De La Salle University - Dasmariñas

Chapter 6: Financial Plan

Sources of Financing

Owner 60% P 120,000

Loan 40% P 80,000
Fund 100% P 150,000

Budgets and Schedules

Production Budget

Quarter Quarter Quarter Quarter

Year
1 2 3 4

1063
Expected Unit Sales 20460 24552 28644 32736
92

Add: Desired ending Finished

0 0 0 0 0
Goods

1063
Total Units Needed 20460 24552 28644 32736
92

Less: Beginning Finished

0 0 0 0 0
Goods Unit

Required Production in 1063

20460 24552 28644 32736
Units 92

Production Budget measures the required production, in this case in units,

to better gauge the business’ needs in the future. However, the group assumes that

all of its products are sold in each quarter within the year. Also, since the
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business’ nature is to deliver its food fresh to its customers, the business is to

avoid inventory, stock, as well as the pre-made product.

Sales Budget

Quarter
Quarter 2 Quarter 3 Quarter 4 Year
1

Budgeted Sales
20460 24552 28644 32736 106392
in Units

Selling Price Per

45 45 45 45 45
Unit

₱ ₱ ₱ ₱ ₱
Total Budgeted
920,700 1,104,840 1,288,980 1,473,120 4,787,640
Sales
.00 .00 .00 .00 .00

Sales Budget calculates the expected sales in units per quarter and its

associated amount in PHP. As seen in the graph above, Quarter 1 started with 360

units to be sold within a day multiplied by 22 working days and to be multiplied

once again in 3 months. Succeeding amounts were also adjusted to meet the

desired sales. This means that both the sales in units and the number of sales must

increase over time.

Direct Labor Budget

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Quarte Quarter Quarter Quarter

Year
r1 2 3 4

Required Production 20460. 24552.0 28644.0 32736.0 106392.

in Units 00 0 0 0 00

Direct Labor hours 0.0027

  0.00274 0.00274 0.00274 0.00274
per Unit 4

Total Direct Labor hours

56.06 67.27 78.48 89.70 291.51
needed

Direct Labor cost ₱ ₱ ₱ ₱ ₱

 
per hour 156.25 156.25 156.25 156.25 156.25

₱ ₱ ₱ ₱ ₱
Total Direct Labor
8,759.4 10,511. 12,263. 14,015. 45,549.
Cost
4 33 21 10 08

Direct Labor Budget computes the related labor cost in the production of

the product. From the data given above, the total direct labor cost from quarter 1

is PHP 8,759.44 with an increasing pattern toward the end of the year. This only

means that the direct labor cost is said to be increasing since the business’ sales

are also increasing. Additionally, the labor hours per unit were computed using

the time-motion study seen in the previous chapters.

Indirect Labor Budget

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Quarter
Quarter 2 Quarter 3 Quarter 4 Year
1

Required
Production in 20460 24552 28644 32736 106392
Units

₱ ₱ ₱ ₱ ₱
Direct Materials 71,143. 85,371.9 99,600.6 113,829. 369,945.
30 6 2 28 16

₱ ₱ ₱ ₱ ₱
Direct
82,500. 82,500.0 82,500.0 82,500.0 330,000.
Labor
00 0 0 0 00

₱ ₱ ₱ ₱ ₱
Overhea
12,150. 12,150.0 12,150.0 12,150.0 48,600.0
d Cost
00 0 0 0 0

₱ ₱ ₱ ₱ ₱
Indirect Materials 20,130. 24,156.0 28,182.0 32,208.0 104,676.
00 0 0 0 00

Total Indirect ₱ ₱ ₱ ₱ ₱
Labor Cost - - - - -

₱ ₱ ₱ ₱ ₱
Total
185,923 204,177. 222,432. 240,687. 853,221.
Cost
.30 96 62 28 16

Cost Per ₱ ₱ ₱ ₱
Unit 9.09 8.32 7.77 7.35

The business has no indirect labor cost in its initial year for all of its

employees work in production. But the business must include labor, relative costs,

and indirect materials to arrive at the cost per unit. The total cost per unit per
 De La Salle University - Dasmariñas
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quarter is decreasing since the production workers’ output is increasing over time

and its costs are being well distributed to enable the product’s cost to decrease.

