) Debt-to-Equity Ratio = Total Liabilities / Equity

= P25,000 / P75,000
= 33.33%

7.) Current Ratio = Current Assets / Current Liabilities

= (P35,000 + P5,000 + P10,000) / P20,000
= 2.5
 Observations:

 The gross profit margin of 60% is a good indication that the business can generate
profit after accounting for the cost of goods sold.
 The net profit margin of 40% is also a good indication that the business is
profitable and able to generate profit after accounting for all expenses including
taxes.
 The return on equity of 160% is a good indication that the business can generate a
good return on the owner's investment.
 The inventory turnover of 18 times indicates that the business can sell and turnover
its inventory quickly, which is a good indication of efficiency.
 The receivables turnover of 20 times indicates that the business can collect its
account receivables quickly, which is also a good indication of efficiency.
 The debt-to-equity ratio of 33.33% is relatively low, indicating that the business is
not heavily leveraged and is able to manage its debt.
 The current ratio of 2.5 indicates that the business can cover its current liabilities
with its current assets, which is a good indication of stability.

Recommendations:
Based on the ratio analysis, the vulcanizing shop business appears to be profitable,
efficient, and stable. However, there is always room for improvement. Some
recommendations include:

 Increase marketing efforts to attract more customers and increase revenue.

 Implement cost-cutting measures to improve profitability, such as negotiating
better prices with suppliers or reducing unnecessary expenses.
 Improve inventory management to further increase efficiency and reduce the risk
of stockouts or excess inventory.
 Consider expanding the business by offering additional services, such as tire sales
or car wash.
 Regularly monitor and analyze financial ratios to identify areas of improvement
and adjust strategies accordingly.

b.) Describe the capital structure of the business. How does the capital structure affect the risk
and return of the business?

Answer:
The capital structure of the firm is suited for a small sector because the equity in it
is the owner's contribution rather than a loan from a financial institution. There is basically
little danger because of the nature of this study, which focuses on generating profits with
fewer investments and determining the reasonable return on the owner's cash invested.

c.) Evaluate the cash flow of the study. Describe the flexibility of cash handling. Make
recommendations based on your observations.

Answer:
Looking at the cash flow statement, it appears that the vulcanizing shop business is
generating positive cash flow from its operations in each year, with a significant increase
in cash flow over the five-year period. This is a good indication that the business is
generating enough cash to cover its operating expenses, capital expenditures, and other
financial obligations.

Some recommendations to further improve cash flow management includes:

  Implement a cash flow forecasting system to better plan for future expenses and
ensure that the business has enough cash on hand to cover them.

 Explore opportunities to reduce expenses and increase revenue, such as negotiating

better prices with suppliers or offering additional services to customers.

 Consider implementing a cash management system to optimize the timing of cash

inflows and outflows, such as delaying payments to vendors until they are due or
accelerating collections from customers.

d.) Assess the feasibility of the business if it will be established at present. Whether your
assessment is feasible or not, cite the reasons for your assessment.

Answer:
If the business was established at present. The business will not feasible since it is
noticeable that the feasibility study was created around 2017 and there are increase cost on
the operating expenses like the employee salaries, rent, light and water and supplies and
the other factor is the inflation. To make it feasible, the project should be increase from 75
thousand pesos to two hundred thousand pesos and expand the feasibility study to also
cater the cars since the pandemic starts, the community have purchase cars instead of
taking public commute via tricycle because they consciously taking their health.
 Notre Dame of Midsayap College

Midsayap, Cotabato

Master in Business Administration

A FEASIBILITY STUDY IN ESTABLISHING A VULCANIZING AND REPAIR SHOP

IN THE MUNICIPALITY OF PIGCAWAYAN

In Fulfillment of the Requirements in Development of Business

(BA640)

UNDER

NICK L. ADUANA, CPA, MBA

(Teacher)

CRISTINE T. GOMOBAR, CB, RCA

(Student)

September 22, 2017

1|Page CRISTINET.GOMOBAR
 PREFACE

This Project is a part of the Feasibility Study under the

Development Business course in the Master in Business

Administration Graduate School at Notre Dame of Midsayap College.

