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
Business Finance – Grade 12
Alternative Delivery Mode
Quarter 1 – Module 3: Financial Planning Tools and Concepts
First Edition, 2020

Republic Act 8293, section 176 states that: No copyright shall subsist in any work
of the Government of the Philippines. However, prior approval of the government agency or
office wherein the work is created shall be necessary for exploitation of such work for profit.
Such agency or office may, among other things, impose as a condition the payment of
royalties.

Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,
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Every effort has been exerted to locate and seek permission to use these materials from
their respective copyright owners. The publisher and authors do not represent nor claim
ownership over them.

Published by the Department of Education, Division of Palawan

Schools Division Superintendent:
Natividad P. Bayubay, CESO VI
Assistant Schools Division Superintendents:
Loida Palay-Adornado, Ph.D.
Felix M. Famaran

Development Team of the Module

Writers: Karen G. Enciso
Content Editors: Edheson M. Gapad
Jovy Cassandra D. Goh-Malacad
Language Editor: Josie Joshua R. Pasion
Reviewers: Eric N. Quillip
Mark G. Javillonar
Management Team: Aurelia B. Marquez
Rodgie S. Demalinao
Eric N. Quillip

Printed in the Philippines by ________________________

Department of Education – MIMAROPA Region – Schools Division of Palawan

Office Address: PEO Road, Bgy. Bancao-Bancao, Puerto Princesa City

Telephone: (048) 433-6392
E-mail Address: palawan@deped.gov.ph
Website: www.depedpalawan.com

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 12

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


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Introductory Message
For the facilitator:

Welcome to the Business Finance– Grade 12 Modular Distance Learning (MDL)

Self-Learning Module on the Financial Planning Tools and Concepts!

This module was collaboratively designed, developed and reviewed by educators

from public institution to assist you, the teacher or facilitator in helping the
learners meet the standards set by the K to 12 Curriculum Most Essential Learning
Competencies (MELCs) in the “New Normal” situation while overcoming their
personal, social, and economic constraints in schooling.

This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration
their needs and circumstances.

In addition to the material in the main text, you will also see this box in the body of
the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator, you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to
manage their own learning. Furthermore, you are expected to encourage and assist
the learners as they do the tasks included in the module.

iv
For the learner:

Welcome to the Business Finance– Grade 12 Modular Distance Learning (MDL)

Self-Learning Module on the Financial Planning Tools and Concepts!

This module was designed to provide you with fun and meaningful opportunities
for guided and independent learning at your own pace and time. You will be
enabled to process the contents of the learning resource while being an active
learner.

This module has the following parts and corresponding icons:

What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in
the module.

What I Know This part includes an activity that aims to

check what you already know about the
lesson to take. If you get all the answers
correct (100%), you may decide to skip this
module.

What’s In This is a brief drill or review to help you link

the current lesson with the previous one.

What’s New In this portion, the new lesson will be

introduced to you in various ways; a story, a
song, a poem, a problem opener, an activity
or a situation.

What is It This section provides a brief discussion of

the lesson. This aims to help you discover
and understand new concepts and skills.

What’s More This comprises activities for independent

practice to solidify your understanding and
skills of the topic. You may check the
answers to the exercises using the Answer
Key at the end of the module.

What I Have Learned This includes questions or blank

sentence/paragraph to be filled into process
what you learned from the lesson.

What I Can Do This section provides an activity which will

help you transfer your new knowledge or
skill into real life situations or concerns.

Assessment This is a task which aims to evaluate your

level of mastery in achieving the learning
competency.

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 Additional Activities In this portion, another activity will be given
to you to enrich your knowledge or skill of
the lesson learned.

Answer Key This contains answers to all activities in the

module.

At the end of this module you will also find:

References This is a list of all sources used in

developing this module.

The following are some reminders in using this module:

1. Use the module with care. Do not put unnecessary mark/s on any part of
the module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your
answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.

