CHAPTER VI

FINANCIAL FEASIBILITY

This chapter discusses the source of funding, financial schedule, financial assumption, balance sheet,

income statement, cashflow statement, break-even analysis, return on investment and payback period.

6.1 SOURCE OF FUNDING

The source of funding of the proposed business is coming from the equal capital investment of the

partners which amounts to P800,000. For the establishment of Little Fireflies Center, the business would need

an initial capital of P4,000,000.

Particulars Amount

Permits and Licenses Php 19,850.00

Building Php 2,700,000.00

Furniture and Fixture Php 327,850.00

Equipment Php 269,157.00

Office Supplies Php 50,661.00

Cash on hand Php 632,482.00

TOTAL Php 4,000,000.00

Table 10: Initial Investment

 6.2 FINANCIAL SCHEDULE

Table 11: Utilities expense

Unit of UNIT TOTAL

ITEM Description QTY Measurement COST AMOUNT

Water Services ₱341.00 Cubic Meter ₱7.00 ₱3,410.00

Electrical Services ₱6,000.00 Kilo Watt/Hour ₱15.00 ₱90,000.00

Internet Services ₱10.00 Mbps ₱1,200.00 ₱12,000.00

Total ₱105,410.00

Table 12: Salaries & Expenses, SSS, Phil heath, Pag-ibig, 13th Month Pay

Position E Daily Monthly Social Phil- Pag-Ibig 13th Month Annual Salary
m Rate Salary Security Health Pay
pl System
o (SSS)
y
e
e