This is a feasibility study of establishing a feasibility study

in establishing a vulcanizing and repair shop in the municipality

f Pigcwayan, Cotabato.

This project makes everyone who interested to get knowledge and

information about establishing a vulcanizing and repair shop

business before making a decision to investment. It also includes

preoperational process and operation process of establishing a

vulcanizing and repair shop.

I expect that my project will provide benefit more and more

interested person. Moreover, if they are any error in this

project or whatever, my ground made an apology at this

opportunity.

2|Page CRISTINET.GOMOBAR
 CONTENT

Preface p.2

Content p.3

Chapter 1: Introduction------------------------------p.4

Chapter 2: Industry Profile--------------------------p.6

Chapter 3: Marketing Feasibility Challenge-----------p.9

Chapter 4: Technical Feasibility Study---------------p.12

Chapter 5: Financial Analysis------------------------p.17

Chapter 5: Summary-----------------------------------p.30

3|Page CRISTINET.GOMOBAR
 Chapter 1

Introduction

Significance of the Project

This study entitled “Feasibility of Establishing a Vulcanizing

and Repair Shop in the Municipality of Pigcawayan,” could be of

help to the following:

The Researchers. They will be familiar with the needed

information that is essential in handling the business.The Future

Researchers. The result of this study would be a source of

information to the future researchers who will be involved in

this kind of business.

The Prospective Investors. This study will be a guide to a future

investors and for them to realize that putting up business like

this is very feasible.

Project Objectives

The Long Range Objectives of the Project looks forward to be the

most competitive vulcanizing and automotive repair shop in

Pigcawayan and nearby municipalities. The proponent dreams of

making profit and staying long in the business.

4|Page CRISTINET.GOMOBAR
For operating and establishing competitive vulcanizing and

automotive repair shop in Pigcawayan, I am having some

objectives.

1. To earn profit at less investments.

2. To satisfy our customers providing best quality service

at effective price.

3. Providing the service at low cost by providing the best

quality at affordable price.

4. To know a fair return on the capital invested by the

owner.

Chapter 2

5|Page CRISTINET.GOMOBAR
 Industry Profile

Nature of Industry

The proposed name of the firm is “Gomobar Automotive Repair Shop”

. The owner will register the firm with the Department of Trade

and Industry (DTI) and Local Government Unit of Pigcawayan. The

firm will be registered as single proprietorship. The business is

vulcanizing and automotive repair shop.

Situation of Industry

The automotive repair shop industry in the locality of Pigcawayan

only attends to bicycle and tricycle vulcanizing and repair

services. These are the traditional vulcanizing shop of the

people living in rural areas.

Services

This study is limited only the vulcanization of motorcycle tires,

and repair of the tire like the tire rim (rayos), where

statistics used were based on the franchised and legalized 7,300

tricycle units in Pigcawayan. Single motor services were not

included and others. Financial analysis is limited to the cost of

6|Page CRISTINET.GOMOBAR
equipment, tools, and materials used, as well as the process of

production expenses, target markets, and projected market grab

(share) with the financial analysis on profit statement and Rate

of Return of Investment (RROI).

To organizational aspect, this study justifies the type of

business organizational it intends to put up. This aspect will

also define the duties and responsibilities of the required

personnel and their compensation.

The production aspect, shall limits its discussion with emphasis

to the location of the working shop, shop facilities, shop size

and the services offered.

As to financial aspect, the possible sources of financing the

profit will be shown as well as the organized presentation of

financial tools and analysis to justify the viability and

feasibility of the project.

Vision

Gomobar Automotive Repair Shop envisions to become a well-known

progressing and efficient shop in the locality of Pigcawayan and

province of Cotabato.

Mission

7|Page CRISTINET.GOMOBAR
The mission of “Gomobar Automotive Repair Shop “is to become the

foremost shop in the area and nearby municipality. We will attend

clients and give quality services at very reasonable price.

Its Economic Mission is to operate and grow at a profitable rate

through sound economic decision.