We hope that through this material, you will experience meaningful learning
and gain deep understanding of the relevant competencies. You can do it!

vi
 What I Need to Know

This module was designed and written with you in mind. It is here to help you
master the financial planning process, and the preparation of budgets and financial
statements. The scope of this module permits it to be used in many different
learning situations. The language used recognizes the diverse vocabulary level of
students. The lessons are arranged to follow the standard sequence of the course.
But the order in which you read them can be changed to correspond with the textbook
you are now using.
The module is divided into two lessons, namely:

• Lesson 1– Steps in the Financial Planning Process; and

• Lesson 2– Formula and Format: Budgets and Projected Financial Statements
Preparation.

After going through this module, you are expected to:

Lesson 1:

1. Define financial planning;

2. Identify the steps in the financial planning process; and
3. Explain the importance of identifying the steps in financial planning.

Lesson 2:

1. Identify the steps in budget and projected financial statements preparation;

2. Prepare different types of budget and different types of projected financial
statements; and
3. Cite real-life situations showing the application of budgeting, and projected financial
statement preparation.

1
 What I Know

Directions: Choose the letter of the best answer and write it on a separate sheet of
paper.
1. One of the steps in the financial planning process is setting goals or objectives.
Which of the following describes goal setting?
a. It begins with careful considerations and ends with a lot of hard work.
b. It is a process of monitoring and evaluation to have a clear plan.
c. It is a process of identifying what plan is done.
d. It establishes an evaluation system for monitoring and controlling.

2. The following are the importance of planning, EXCEPT __________________.

a. Ensures adequate funds.
b. Helps in making growth and expansion.
c. Guarantees that the buyer of funds is investing in companies.
d. Maintains a secure balance between outflow and inflow of funds.

3. It is considered as the most important financial statement account in

forecasting.
a. Production Budget c. Cash Budget
b. Operating Budget d. Sales Budget

4. Which of the following provides information regarding the number of units that
should be produced over a given accounting period?
a. Sales Budget c. Operating Budget
b. Production Budget d. Cash Budget

5. Which of the following refers to the process of formulating financial policies,

procedures, and budget forecasting in managing financial plans?
a. Financial Planning c. Short-term planning
b. Long-term Planning d. Forecasting

6. Alona wanted to put-up hardware in their barangay. She surveyed to assess

the capability and the capacity of her neighborhood. This action describes what
phase of planning?
a. Short-term Plan c. Long-term plan
b. Medium plan d. First phase plan

7. Making financial projections always begin with statements of profit or loss. This
explains what steps of financial statement projection?
a. forecast net income and retained earnings
b. determine payment of loans
c. forecast sales
d. forecast cost of sales and operating expenses

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8. Which of the following is an example of identifying other receipts?
a. Payable interest
b. Return on interest
c. Proceeds from the sale of non-operating assets
d. Issuance of capital gains

9. The formula for external funds needed (EFN) is __________________________.

a. EFN = Change in Total Assets - (Change in Total Liabilities + Total
Change in Stockholders’ Equity
b. EFN = Change in Total Assets + (Change in Total Liabilities - Total
Change in Stockholders’ Equity)
c. EFN = Change in Total Liabilities + Change in Total Assets - Change in
Stockholders’ Equity
d. EFN = Change in Stockholders Equity + Change in Total Assets - Total
Change in Liabilities

10. A contingency plan is often referred to as plan B because ____________________.

a. it can be used as an assumption for an unexpected result.
b. it can be used as an immediate plan.
c. it can be used for the preparation of the expected result.
d. it can be used for a strategic plan.

11. Because of the COVID-19 pandemic you make arrangements with your
business. You make plans that could not hamper your business operations.
This is an example of _______________________.
a. Strategic plan. c. Visualize plan.
b. Tactical plan. d. Setting plan.

12. Which of the following is TRUE about the production budget?

a. Ending inventory of the current period is the beginning inventory of the
next period.
b. Ending inventory of the previous period is the beginning inventory of the
next period.
c. The beginning inventory of the current period is the ending inventory of
the next period.
d. The beginning inventory of the previous period is the ending inventory of
the current period.

