4.

3 Total Project Cost

FIXED ASSETS
Land ₱ 2,813,553.50
Building 2,525,396.00
Machines 2,848,396.70
Office equipment and furniture 1,174,505.85
Company Vehicle 825,000.00
Total Fixed Assets ₱ 10,186,849.05

INVENTORIES
Direct Raw Materials ₱ 3,272,850.00
Indirect Raw Materials 1,647903.10
Office Supplies 58,206.50
Medical Supplies 6866.60
Cleaning Supplies 7568.00
Total Inventory Cost ₱ 4,993,394.20

LABOR
Direct Labor ₱ 1,230,154.50
Indirect Labor 2,490,245.80
Total Labor Cost ₱ 3,720,400.30

UTILITIES
Electricity ₱ 1,166,687.75
Water 12,000.00
Communication 78,000.00
Fuel 250,000.00
Total Utilities Cost ₱ 1,506,687.75

SELLING AND ADMINISTRATIVE

Selling and administrative labor ₱ 1,325,550.25
Transportation 250,000.00
Promotion 40,000.00
Maintenance and repairs 420,250.45
Land tax 6,000.00
Miscellaneous (permits) 50,868.00
Total selling and administrative cost ₱ 2,092,668.70

TOTAL PROJECT COST ₱ 22,500,000.00

 4.4 Financial Analysis

4.4.1 Initial Capital Requirement

Based on the computed total project cost, the initial capital requirement was derived. The
proponents were able to know the number of capitals needed for both operations and in
purchasing fixed assets. Through this, the proponents were able to provide an estimate of the
Sewage filter tube capital and working capital for their company. The initial capital requirement
computed is ₱ 22,500,000.00 (Table 4). An excess estimate is provided to cover unforeseen
expenses and will also serve as contingency funds for the company’s operation.
Table 4.1 Initial Capital Requirement
Capital for Fixed Assets
Fixed Assets ₱ 10,186,849.05

Capital for Operations

Inventories ₱ 4,993,394.20
Production Labor 3,720,400.30
Utilities 1,506,687.75
Selling and Administrative 2,092,668.70
Total Working Capital 12,313,150.95
Total Capital Requirement ₱ 22,500,000.00

4.4.2 Sources of Financing

After arriving with the initial capital requirement, the proponents decided on how
they will finance their company. Their finances will be from different sources which will
be shown together with their amount and terms.

4.4.2a Sources Selected

 Proponent’s Share
The proponents will provide equal amounts of shares to cover the major
portion of their initial capital requirement. The shareholders will contribute 30%
shares each from their own assets to support the start-up of their firm.
  Bank Loans
To cover the remaining 10% of their initial capital requirement, the
proponents will acquire loans from a commercial bank. The collateral will
be the proponent’s assets. They have opted to acquire bank loan with an
interest rate of 7%.
4.4.2b Amount and Terms of Financing

For the proponent’s shares, the summary of their shares and amounts to be invested is
shown in Table 4.1.
Table 4.2 Summary of Shares
Proponents Percentage Share Amount

Cherry Ann P. Acbayaan 30% ₱ 6,750,000.00

Stevenson Dagdagui 30% 6,750,000.00
Eleazar Junior L. Montes 30% 6,750,000.00

TOTAL ₱ 20,250,000.00

For the bank loan of ₱2,250,000.00, the summary of amount and terms of financing
are shown in Table 4.3.
Table 4.2.1 Summary of Bank Loan
Loan Amount Years to Pay Annual Payment
₱2,250,000.00 1 ₱ 630,019.32
₱2,250,000.00 2 ₱ 593,947.77
₱2,250,000.00 3 ₱ 557,876.22
₱2,250,000.00 4 ₱ 521,804.67
₱2,250,000.00 5 ₱ 485,733.12

4.4.3 Financial Statements

After determining the total project cost, initial capital requirement and sources of

financing, the proponents made the financial statements that will give them necessary

financial information of the company. The prepared financial statement for the next five

years includes income statement, cost of goods sold and manufactured, income statement,

balance sheet and statement of cash flows.

 4.4.3a Assumptions

 The total lot area of the company is 500 square meters to be purchased at ₱5,627,107 per
square meter.

 The building will only cover 450 square meters to be purchased at ₱5,627,107 per square
meter.