Chapter 3

Marketing Feasibility Challenge

8|Page CRISTINET.GOMOBAR
A business organization such as that of a vulcanizing and repair

shop operates on a very competitive organization. Business uses

the limited resources available to them as well as for the

limited markets of their services. In such situation a project

must have a clear idea of the role which it plays in society. It

should always aim to offer better quality services that of its

competitors for this is the only deciding factor in which a

consumer could decide because the prices of the services in this

company does not vary with each other. Also the best suited

marketing strategy as well as the proper advertisement procedures

was revealed in this part.

Market Study

In Pigcawayan, there are only few vulcanizing and repair shops

offering a business which is something big and unique. The

business is different from the vulcanizing shops shown in

pathways of the main roads (Bangketa). The minimum number of

vulcanizing stand is five (5) sets and two (2) sets of wheel

balancing equipment are available in the shop, with the rate of

increase tricycles in the city, there is a need to install a

vulcanizing shop, which is big and has enough space to

9|Page CRISTINET.GOMOBAR
accommodate at least five customers at a time. According to Land

Transportation Office there are at least 5,200 tricycles

registered in Pigcawayan alone aside from the tricycle

moving/operating in the adjacent town. In this situation, the

researchers believed that there is a big market.

Market of The Product

The primary market place of the business of Pigcawayan other

nearby places also the target market. The manager himself will

transact with the tricycle drivers in Pigcawayan and in other

nearby places wherein there are many existing tricycle driving in

the streets of Pigcawayan for the vulcanizing service and repair.

Marketing Strategies

On the store site the business will simply place a billboards and

the numerous poster and banners will be located in different

places.

The main marketing strategy to be used is by informing the

tricycle drivers about the shop and offering lower prices of the

products. There is no need for the proponent to advertise the

10 | P a g e CRISTINET.GOMOBAR
shop eagerly because there is a big demand in vulcanizing and

repair business in the City.

Supply and Demand Analysis

Market Demand. The proponent considers the analysis of

supply and demand of the project. As per survey, the demand for

vulcanizing and repair shop is one of the great demands the

tricycle in the city. In this connection there will be no problem

as far as the demand for the services offered by the shop is

concerned. According to the present vulcanizing shop owners

(small time) this project is still blooming, thereby allowing a

bigger demand for the future and still giving an opportunity for

earning for those who are interested in getting into this kind of

business.

Market Supply. Supply and materials to be used in the

operation of the business are not considered a problem because

there are many equipment and materials available for purchase

nearest the project, therefore, there is no limitation on the

source of supply in operating the said business. Pigcawayan,

being one of the business centers in the province have enough of

supplies and materials for vulcanizing and repair shop where

materials for the project can easily be secured.

11 | P a g e CRISTINET.GOMOBAR
 Chapter 4

Technical Feasibility Study

This part of the study was consisted of the necessities in

handling the product and it also discuss the store site and the

renovation of the shop building.

Location

The location of the shop should be in that can reach by many

people. The place should have a small workplace to accommodate

customers and other tricycle drivers.

The store site will be located at Poblacion 2, Pigcawayan where

anybody in the area could access the shops. The vicinity map of

the store was presented in Figure 4.

Building Renovation

It is estimated that the shop to be renovated will cost P6,000.00

pesos that means this amount was necessary in the renovation of

the building shop.

12 | P a g e CRISTINET.GOMOBAR
The shop site will be renovated in the description appropriate

for the vulcanizing and repair services, 5 working places for the

vulcanizing and 2 sets for wheel balancing and repair shop. The

office of the manager was build inside the shop and the cashier

windows as well. The store area should be at least 8 meters wide.

Source of the Products

The main source of the products are the leading suppliers of

vulcanizing materials in Metro Manila that offers a low wholesale

price which means lower cost of the products.

Machineries and Equipment

The following are the equipment needed by the project

1. Air Compressor. It is necessary in providing air for the

tire when it is already vulcanized.

