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1. Straight line depreciation was used for all equipments and furniture.

2. 250 free samples will be given away for the first year.

3. Finished Goods Inventory is 3% of Cost of Goods Available for Sale.

4. Office supplies, repairs and maintenance and miscellaneous expenses

were treated as outright expenses

5. Taxes are paid based on assessment made by city taxes and licenses.

6. No WIP, End per year.

7. Accounts Receivables from sales will be 15% of the gross sales of

year 1 and will increase by 3% annually.8. Withdrawals asi de from partners share in the net income will depend

on her.

9. Profit and Losses will be divided equally among partners.

10. Applicable tax is 30%

11. Figures reflected on the financial statements are VAT exclusive.

12. Company will operate 8 hours a day, 5 days a week and 240 days

annually excluding holidays and weekends.


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Initial Investment Cost

PROJECT INVESTMENT COST

Fixed Asset

Office Equipment 26,680.00

Production Equipment 81,540.00

Other tools & Equipments 1,250.00

Office Furniture 13,200.00

Production Furniture 1,150.00

Working Capital

Salaries 25,560.00

SSS Contribution 8,766.30

Pag-Ibig Contribution 2,733.60

PhilHealth Contribution 1,650.00

Rent Expense 39,000.00

Rent Deposit 39,000.00

Utilities 19,561.71

Freight In 750.00Freight Out 14,400.00

Advertisement 20,559.20

Taxes & Licenses 12,300.00

Office Supplies 8,535.00

Repairs & Maintenance 11,555.00

Miscellaneous 2,750.00

Packaging & Labeling 40,848.22Raw Materials 286,928.57

TOTAL 648,438.00

Add: Contingencies 11,562.00

TOTAL 660,000.00


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In order to start the operation of the proposed business, a start up cost

must be first known. The Table below showed the amount needed to put up

the business, specifically, P660,000.00

Initial Capital Requirement

Charmaine N. Belza PHP 220,000.00

Maria Teresa A. Gacot PHP 220,000.00

Cristel Jane S. Miranda PHP 220,000.00

Total Capital Contribution PHP 660,000.00

Sources of Financing the Project

Manufacturing hand sanitizer with insect repellent and putting up CMC

Company will require an initial capital contribution of P660, 000.00. The said

amount is enough to cover 2 months of operation of the entity. The partners

will shoulder the financing requirement equally from their personal funds


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CMC COMPANYProjected Statement of Income

For the Year Ended December 31

Schedule 2014 2015 2016 2017 2018

Net Sales 1,989,442.29 2,216,242.70 2,466,574.94 2,742,772.06 3,047,343.76

Cost of Sales 31 1,248,747.88 1,379,866.12 1,492,964.95 1,618,733.05 1,756,126.05

Gross Profit 740,694.40 836,376.58 973,610.00 1,124,039.01 1,291,217.71

Less: Selling & Administrative

Expenses 30 546,136.18 525,003.80 527,035.30 528,960.01 530,612.61

Income Before Tax 194,558.22 311,372.78 446,574.70 595,079.01 760,605.10

Income Tax (30%) 58,367.47 93,411.83 133,972.41 178,523.70 228,181.53

Net Income 136,190.75 217,960.94 312,602.29 416,555.31 532,423.57


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CMC CompanyProjected Statement of Financial Position


Note 2014 2015 2016 2017 2018ASSETS

Current AssetsCash 302,798.58 502,790.68 656,589.49 847,691.25 1,079,271.06Accounts Receivable 1 293,328.00 302,127.84 311,191.68 320,527.43 330,143.25Inventory 2 38,621.07 42,676.27 46,174.17 50,063.91 54,313.18Prepaid Rent 34,821.43 34,821.43 34,821.43 34,821.43 34,821.43Total Current Assets 669,569.08 882,416.22 1,048,776.77 1,253,104.01 1,498,548.91

Non-Current AssetsDeffered Tax Asset 3 35,917.71 36,995.25 38,105.10 39,248.26 40,425.70Property, Plant & Equipment 4 97,966.67 85,379.76 72,792.86 60,205.95 47,619.05Total Non-Current Assets 133,884.38 122,375.01 110,897.96 99,454.21 88,044.75

TOTAL ASSETS 803,453.46 1,004,791.22 1,159,674.73 1,352,558.22 1,586,593.67

LIABILITIES & PARTNERS' EQUITY

LiabilitiesTrade and other Payables 5 279,644.21 335,674.68 396,777.50 464,694.40 539,002.77Total Liabilities 279,644.21 335,674.68 396,777.50 464,694.40 539,002.77