Director/ 1 ₱950.00 ₱19,000.00 ₱1,820.39 ₱555.75 ₱741.00 ₱19,000.00 ₱228,000.00

Principal

Teaching 9 ₱473.00 ₱9,460.00 ₱906.36 ₱276.71 ₱368.94 ₱9,460.00 ₱113,520.00

Staff

Admission 1 ₱368.00 ₱7,360.00 ₱705.16 ₱225.00 ₱287.04 ₱7,360.00 ₱88,320.00

Staff

Security 1 ₱368.00 ₱7,360.00 ₱705.16 ₱225.00 ₱287.04 ₱7,360.00 ₱88,320.00

Maintenance 1 ₱368.00 ₱7,360.00 ₱705.16 ₱225.00 ₱287.04 ₱7,360.00 ₱88,320.00

TOTAL ₱4,842.23 ₱1,507.46 ₱1,971.06 ₱50,540.00 ₱1,514,640.00

Table 13: Advertising Expenses

Particulars Amount

Facebook Page ₱500.00

Radio Station ₱2,000.00

Total ₱2,500.00

Table 14: Waste Disposal Management

Particulars Description Monthly Annually

Trash Bag ₱53.00 / 10 pcs. ₱265.00 ₱3,180.00

Table 15: Procurement

Unit of Estim

QT Measure UNIT TOTAL ated Depreciation

ITEM DESCRIPTION Y: ment COST AMOUNT Life Per Year

A. Awards and Rewards

Medals 32 Pcs. ₱50.00 ₱1,600

Certificate 32 Pcs. ₱45.00 ₱1,440

Total ₱3,040.00
B. Office Supplies and Materials

Ball pen 10 Packs ₱25.00 ₱250.00

Bond Paper 5 Ream ₱175.00 ₱1,750.00

White Board 1 Pcs. ₱785.00 ₱785.00

White Board 2 Set ₱33.00 ₱66.00

Marker &Eraser
Printer Ink 4 Set ₱376.00 ₱1,504.00

Post-it/Sticky Notes 5 Pcs. ₱35.00 ₱175.00

Scissors 5 Pcs. ₱34.00 ₱170.00

Staplers 6 Pcs. ₱52.00 ₱312.00

File Folders and 6 Pcs. ₱65.00 ₱390.00

Envelopes
Art Clay 20 Packs ₱110.00 ₱2,200.00

Coloring Books 120 Pcs. ₱14.00 ₱1,680.00

Reading Books 120 Pcs. ₱40.00 ₱4,800.00

Rubber Mat 20 Packs ₱90.00 ₱1,800.00

Educational Charts 14 Set ₱195.00 ₱2,730.00

Camping Tent 8 Pcs. ₱365.00 ₱2,920.00

Cooking Kit 8 Set ₱950.00 ₱7,600.00

Building Blocks 8 Set ₱325.00 ₱2,600.00

Playing Balls 8 Set ₱250.00 ₱2,000.00

Portable pool for 8 Pcs ₱899.00 ₱7,192.00

kids
Obstacle course for 1 Set ₱2,555.00 ₱2,555.00
kids
Floor Puzzles 5 Set ₱499.00 ₱2,495.00