Factory Overhead Budget

Quarter Quarter
Quarter 3 Quarter 4 Year
1 2

Required
Production in 20460 24552 28644 32736 106392
Units

Variable Overhead
Costs

₱ ₱ ₱ ₱ ₱
Indirect
20,130. 24,156.0 28,182.0 32,208.0 104,676.
materials
00 0 0 0 00

₱ ₱ ₱ ₱ ₱
Direct
71,143. 85,371.9 99,600.6 113,829. 369,945.
Materials
30 6 2 28 16

₱ ₱ ₱ ₱ ₱
Utilities
  12,150. 12,150.0 12,150.0 12,150.0 48,600.0
Overhead
00 0 0 0 0

₱ ₱ ₱ ₱ ₱
Total Variable
103,423 121,677. 139,932. 158,187. 523,221.
Overhead Costs
.30 96 62 28 16

Fixed Overhead
Costs

₱ ₱ ₱ ₱ ₱
Salaries 82,500. 82,500.0 82,500.0 82,500.0 330,000.
00 0 0 0 00
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₱ ₱
Depreciati ₱ ₱ ₱
3,031.1 12,124.4
on 3,031.10 3,031.10 3,031.10
0 0

₱ ₱ ₱ ₱ ₱
Total Fixed
  85,531. 85,531.1 85,531.1 85,531.1 342,124.
Overhead Costs
10 0 0 0 40

₱ ₱ ₱ ₱ ₱
Total Overhead
188,954 207,209. 225,463. 243,718. 865,345.
Cost
.40 06 72 38 56

₱ ₱ ₱ ₱ ₱
Less Depreciation   (3,031.1 (3,031.1 (3,031.1 (3,031.1 (12,124.4
0) 0) 0) 0) 0)

₱ ₱ ₱ ₱ ₱
Total     185,923 204,177. 222,432. 240,687. 853,221.
.30 96 62 28 16

Manufacturing ₱ ₱ ₱ ₱
Overhead Per Unit 9.09 8.32 7.77 7.35

Factory overhead includes both total variable costs and total fixed costs to

arrive at the manufacturing overhead per unit. Its amounts are fairly similar to the

previous table since all of its costs are parallel to each other. The only difference

between these two tables is how the factory overhead budget presents its data. The

data found in this table is expanded and shows specific amounts per item.