Partners' EquityBelza, Capital 174,603.08 223,038.85 254,299.08 295,954.61 349,196.96Gacot, Capital 174,603.08 223,038.85 254,299.08 295,954.61 349,196.96Miranda, Capital 174,603.08 223,038.85 254,299.08 295,954.61 349,196.96Total Partners' Equity 523,809.25 669,116.54 762,897.23 887,863.82 1,047,590.89

TOTAL LIABILITIES & PARTNERS' EQUITY 803,453.46 1,004,791.22 1,159,674.73 1,352,558.22 1,586,593.67


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CMC CompanyStatement of Cash Flows


2014 2015 2016 2017 2018Cash Flow from Operating ActivitesNet Income 136,190.75 217,960.94 312,602.29 416,555.31 532,423.57Add: Depreciation PPE 12,586.90 12,586.90 12,586.90 12,586.90 12,586.90

Increase in Trade & Other Payables 279,644.21 56,030.47 61,102.82 67,916.89 74,308.38Less: Increase in Inventory 38,621.07 4,055.20 3,497.90 3,889.74 4,249.27

Increase in Accounts Receivable 293,328.00 8,799.84 9,063.84 9,335.75 9,615.82Rent Deposit 34,821.43Increase in Deffered Tax Asset 35,917.71 1,077.53 1,109.86 1,143.15 1,177.45Net Cash Flow from Operating Activities 25,733.66 272,645.74 372,620.42 482,690.47 604,276.31

Cash Flow from Investing ActivitiesAcquisition of Office Equipment (23,821.43)Acquisition of Production Equipment (72,803.57)Acquisition of Othe tools & Equipment (1,116.07)Acquisition of Office Furniture (11,785.71)Acquisition of Production Furniture (1,026.79)Net Cash Flow from Investing Activities (110,553.57)

Cash Flow from Financing ActivitiesInitial Investment 660,000.00 - - - -Less: Withdrawals 272,381.51 72,653.65 218,821.60 291,588.71 372,696.50Net Cash Flow from Financing Activities 387,618.49 (72,653.65) (218,821.60) (291,588.71) (372,696.50)

Net Increase (decrease) in Cash 302,798.58 199,992.09 153,798.82 191,101.75 231,579.81Cash Balance, Beginning 0 302,798.58 502,790.68 656,589.49 847,691.25

Cash Balance, End 302,798.58 502,790.68 656,589.49 847,691.25 1,079,271.06


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CMC CompanyProjected Statement of Changes in Equity


Belza Equity

2014 2015 2016 2017 2018Capital, beg. 220,000.00 174,603.08 223,038.85 254,299.08 295,954.61Add: Net Income 45,396.92 72,653.65 104,200.76 138,851.77 177,474.52Less: Withdrawals 90,793.84 24,217.88 72,940.53 97,196.24 124,232.17

Capital, end 174,603.08 223,038.85 254,299.08 295,954.61 349,196.96

Gacot Equity2014 2015 2016 2017 2018

Capital, beg. 220,000.00 174,603.08 223,038.85 254,299.08 295,954.61Add: Net Income 45,396.92 72,653.65 104,200.76 138,851.77 177,474.52Less: Withdrawals 90,793.84 24,217.88 72,940.53 97,196.24 124,232.17

Capital, end 174,603.08 223,038.85 254,299.08 295,954.61 349,196.96

Miranda Equity2014 2015 2016 2017 2018

Capital, beg. 220,000.00 174,603.08 223,038.85 254,299.08 295,954.61Add: Net Income 45,396.92 72,653.65 104,200.76 138,851.77 177,474.52Less: Withdrawals 90,793.84 24,217.88 72,940.53 97,196.24 124,232.17

Capital, end 174,603.08 223,038.85 254,299.08 295,954.61 349,196.96


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Financial Analysis

Financial ratio is a comparison in fraction, proportion, decimal or

percentage form of two significant figures taken from the financial statements

(Cabrera, 2011). In this section, financial ratio analysis pertaining to the

companys liquidity, efficiency in managing resources, leverage and

profitability will be plotted.

I. Analysis of Liquidity or Short-Term Solvency

Current Ratio

Table 5.1

Current Ratio

2014 2015 2016 2017 2018

Current Assets 669,569.08 882,416.22 1,048,776.8 1,253,104.0 1,498,548.9

Current

Liabilities 279,644.21 335,674.68 396,777.50 464,694.40 539,002.77

Current Ratio 2.39 2.63 2.64 2.70 2.78

The current ratio of the business implies that it has a high rate of

solvency to meet his current obligations. Current assets of the business were

2.39, 2.63, 2.64, 2.70 and 2.78 times compared to its current liabilities from

2014 to 2018 respectively.


