UY, MIA FE

ACC223(11416) SUMMER

COMPETENCY EXAM – BUSINESS PLAN

I. Project Summary

YIFU is a start-up retail clothing shop that would sell trendy apparel
collections of the Baby Boom generation and associated online retail. YIFU will
be located at 103 Krislamville, Santos Street, Cotabato City. The fashion brand
industry is one of the best industries nowadays, but YIFU sets itself off from the
other clothing stores because it will offer carefully selected items for its weekly
collection. YIFU has a strong emphasis on social media marketing.

II. Project Description

YIFU is a fashion brand company that sells fashionable, chic, and dainty
clothing to women of the Baby Boom generation. YIFU will follow the clothing
trends along with our own customers’ purchasing preferences, we will
customize our collection to meet the specific demands of our customers. YIFU
will focus on designs, colors, and fits that will surely complement the feminine
Baby Boomer.

III. Marketing Aspect – 4Ps

a. Product

YIFU will import most of its products overseas. Women's clothes are its
major focus; supplemented with a collection of bags, shoes, and
accessories to flatter the female Baby Boomer image. The product range is
composed of the latest fashion trends, stylish classics, and simple basics.
These include chic blouses, puff sleeves tops, cropped tops, dresses,
pants, bags, accessories, and sneakers.

b. Price

YIFU will offer items at cheaper price but with high quality items. YIFU
will also adopt a value-based pricing structure, which assesses the value of
its products to its clients based on factors such as ease of access, quality,
customer service, and flattering styles for our target market.
 c. Promotion

As the Internet has become an integral part of retail marketing, YIFU will
use a Facebook page, an Instagram account, and a Shopee account to
introduce its products to the market. YIFU can also advertise their products
through Facebook and Instagram.

d. Place

YIFU’s physical store will be located at 103 Krislamville, Santos Street,

General Santos. The store is approximately 1300 square feet. It contains
two dressing rooms. Parking space is available in front of the store with
additional spaces in the rear for overflow.

IV. Operational/Technical Aspect

As a retail clothing shop, YIFU will conduct business six days a week
from 9:30 a.m. to 8 p.m., from Monday to Saturday. During the holiday seasons
and during special events, we will extend store hours. YIFU will also keep an
updated Facebook page, Instagram, and Shopee account with updated
information. Some of its products will be posted to these platforms.
YIFU will offer a 3-day return/exchange policy as long as the customers have
the receipt to build trust with its customers.
YIFU will set up an inventory control system to keep track of costs,
inventory, and inventory levels. This will feature the typical bar code. Staff will
execute inventory audits. All accounting and financial data will be stored in
QuickBooks online.

V. Organizational Aspect

As a start-up small business, the owner will take on leadership roles

inside the shop, controlling daily operations, marketing activities, goods
purchases, inventory management, and all other administrative tasks. A small
sales team will support the owner in securing sales, assisting customers, and
maintaining inventory levels.
VI. Financial Aspect

a. Five year Projected Financial Statement

a.1 Income Statement Projections

YIFU expect to collect net sales of ₱1,500,000 in year one, ₱1,650,000

in year two, ₱1,815,000 in year three, ₱1,996,500 in year four, and
₱2,196,150 in year five.

In 2023, YIFU will earn net income of ₱272,250. The projected income
statement below demonstrates YIFU’s profitability.

YIFU
Projected Income Statement
Year 2021 to 2025
2021 2022 2023 2024 2025
Net Sales ₱ 1,500,000 ₱ 1,650,000 ₱ 1,815,000 ₱ 1,996,500 ₱ 2,196,150
Less: Cost of Sales 750000 825000 907500 998250 1098075
Gross Profit ₱ 750,000 ₱ 825,000 ₱ 907,500 ₱ 998,250 ₱ 1,098,075
Less: Rent Expense 100,000.00 110,000.00 121,000.00 133,100.00 146,410.00
Insurance Expense 60,000.00 66,000.00 72,600.00 79,860.00 87,846.00
Salaries Expense 150,000.00 165,000.00 181,500.00 199,650.00 219,615.00
Utilities Expense 80,000.00 88,000.00 96,800.00 106,480.00 117,128.00
Advertising Expense 60,000.00 66,000.00 72,600.00 79,860.00 87,846.00
Miscellaneous Expense 50,000.00 46,000.00 42,600.00 39,860.00 37,846.00
Depreciation Expense 10,000.00 20,000.00 30,000.00 40,000.00 50,000.00
Income Before Tax ₱ 300,000 ₱ 330,000 ₱ 363,000 ₱ 399,300 ₱ 439,230
Income Tax (25%) 75000 82500 90750 99825 109807.5
Net Income ₱ 225,000 ₱ 247,500 ₱ 272,250 ₱ 299,475 ₱ 329,422.50
 a.2 Balance Sheet Projections