Total ₱45,974.00
C. Expendable Equipment & Furniture and Fixture's

Office Table 9 Pcs. ₱1,187.00 ₱10,683.00 10 ₱1,068.30

Office Chair 9 Pcs. ₱385.00 ₱3,465.00 10 ₱346.50

Monoblock Chair 1 Pcs. ₱465.00 ₱465.00 5 ₱93.00

Office Sofa 1 Pc. ₱5,999.00 ₱5,999.00 10 ₱599.90

Ceiling Led Lights 16 Pcs. ₱95.00 ₱1,520.00 5 ₱304.00

Emergency Lights 5 Pcs. ₱760.00 ₱3,800.00 5 ₱760.00

Cabinet 4 Pcs. ₱799.00 ₱3,196.00 10 ₱319.60

Kids Table & Chair 100 Set ₱2,499.00 ₱249,900.00 10 ₱24,990.00

Set
Fire Extinguisher 5 Pcs. ₱1,100.00 ₱5,500.00 10 ₱550.00

Smoke Alarm 5 Pcs. ₱159.00 ₱795.00 10 ₱79.50

Vacuum Cleaner 2 Pcs. ₱1,169.00 ₱2,338.00 5 ₱467.80

Total ₱287,661.00 ₱29,578.6

D. Rent

Building N/A ₱2,700,000.00 5 ₱540,000.00

Total ₱2,700,000.00 ₱540,000.00

E. Equipment

Computer unit 7 Set ₱15,300.00 ₱107,100.00 8 ₱13,387.50

Electric Generator 1 Set ₱15,000.00 ₱15,000.00 15 ₱1000.00

Air Conditioner 4 Pcs. ₱16,490.00 ₱65,960.00 15 ₱4,397.33

Electric Fan 1 Pcs. ₱999.00 ₱999.00 5 ₱199.80

Smart TV 4 Pcs. ₱6,999.00 ₱27,996.00 8 ₱3,499.50

 CCTV Camera 5 Pcs. ₱1,650.00 ₱8,250.00 10 ₱825.00

CCTV Camera 1 Pcs. ₱5,490.00 ₱5,490.00 10 ₱549.00

Monitor
Printer Set 1 Set ₱13,749.00 ₱13,749.00 5 ₱2,749.80

Total ₱244,544.00 ₱26,607.93

F. Papers

Barangay Clearance N/A ₱500.00 ₱500.00

SEC Registration N/A ₱6,750.00 ₱6,750.00

DSWD Permit N/A ₱2,000.00 ₱2,000.00

DEPED N/A ₱4,000.00 ₱4,000.00

Registration
Mayor's Permit N/A ₱2,000.00 ₱2,000.00

BIR Registration N/A ₱500.00 ₱500.00

Solid Waste N/A ₱300.00 ₱300.00

Management Fee
Total ₱16,050.00

G. Trainings

Orientation
program for newly N/A ₱25,000.00
hired teacher
Total ₱25,000.00

Grand Total ₱2,872,269.00 ₱397,376.53

Table 16: Renovation

ITEM DESCRIPTION QTY UOM UNIT COST TOTAL

AMOUNT

Flush Door 4 pcs ₱1,900.00 ₱7,600.00

Door jamb 4 pcs ₱1,699.00 ₱6,796.00

PVC door and jamb 7 sets ₱5,456.00 ₱38,192.00

Lavatory 7 sets ₱2,799.00 ₱19,593.00

Water closet 7 sets ₱3,999.00 ₱27,993.00

¼ x4x8 Plywood 13 pcs ₱435.00 ₱5,655.00

Fluorescent Lamp 16 pcs ₱165.00 ₱2,640.00

Bags cement 20 bags ₱450.00 ₱9,000.00

Paints 28 gal ₱255.00 ₱7,140.00

TW wire # 14 2 box ₱1,875.00 ₱3,750.00

TW wire #12 2 box ₱1,450.00 ₱2,900.00

Breaker box w/ 8 branches 1 box ₱650.00 ₱650.00

Breaker switch 15 amps 2 box ₱350.00 ₱700.00

Breaker switch 20 amps 2 box ₱255.00 ₱510.00

Breaker switch 30 amps 2 box ₱320.00 ₱640.00

Main Breaker 60 amps 1 box ₱650.00 ₱650.00

Wood nails # 4 5 kls. ₱88.00 ₱440.00

Wood nails # 2 1/2 5 kls. ₱110.00 ₱550.00

Wood nails # 1 5 kls. ₱185.00 ₱370.00

Total Materials ₱135,769.00

Table 17: ICSR

Benefits of Employees Amount

Financial assistance (Calamities) ₱3,000.00

Financial Support (Hospitalization) ₱3,000.00

TOTAL ₱6,000.00

Table 18: ECSR

Benefits of Community Amount

Feeding program ₱1,000.00

Tree planting ₱2,000.00

TOTAL ₱3,000.00

6.3 FINANCIAL ASSUMPTION

 Financial revenue is expected to increase 9.31% per year

 Straight line method of depreciation was used

 Utilities Expense expected to increase 2% per year

 Fixed Cost expected to increase 2% per year

 Variable Cost expected to increase 9.31% per year

 Indirect Method was used to compute Statement of Cashflow

 Tax expense was computed by using 10% Special Proprietary Education under TRAIN Law.

 Renovation Expense was divided for 5 years

6.4 FINANCIAL STATEMENTS

A financial Statement or Financial Report is a formal record of the financial activities of a business,

organization, person, or other entity. The main objective of Financial Statement is to give users of financial

statements the information they need to make informed decisions, evaluate the business present and past

performance and forecast the success of the business, among other things.

Little Fireflies Center’s Financial Statement will include Projected Statement of Financial Performance,

Projected Statement of Financial Position, Projected Statement of Changes in Equity and Projected Statement of

Cash Flows for 5 years.

The Statement of Financial Performance also known as Statement of Profit/Loss or Income Statement. It

refers to the company’s income, expense and profits/loss over a given period of time.

The Statement of Financial Position also known as a balance sheet report is a financial statement that

reports the company’s assets, liabilities and equity of a business on a specific date.

The Statement of Changes in Equity is a financial statement that measures the changes in equity

throughout a specific accounting period.

The Statement of Cash Flows is a financial report on a company’s cash flow activities on operating,

investing and financing activities. It provides detailed insights into how a company spends and make its cash.

Little Fireflies Center

Projected Income Statement

Projected for 5 Years

2023 2024 2025 2026 2027

Service ₱2,906,669.12 ₱3,177,280.02 ₱3,473,084.78 ₱3,796,428.98 ₱4,149,876.52

Revenue

Less:
Operating
Expenses
Salaries ₱1,514,640.00 ₱1,514,640.00 ₱1,514,640.00 ₱1,514,640.00 ₱1,514,640.00