Cost of Goods Sold

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Year 1 Quarter 1

Cost of Product Unit Cost Cost per Unit

Raw Materials

Ingredients 20460 ₱ 17,380.80 ₱ 0.85

PP Plastic 20460 ₱ 11,687.50 ₱ 0.57

Paper Bag 20460 ₱ 7,425.00 ₱ 0.36

Cling Wrap 20460 ₱ 34,650.00 ₱ 1.69

Labor Cost (5) 20460 ₱ 82,500.00 ₱ 4.03

Overhead Cost

Freight In 20460 ₱ 3,000.00 ₱ 0.15

Electricity 20460 ₱ 6,000.00 ₱ 0.29

Water 20460 ₱ 750.00 ₱ 0.04

Gas 20460 ₱ 2,400.00 ₱ 0.12

Indirect
Tissue 20460 ₱ 19,250.00 ₱ 0.94
Materials

Plastic Gloves 20460 ₱ 880.00 ₱ 0.04

Total ₱ 185,923.30 ₱ 9.09

Quarter 2
Unit Cost Cost per Unit

24552 ₱ 20,856.96 ₱ 0.85

24552 ₱ 14,025.00 ₱ 0.57

24552 ₱ 8,910.00 ₱ 0.36

24552 ₱ 41,580.00 ₱ 1.69

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24552 ₱ 82,500.00 ₱ 3.36

24552

24552 ₱ 3,000.00 ₱ 0.12

24552 ₱ 6,000.00 ₱ 0.24

24552 ₱ 750.00 ₱ 0.03

24552 ₱ 2,400.00 ₱ 0.10

24552 ₱ 23,100.00 ₱ 0.94

24552 ₱ 1,056.00 ₱ 0.04

₱ 204,177.96 ₱ 8.32

Quarter 3
Unit Cost Cost per Unit

28644 ₱ 24,333.12 ₱ 0.85

28644 ₱ 16,362.50 ₱ 0.57

28644 ₱ 10,395.00 ₱ 0.36

28644 ₱ 48,510.00 ₱ 1.69

28644 ₱ 82,500.00 ₱ 2.88

28644 ₱ 3,000.00 ₱ 0.10

28644 ₱ 6,000.00 ₱ 0.21

28644 ₱ 750.00 ₱ 0.03

28644 ₱ 2,400.00 ₱ 0.08

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28644 ₱ 26,950.00 ₱ 0.94

28644 ₱ 1,232.00 ₱ 0.04

₱ 222,432.62 ₱ 7.77

Quarter 4 Year 1

Unit Cost Cost per Unit Cost Per Year

32736 ₱ 27,809.28 ₱ 0.85 ₱ 90,380.16

32736 ₱ 18,700.00 ₱ 0.57 ₱ 60,775.00

32736 ₱ 11,880.00 ₱ 0.36 ₱ 38,610.00

32736 ₱ 55,440.00 ₱ 1.69 ₱ 180,180.00

32736 ₱ 82,500.00 ₱ 2.52 ₱ 330,000.00

32736 ₱ 3,000.00 ₱ 0.09 ₱ 12,000.00

32736 ₱ 6,000.00 ₱ 0.18 ₱ 24,000.00

32736 ₱ 750.00 ₱ 0.02 ₱ 3,000.00

32736 ₱ 2,400.00 ₱ 0.07 ₱ 9,600.00

32736 ₱ 30,800.00 ₱ 0.94 ₱ 100,100.00

32736 ₱ 1,408.00 ₱ 0.04 ₱ 4,576.00

₱ 240,687.28 ₱ 7.35 ₱ 853,221.16

This table shows how the product’s costs are spread within 4 quarters of

business operations. Once again, the cost per unit is decreasing over time since

sales in units are increasing and labor costs stay the same throughout. Although
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overhead costs are increasing, labor costs have the highest impact on determining

the sale price of the product.

Operating Expense Budget

Quarter Quarter Quarter Quarter

Year
1 2 3 4

Operating
Expenses

₱ ₱ ₱ ₱ ₱
Salaries Expense
29,700 29,700 29,700 29,700 118,800

Depreciation ₱ ₱ ₱ ₱ ₱
Exp 3,031 3,031 3,031 3,031 12,124

SSS Premium ₱ ₱ ₱ ₱ ₱
Expense 2,160 2,160 2,160 2,160 8,640

Philhealth
₱ ₱ ₱ ₱ ₱
Premium
1,056 1,056 1,056 1,056 4,224
Expense

HDMF Premium ₱ ₱ ₱ ₱ ₱
Expense 1,200 1,200 1,200 1,200 4,800

₱ ₱ ₱ ₱ ₱
Percentage Tax
8,102 9,723 11,343 12,963 42,131

Total Operating ₱ ₱ ₱ ₱ ₱
Expenses before Tax 45,249 46,870 48,490 50,111 190,720

The operating expense budget shows the business’ expenses per quarter

deducted from Gross Profit that is also shown in the income statement for the

succeeding tables. These expenses were incurred by the business that stretches
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within a year, specifically in quarters. Mandatory deductions were computed to

include the required obligation by the business on the paychecks of its employees.

Percentage tax was also computed under the Create Law.