13. You opt for a stable, financial stability and security for your business. You
made plans and set goals in the future. This is an example of _________________.
a. strategic plan c. visualize plan
b. tactical plan d. setting plan

14. It refers to the collection of money from customers which increases the cash
balance.
a. Cash Disbursement c. Cash Flow
b. Cash Receipts d. Cash balance

3
15. The following are the steps in projecting financial statements, EXCEPT
________________.
a. forecast sales
b. forecast cost of sales and operating expenses
c. determine balance sheet items
d. forecast account receivables

4
Lesson
Steps in the Financial
1 Planning Process
In view of the economic condition of our society, firms, companies, and other
business organizations, strategic and tactical planning to achieve organizational
goals must be considered. These plans support the system that would uplift a
company’s financial stability.

Planning is an important tool not only in the business world but also in our day to
day activities. This lesson will give you a piece of full-blown information about what
financial planning is and the importance of planning.

What’s In

In the previous lesson, you have learned what is finance and financial
management, the flow of funds within an organization – through and from the
enterprise – and financial markets, as well as the role of the financial manager in
the financial institution.

In this modules, financial planning, budget preparations, and projected financial

statements preparation will take place.

Notes to the Teacher

Begin the lesson by letting the students do Activity No 1. Let the
students do the given worksheets which will help them gain an
overview about financial planning.

5
 What’s New

The below activity will help you check how much you know about the financial
plan.

Activity 1: Picture Perfect

Directions: Follow the instructions below and answer in a separate sheet of paper.
1. Analyze the pictures below.

Source: https://www.google.com

2. What do the pictures show?

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

3. From the given pictures, make a definition of financial planning.

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

6
 What is It

In Activity 1, you were able to gain an overview of financial planning. In this part of
the module, you will find out further about the process and steps in the financial
planning process and the procedure in budgeting and forecasting of projected
financial statement.

Financial planning
It is the process of formulating financial policies, procedures, and budget
forecasting in managing financial plans.

There are two (2) phases of financial planning, the long-term plan or strategic
plan, and the short-term plan or tactical plan. A long-term financial plan is a
set of goals that design the overall direction of the company. It is an integrated
strategy for strategic goals. While a short-term financial plan is a process of
setting specific strategies in a closer time frame that will ultimately reach overall
goals.

The Importance of Financial Planning

o To ensure adequate funds.
o Help in making growth and expansion program which will aid the long-run
survival of the company.
o Assures the suppliers of funds that their investments are well managed.
o Maintain a secure balance between outflow and inflow of funds for stability.

Steps in the Financial Planning Process

1. Setting goals or objectives. Goal setting is a process that starts with
careful consideration of what you want to achieve and ends with a lot of
hard work to accomplish it. In setting goals, you have to identify the long-
term and short-term plans in order to achieve your mission and vision.

2. Identify resources. Resources include production capacity, human

resources who will man the operations, and financial resources (Borja &
Cayanan, 2015).

3. Identify goal-related tasks – In this step, management should focus on

completing a task in order to achieve planned objectives. Task-driven or
results-driven uses targets to stay motivated in their work.

4. Establish responsibility centers for accountability and timeline. If the

task is already identified, the next step is to identify which department
should be held accountable. For example, if your goal is to achieve a 30%

7
 increase in sales, this should be the responsibility of the head of the sales
and marketing department and there should also be other departments who
should take responsibility for achieving the goal.
o There must also be a timeline for the planned activities, especially
activities which are not normally done.

5. Establish the evaluation system for monitoring and controlling. In

financial planning, the management must establish a monitoring and
controlling evaluation system so that there is a clear plan for the program or
activity. It will help the staffs decide how they are going to track and analyze
data. Quantified plans on budget and projected financial statements should
also be done.

6. Determine the contingency plan. A contingency plan is often referred to as

Plan B because it can be used as an assumption for an unexpected result.
Determining a contingency plan helps an organization respond effectively to
a future event or situation that may or may not occur.