Expense

SSS, Pag-Ibig, ₱58,860.75 ₱58,860.75 ₱58,860.75 ₱58,860.75 ₱58,860.75

Philhealth,13th

Month Pay

Advertising ₱2,500.00 ₱2,500.00 ₱2,500.00 ₱2,500.00 ₱2,500.00

Expense

Utilities ₱105,410.00 ₱107,518.20 ₱109,626.40 ₱111,734.60 ₱113,842.80

Expense

Waste Disposal ₱3,180.00 ₱3,180.00 ₱3,180.00 ₱3,180.00 ₱3,180.00

Management
Award and ₱3,040.00 ₱3,323.02 ₱3,632.40 ₱3,970.57 ₱4,340.23

Rewards

Miscellaneous ₱335,942.40 ₱367,218.64 ₱401,406.69 ₱438,777.66 ₱479,627.86

Expense
Office Supplies ₱45,974.00 ₱50,254.18 ₱54,932.84 ₱60,047.09 ₱65,637.48
Expense
Depreciation ₱29,578.60 ₱29,578.60 ₱29,578.60 ₱29,578.60 ₱29,578.60
Expense
(Expandable
Equipment and
F&F)
Depreciation ₱26,607.93 ₱26,607.93 ₱26,607.93 ₱26,607.93 ₱26,607.93
Expense
(Equipment and
F&F)
Permits and ₱16,050.00 ₱16,371.00 ₱16,698.42 ₱17,032.39 ₱17,373.04

Licenses
 Trainings ₱25,000.00 ₱27,327.50 ₱29,655.00 ₱31,982.50 ₱34,310.00

Rent Expense ₱540,000.00 ₱540,000.00 ₱540,000.00 ₱540,000.00 ₱540,000.00

Renovation ₱36,657.63 ₱36,657.63 ₱36,657.63 ₱36,657.63 ₱36,657.63

Expense

CSR ₱75,000.00 ₱75,000.00 ₱75,000.00 ₱75,000.00 ₱75,000.00

Net Income ₱88,227.81 ₱318,242.56 ₱570,108.12 ₱845,859.46 ₱1,147,720.20

Before Tax
Income Tax ₱8,822.78 ₱31,824.26 ₱57,010.81 ₱84,585.93 ₱114,772.02

Expense

Net Income ₱79,405.03 ₱286,418.31 ₱513,097.31 ₱761,273.33 ₱1,032,948.18

After Tax

Table 18: Statement of Financial Performance

Little Fireflies Center

Projected Balance Sheet

Projected for 5 Years

2023 2024 2025 2026 2027

ASSETS
Current Assets

Cash ₱674,124.41 ₱1,593,386.88 ₱2,739,328.35 ₱4,133,445.84 ₱5,799,238.18

Office Supplies ₱45,974.00 ₱45,974.00 ₱45,974.00 ₱45,974.00 ₱45,974.00

Total Current Assets ₱720,098.41 ₱1,639,360.88 ₱2,785,302.35 ₱4,179,419.84 ₱5,845,212.18

NON-CURRENT ASSETS

Expendable Equipment ₱287,661.00 ₱287,661.00 ₱287,661.00 ₱287,661.00 ₱287,661.00

&Furniture and Fixture's

Accumulated depreciation ₱29,578.60 ₱59,157.20 ₱88,735.80 ₱118,314.40 ₱147,893.00

Equipment &Furniture and
Fixture's
Equipment ₱244,544.00 ₱244,544.00 ₱244,544.00 ₱244,544.00 ₱244,544.00

Accumulated Depreciation - ₱26,607.93 ₱53,215.86 ₱79,823.79 ₱106,431.72 ₱133,039.65

Equipment
Building Improvement ₱183,288.29 ₱146,630.63 ₱109,972.97 ₱73,315.32 ₱36,657.66

Prepaid Rent ₱2,700,000.00 ₱2,160,000.00 ₱1,620,000.00 ₱1,080,000.00 ₱540,000.00

Total Non-Current Assets ₱3,359,306.76 ₱2,726,462.57 ₱2,093,618.38 ₱1,460,774.20 ₱827,930.01