Financial Statements

Pro-Forma Income Statements

Projected Income Statement

For the Period Ending December 31, 2022

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year 1

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₱ ₱ ₱ ₱ ₱
Sales 920,700. 1,104,84 1,288,98 1,473,12 4,787,64
00 0.00 0.00 0.00 0.00

₱ ₱ ₱ ₱ ₱
Output Tax 110,484. 132,580. 154,677. 176,774. 574,516.
00 80 60 40 80

₱ ₱ ₱ ₱ ₱
Net Sales 810,216. 972,259. 1,134,30 1,296,34 4,213,12
00 20 2.40 5.60 3.20

₱ ₱ ₱ ₱ ₱
Less: COGS 185,923. 204,177. 222,432. 240,687. 853,221.
30 96 62 28 16

₱ ₱ ₱ ₱ ₱
Gross Profit 624,292. 768,081. 911,869. 1,055,65 3,359,90
70 24 78 8.32 2.04

Less: Operating
Expenses

₱ ₱ ₱ ₱ ₱
Salaries
29,700.0 29,700.0 29,700.0 29,700.0 118,800.
Expense
0 0 0 0 00

₱
Depreciation ₱ ₱ ₱ ₱
12,124.4
Exp 3,031.10 3,031.10 3,031.10 3,031.10
0

SSS Premium ₱ ₱ ₱ ₱ ₱
Expense 2,160.00 2,160.00 2,160.00 2,160.00 8,640.00

Philhealth
₱ ₱ ₱ ₱ ₱
Premium
1,056.00 1,056.00 1,056.00 1,056.00 4,224.00
Expense

HDMF Premium ₱ ₱ ₱ ₱ ₱
Expense 1,200.00 1,200.00 1,200.00 1,200.00 4,800.00
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₱ ₱ ₱
Percentage ₱ ₱
11,343.0 12,963.4 42,131.2
Tax 8,102.16 9,722.59
2 6 3

₱ ₱ ₱ ₱ ₱
Net Income
579,043. 721,211. 863,379. 1,005,54 3,169,18
before Taxes
44 55 66 7.76 2.41

₱ ₱ ₱ ₱ ₱
Less: Tax
216,034. 216,034. 216,034. 216,034. 864,138.
Due
59 59 59 59 37

₱ ₱ ₱ ₱ ₱
Net Income after
363,008. 505,176. 647,345. 789,513. 2,305,04
Tax
85 96 06 17 4.04

The income statement shows the total sales for all quarters less the output

tax to arrive at the net sales. Since COGS has already been computed, it is then

subtracted to net sales to arrive at the gross sales. The gross sales is the profit

before expenses and taxes which means expenses incurred by the business and the

associated percentage and tax due (from the graduated tax table) should be

deducted. By deducting the expenses and taxes from the gross profit, the group

now arrived at the net income for each quarter.

Balance Sheet

Projected Balanced Sheet

For the Period Ending December 31,2022
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Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year 1

Assets

Current Assets

₱ ₱ ₱ ₱ ₱
Cash 416,039. 558,208. 700,376. 842,544. 2,517,16
95 06 16 27 8.44

Supplies ₱
Inventory -

₱ ₱ ₱ ₱ ₱
Total Current 416,039. 558,208. 700,376. 842,544. 2,517,16
95 06 16 27 8.44

₱ ₱ ₱ ₱ ₱
Building
12,500.0 12,500.0 12,500.0 12,500.0 50,000.0
(stall)
0 0 0 0 0

₱
Machinery and ₱ ₱ ₱ ₱
10,622.0
equipment 2,655.50 2,655.50 2,655.50 2,655.50
0

₱ ₱ ₱ ₱ ₱
Accumulated
(3,031.1 (3,031.10 (3,031.10 (3,031.10 (12,124.4
Depreciation
0) ) ) ) 0)

₱ ₱ ₱ ₱ ₱
Property, Plant
12,124.4 12,124.4 12,124.4 12,124.4 48,497.6
and Equipment
0 0 0 0 0

₱ ₱ ₱ ₱ ₱
Total Assets 428,164. 570,332. 712,500. 854,668. 2,565,66
35 46 56 67 6.04