Notes to the Teacher

The brief discussion above provided enough information for the
students to do the activities on the succeeding pages. Such
activities are designed for individual preparation and lesser
teacher intervention.

8
 What’s More

ACTIVITY 2: FLOW SHEET!

Directions: Fill-out the given flowchart showing the correct process of financial
planning and write a brief explanation on the importance of financial planning.
Financial Planning Process

Step 1:
_____________________
_____________________
_____________________
_

Explanation:
Step Step 2:
__ 6: ____________________________
_____________________ ____________________
_____________________ ____________________________ ____________________
_____________________ ____________________________ ____________________
_ ____
____________________________
____________________________
____________________________
____________________________

Step 5: ____________________________ Step 3:

_____________________ _____________________
____________________________
_____________________ _____________________
_____________________ ____________________________ _____________________
_ _

Step 4:
_____________________
_____________________
_____________________
_

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Activity 3: WED-DING PLAN
Suppose you are the wedding planner, and you want to adopt a comprehensive
wedding plan given below. Arrange the plan according to the financial planning
process by using the given template.

The wedding plan considered the schedule and timeframe, as well as the service
providers for the wedding, like catering services and the like. Goals and objectives
setting are well done. Setting Plan B are also considered as back-up plan.
Resources such as number and types of chairs and tables are determined. The
wedding planner has also formulated the monitoring and evaluation system/tool for
smooth flow of the wedding. As well as, the planner made sure to have a tangible
results of the plan.

THE WEDDING PLAN

STEPS ACTIVITIES AMOUNT

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

Note: Consider that the wedding package is worth P250,000.

10
 What I Have Learned

At this point, let us see how much you have gained from the discussions and
activities you have undergone.

Activity 4: Fill-in the Blanks

Directions: Complete the sentences below by filling in the blanks with the correct
word or phrase.

1. __________________ is the process of formulating financial policies,

procedures, and budget forecasting in managing financial plan.

2-3. The two (2) phases of financial planning are the

_____________________ and the _________________ plan.
4. __________________ is a process that starts with careful
consideration of what you want to achieve and ends with a lot of
hard work to accomplish it.

5. One of the importance of financial planning is to _______________ and

______________________ which will aid the long-run survival of the
company.

11
 Notes to the Teacher
Activities 2, 3 and 4 are designed to develop and enrich students’
knowledge on financial planning, process, and importance in
projecting financial statements. The activities ensure that
students’ full understanding of the lesson is achieved.

What I Can Do

This activity will help you transfer into real-life situations the knowledge and skills
you have gained or learned from this module.

Activity 5: EVENTUROUS!
Directions: Suppose you are planning an event (birthday, wedding, debut, etc.),
prepare a step-by-step activity following the financial planning process.

Event Title:

Date and Time:

Step-by-Step Activity:

Step 1

Step 2

Step 3

Step 4

Step 5

Step 6

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Rubrics in Rating Activity 5: Eventurous!
Score
Description 5 4 3
The All the activities The activity presented The activity presented
correctness of presented are has 1-3 errors. has 4-6 errors.
the sequence correct.
Quality of The written activities The written activities The written activities
writing are very informative are somewhat give new information but
and well organized. informative and poorly organized.
organized.
Clarity of the The activities given The activities given are The activities given are
activity are very clear. somewhat clear. unclear.

Lesson Formula and Format: Budgets

2 and Projected Financial
Statements Preparation
In making financial decisions, we should consider budgeting and other
unpredictable expenses. Often we disregard budgeting and forecasting of cash
inflows and outflows in an overall financing plan. Moreover, the preparation of
budgets and projected financial statements are necessary. In this part of the
module, you will understand how budgeting and forecasting of financial statements
will be prepared.

What’s In

In the previous lesson, we have discussed financial planning, steps in preparing a

financial plan, and its importance. For this lesson, you will focus on the
preparations of budgets and projected financial statements such as projected
collection, sales budget, production budget, income projected statement of
comprehensive income, projected of financial position, and projected cash flow
statement.

