J.B.

ALFONSO GENERAL MERCHANDISE

House of Square

Fruits are an all-around great source of nutrition and enjoyment. They contain vitamins,
minerals, antioxidants, and fiber that can improve our health and well-being. But how do we get
access to fresh and quality fruits in our busy lives? That’s where J.B. Alfonso General
Merchandise comes in. J.B. Alfonso General Merchandise is a retailing business owned by the
married couple, Domingo Alfonso and Jelly B. Alfonso. This business can be traced back to its
long history, dating back to December 1995. It is located at Rizal St,, Barangay Ilawod, Daraga,
Albay, and it serves as the drop point for fruit delivery in Daraga. The married couple at first
never thought that this business was what they needed. According to them, it naturally came to
be. It was more of an idea that their location is always full of people, and it would be a great start
for them to set up a business which is essential for the people and the community.

Starting this business took a lot of effort from the couple. They even arrived at the decision to
sell their refrigerator in order to acquire a startup capital amounting to P2,000. They used this
startup capital to buy the fruits they were going to sell. Their operating cycle begins with the
acquisition of fruits to be sold from wholesalers in Manila and Davao. Items for inventory are
usually purchased twice a week, every Tuesday and Friday. No existing contract currently binds
the suppliers and J.B. Alfonso General Merchandise, though Jelly Alfonso affirms that
communication with the other parties isn’t difficult.

The selection of fruits which the retail business offers change depending on the season.
However, some fruits remain available all year round, such as bananas and apples. Seasonal
fruits, on the other hand, include lanzones, mangosteen, and avocados. The season during which
sales are at its peak is the summer. Nevertheless, profit is still generated during the “ber” months,
most especially during December 31 due to the Filipino tradition of serving round fruits for the
New Year.

Day-to-day operations of the business revolve solely around the sale of their fruit products. As of
writing, two part-time employees are helping Domingo and Jelly Alfonso in running the
business. They encounter and transact with customers of different ages, though it was noted by
Jelly that the majority of their buyers are of middle age. Some of the customers engage in the
practice of haggling which, as a consequence, reduces the income earned by the business. There
are also those who return the fruits they bought, citing reasons such as decay and dissatisfaction.

One of the common incidents that can be encountered in handling a business that involves fresh
farm harvests is the product's natural decaying process. J.B. Alfonso found no exception to that
problem. Fruits do not contain any preservatives. When fruits become rotten, those automatically
turn into waste which equally means loss for such sort of business, which can no longer be
displayed in the market or sold. This naturally occurring process poses a threat to J.B. Alfonso,
especially in a market with unpredictable consumer demand. On days when there is a decreased
demand for fruits due to several factors, such as inflation or what's in season, spoilage is a
problem that is difficult to take care of. In order to cope with this, one strategy that they used was
to drop prices. For example, a fresh apple that has an original selling price of 40 will be sold at a
value of 20–30 pesos once it has reached its near-dead form. The purpose of this is to return at
least the capital that was spent and prevent future losses. However, this strategy has a higher
chance of leading to a loss and only generates a little income.

Given the fact that J.B. Alfonso is a startup business; it only started as a mini-stall with a very
small space, no more than 3 to 5 square meters, which they rented back then for 500 pesos. The
space is just enough for them to set up a stall where most of their fruits are often placed in a
billow. J.B. Alfonso, as a startup business, who sell their fruits placed in a billow and in a little
space, have not yet registered their business. As a result, policemen and other government
bodies, shoved them off, by which, they are being driven by the police, or sometimes, forced to
close temporarily. This directly affected their income and operations as it hindered them from
doing transactions to their customers. In order to permanently end this recurring issue, they
officially registered their business using the profit they earned from the operations in 1998. The
business is now a general merchandise business under the name of Jelly Alfonso.

In addition, the presence of insects and numerous cases of thefts cloud over the business as well.
Green apples are vulnerable to being eaten by cockroaches, despite taking measures on sanitation
and pest control. One reason for this is the positioning of the business, which is right beside a
main road in the municipality. Such positioning also makes it easy for people to snatch away
some fruits as they pass by the store. Jelly shared that there was even an instance when a whole
watermelon was stolen.

In the year 2020, when the COVID-19 pandemic happened, it had detrimental impacts on
different businesses. However, for J.B. Alfonso, this phenomenon was a blessing in disguise
because they were not negatively affected. During pandemic times, their sales skyrocketed due to
the increasing demand for fruits as a main source of nutrients to combat the Coronavirus. To
cope with this relatively increasing market demand, they opted to increase their purchases and
inventories. Because of the low number of competitors in the market, they were able to
maximize not only their inventories but their operations and ultimately their income as well.
Because of the demand for necessities and nutritious products, their fruits became best sellers,
and it opened them many opportunities to purchase and sell bulk fruits to big businesses like
LCC and other fruit businesses. Although this did not lessen their existing competitors in the
market, it still undoubtedly led them to gain new customers and friends. However, when their
business transitioned to the year 2022 and as the pandemic subsided, the demand for their
product started to decline. Purchases during the peak of the pandemic failed to be sold due to
decreasing demand, and this resulted in obsolete inventory that caused the spoilage of fruits,
which cost them a great deal of loss. Oftentimes, unsold fruits in their inventory were pestered by
insects, started to overripe, and then eventually decayed.