Liabilities and
Capital

Current ₱ ₱ ₱ ₱ ₱
Liabilities 20,000.0 20,000.0 20,000.0 20,000.0 80,000.0
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0 0 0 0 0

₱ ₱ ₱ ₱ ₱
Felizardo
408,164. 550,332. 692,500. 834,668. 2,485,66
Capital
35 46 56 67 6.04

₱ ₱ ₱ ₱ ₱
Total Liabilities
428,164. 570,332. 712,500. 854,668. 2,565,66
& Capital
35 46 56 67 6.04

The balance sheet portrays the total assets, liabilities, and capital of the

owner. This also shows the running balances per item per quarter. This will be

helpful to determine financial ratios and analysis that the business needs in order

to continuously improve its operations. Not only does it provide important details,

but it also allows investors, possible business expansion, and possible investments

that the owner might make.

Cash Budget Statement

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Statement of Cash Flows

Quarte Quarte Quarte Quarte

Year 1
r1 r2 r3 r4

Cash flows from

operating activities:

Collections ₱ ₱ ₱ ₱ ₱
from 810,21 972,25 1,134,3 1,296,3 4,213,1
customers 6.00 9.20 02.40 45.60 23.20

₱ ₱ ₱ ₱ ₱
Payment for
9,150.0 9,150.0 9,150.0 9,150.0 36,600.
utilities
0 0 0 0 00

₱ ₱ ₱ ₱ ₱
Payment for
112,20 112,20 112,20 112,20 448,80
salaries
0.00 0.00 0.00 0.00 0.00

₱ ₱ ₱ ₱ ₱
Payment for
3,000.0 3,000.0 3,000.0 3,000.0 12,000.
transportation
0 0 0 0 00

₱ ₱ ₱ ₱ ₱
Payment for
91,273. 109,52 127,78 146,03 474,62
inventories
30 7.96 2.62 7.28 1.16

₱ ₱ ₱ ₱ ₱
Payment for SSS
2,160.0 2,160.0 2,160.0 2,160.0 8,640.0
Premium expense
0 0 0 0 0

Payment for ₱ ₱ ₱ ₱ ₱
Philhealth Premium 1,056.0 1,056.0 1,056.0 1,056.0 4,224.0
Expense 0 0 0 0 0

₱ ₱ ₱ ₱ ₱
Payment for HDMF
1,200.0 1,200.0 1,200.0 1,200.0 4,800.0
Premium Expense
0 0 0 0 0
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₱ ₱ ₱ ₱ ₱
Payment for
224,13 225,75 227,37 228,99 906,26
Taxes
6.75 7.18 7.62 8.05 9.60

Net cash inflows ₱ ₱ ₱ ₱ ₱

from operating 366,03 508,20 650,37 792,54 2,317,1
activities 9.95 8.06 6.16 4.27 68.44

Cash flows from

investing activites:

Purchase of
₱ ₱ ₱ ₱ ₱
machinery and
- - - - -
equipment

Net cash outflows

₱ ₱ ₱ ₱ ₱
from investing
- - - - -
activities

Cash flows from from

financing activites

₱ ₱ ₱ ₱ ₱
Investment by the
50,000. 50,000. 50,000. 50,000. 200,00
owner
00 00 00 00 0.00

Cash ₱ ₱ ₱ ₱
withdrawals - - - -

Net cash inflows ₱ ₱ ₱ ₱ ₱

from financing 50,000. 50,000. 50,000. 50,000. 200,00
activities 00 00 00 00 0.00

Cash,
₱
Januar
-
y1

₱ ₱ ₱ ₱ ₱
Cash, December 31 416,03 558,20 700,37 842,54 2,517,1
9.95 8.06 6.16 4.27 68.44
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The cash flow statement explains what has happened to the business’ cash

balance all throughout the year divided into quarters. It includes cash flows from

operations, investing activities, and lastly financing. This also helps to see how

the cash balance found in the balance sheet will arrive at its correct amount.