13
 Notes to the Teacher
Begin the lesson by letting the students do Activity No 1. Let the
students answer the given worksheets.

What’s New

The below activity will help you check how much you know about budgeting and
projected financial plan in your daily lives.

Activity 1: THE BUDGET

Directions: Make a detailed budget for the given scenario. Use the given template
for your guide in doing the activity and answer the question below.

Scenario: Suppose you are in charge to buy ingredients in making pork adobo that
is good for 12 persons, you were given P500 for the menu. The list and quantity of
ingredients are also given, such as 2kls of pork, 3pcs of potatoes, 1 can of
pineapple, 1 pouch of soy sauce, 1 pouch of vinegar, and spices.

Quantity Items to be Purchased Amount

TOTAL

Before doing the activity, how do you plan to divide the money to be
spent?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

14
 What is It

In activity 1, you were able to experience budgeting and reflect on how to plan your
future spending. In this part of the module you will discover how to prepare
different types of budgets and how projected financial statements should be
prepared; and the application of budgeting and financial planning in real-life
situations.

Budgeting and Forecasting Financial Statement

The budget is an amount of money available for spending based on a plan and for
how it will be spent. It serves as a tool for planning and controlling.

Types of Budget

1. Sales Budget is the most important financial statement account in

forecasting. It is a financial plan that shows how the resources should be
allocated to achieve forecasted sales. It contains an itemization of a
company’s sales expectations for the budget period.

Forecasted Price Total Sales Discounts Total

Unit Sales X per Unit = Gross Sales - and Allowances = Net Sales

Example:

Table 1.1 Sales Budget

In table 1.1, KGE sales manager expects that there will be an increase in
demand for the next half of the year and an increase in price from Php30.00
to Php40.00. And also expects the company’s historical sales discounts and
allowances percentage of two percent of gross sales will continue through the
budget period.

15
2. Projected Collection refers to the calculation of expected cash collections
based on the total sales figure obtained from the sales budget. The
management estimates the proportion in which sales are expected to be
collected in the current and following periods. This is used to determine how
much sales are expected to be collected during a period.

Example:

A master budget of Company A shows the projected collection. The sales

figures are obtained from the sales budget of the company. 70% of sales
are expected to be collected in the quarter in which sales are made and
the rest are expected to be collected in the next period.

a. Q1 Sales = P120,000
Collections in Q1 = 120,000 X 70% = P84,000
Collections in Q2 = 120,000 X 30% = P36,000
b. Q2 Sales = P87,000
Collections in Q2 = 87,000 X 70% = P60,900
Collections in Q3 = 87,000 X 30% = P26,100
c. Q3 Sales = P100,000
Collections in Q3 = 100,000 X 70% = P70,000
Collections in Q4 = 100,000 X 30% = P30,000
d. Q4 Sales = 180,000
Collections in Q4 = 180,000 X 70% = P126,000

Quarter
1 2 3 4
Beginning P55,000
AR

Quarter 1 P84,000 P36,000

Sales

Quarter 2 P60,900 P26,100

Sales

Quarter 3 P70,000 P30,000

Sales

Quarter 4 P126,000
Sales

Total P139,000 P96,900 P96,100 P156,000

Collections

16
 3. Production Budget provides information regarding the number of units that
should be produced over a given accounting period based on expected sales
and targeted level of ending inventories.
It is computed as follows:

Required Production in Units = Expected Sales + Target Ending

Inventories – Beginning Inventories

Note: Ending inventory of the current period is the beginning inventory of the
next period.

Example: KGE Company plans to produce plastic bottle for the year, the
production needs as follows:

Table 1.2 Production Budget

Table 1.2 shows that the planned ending finished goods inventory at the end
of each quarter decreases from an initial 1,000 units to 500 units, due to
countless finished goods in stock. The plan calls for a decline from 1,000
units ending inventory at the end of the first quarter to 500 units by the end
of the second quarter despite an increase in sales projection. Given the size
of the projected inventory decline, there is a chance that KGE will increase
the amount of ending finished goods inventory later this year.

