ORANGE

RETAILERS INC.
PRESENTED BY:
Alipio, Junalin V.
Angeles, Shanika Joy S.
Manlincon, Lyka Noreen A.
Rosario, Syleen Marwel N.
Tibalao, Blaise Gayle P.
 POSITIVE INDICATORS CHALLENGES

Impressive Strategic Alignment Uncertainty High Risks of

Broad Market of Large-Customer-
Sales for New Entrants
Appeals Based Orange
Performance Retailers with Patron
Sustainable which Leads
as a Reliable Major Market to Market
Player in the Industry Acceptance Saturation
 ASSUMPTIONS

Advance Rent (# of Months) ₱ 71,250.00

Initial & Maintaining Annual Cash Flows (Amounts in Thousands)

Inventory (3 Months of 22,500,000.00
Sales) Net
₱ 16,747.43 ₱ 16,977.00 ₱ 16,867.50 ₱ 16,257.07 ₱ 14,917.53
Income/Loss

Store Construction 3,600,000.00

Furniture & Fixtures 2,400,000.00 Depreciation 1,400.00 1,400.00 1,400.00 1,400.00 1,400.00

POS & IT Equipment 1,000,000.00 ∆ in Inventory 0.00 (1,350.00) (1,431.00) (1,516.86) (1,607.87)

Monthly Rate / Selling

2,016,000.00 ∆ in A/R (27,000.00) (1,620.00) (1,717.20) (1,820.23) (1,929.45)
Personnel
∆ in Prepaid
Monthly Rate / Store Rent
(71.25) 71.25 - - -
1,680,000.00
Manager + Supervisor
Cash Flows ₱ (8,923.82) ₱ 15,478.25 ₱ 15,119.30 ₱ 14,319.98 ₱ 12,780.21
Other Employee Benefits 21,000.00

Initial Franchise Fee 5,000,000.00

Total Initial Investment ₱ 38,288,250.00

 Y0 Y1 Y2 Y3 Y4 Y5 IRR

(38,288,250.00) (8,923,820.00) 15,478,252.00 15,119,301.70 14,319,980.74 12,780,213.56 Cash Flows

(8,381,732.08) 13,654,879.08 12,527,968.46 11,144,852.49 9,342,282.04 Present Value

6.47% IRR

Y0 Y1 Y2 Y3 Y4 Y5 PAYBACK PERIOD

(38,288,250.00) (8,923,820.00) 15,478,252.00 15,119,301.70 14,319,980.74 12,780,213.56 Cash Flows

(47,212,070.00) (31,733,818.00) (16,614,516.30) (2,294,535.56) Remaining Balance

4.16 years Payback Period

 Y0 Y1 Y2 Y3 Y4 Y5
NET PRESENT VALUE

Cash Flows (38,288,250.00) (8,923,820.00) 15,478,252.00 15,119,301.70 14,319,980.74 12,780,213.56

Present Value (8,112,563.64) 12,791,943.80 11,359,355.15 9,780,739.53 7,935,507.11

Net Present Value (₱ 4,533,268.05)

CONCLUSION
The group recommends that Patron Investment and Orange Retailers should not pursue the opening of
another nine (9) stores as the Net Present Value is negative, the Internal Rate of Return (6.47%) is lower
than the Weighted Average Cost of Capital (10%), and it will take 4.16 years (Payback Period) to recover the
initial investment. Hence, the company is better off reallocating its resources and exploring alternative
investment opportunities that align with the overall financial objectives and growth strategy.