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Acid-test Ratio

Formula: Cash + Accounts Receivable

Current Liabilities

Table 5.2

Acid-Test Ratio

2014 2015 2016 2017 2018

Total Quick

Assets 596,126.58 804,918.52 967,781.17 1,168,218.7 1,409,414.3

Current

Liabilities 279,644.21 335,674.68 396,777.50 464,694.40 539,002.77

Acid-Test Ratio 2.13 2.40 2.44 2.51 2.61

A test of ability to meet demands from current assets which is the acid

test ratio of the company shows that it has 2.13, 2.40, 2.44, 2.51 and 2.61

quick asset ratios for the years 2014 to 2018 respectively.

Cash Flow Liquidity Ratio

Formula: Cash+ Cash flow from operating

Current liabilities

Table 5.3


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Cash Flow Liquidity Ratio

2014 2015 2016 2017 2018

Cash + CF

Operating

Activities 328,532.24 775,436.42 1,029,209.9 1,330,381.7 1,683,547.4

Current

Liabilities 279,644.21 335,674.68 396,777.50 464,694.40 539,002.77

CF Liquidity

Ratio 1.17 2.31 2.59 2.86 3.12

The companys current ratio and acid -test ratio both increased from

2014 and 2018 which could be interpreted as an improvement of liquidity.

Consequently, the cash flow liquidity ratio also increased which could be a

possible indication that there is an improvement in short-term solvency.

II. Analysis of Asset Liquidity and Asset Management Efficiency

Accounts Receivable Turnover

Formula: Net sales Average Accounts receivable

Table 5.4

Accounts Receivable Turnover


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2014 2015 2016 2017 2018

Net Sales 1,989,442. 2,216,243 2,466,574. 2,742,772. 3,047,344

Ave. Accounts

Receivable 302,127.84 297,727.92 306,659.76 315,859.55 325,335.34

AR Turnover 6.58 7.44 8.04 8.68 9.37

Based on the accounts receivable turnover ratio, it shows that

companys accounts receivable have been turned into cash on the average of

8 times annually. An increasing rate implies that the collection schemes of

receivable become more efficient for the succeeding years.

Average Collection Period

Formula: 365 days Accounts receivable turnover

Table 5.5

Average Collection Period

2014 2015 2016 2017 2018

No. of Days 365 365 365 365 365

AR Turnover 6.58 7.44 8.04 8.68 9.37

Ave. Sale

Period 55.43 49.03 45.38 42.03 38.97


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An average collection period of accounts receivable ranges roughly

from 55.43 on the first year and 38.97 days on the last year. This is good for a

course of business having an actual collection period of 60 days from the

customers.

Inventory Turnover

Table 5.6

Inventory Turnover 2014 2015 2016 2017 2018

Cost of Sales

1,248,747.8

8

1,379,866.1

2

1,492,964.9

5

1,618,733.0

5

1,756,126.0

5

Ave. Inventory

Balance 38,621.07 40,648.67 44,425.22 48,119.04 52,188.54

Inventory Turnover 32.33 33.95 33.61 33.64 33.65

The inventory turnover ratio showed a 32.33 for 2014 and continued to

increase by 33.95, 33.61, 33.64 and 33.65 for the succeeding years. Since a

generally high turnover is preferred, this implies that the company has an

efficient inventory management.

Average Sale Period


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Table 5.7

Average Sale Period

2014 2015 2016 2017 2018

No. of Days 365 365 365 365 365

Inventory

Turnover 32.33 33.95 33.61 33.64 33.65

Average Sale

Period 11.29 10.75 10.86 10.85 10.85

The number of days being taken to sell the entire inventory of the

company falls roughly by 11.29 in 2014, 10.75 in 2015, 10.86 for 2016 and

10.85 the succeeding years. The companys average sale period decreased

by 2017 however, an equal average of sale period by 2018 can indicate that

the company considers this kind of average sale period or probably, taking

actions in increasing efficiency in managing inventories.

Fixed Asset Turnover

Table 5.8

Fixed Asset Turnover

2014 2015 2016 2017 2018

Net Sales

1,989,442.

29

2,216,242.

70

2,466,574.

94

2,742,772.

06

3,047,343.