The following are the Steps in Formulating Budget

1. Obtaining Estimates
2. Coordinating Estimates
3. Communicating Budget
4. Implementing the Budget Plan
5. Reporting Interim Progress towards Budgeted Objectives

17
Projected Financial Statements
The financial statement method will be used in projecting financial statement. The
following are the steps in making financial projections:

a. Forecast sales. In making financial projections, always begin with the

statement of profit or loss and the most vital account to forecast is sales.

b. Forecast cost of sales and operating expenses. For the cost of sales,
the average cost of sales over the historical data analyzed can be used.

c. Forecast net income and retained earnings. To forecast net income,

there should be information on income taxes and how much financing
cost a company will have. Financing costs will be based on the amount of
loan that a company has.

d. Determine balance sheet items that will vary with sales or whose
balances will be correlated with sales. Sales, cash, accounts receivable,
inventories, accounts payable, and accrued expenses payable are the
balance sheet items that may vary with sales.

e. Determine the payment schedule for loans. The payment schedule for
loans can be based on the disclosures provided in the notes of the
financial statement.

f. Determine the external funds needed. The Balance Sheet has to be

balanced. After assumptions are made the projected statement of
financial position has to be balanced.
The formula for EFN is:
EFN = Change in Total Assets – (Change in Total Liabilities + Total
Change in Stockholders’ Equity)
• If the EFN is on the liabilities and stockholders’ equity section and
the amount is positive, there will be additional financing. However,
if the amount is negative there will be excess cash.

g. Determine how external funds will be financed. Once EFN, is

computed, the management decides how to finance it either debt or
equity, or a combination of debt and equity.

18
Types of Projected Financial Statements

1. Projected Statement of Comprehensive Income is an estimate

of the financial results you’ll see from your business in a future
period of time. It is often presented in the form of an income
statement.

Example:

Company X
Projected Income Statement
Launch of Widget Project
20XX

Revenues P 50,000
Cost of Goods Sold 15,000
Gross Profit P 35,000

Operating Expenses
Commissions 5,000
Marketing Expenses 6,000
Office Expenses 18,000
Total Operating Expenses P 29,000

Net Income P 6,000

2. Projected Statement of Financial Position refers to the informed

projection of its business’s assets, liabilities, and capital. It allows
businesses to see what they’re likely to own and owe at a future
date, which can help them plan for future purchases and other
important business decisions. Businesses examine past financial
statements and use that historical data to make projections about
their future capital assets, debt, and equity.

19
 Steps in Projecting Statement of Financial Position:

1. Format your Financial Position

2. Enter Starting Balances
3. How Sales Impact the Balance Sheet
4. How Expenses Impact the Balance Sheet
5. How does a New Loan Impact the Balance Sheet

3. Projected Cash Flow Statements refer to estimate the amount of

cash flowing into and out of your company for a specific future
period. A pro forma cashflow statement can help you identify where
your business may experience cash shortfalls in the future, so you
can plan accordingly to offset lean times.

Cash Flow = Cash Received – Cash Spent

20
 Notes to the Teacher
The brief discussion above provided enough information for the
students to do the activities on the succeeding pages. Such
activities are designed for individual preparation and lesser
teacher intervention.

21
 What’s More

Activity 2: Identify Me
Directions: Identify and name the following procedures, whether it belongs to the
budget preparation procedure or projected financial statement procedure.

_______________________ 1. Determine how external funds will be financed.

_______________________ 2. Reporting interim progress towards budgeted objectives.

_______________________ 3. Forecast net income and retained earnings.

_______________________ 4. Obtaining estimates

_______________________ 5. Forecast sales

What I Have Learned

At this point, let us see how much you have gained from the discussions and
activities you have undergone.