YIFU will launch with ₱260,000 in equity capital on the first year.
Details are shown in the projected balance sheet below.

YIFU
Projected Balance Sheet
Year 2021 to 2025

2021 2022 2023 2024 2025

ASSETS
Current Assets:
Cash and Cash Equivalents ₱ 100,000 ₱ 110,000 ₱ 121,000 ₱ 133,100 ₱ 146,410
Trade and Other Receivables 90000 99000 108900 119790 131769
Inventory 200000 220000 242000 266200 292820
Total Current Assets ₱ 390,000 ₱ 429,000 ₱ 471,900 ₱ 519,090 ₱ 570,999
Noncurrent Assets:
Plant, Property, and Equipment ₱ 100,000 ₱ 100,000 ₱ 100,000 ₱ 100,000 ₱ 100,000
Accumulated Depreciation -10000 -20000 -30000 -40000 -50000
Total Assets ₱ 480,000 ₱ 509,000 ₱ 541,900 ₱ 579,090 ₱ 620,999

LIABILITIES
Current Liabilities:
Accounts Payable ₱ 50,000 ₱ 70,000 ₱ 60,500 ₱ 86,550 ₱ 73,205
Notes Payable 20000 30000 0 26620 39282
Total Current Liabilities ₱ 70,000 ₱ 100,000 ₱ 60,500 ₱ 113,170 ₱ 112,487
Noncurrent Liabilities:
Loans Payable 150000 77000 104200 100000 90000
Total Liabilities ₱ 220,000 ₱ 177,000 ₱ 164,700 ₱ 213,170 ₱ 202,487

EQUITY
Owner's Capital ₱ 260,000 ₱ 332,000 ₱ 377,200 ₱ 365,920 ₱ 418,512
Total Liabilities and Equity ₱ 480,000 ₱ 509,000 ₱ 541,900 ₱ 579,090 ₱ 620,999

b. Sources of Financing

YIFU requires ₱480,000 to launch successfully in the first year. YIFU

have already ₱500,000 since the owner of this clothing shop received it as
a recipient of the grant. These start-up funds will be used for inventory and
expenses such as rent, insurance, salaries, utilities, miscellaneous, and
depreciation. A small portion of its investment will be used for online
advertisement. Furthermore, the majority of our initial investment will be
utilized to purchase retail equipment which will assist the clothing shop in
the future.
c. Capital Investment Analysis

1. Payback Period

2021 2022 2023 2024 2025

500000/445000 500000/424500 500000/436950 500000/512645 500000/531909.5

1.12 1.18 1.14 0.97 0.94

2. Accounting Rate of Return

Particulars Amount
Annual net profit
Year 1 225,000.00
Year 2 247,500.00
Year 3 272,250.00
Year 4 299,475.00
Year 5 329,422.50
Estimated life 5.00
Initial Investment 500,000.00
Salvage Value -

Average Annual Net Earnings 274,729.50

Average Rate of Return 54.95%

2. Return on Equity

2021 2022 2023 2024 2025

225000/260000 247500/296000 272250/334600 299475/371560 329422.50/392216
86.54% 83.61% 81.37% 80.60% 84%

4. Current Ratio

2021 2022 2023 2024 2025

390000/70000 429000/100000 471900/60500 519000/113170 570999/112487
5.57:1 4.29:1 7.8:1 4.59:1 5.07:1