76

Ave. PPE 97,966.67 91,673.21 79,086.31 66,499.40 53,912.50

Fixed Asset

Turnover 20.31 24.18 31.19 41.25 56.52


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A constant increase in fixed asset turnover for 5 years implies that the

management is effective in generating sales from the investment of fixed

assets.

Total Asset Turnover

Table 5.9

Total Asset Turnover

2014 2015 2016 2017 2018

Net Sales

1,989,442.2

9

2,216,242.7

0

2,466,574.9

4

2,742,772.0

6

3,047,343.7

6

Ave. Total Assets 803,453.46 904,122.34

1,082,232.9

8

1,256,116.4

8

1,469,575.9

4

Total Asset

Turnover 2.48 2.45 2.28 2.18 2.07

III. Analysis of Leverage: Debt Financing and Coverage

Debt Ratio

Table 5.10

Debt Ratio

2014 2015 2016 2017 2018

Total

Liabilities

279,644.2

1 335,674.68 396,777.50 464,694.40 539,002.77

Total Assets

803,453.4

6

1,004,791.2

2

1,159,674.7

3

1,352,558.2

2

1,586,593.6

7

Debt Ratio 35% 33% 34% 34% 34%


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Since the company did not reach the generally considered maximum

ratio of 50% debt and 50% equity, the debt ratio shows that the company

does not have heavy reliance on borrowed capital nor other debts.

Debt to Equity Ratio

Table 5.11

Debt to Equity Ratio

2014 2015 2016 2017 2018

Total Liabilities 279,644.21 335,674.68 396,777.50 464,694.40 539,002.77

Total Equity 523,809.25 669,116.54 762,897.23 887,863.82

1,047,590.

89

Debt to Equity

Ratio 53% 50% 52% 52% 51%

The companys debt to equity ratio continues to decrease from 2014 to

2015 and an increase to 52% for 2016 and 2017 and deterioration on 2018

thus, giving an implication that the company is far from having a risky capital

structure.

IV. Operating Efficiency and Profitability

Gross Profit Margin

Table 5.12

Gross Profit Margin


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2014 2015 2016 2017 2018

Gross Profit 740,694.40 836,376.58 973,610.00

1,124,039.

01

1,291,217.

71

Net Sales

1,989,442.2

9

2,216,242.7

0

2,466,574.9

4

2,742,772.

06

3,047,343.

76

Gross Profit

Margin 37% 38% 39% 41% 42%

The companys gross profit margins for the entire 5 -year projection

have been stable which is considered to be a positive sign.

Net Profit Margin

Table 5.13

Net Profit Margin

2014 2015 2016 2017 2018

Net Income 136,190.75 217,960.94 312,602.29 416,555.31 532,423.57

Net Sales

1,989,442.2

9

2,216,242.7

0

2,466,574.9

4

2,742,772.0

6

3,047,343.7

6

Net Profit

Margin 7% 10% 13% 15% 17%

The companys net profit margin increased by from 2014 to 201 8 despite the i

ncreased tax expenses.


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Cash Flow Margin

Table 5.14

Cash Flow Margin

2014 2015 2016 2017 2018

CF Operating

Activities 25,733.66

272,645.7

4

372,620.4

2

482,690.4

7

604,276.3

1

Net Sales

1,989,442

.29

2,216,242

.70

2,466,574

.94

2,742,772

.06

3,047,343

.76

Cash Flow

Margin 1% 12% 15% 18% 20%

There is an increase in cash flow margin, thus, representing a good

improvement for 5 years.

Return on Investment on Assets

Table 5.15

Return on Investment on Asset

2014 2015 2016 2017 2018

Net Income 136,190.75 217,960.94 312,602.29 416,555.31 532,423.57

Ave. Total

Assets 803,453.46 904,122.34

1,082,232.

98

1,256,116.

48

1,469,575.

94

ROA 17% 24% 29% 33% 36%


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Return on Equity

Table 5.16

Return on Equity

2014 2015 2016 2017 2018

Net Income 136,190.8 217,960.9 312,602.3 416,555.3 532,423.6

Ave. Partners'

Equity 523,809.3 596,462.9 716,006.9 825,380.5 967,727.4

ROE 26% 37% 44% 50% 55%

Financial Leverage Index

Table 5.17

Financial Leverage Index

2014 2015 2016 2017 2018

Return on Equity 26% 37% 44% 50% 55%

Return on Assets 17% 24% 29% 33% 36%Financial Leverage 153% 152% 151% 152% 152%

Since the financial leverage index is greater than 1, it implies that the

company is using debts effectively.