Activity 3: BUDGET-ING
Directions: Read and analyze the given scenario. Write your answer on a separate
sheet of paper.

Mielle’s Company has forecasted sales for its product to be 10,000 units for
September, 12,000 units for October, 13,000 units for November, and 14,000 units
for December. The budgeted selling price is Php 45.00 per unit and increases to
Php 50.00 per unit in November. The company expects to continue sales discounts
of three percent for the year. The desired ending inventory is 3,000 units, and the
expected beginning inventory in September 1 is 4,000 units.

Prepare the following:

A. Sales Budget
B. Projected Collection
C. Production Budget

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 What I Can Do

This activity will help you transfer into real-life situations the knowledge and skills
you have gained or learned from this module.

Activity 4: YOU’RE THE BOSS

Suppose you are the owner of a cafeteria. You wanted to expand your business and
open another branch in another place, but the problem is you have insufficient
funds to finance your project. You decided to borrow money from the bank but the
bank requires you to prepare projected financial statements as an attachment for
your loan application.

Loan Amount- Php500,000.00

Terms: 5 Years

Prepare the following:

A. Projected Statement of Comprehensive Income;

B. Projected Cash Flow Statement
C. Projected Statement of Financial Position

Notes to the Teacher

Activities 2, 3 and 4 are designed to develop and enrich students’
knowledge on budgeting and projecting financial statements. The
activities ensure that students’ full understanding of the lesson is
achieved.

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 Assessment

Directions: Choose the letter of the best answer. Write the chosen letter on a
separate sheet of paper.

1. Which of the following refers to the process of formulating financial policies,

procedures, and budget forecasting in managing financial plans?
a. Financial Planning c. Short-term Planning
b. Long-term Planning d. Forecasting

2. Alona wanted to put-up hardware in their barangay. She conducted a survey in

order to assess the capability and the capacity of her neighborhood. This action
describes what phases of planning?
a. Short-term plan c. Long-term plan
b. Medium plan d. 1st phase plan

3. The following are the importance of planning, EXCEPT _________________.

a. to ensure adequate funds
b. help in making growth and expansion
c. guarantee that the buyer of funds is investing in companies
d. maintain a secure balance between outflow and inflow of funds

4. One of the steps in the financial planning process is setting goals or objectives.
Which of the following describes goal setting?
a. It begins with careful considerations and ends with a lot of hard work.
b. It is a process of monitoring and evaluation in order to have a clear plan.
c. It is a process of identifying what plan is done.
d. Establishes an evaluation system for monitoring and controlling.

5. It is the most important financial statement account in forecasting.

a. Production budget c. Cash budget
b. Operating budget d. Sales budget

6. Which of the following provides information regarding the number of units that
should be produced over a given accounting period?
a. Sales budget c. Operating budget
b. Production budget d. Cash Budget

7. Making financial projections always begin with a statement of profit or loss. This
explains what steps of financial statement projection?
a. Forecast net income and retained earnings
b. Determine payment of loans
c. Forecast sales
d. Forecast cost of sales and operating expenses

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8. The formula for external funds needed (EFN) is: _________________________.
a. EFN = Change in Total Assets- (Change in Total Liabilities + Total Change
in Stockholders’ Equity
b. EFN = Change in Total Assets + (Change in Total Liabilities - Total
Change in Stockholders’ Equity)
c. EFN = Change in Total Liabilities + Change in Total Assets- Change in
Stockholders’ Equity
d. EFN = Change in Stockholders Equity + Change in Total Assets –Total
Change in Liabilities

9. Which of the following is an example of identifying other receipts?

a. Payable interest
b. Return on interest
c. Proceeds from the sale of non-operating assets
d. Issuance of capital gains

10. A contingency plan is often referred to as plan B because __________________

a. it can be used as an assumption for an unexpected result.
b. it can be used as an immediate plan.
c. it can be used for the preparation of expected results.
d. it can be used for a strategic plan.