Depreciation of fixed assets is computed using straight line method. The summary of fixed
assets, its life span, salvage value and depreciation charge per year are shown in Table 4.3.

Table 4.3 Depreciation of Fixed Assets

Fixed Assets Life Salvage Salvage Value Depreciation
span (in Value (in Php) Charge
years) Per Year (in Php)

Building 30 30% 757,618.80 58,925.24.

Machinery 10 30% 854,519.01 199,387.77

Office furniture, fixtures 10 15% 176,175.88 99,832.99

and equipment
Company vehicle 7 25% 206,250.00 88,392.86

1. All fixed assets are paid in cash for the first-year operations.
2. The percentages of ending finished goods inventory are computed with respect to the
scrap allowance per year excluding the particle boards used for QA.
3. The company assumes that all products are turned into finished goods every year.
4. Therefore, there will be no work-in-process inventory every year.
5. There will be a uniform supplies expense of ₱ 53,831.15 and an inventory of ₱ 26, 835.95
for five years.
6. 40% of the indirect materials for each year will be considered as accounts payable.
7. The company will operate 10 hours per day with 5 working days per week to produce
target outputs per week.
 8. There will be one hour overtime for five years.
9. There will be 1% increase on water expense for production in every year while electricity
will be consistent for the first four years and will increase on the fifth year due to
acquisition of additional machines. Zeolites as additional filter media
10. 70% of water consumption is for production while the remaining 30% is for the
11. office.
12. The allotted budget for transportation, promotion, communication and fuel will
13. remain constant for five years.
14. The maintenance and repairs allowance will be 3% of the total cost of building,
15. machines, process equipment, office equipment, furniture and fixtures and company
16. vehicle.
17. The company will pay their bank loan monthly for five years.
18. Miscellaneous expense varies due to the validity of permits to be acquired.
19. There will be additional revenue of ₱ 120,000 from payment from canteen rental.
20. 10% of total units available for sale will be accounts receivable.
21. Income Tax Rate is 35% based on train law.

4.4.3b Breakdown of Annual Expenses

To prepare the financial statements needed by the company, the proponents create a
breakdown of different expenses their company will incur. This includes breakdown of
compensation expense (Table 4.4), total cost of raw materials (Table 4.5), accounts payable,
(Table 4.6), utilities expense (Table 4.7), depreciation expense (Table 4.8), manufacturing
overhead (Table 4.9), miscellaneous expense (Table 4.10) and selling and administrative cost
(Table 4.11)

This table provides a breakdown of the labor costs for the company, including both direct
and indirect labor costs for the years 2024 to 2028.
Table 4.4 Breakdown of Compensation
Description 2024 2025 2026 2027 2028

Direct Labor 1,230,154.50 1,230,154.50 1,230,154.50 1,230,154.50 1,230,154.50

Indirect Labor 2,490,245.80 2,490,245.80 2,490,245.80 2,490,245.80 2,490,245.80

Total Labor Cost 3,720,400.30 3,720,400.30 3,720,400.30 3,720,400.30 3,720,400.30

 This table shows the costs associated with raw materials used in production, categorized
into direct and indirect materials for the years 2024 to 2028.
Table 4.5 Cost of Raw Material
Description 2024 2025 2026 2027 2028

Direct Raw 3,272,850.0 3,272,850.00 3,272,850.00 3,272,850.0 3,272,850.00

Materials 0 0
Indirect Raw 1,647,903.1 1,647,903.10 1,647,903.10 1,647,903.1 1,647,903.10
Materials 0 0
Total Raw Material 4,920,753.1 4,920,753.10 4,920,753.10 4,920,753.1 4,920,753.10
Cost 0 0

This table summarizes the accounts payable based on the indirect raw materials and the
percentage that is expected to be payable (40%) each year.
Table 4.6 Summary of Accounts Payable
Description 2024 2025 2026 2027 2028

Indirect Raw 1,647,903.10 1,647,903.10 1,647,903.1 1,647,903.10 1,647,903.10

Materials 0
Accounts Payable 659,161.24 659,161.24 659,161.24 659,161.24 659,161.24
(40%)

This table represents the total utilities expenses for the company, including electricity,
water, communication, and fuel costs for the years 2024 to 2028.
Table 4.7 Utilities Expense
Description 2024 2025 2026 2027 2028