Overall, this table helps both the owner and the business to look deeper into

sections on where its cash balance performs good or bad.

Financial Ratio and Analysis

Payback Period

Quarter Quarter 2 Quarter 3 Quarter 4 Year

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Initial ₱ ₱ ₱ ₱ ₱
Investment 45,155.5 45,155.5 45,155.5 45,155.5 180,622.0

₱ ₱
Cash Flow per ₱ ₱ ₱
416,039. 2,517,168
Quarter 558,208.1 700,376.2 842,544.3
9 .4

Payback Period 0.072

The payback period is simply calculated by dividing the initial investment

by the cash flow per year or quarter. In this table the payback period,

optimistically speaking, is around 0.072 years or almost a whole month if all units

are sold within its assumptions.

Break Even Value

Quarter Quarter Quarter Quarter

Year
1 2 3 4

Production
20460 24552 28644 32736 106392
(units)

Fixed
Costs

₱ ₱ ₱ ₱ ₱
Salaries
82,500. 82,500.0 82,500.0 82,500.0 330,000.
Expense
00 0 0 0 00

₱ ₱
Depreciation ₱ ₱ ₱
3,031.1 12,124.4
Expense 3,031.10 3,031.10 3,031.10
0 0
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₱ ₱ ₱ ₱ ₱
Total Fixed
85,531. 85,531.1 85,531.1 85,531.1 342,124.
Costs
10 0 0 0 40

Variabl
e Costs

₱ ₱ ₱ ₱ ₱
Indirect
20,130. 24,156.0 28,182.0 32,208.0 104,676.
materials
00 0 0 0 00

₱ ₱ ₱ ₱ ₱
Direct
71,143. 85,371.9 99,600.6 113,829. 369,945.
Materials
30 6 2 28 16

₱ ₱ ₱ ₱ ₱
Utilities
12,150. 12,150.0 12,150.0 12,150.0 48,600.0
Overhead
00 0 0 0 0

₱ ₱ ₱ ₱ ₱
Total Variable
103,423 121,677. 139,932. 158,187. 523,221.
Cost
.30 96 62 28 16

Variable Cost ₱ ₱ ₱ ₱ ₱
Per Unit 5.05 4.96 4.89 4.83 4.92

₱ ₱ ₱ ₱ ₱
Price
45.00 45.00 45.00 45.00 45.00

Sales Price/Unit - ₱ ₱ ₱ ₱ ₱
Variable Cost/Unit 39.95 40.04 40.11 40.17 40.08

BEP (in
2141.22 2135.92 2132.16 2129.35 8535.58
units)

For the break-even analysis, sale price, variable costs, and fixed costs must

be determined. BEP can be computed by dividing the fixed cost by the difference
 De La Salle University - Dasmariñas
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of sales price and variable cost. Ending the year 2022, the BEP in units is at

8,535.58, meaning that the amount given must be sold to break even.

Profitability Ratios

Gross Profit Margin

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year 1

₱ ₱ ₱ ₱ ₱
Gross
624,292. 768,081.2 911,869.7 1,055,658 3,359,902.
Profit
70 4 8 .32 04

₱ ₱ ₱ ₱ ₱
Sales 920,700. 1,104,840 1,288,980 1,473,120 4,787,640.
00 .00 .00 .00 00

Gross Profit
67.81% 69.52% 70.74% 71.66% 70.18%
Margin

Gross profit margin measures the percentage of each sales pesos

remaining after the firm has paid for its goods. It measures how much a company

makes after accounting for the cost of goods sold. For the GPM at year-end, it has

a total amount of approximately 70% which means that 70% of sales is the total

gross profit. This is a very significant ratio for small retailers, especially during

times of inflationary prices. If the owners of the firm do not raise prices when the

cost of sales is rising, the gross profit will erode.