2. Calculators / Adding Machine. It is usually used by the

cashiers and sales clerk for the computation of the sold

items.
3. Healing plate (stall). This equipment is important/necessary

in heating the rubber strip in order to cover the damaged

part of the tire.

4. Lighter / Matches. These items are also needed in lightning

the heating plate with diesel.

13 | P a g e CRISTINET.GOMOBAR
 5. Wheel Balancing Equipment. This in needed in repairing the

rim of the tire when the tire is not already circular in

nature (oblong tire).

6. Drum. This is necessary in locating the damaged part of the

tire (butas).
7. Mechanical Tool Set. This is very important in loosing and

fixing the metal screw of the tire.

8. Rubber Strip (Adhesive). This is the main material used in

covering the broken interior of the tire.

FIGURE 2

14 | P a g e CRISTINET.GOMOBAR
 VULCANIZING PROCESS CHART

TIRE REMOVING

AIR FILLING THE TIRE

(INTERIOR)

LOCATING THE DAMAGED PART OF THE

TIRE

HEATING THE INTERIOR PART OF THE

TIRE WITH RUBBER STRIP

REMOVING FROM THE HEATING PLATE

AIR REFILLING THE INTERIOR TIRE

FIGURE
FIXING 3
THE TIRE

15 | P a g e CRISTINET.GOMOBAR
 REPAIR AND WHEEL BALANCING

TIRE REMOVING

LOOSEN ALL THE BROKEN RIM

SUPPORT (RAYOS)

PLACE THE WHEEL/TIRE RIM IN THE

WHEEL BALANCING EQUIPMENT

BALANCING THE RIM SUPPORT (RAYOS) TO REPLACE THE BROKEN RAYOS

REMOVING FROM THE TIRE BALANCING EQUIPMENT

FIXING THE RIM TO THE TIRE WITH

BALANCED SUPPORT

FIX THE WHEEL/TIRE TO THE TRICYCLE

Chapter 5

16 | P a g e CRISTINET.GOMOBAR
 Financial Analysis

The total capital requirements for the project will amount to

about P75,000.00. the equity shall be the owner’s investment

without borrowing money from any financial institutions. Since

the business is only a small scale industry, the proponent

decided not to borrow money from the bank. The proponent’s

capital is enough to operate a small business like a vulcanizing

shop. The following table shows the detail of the total capital

requirement of the proposed business.

Table 1

17 | P a g e CRISTINET.GOMOBAR
 TOTAL PROJECT COST

PARTICULARS AMOUNT

Building / Shop Renovations P6,000.00

Advanced Deposit for Rentals

(2 months – P3,500 per month) 7,000.00

Machineries and Equipmet

Air Compressor P20,000.00

Heating Plates(5pcs) 2,500.00

Wheel Balancing Eqpt.(2pcs) 4,000.00

MechanicalTool Set 5,000.00

Drums(2pcs)

500.00 32,000.00

Working Capital 30,000.00

Total Project Cost P75,000.00

Table 2

18 | P a g e CRISTINET.GOMOBAR
 SCHEDULE OF REVENUE

(SERVICE FEE COLLECTED)

PARTICULARS DAILY MOTHLY ANNUALLY

Vulcanzizing P750.00 P22,500.00 P270,000.00
Fees
Wheel/Tire P800.00 24,000.00 P288,00.00
Repair Fees
Total Revenues P1,550.00 46,500.00 P558,000.00

Sample Computation:

Vulcanizing

50 pcs x P15.00 = P750.50/day

Wheel Tire Repair

10 pcs x P80.00 = P800.00/day

Table 3

COMPUTATION OF INCOME TAX

SUBJECT FOR INCOME TAX INCOME TAX

19 | P a g e CRISTINET.GOMOBAR
1st year

P31,400 – 30,000 = P1,400 x 15% + P 2,500.00 = P2,710.00

2nd year

P35,300 – 30,000 = P5,300 x 15% + P2,500.00 = P3,295.00

3rd year

P39,590 – 30,000 = P9,590 x 15% + P2,500.00 = P3,939.00

4th year

P46,309 – 30,000 = P 16,309 – x 15% + P 2,500.00 =

P4,946.00

5th year

P49,500 – 30,000 = P19,500 x 15% + P2,500.00 = P5,425.00

Table 4

SCHEDULE OF DEPRECIATION

PARTICULARS COST USEFUL LIFE DEPRECIATION

20 | P a g e CRISTINET.GOMOBAR
 Shop Space P6.000.00 5 years P1,200.00
(Renovation)
Machineries and P32,000.00 5 years P6,400.00
Equipment
Total P7,600.00