11. Which of the following is TRUE about the Production Budget?

a. Ending inventory of the current period is the beginning inventory of the
next period.
b. Ending inventory of the previous period is the beginning inventory of the
next period.
c. The beginning inventory of the current period is the ending inventory of
the next period.
d. The beginning inventory of the previous period is the ending inventory of
the current period.

12. The following are the steps in projecting financial statements, EXCEPT for
_____________________________.
a. forecast sales
b. forecast cost of sales and operating expenses
c. determine balance sheet items
d. forecast account receivables

13. It is the collection of money from a customer which increases the cash balance.
a. Cash Disbursement c. Cash Flow
b. Cash Receipts d. Cash balance

14. You opt for a stable, financial stability and security for your business. You made
plans and set goals in the future. This is an example of __________________.
a. strategic plan c. visualize plan
b. tactical plan d. setting plan

25
15. Because of the pandemic Covid-19 you make arrangements with your business
arrangements. You make plans that couldn’t hamper your business operations.
This is an example of _________________.
a. strategic plan c. visualize plan
b. tactical plan d. setting plan

26
 Additional Activities

Let us reinforce the skills/knowledge that you have gained from this lesson by
doing the next activity. This activity will help develop your understanding of
financial planning, budgeting, and financial projection.

Directions: Write a brief explanation of the following questions.

1. How do you apply financial planning, budgeting, and financial projection in

setting and attaining your goal? Explain.

2. Do planning, budgeting, and projecting make sense in your daily life?

Explain.

Rubrics in Rating Activity 7:

Score
Description 3 2 1
Quality of writing The written The written The written
activity is very activity is activity gives new
informative and somewhat information but
well organized informative and poorly organized
organized
Clarity of
the The activity The activity The activity
activity presented has 0-2 presented has 3-5 presented has 6
errors errors and above errors
The activity The activity The activity
Uniqueness/
presented in a presented is less presented is not
Creativity creative creative
creative way

27
 28
What I Know
1. A
2. C
Activity 2-Lesson 1& 2
3. D
4. B Activity 1 Lesson
Students’ answers might vary.
5. A 1&2
Refer to Rubrics for scoring.
6. C
7. C Students’
answers might
8. C
vary. Refer to
9. A Rubrics for
10. A scoring.
11. A
12. A
13. A
14. B
15. D
Activity 3 Lesson 1- Students’ answers might vary. Scoring will be based on the
Rubrics
Activity 4 Lesson 1
1. Financial planning
2-3. Long-term goals, short-term goals
4. Setting goals and objectives
5. Helps in making growth, and expansion
Activity 5Students’ answers might vary. Scoring will be based on the Rubrics Skill:
Technical and Interpersonal skills
Activity 3 Lesson 2 Activity 6 Students’ answers might vary.
Scoring will be based on the Rubrics
Assessment
1. A 6. B 11. A
2. C 7. C 12. D
3. C 8. A 13. B
4. A 9. C 14. A
5. D 10. A 15. B
Additional Activity: Students’ answers might
vary. Refer to the Rubrics for scoring.
Answer Key
References
Cayanan, A., Borja D.,Business Finance First Edition. Philippines: Rex Book Store.
Inc., 2017
Licuanan B., Commission on Higher Education. Teaching Guide for Senior High
School 2016
Paramasivan C., Subramanian T., Financial Management
Investopedia.com.2020. Internal Rate of Return.https://www.investopedia.com
Accountingtools.com.2020. Capital Budgeting. https://www.accountingtools.com
Accountingtools.com.2020. Sales Budgeting. https://www.accountingtools.com
Philstar.com.2020. PLDT Enterprise offers business bundle for MSMEs. Accessed
July 14, 2020. https://www.philstar.com/business/

29
For inquiries or feedback, please write or call:

Department of Education – SDO Palawan

Curriculum Implementation Division Office

2nd Floor Deped Palawan Building
Telephone no. (048) 433-6392

Learning Resources Management Section

LRMS Building, PEO Compound
Telephone no. (048) 434-0099