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AVERAGE NET INCOME (5 YEARS) Year Projected Net Income2014 136,190.752015 217,960.942016 312,602.292017 416,555.312018 532,423.57

Total 1,615,732.86Divided by Number of Years 5

Average Net Income 323,146.57

AVERAGE RATE OF RETURN Average Net Income 323,146.57Divided by Initial Investment 660,000.00

Average Net of Return 49%

PAYBACK PERIODInvestment 660,000.00

Divided by Average Net Income 323,146.57Payback Period (Years) 2.04


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CMC COMPANYFixed & Variable Cost

2014 2015 2016 2017 2018Variable CostDirect Materials 717,321.4 797,948.4 887,637.8 987,408.2 1,098,392.9Factory Overhead 360,102.1 375,871.5 398,567.6 424,801.1 451,412.9

Total 1,077,423.5 1,173,819.8 1,286,205.4 1,412,209.3 1,549,805.8

Fixed CostLabor 204,480.0 204,636.0 204,792.0 204,948.0 205,104.0Salary - Manager 240,000.0 240,013.0 240,026.0 240,039.0 240,052.0Salary - Office Personnel 102,240.0 102,396.0 102,552.0 102,708.0 102,864.0Retainer's Fee 24,000.0 25,000.0 26,000.0 27,000.0 28,000.013th Month Manager 20,000.0 20,013.0 20,026.0 20,039.0 20,052.013th Month - Office Personnel 8,520.0 8,533.0 8,546.0 8,559.0 8,572.0ER SSS 20,408.4 20,832.0 20,832.0 21,255.6 21,255.6ER PAG-IBIG 6,844.8 7,051.2 7,257.6 7,464.0 7,670.0ER PHILHEALTH 4,200.0 4,200.0 4,500.0 4,500.0 4,650Utilities 78,246.9 80,594.3 83,012.1 85,502.4 88,067.5Rent 139,285.7 140,357.1 141,428.6 142,500.0 143,571.4Advertisement 19,104.3 6,299.6 5,304.5 4,048.9 2,914.3Depreciation - Office Equipment 223.2 223.2 223.2 223.2 223.2Depreciation - Office Furniture 2,357.1 2,357.1 2,357.1 2,357.1 2,357.1Office Supplies 7,620.5 7,849.2 8,084.6 8,327.2 8,577.0Repairs & Maintenance 10,317.0 1,430.0 1,472.9 1,517.1 1,562.6Legal Fees 12,300.0 9,780.0 9,780.0 9,780.0 9,780.0

Total Fixed Cost 900,147.9 881,564.7 886,194.7 890,768.6 895,272.8


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Contribution Margin and Break Even Point

Ratio Formula

Break Even Point(Units)

Total FixedCost = 900,147.91 881,564.71 886,194.68 890,768.65 895,272.80

CM Per Unit 19.13 20.23 21.20 22.11 23.03

47,066.30 43,582.69 41,808.82 40,281.99 38,865.82

CM Per UnitUnit SellingPrice = 42.86 44.20 45.54 46.88 48.21

Variable Cost 22.45 22.64 22.97 23.36 23.73

20.41 21.55 22.56 23.52 24.48


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Generalization

This chapter presented the projected financial statements of CMC

Company for 5 years. It presented merely the Statement of Financial Position,

Statement of Income, Statement of Cash Flow and Statement of Changes in

Equity. These financial statements were supported by notes and schedules.

The financial assumptions which served as the basis for the preparation of

the financial statements were also presented in this chapter. The

computations illustrated in this chapter came up with a payback period of 2.04

years or approximately 2 years and 15 days. Almost all of the financial ratios

shown in this chapter provided positive result except for the total asset

turnover. Based on the financial analysis in this chapter, the researchers

concluded that CMC Company is feasible and can be a good source of

income.


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beginnings so even a minimal number of possible employment CMC

Company could possible provide is already a small step towards immense

leeway.

Social Desirability

Aside from possible help to lessen number of unemployment in the

country, putting CMC Company into reality could possibly give people the

convenience of having a hand sanitizer with insect repellent in one. This could

possibly overcome or somehow penetrate the needs in peoples heart. Whats

best in this business is not only this, but also, utilization to future employees

skills and abilities can also be possible.

In the making of this study, the researchers learned the value of trust,

understanding others vulnerable spot and to appreciate more the blessings

that come upon them, to be brief, the researchers behind this project a better

person. The researchers became more particular in accounting procedures

and in socializing with other people. The researchers strive so hard for this

project and are continuing do harder for they believe that success comes to

those who know how to value hard work.


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financial revised

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