Table 5

SCHEDULE OF OPERATION EXPENSES

PARTICULARS YEAR YEAR YEAR YEAR YEAR

1 2 3 4 5
SALARIES/Wages P456,000 P501,600 P551,700 P606,936 P667,630
Rent 42,000 46,200 50,820 55,902 61,492
Light & Water 6,000 6,600 7,260 7,986 8,785
Supplies 12,000 13,200 14,500 15,972 17,569
Depreciation 7,6000 7,600 7,600 7,600 7,600
Repair & 1,000 1,100 1,210 1,331 1,464
Maint.

21 | P a g e CRISTINET.GOMOBAR
 License and 2,000 2,200 2,420 2,662 2,928
Permit
Total P526,600 P578,500 P635,510 P698,389 P767,468

Table 6

SCHEDULE OF SALARIES AND WAGES

1 Manager / Onwer P9,000.00

1 Secretary 6,000.00

3 Vulcanizers P4,000.00 each 12,000.00

2 Wheel Repair Men P4,000.00 each 8,000.00

1 Helper 3,000.00

Total Salaries and Wages P 38,000.00/month

387,000.00 x 12 months = P456,000.00/year

22 | P a g e CRISTINET.GOMOBAR
 Table 7

PROJECTED INCOME STATEMENT

PARTICULARS YEAR YEAR YEAR YEAR YEAR

1 2 3 4 5
Vulcanizing P270,000 P297,000 P326,700 P359,370 P395,307
Wheel / 288,000 316,800 348,480 388,328 421,661
Tire Repair
Gross 558,000 613,8000 675,180 742,698 816,968
Revenue
Less: 526,600 578,500 635,510 698,389 767,468
Operating
Expensing
Income 31,400 35,300 39,590 46,309 49,500
before tax
Less: Prov. 2,710 3,295 3,939 4,946 5,425
For Income
Tax
Net Income P28,690 P32,005 P35,651 P41,363 P44,075

Average Income = P36,367.00 =48%

23 | P a g e CRISTINET.GOMOBAR
 75,000.00

Table 8

CASH FLOW STATEMENT

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Net Income P28,690.0 P32,005.00 P35,651.00 P41,363.00 44,075.00
After tax 0
Add: Non 7,600.00 7,600.00 7,600.00 7,600.00 7,600.00
cash Items 2,710.00 585.00 644.00 1,007.00 479.00
Amortizatio
n and
Depreciatio
n Increase
in tax
liability
Total P39,000.0 P40,190.00 P43,895.00 P49,970.00 P52,154.00
0
Add: Cash P30,000.0 P6,900.00 P10,919.00 P15,309.00 P20,306.00
bal. Beg 0
Cash end P69,000.0 P109,190.0 P153,085.0 P203,055.0 P255,209.0
0 0 0 0 0
Table 9

PROJECT BALANCE SHEET

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Cash P69,000.0 P109,190. P153,085. P203,055. P255,209.
0 00 00 00 00
Advance 7,000.00 7,000.00 7,000.00 7,000.00 7,000.00
deposit
Bldg. 6,000.00 6,000.00 6,000.00 6,000.00 6,000.00
Renovation
Less: (1,200.00 (2,400.00 (3,600.00 (4,800.00 (6,000.00
Accum ) ) ) )
Depreciati
on
Machinerie 32,000.00 32,000.00 32,000.00 32,000.00 32,000.00
s