Electricity 1,166,687.75 1,166,687.75 1,166,687.75 1,166,687.75 1,166,687.75

Water 12,000.00 12,120.00 12,241.20 12,362.41 12,485.58

Communication 78,000.00 78,000.00 78,000.00 78,000.00 78,000.00

Fuel 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00

Total Utilities Cost 1,506,687.75 1,506,807.75 1,506,928.95 1,507,050.16 1,507,172.33

 This table outlines the annual depreciation expense for each fixed asset based on its
lifespan, salvage value, and depreciation charge for the years 2024 to 2028.
Table 4.8 Breakdown of Depreciation Expense
Fixed Life Depreciatio 2024 2025 2026 2027 2028
Asset Span n Per Year
(Years
)
Building 30 58,925.24 58,925.24 58,925.24 58,925.24 58,925.24 58,925.24
Machiner 10 199,387.77 199,387.7 199,387.7 199,387.7 199,387.7 199,387.7
y 7 7 7 7 7
Office 10 99,832.99 99,832.99 99,832.99 99,832.99 99,832.99 99,832.99
Furniture
&
Equipme
nt
Company 7 88,392.86 88,392.86 88,392.86 88,392.86 88,392.86 88,392.86
Vehicle

This table shows the breakdown of manufacturing overhead costs, including utilities,
labor, and raw material costs, for the years 2024 to 2028.
Table 4.9 Breakdown of Manufacturing Overhead Cost
Description 2024 2025 2026 2027 2028

Utilities (Total) 1,506,687.75 1,506,807.75 1,506,928.95 1,507,050.16 1,507,172.33

Labor (Total) 3,720,400.30 3,720,400.30 3,720,400.30 3,720,400.30 3,720,400.30

Raw Materials 4,920,753.10 4,920,753.10 4,920,753.10 4,920,753.10 4,920,753.10

(Total)

This table presents miscellaneous expenses, such as permits and other unclassified costs,
for the years 2024 to 2028.
Table 4.10 Breakdown of Miscellaneous Expense
Description 2024 2025 2026 2027 2028

Miscellaneous Expense 50,868.00 50,868.00 50,868.00 50,868.00 50,868.00

 This table presents the breakdown of selling and administrative costs, including labor,
transportation, promotion, maintenance, taxes, and miscellaneous costs, for the years 2024 to
2028.
Table 4.11 Breakdown of Selling and Administrative Cost
Description 2024 2025 2026 2027 2028
Selling and 1,325,550.25 1,325,550.2 1,325,550.25 1,325,550.2 1,325,550.25
Administrative 5 5
Labor
Transportation 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00
Promotion 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00
Maintenance and 420,250.45 420,250.45 420,250.45 420,250.45 420,250.45
Repairs
Land Tax 6,000.00 6,000.00 6,000.00 6,000.00 6,000.00
Miscellaneous 50,868.00 50,868.00 50,868.00 50,868.00 50,868.00
(Permits)
Total Selling and 2,092,668.70 2,092,668.7 2,092,668.70 2,092,668.7 2,092,668.70
Administrative 0 0
Cost

4.4.3c Projected Income Statement

Here is the format for the projected income statement, broken down by revenue, costs, and
expenses.
Table 4.12 Projected Income Statement
Sewage Filter Tube
Income Statement
For the Years 2024-2028