TOTAL ASSETS ₱4,079,405.17 ₱4,365,823.45 ₱4,878,920.73 ₱5,640,194.03 ₱6,673,142.19

LIABILITIES ₱ - ₱ - ₱ - ₱ - ₱ -

Total Liabilities ₱ - ₱ - ₱ - ₱ - ₱ -

PARTNER'S EQUITY

Babatoan, Capital ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80 ₱1,334,628.43

Arreola, Capital ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80 ₱1,334,628.43

Belgera, Capital ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80 ₱1,334,628.43

Retorca, Capital ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80 ₱1,334,628.43

Duero, Capital ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80 ₱1,334,628.43

Total Partner's Equity ₱4,079,405.05 ₱4,365,823.34 ₱4,878,920.65 ₱5,640,193.98 ₱6,673,142.16

TOTAL LIABILITIES ₱4,079,405.05 ₱4,365,823.34 ₱4,878,920.65 ₱5,640,193.98 ₱6,673,142.16

AND PARTNER'S EQUITY

Table 18: Statement of Financial Position

 Little Fireflies Center

Projected Statement of Changes in Partner’s Equity

Projected for 5 Years

2023 2024 2025 2026 2027

Beginning

Capital

Babatoan, ₱800,000.00 ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80

Capital

Arreola, Capital ₱800,000.00 ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80

Belgera, Capital ₱800,000.00 ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80

Duero, Capital ₱800,000.00 ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80

Retorca, Capital ₱800,000.00 ₱815,881.01 ₱873,164.67 ₱975,784.13 ₱1,128,038.80

Total ₱4,000,000 ₱4,079,405.03 ₱4,365,823.34 ₱4,878,920.65 ₱5,640,193.98

Net Income (Loss) ₱79,405.03 ₱286,418.31 ₱513,097.31 ₱761,273.33 ₱1,032,948.18

Ending Capital ₱4,079,405.03 ₱4,365,823.34 ₱4,878,920.65 ₱5,640,193.98 ₱6,673,142.16

Table 19: Statement of Changes in Partner’s Equity

Little Fireflies Center

Projected Statement of Cash Flow

Projected for 5 Years

 2023 2024 2025 2026 2027

Cashflow from Operating Activities

Net income ₱79,405.03 ₱286,418.31 ₱513,097.31 ₱761,273.33 ₱1,032,948.18

Depreciation Expense ₱56,186.53 ₱56,186.53 ₱56,186.53 ₱56,186.53 ₱56,186.53

Increase/Decrease ₱45,974.00
Office Supplies
Total Cash Flow from
₱89,617.56 ₱342,604.84 ₱569,283.84 ₱817,459.86 ₱1,089,134.71
Operating Activities

Cashflow from Investing Activities

Payment to expendable ₱287,661.00

Equipment and F&F
Payment for Equipment ₱244,544.00

Payment for Building ₱183,288.15 ₱36,657.63 ₱36,657.63 ₱36,657.63 ₱36,657.63

Improvement

Payment to Rent ₱2,700,000.00 ₱540,000.00 ₱540,000.00 ₱540,000.00 ₱540,000.00

Total Cash Flow from ₱3,415,493.15 ₱576,657.63 ₱576,657.63 ₱576,657.63 ₱576,657.63

Investing Activities

Cashflow from Financing Activities

Cash received as ₱4,000,000.00

investment by owner
Net cash provided by ₱4,000,000.00
financing activities
Net increase/decrease in ₱674,124.41 ₱919,262.47 ₱1,145,941.47 ₱1,394,117.49 ₱1,665,792.34
cash
Cash balance at the ₱674,124.41 ₱1,593,386.88 ₱2,739,328.35 ₱4,133,445.84
beginning of the period
Cash balance at the end ₱674,124.41 ₱1,593,386.88 ₱2,739,328.35 ₱4,133,445.84 ₱5,799,238.18
of the period
Table 19: Statement of Cash Flow

6.5 FINANCIAL ANALYSIS

Break-Even Point (BEP)