Net Profit Margin

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Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year 1

₱ ₱ ₱ ₱ ₱
Net
363,008.8 505,176.9 647,345.0 789,513.1 2,305,044.
Profit
5 6 6 7 04

₱ ₱ ₱ ₱ ₱
Sales 920,700.0 1,104,840. 1,288,980. 1,473,120. 4,787,640.
0 00 00 00 00

Net Profit
39.43% 45.72% 50.22% 53.59% 48.15%
Margin

Net Profit Margin measures the percentage of each peso sales remaining

after all costs and expenses, including taxes, interest, and preferred stock

dividends, have been deducted. In other words, it shows profitability after further

accounting for non-operating expenses. The net profit margin shows the firm’s

ability to generate earnings after all expenses and taxes. A net margin ratio of

48.15% means that for every PhP1.00 of sales, the firm produces 48.15 pesos of

net margin. Obviously, the higher the ratio value, the better it is.

Return on Investment

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year 1

Net ₱ ₱ ₱ ₱ ₱
Profit 363,008. 505,176.9 647,345.0 789,513.1 2,305,044.
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85 6 6 7 04

Invest ₱ ₱ ₱ ₱ ₱
ment 45,155.5 45,155.5 45,155.5 45,155.5 180,622.0

Return on
804% 1119% 1434% 1748% 1276%
Investment

Return on investment simply shows the percentage of how the initial or

total investment can be repaid or refunded by the total net profit. Based on the

table above, this tells the group that over 1000% is the rate of return on

investment at year-end 2022 (once more, assuming that all units have been sold

during the entire year of operation).

Liquidity Ratios

Current Ratio
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Quarter
Quarter 2 Quarter 3 Quarter 4 Year 1
1

₱ ₱ ₱ ₱ ₱
Current
416,039. 558,208.0 700,376.1 842,544.2 2,517,168.
Assets
95 6 6 7 44

₱
Current ₱ ₱ ₱ ₱
20,000.0
Liabilities 20,000.00 20,000.00 20,000.00 80,000.00
0

Current
20.80 27.91 35.02 42.13 31.46
Ratio

The table measures the business’s ability to meet its short-term

obligations. The current ratio tells us if a firm has sufficient cash or other liquid

assets to cover its short-term obligations. The higher the current ratio, the more

liquid the firm. As seen in the graph, the current ratio at year-end is at around

31% which means that its total current assets can pay 30% of its current liabilities.

Quick Ratio

Quarter
Quarter 2 Quarter 3 Quarter 4 Year 1
1

₱ ₱ ₱ ₱ ₱
Current
416,039. 558,208.0 700,376.1 842,544.2 2,517,168.
Assets
95 6 6 7 44

₱ ₱ ₱ ₱ ₱
Inventory
- - - - -
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₱
Current ₱ ₱ ₱ ₱
20,000.0
Liabilities 20,000.00 20,000.00 20,000.00 80,000.00
0

Current
20.80 27.91 35.02 42.13 31.46
Ratio

Quick (Acid Test) Ratio is similar to the current ratio except that it

excludes inventory, which is generally the least liquid asset. It provides a better

measure of liquidity when a firm’s inventory cannot easily be converted into cash.

However, since the business’ assumption is to avoid inventories, its quick ratio is

similar to its current ratio.

Cash Flow Ratio

Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year 1

₱ ₱ ₱ ₱ ₱
Cash
416,039. 558,208.0 700,376.1 842,544.2 2,517,168.
Flows
95 6 6 7 44

₱
Current ₱ ₱ ₱ ₱
20,000.0
Liabilities 20,000.00 20,000.00 20,000.00 80,000.00
0

Cash Flow
20.80 27.91 35.02 42.13 31.46
Ratio

The operating cash flow ratio is a measurement of how easily a company's

current liabilities are paid by cash flows generated through activities. This metric
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can be used to assess a firm's short-term liquidity. As seen in the table below, the

cash flow ratio is similar to the quick ratio since the current assets of the business

only entail cash on hand. Since the business is fairly decent in size and is only

operating for the very first year, the lack of entries for other current assets is

expected.