Description 2024 2025 2026 2027 2028

Revenue ₱120,000 ₱120,000 ₱120,000 ₱120,000 ₱120,000
Cost of
Goods Sold
(COGS)
- Raw ₱4,920,753.10 ₱4,920,753.10 ₱4,920,753.10 ₱4,920,753.10 ₱4,920,753.10
Materials
- Labor ₱3,720,400.30 ₱3,720,400.30 ₱3,720,400.30 ₱3,720,400.30 ₱3,720,400.30
- Utilities ₱1,506,687.75 ₱1,506,807.75 ₱1,506,928.95 ₱1,507,050.16 ₱1,507,172.33
Total ₱10,147,841.1 ₱10,147,961.1 ₱10,148,082.3 ₱10,148,203.5 ₱10,148,325.7
COGS 5 5 5 6 3
Gross (₱10,027,841. (₱10,027,961. (₱10,027,982. (₱10,027,903. (₱10,027,825.
Profit 15) 15) 35) 56) 73)
Operating
Expenses
- Selling & ₱2,092,668.70 ₱2,092,668.70 ₱2,092,668.70 ₱2,092,668.70 ₱2,092,668.70
Administrati
ve Costs
- ₱50,868.00 ₱50,868.00 ₱50,868.00 ₱50,868.00 ₱50,868.00
Miscellaneo
us Expenses
Total ₱2,143,536.70 ₱2,143,536.70 ₱2,143,536.70 ₱2,143,536.70 ₱2,143,536.70
Operating
Expenses
Operating (₱12,171,377. (₱12,171,497. (₱12,171,519. (₱12,171,440. (₱12,171,362.
Profit 85) 85) 05) 25) 43)
(EBIT)
Interest ₱630,019.32 ₱593,947.77 ₱557,876.22 ₱521,804.67 ₱485,733.12
Expense
Earnings (₱12,801,397. (₱12,765,445. (₱12,729,395. (₱12,693,244. (₱12,657,095.
Before Tax 17) 62) 27) 92) 55)
(EBT)
Income Tax ₱- ₱- ₱- ₱- ₱-
Expense 4,480,489.00 4,464,902.00 4,457,292.00 4,451,636.00 4,446,984.00
(35%)
Net Income (₱8,320,908.1 (₱8,300,543.6 (₱8,272,103.2 (₱8,241,608.9 (₱8,210,111.5
7) 2) 7) 2) 5)
Table 4.13 Statement of Cost of Goods Manufactured and Sold for the Year 2024
Sewage Filter Tube
Statement of Cost of Goods Manufactured and Sold
For the Year 2024

Description Amount (₱)

Direct Materials Used
Beginning Inventory of Raw Materials ₱0
Add: Purchases of Raw Materials ₱4,920,753.10
Less: Ending Inventory of Raw Materials ₱0
Total Direct Materials Used ₱4,920,753.10

Direct Labor ₱3,720,400.30

Manufacturing Overhead
- Utilities (Total) ₱1,506,687.75
- Depreciation Expense ₱446,638.87
- Maintenance and Repairs ₱420,250.45
Total Manufacturing Overhead ₱2,373,577.07

Total Manufacturing Costs ₱11,014,730.47

Add: Beginning Work-in-Process Inventory ₱0
Less: Ending Work-in-Process Inventory ₱0
Cost of Goods Manufactured ₱11,014,730.47

Add: Beginning Finished Goods Inventory ₱0

Less: Ending Finished Goods Inventory ₱0
Cost of Goods Sold (COGS) ₱11,014,730.47
Table 4.14 Statement of Cost of Goods Manufactured and Sold for the Year 2025
Sewage Filter Tube
Statement of Cost of Goods Manufactured and Sold
For the Year 2025

Description Amount (₱)

Raw Materials Used
Raw materials, beginning ₱4,920,753.10
Add: Purchases ₱4,920,753.10
Total raw materials available for use ₱9,841,506.20
Less: Raw materials, ending ₱0
Raw materials used ₱9,841,506.20

Add: Direct labor costs ₱3,720,400.30

Add: Manufacturing overhead costs ₱2,373,577.07
Total manufacturing costs ₱15,935,483.57
Add: Work-in-process, beginning ₱0
Less: Work-in-process, ending ₱0
Cost of goods manufactured ₱15,935,483.57
Add: Finished goods, beginning ₱0
Total goods available for sale ₱15,935,483.57
Less: Finished goods, ending ₱0
Cost of goods sold ₱15,935,483.57
Table 4.15 Statement of Cost of Goods Manufactured and Sold for the Year 2026
Sewage Filter Tube
Statement of Cost of Goods Manufactured and Sold
For the Year 2026

Description Amount (₱)

Raw Materials Used
Raw materials, beginning ₱9,841,506.20
Add: Purchases ₱4,920,753.10
Total raw materials available for use ₱14,762,259.30
Less: Raw materials, ending ₱0
Raw materials used ₱14,762,259.30