 Breakeven point (BEP) is when total cost and total revenue are equal, a business is said to have reached

its break- even point and is profit-neutral. Businesses can use the break-even point to help with pricing choices,

sales projections, cost control and expansion plans. Businesses can determine the minimal price they must

charge to cover costs with the help of break-even point. Typically, a company with lower fixed costs will have a

lower break-even point of sale. If a business income is below the break-even point, the company is running at a

loss. If it is higher than that, it is making profit. The formula for Break-even point (BEP) is:

¿
BEP (in sales) = Total ¿Cost CM Ratio

Break – Even Point Analysis

For the year ended December 31, 2023 -2027

Year Revenue Variable Cost Contribution Margin Contribution Margin Ratio

2023 ₱2,906,669.12 ₱409,956.40 ₱2,496,712.72 85.8960%

2024 ₱3,177,280.02 ₱448,123.34 ₱2,729,156.67 85.8960%

2025 ₱3,473,084.78 ₱489,626.93 ₱2,983,457.85 85.9022%

2026 ₱3,796,428.98 ₱534,777.82 ₱3,261,651.16 85.9137%

2027 ₱4,149,876.52 ₱583,915.56 ₱3,565,960.95 85.9293%

Year Variable Cost Fixed Cost Total Cost

2023 ₱409,956.40 ₱2,408,484.91 ₱2,818,441.31

2024 ₱448,123.34 ₱2,410,914.11 ₱2,859,037.45

2025 ₱489,626.93 ₱2,413,349.73 ₱2,902,976.66

2026 ₱534,777.82 ₱2,415,791.90 ₱2,950,569.72

2027 ₱583,915.56 ₱2,418,240.75 ₱3,002,156.31

 Using the formula, the BEP in sales for 5 years are as follows:

Year Total Fixed Divide Contribution Margin BEP

Cost Ratio

2023 ₱2,408,484.91 / 85.8960% ₱2,803,954.44

2024 ₱2,410,914.11 / 85.8960% ₱2,806,782,51

2025 ₱2,413,349.73 / 85.9022% ₱2,809,413.99

2026 ₱2,415,791.90 / 85.9137% ₱2,811,883.28

2027 ₱2,418,240.75 / 85.9293% ₱2,814,220.52

Table 12: Break-Even Point

This means that in order for Little Fireflies Center to generate a revenue, sales must at least equal to the

break-even point. If sales fall short of that amount, a loss will result for the Day Care Center.

ROI (Return on Investment)

Net Return on Investment

ROI =
Cost of Investment

Year Investment Net Income ROI

2023 ₱4,000,000.00 ₱79,405.03 1.99%

2024 ₱4,000,000.00 ₱286,418.31 7.16%

2025 ₱4,000,000.00 ₱513,097.31 12.83%

2026 ₱4,000,000.00 ₱761,273.33 19.03%

2027 ₱4,000,000.00 ₱1,032,948.18 25.82%

 Year Net Return Divide Cost of Investment X 100 ROI %

2023 ₱79,405.03 / ₱4,000,000.00 100 1.99%

2024 ₱286,418.31 / ₱4,000,000.00 100 7.16%

2025 ₱513,097.31 / ₱4,000,000.00 100 12.83%

2026 ₱761,273.33 / ₱4,000,000.00 100 19.03%

2027 ₱1,032,948.18 / ₱4,000,000.00 100 25.82%

Table 13: Return on Investment

Payback Period

Initial Capital Investment

Payback Period = the Investment ¿
Annual Cash Flow ¿

Year Net Cash Flow Project Cost Cumulative Cash Flow Payback Period

₱4,000,000.00

1 ₱674,124.41 ₱674,124.41 1

2 ₱919,262.47 ₱1,593,386.88 1

3 ₱1,145,941.47 ₱2,739,328.35 1

4 ₱1,394,117.49 ₱4,133,445.84 1

5 ₱1,665,792.34 ₱5,799,238.18 1

6 ₱1,386,496.57 ₱7,185,734.76 0.21

5.21 years

Table 14: Payback Period