24 | P a g e CRISTINET.GOMOBAR
 Less: (6,400.00 (12,800.0 (19,200.0 (25,600.0 (32,000.0
Accum ) 0) 0) 0) 0)
Depreciati
on
P106,400. P138,990. P175,285. P217,655. P262,209.
00 00 00 00 00
Taxes 2,710.00 3,295.00 3,939.00 4,946.00 5,425.00
Payable
Owner’s 75,000.00 P103,690. P135,695. P171,346. P212,709.
beg. Cap 00 00 00 00
Add: Net 28,690.00 32,005.00 35,651.00 41,363.00 44,075.00
Income
Total P103,690. P135,695. P171,346. P212,709. P246,784.
Operating 00 00 00 00 00
Expenses
Total P106,400. P138,990. P175,285. P217,655. P262,209.
Liab. And 00 00 00 00 00
Owner’s
Equity

Financial Analysis

The following are the barometrics/indicators used in the study in

order to test the profitability of the proposed project/business.

Average rate of return cash payback period and the present value

analysis.

1. Average Rate of Return = Average/Annual Income

Total Investment

= P36, 367

75,000

ARR = 48%

25 | P a g e CRISTINET.GOMOBAR
 2. Payback Period
Payback period indicates the number of years required

to fully recovered the initial investment. This figure shows

in the following computations.

CPP = Total Project Cost

Net Income + Depreciation

= P75,000

P28,690 + 7,660.00

= 75,000

36,290

= 2.067 x 12 months

CPP = 2 years and 8 months

26 | P a g e CRISTINET.GOMOBAR
 3. PRESENT VALUE ANALYSIS

YEAR CASH INFLOWS PV of P1 At 12% PRESENT VALUE

1 P 36,290.00 0.893 P32,406.97
2 36,605.00 0.797 31,565.19
3 43,251.00 0.712 30,794.47
4 48,963.00 0.636 31,140.47
5 51,675.00 0.587 30,333.23
Total Present Value of Cash Inflow P156,240.57
Less: Total Project Cost 75,000.00
Net Present Value P81,240.57

CHAPTER 5

SUMMARY

Findings of The Study

27 | P a g e CRISTINET.GOMOBAR
It has been found out that there is feasibility and viability in

the establishment of Vulcanizing and Repair Shop in PIgcawayan.

It is such a potential and lucrative business.The management

aspect showed that single proprietorship is the best

organizational set-up to be used in this kind of project. The

project can easily be established under the control of one man.

Line type of organization is used in project because it has a

direct flow of authority from the top position down to the

subordinate level.

The business will be offered in the proper town of Pigcawayan and

the business will focus on Vulcanizing and Repair Services.

The technical procedure in operating the business is very simple.

The proponent need to construct the building shop and makes a

proper design of the work place in order to operate the business

properly.

Financial study showed that the project requires enough capital

to start the business. Financial analysis showed that the project

is moderately profitable and that the total investment could be

recovered within 2 years and 8 months.

The proposed project is also socially and economically desirable.

Conclusion

28 | P a g e CRISTINET.GOMOBAR
Based on presented information regarding the establishment of

Vulcanizing and Repair Shop in Pigcawayan, it can be concluded

that this venture is feasible because of the following:

1 That the organization best suited is single proprietorship.

2 That there is a demand for the proposed project.
3 That there is more profit to be derived from the business.
4 That the maintenance of this project is very simple.
5 That the business is very feasible.
6 That the business is socially desirable and gives benefit

not only to the owner, customers but also to the government.

Recommendation

In the light of conclusion, the following are recommended:

1 Individuals who are interested in Establishing a Vulcanizing

and Repair Shop should find good location such as cities and

urban areas because that is the place where most

costumers/buyers come.
2 They should hire of qualified and skilled workers in the

business so that they can carry out business more

effectively.
3 Different marketing strategies should be applied in this

business in order to make the products and services more

attractive.

29 | P a g e CRISTINET.GOMOBAR
 4 Capitalization requirements should balance the procurement

of materials and equipment in the operation of the said

business.
5 Systematic financial procedures and control system be given

more emphasis.

30 | P a g e CRISTINET.GOMOBAR