Add: Direct labor costs ₱3,720,400.30

Add: Manufacturing overhead costs ₱2,373,577.07
Total manufacturing costs ₱20,856,236.67
Add: Work-in-process, beginning ₱0
Less: Work-in-process, ending ₱0
Cost of goods manufactured ₱20,856,236.67
Add: Finished goods, beginning ₱0
Total goods available for sale ₱20,856,236.67
Less: Finished goods, ending ₱0
Cost of goods sold ₱20,856,236.67
Table 4.16 Statement of Cost of Goods Manufactured and Sold for the Year 2027
Sewage Filter Tube
Statement of Cost of Goods Manufactured and Sold
For the Year 2027

Description Amount (₱)

Raw Materials Used
Raw materials, beginning ₱14,762,259.30
Add: Purchases ₱4,920,753.10
Total raw materials available for use ₱19,683,012.40
Less: Raw materials, ending ₱0
Raw materials used ₱19,683,012.40

Add: Direct labor costs ₱3,720,400.30

Add: Manufacturing overhead costs ₱2,373,577.07
Total manufacturing costs ₱25,777,989.77
Add: Work-in-process, beginning ₱0
Less: Work-in-process, ending ₱0
Cost of goods manufactured ₱25,777,989.77
Add: Finished goods, beginning ₱0
Total goods available for sale ₱25,777,989.77
Less: Finished goods, ending ₱0
Cost of goods sold ₱25,777,989.77
Table 4.17 Statement of Cost of Goods Manufactured and Sold for the Year 2028
Sewage Filter Tube
Statement of Cost of Goods Manufactured and Sold
For the Year 2028

Description Amount (₱)

Raw Materials Used
Raw materials, beginning ₱19,683,012.40
Add: Purchases ₱4,920,753.10
Total raw materials available for use ₱24,603,765.50
Less: Raw materials, ending ₱0
Raw materials used ₱24,603,765.50

Add: Direct labor costs ₱3,720,400.30

Add: Manufacturing overhead costs ₱2,373,577.07
Total manufacturing costs ₱30,697,742.87
Add: Work-in-process, beginning ₱0
Less: Work-in-process, ending ₱0
Cost of goods manufactured ₱30,697,742.87
Add: Finished goods, beginning ₱0
Total goods available for sale ₱30,697,742.87
Less: Finished goods, ending ₱0
Cost of goods sold ₱30,697,742.87
4.4.3d Projected Statement of Cash Flow

Table 4.18: Projected Statement of Cash Flow for the Year 2024
Sewage Filter Tube
Statement of Cash Flow
For the Year 2024

Description Amount (₱)

Operating Activities
Add: Cash Receipts from Customers (Revenue) 4,000,000.00
Less: Cash Paid to Suppliers (COGS) (10,147,841.15)
Less: Cash Paid to Employees (Labor) (3,720,400.30)
Less: Cash Paid for Utilities (1,506,687.75)
Less: Selling and Admin Expenses (2,092,668.70)
Less: Miscellaneous Expenses (50,868.00)
Add: Income Taxes Paid 0
Net Cash from Operating Activities (13,517,465.90)
Investing Activities
Less: Purchase of Fixed Assets (10,186,849.05)
Net Cash from Investing Activities (10,186,849.05)
Financing Activities
Add: Shareholder Contributions (Equity) 20,250,000.00
Add: Bank Loan Proceeds 2,250,000.00
Less: Loan Repayment (Principal) (630,019.32)
Net Cash from Financing Activities 21,869,980.68
Net Change in Cash (1,834,334.27)
Opening Cash Balance 0
Closing Cash Balance (1,834,334.27)

4.19: Projected Statement of Cash Flow for the Year 2025

Sewage Filter Tube
Statement of Cash Flow
For the Year 2025

Description Amount (₱)

Operating Activities
Add: Cash Receipts from Customers (Revenue) 4,500,000.00
Less: Cash Paid to Suppliers (COGS) (10,147,961.15)
Less: Cash Paid to Employees (Labor) (3,720,400.30)
Less: Cash Paid for Utilities (1,506,807.75)
Less: Selling and Admin Expenses (2,092,668.70)
Less: Miscellaneous Expenses (50,868.00)
Add: Income Taxes Paid 0
Net Cash from Operating Activities (13,517,705.90)
Investing Activities
Less: Purchase of Fixed Assets 0
Net Cash from Investing Activities 0
Financing Activities
Add: Shareholder Contributions (Equity) 0
Add: Bank Loan Proceeds 0
Less: Loan Repayment (Principal) (593,947.77)
Net Cash from Financing Activities (593,947.77)
Net Change in Cash (14,111,653.67)
Opening Cash Balance (1,834,334.27)
Closing Cash Balance (15,946,988.94)