A comparison between the 2022 and 2020 balance sheets reveals the financial growth and
changes that have occurred within the company during this time period.

Starting with the assets section, the total assets for JB Alfonso General Merchandise have
increased from ₱340,460.30 in 2020 to ₱439,650.68 in 2022. This signifies a substantial growth
in the company's resources and a positive performance. The increase in assets was attributed to
various factors such as increased sales, investments, and efficient management of the company's
finances. These assets include tangible and intangible items that the company owns and can
utilize to generate profits.

Moving on to the liabilities section, there is a decrease in total liabilities from ₱48,700.00 in
2020 to ₱35,000.00 in 2022. This reduction illustrates the company's ability to repay its short-
term and long-term obligations. It also highlights the company's improved ability to meet its
financial obligations and increases its creditworthiness in the market.

The owner's equity section reflects the residual value left for the owner after subtracting
liabilities from assets. Total owner's equity increased from ₱291,760.30 in 2020 to ₱404,650.68
in 2022. This increase signifies that the company has accumulated more profits over the period,
or that the owner has invested additional capital into the business. A healthy increase in owner's
equity of the company shows that it is financially stable and has the resources to support its
growth and operations.

JB Alfonso General Merchandise's balance sheet as of December 31, 2022, reflects positive
changes in its financial position, with an increase in total assets, a decrease in total liabilities, and
an increase in owner's equity.

JB Alfonso General Merchandise

Balance Sheet
As of December 31

2022 2020
Total Assets ₱439,650.68 ₱340,460.30
Total Liabilities ₱35,000.00 ₱48,700.00
Total Owner’s Equity ₱404,650.68 ₱291,760.30
Total Liabilities & Owner’s Equity ₱439,650.68 ₱340,460.30

JB Alfonso General Merchandise income statement for the year ended December 31, 2022, and
its financial performance in comparison to the previous two years, 2021 and 2020.

The company's sales for the year 2022 are recorded as ₱448,830.00, which is a significant
decrease from the previous year's sales of ₱617,799.00. Similarly, there was also a decline in
sales in 2021 compared to 2020, where sales were ₱821,426.00. The decrease in sales indicates
that the business is encountering changes in market demand. In 2020 and 2021, during the
pandemic, the business experienced an increase in sales since fruits are a necessity and a lot of
people purchase them at that time. Moreover, stranded travellers who got stuck in the area also
became their customers. However, in the last months of 2021 and early 2022, as the economy
gradually comes back to normal and people are able to travel back, the business experienced
changes in market demand.

Moving on to the cost of sales, JB Alfonso General Merchandise spent ₱265,847.00 in 2022,
which is lower than the cost of sales in both 2021 (₱318,714.00) and 2020 (₱426,444.00). This
reduction in cost of sales attributed to efficient inventory management or a decrease in
production costs.

The gross profit for the year 2022, which is the difference between sales and the cost of sales, is
₱182,983.00. This figure indicates the amount of money the company retained after covering the
expenses directly related to the production and sale of its products. Comparing this with the gross
profit in 2021 (₱299,085.00) and 2020 (₱394,982.00), it is evident that the company is
experiencing a decline in profitability.

Moving on to the operating expenses, JB Alfonso General Merchandise spent ₱92,998.82 in

2022 to cover its day-to-day operations. This amount is lower than the operating expenses in
both 2021 (₱176,178.80) and 2020 (₱211,829.73). This reduction in operating expenses is
attributed to cost-cutting measures implemented by the company or a decrease in administrative
and operating costs. However, as it was investigated this reduction in expenses had never
affected the company's ability to operate effectively and maintain its operations.

JB Alfonso General Merchandise earnings were ₱89,984.18 in 2022, which is significantly lower
than the net income in both 2021 (₱122,906.20) and 2020 (₱183,152.27). This substantial
decrease of net income shows that the company’s profitability has been affected.

JB Alfonso General Merchandise

Income Statement
For the year ended December 31

2022 2021 2020

Sales ₱448,830.00 ₱617,799.00 ₱821,426.00
Cost of Sales ₱265,847.00 ₱318,714.00 ₱426,444.00
Gross Profit ₱182,983.00 ₱299,085.00 ₱394,982.00
Operating Expenses ₱92,998.82 ₱176,178.80 ₱211,829.73
Net Income ₱89,984.18 ₱122,906.20 ₱183,152.27