Table 4.20: Projected Statement of Cash Flow for the Year 2026
Sewage Filter Tube
Statement of Cash Flow
For the Year 2026

Description Amount (₱)

Operating Activities
Add: Cash Receipts from Customers (Revenue) 5,000,000.00
Less: Cash Paid to Suppliers (COGS) (10,148,082.35)
Less: Cash Paid to Employees (Labor) (3,720,400.30)
Less: Cash Paid for Utilities (1,506,928.95)
Less: Selling and Admin Expenses (2,092,668.70)
Less: Miscellaneous Expenses (50,868.00)
Add: Income Taxes Paid 0
Net Cash from Operating Activities (13,518,049.30)
Investing Activities
Less: Purchase of Fixed Assets 0
Net Cash from Investing Activities 0
Financing Activities
Add: Shareholder Contributions (Equity) 0
Add: Bank Loan Proceeds 0
Less: Loan Repayment (Principal) (557,876.22)
Net Cash from Financing Activities (557,876.22)
Net Change in Cash (14,075,925.52)
Opening Cash Balance (15,946,988.94)
 Closing Cash Balance (30,022,914.46)

Table 4.21: Projected Statement of Cash Flow for the Year 2027
Sewage Filter Tube
Statement of Cash Flow
For the Year 2027

Description Amount (₱)

Operating Activities
Add: Cash Receipts from Customers (Revenue) 5,500,000.00
Less: Cash Paid to Suppliers (COGS) (10,148,203.56)
Less: Cash Paid to Employees (Labor) (3,720,400.30)
Less: Cash Paid for Utilities (1,507,050.16)
Less: Selling and Admin Expenses (2,092,668.70)
Less: Miscellaneous Expenses (50,868.00)
Add: Income Taxes Paid 0
Net Cash from Operating Activities (13,518,190.72)
Investing Activities
Less: Purchase of Fixed Assets 0
Net Cash from Investing Activities 0
Financing Activities
Add: Shareholder Contributions (Equity) 0
Add: Bank Loan Proceeds 0
Less: Loan Repayment (Principal) (521,804.67)
Net Cash from Financing Activities (521,804.67)
Net Change in Cash (14,039,995.39)
Opening Cash Balance (30,022,914.46)
 Closing Cash Balance (44,062,909.85)

Table 4.23: Projected Statement of Cash Flow for the Year 2028
Sewage Filter Tube
Statement of Cash Flow
For the Year 2028

Description Amount (₱)

Operating Activities
Add: Cash Receipts from Customers (Revenue) 6,000,000.00
Less: Cash Paid to Suppliers (COGS) (10,148,325.73)
Less: Cash Paid to Employees (Labor) (3,720,400.30)
Less: Cash Paid for Utilities (1,507,172.33)
Less: Selling and Admin Expenses (2,092,668.70)
Less: Miscellaneous Expenses (50,868.00)
Add: Income Taxes Paid 0
Net Cash from Operating Activities (13,518,435.06)
Investing Activities
Less: Purchase of Fixed Assets 0
Net Cash from Investing Activities 0
Financing Activities
Add: Shareholder Contributions (Equity) 0
Add: Bank Loan Proceeds 0
Less: Loan Repayment (Principal) (485,733.12)
Net Cash from Financing Activities (485,733.12)
Net Change in Cash (14,004,168.18)
Opening Cash Balance (44,062,909.85)
 Closing Cash Balance (58,067,078.03)

4.4.4e Projected Balance Sheet

Table 24 Projected Balance Sheet for the Year 2024

Sewage Filter Tube
Balance Sheet
for the Year 2024
Assets ₱ Amount Liabilities & Equity ₱ Amount
Current Assets Current Liabilities
- Cash ₱10,000,000.0 - Loan Payable (Current ₱630,019.32
0 Portion)
- Receivables ₱5,000,000.00
- Inventory ₱500,000.00 Non-Current Liabilities
Total Current Assets ₱15,500,000.0 - Bank Loan Payable (Long- ₱2,250,000.00
0 term)
Non-Current Assets Total Liabilities ₱2,880,019.32
- Fixed Assets ₱10,186,849.0 Equity
5
Total Non-Current ₱10,186,849.0 - Shareholder Equity ₱20,250,000.00
Assets 5
Total Assets ₱25,686,849.0 - Retained Earnings (₱14,147,485.22
5 )
Total Equity ₱6,102,514.78
Total Liabilities & Equity ₱25,686,849.05

Table 25 Projected Balance Sheet for the Year 2025

Sewage Filter Tube
Balance Sheet
for the Year 2025
 Assets ₱ Amount Liabilities & Equity ₱ Amount
Current Assets Current Liabilities
- Cash ₱10,000,000.00 - Loan Payable (Current ₱593,947.77
Portion)
- Receivables ₱5,000,000.00
- Inventory ₱500,000.00 Non-Current Liabilities
Total Current Assets ₱15,500,000.00 - Bank Loan Payable (Long- ₱1,656,052.23
term)
Non-Current Assets Total Liabilities ₱2,250,000.00
- Fixed Assets ₱10,186,849.05 Equity
Total Non-Current ₱10,186,849.05 - Shareholder Equity ₱20,250,000.00
Assets
Total Assets ₱25,686,849.05 - Retained Earnings (₱26,166,192.12)
Total Equity (₱5,916,192.12)
Total Liabilities & Equity ₱25,686,849.05

Table 26 Projected Balance Sheet for the Year 2026

Sewage Filter Tube
Balance Sheet
for the Year 2026
Assets ₱ Amount Liabilities & Equity ₱ Amount
Current Assets Current Liabilities
- Cash ₱10,000,000.00 - Loan Payable (Current ₱557,876.22
Portion)
- Receivables ₱5,000,000.00
- Inventory ₱500,000.00 Non-Current Liabilities
Total Current Assets ₱15,500,000.00 - Bank Loan Payable (Long- ₱1,098,175.01
term)
Non-Current Assets Total Liabilities ₱1,656,051.23
- Fixed Assets ₱10,186,849.05 Equity
Total Non-Current ₱10,186,849.05 - Shareholder Equity ₱20,250,000.00
 Assets
Total Assets ₱25,686,849.05 - Retained Earnings (₱41,734,240.42)
Total Equity (₱21,484,240.42)
Total Liabilities & Equity ₱25,686,849.05

Table 27 Projected Balance Sheet for the Year 2027

Sewage Filter Tube
Balance Sheet
for the Year 2027
Assets ₱ Amount Liabilities & Equity ₱ Amount
Current Assets Current Liabilities
- Cash ₱10,000,000.00 - Loan Payable (Current ₱521,804.67
Portion)
- Receivables ₱5,000,000.00
- Inventory ₱500,000.00 Non-Current Liabilities
Total Current Assets ₱15,500,000.00 - Bank Loan Payable (Long- ₱1,016,369.34
term)
Non-Current Assets Total Liabilities ₱1,538,174.01
- Fixed Assets ₱10,186,849.05 Equity
Total Non-Current ₱10,186,849.05 - Shareholder Equity ₱20,250,000.00
Assets
Total Assets ₱25,686,849.05 - Retained Earnings (₱55,142,430.14)
Total Equity (₱34,892,430.14)
Total Liabilities & Equity ₱25,686,849.05

Table 28 Projected Balance Sheet for the Year 2028

Sewage Filter Tube
Balance Sheet
for the Year 2028
Assets ₱ Amount Liabilities & Equity ₱ Amount
Current Assets Current Liabilities
 - Cash ₱10,000,000.00 - Loan Payable (Current ₱485,733.12
Portion)
- Receivables ₱5,000,000.00
- Inventory ₱500,000.00 Non-Current Liabilities
Total Current Assets ₱15,500,000.00 - Bank Loan Payable (Long- ₱928,564.22
term)
Non-Current Assets Total Liabilities ₱1,414,297.34
- Fixed Assets ₱10,186,849.05 Equity
Total Non-Current ₱10,186,849.05 - Shareholder Equity ₱20,250,000.00
Assets
Total Assets ₱25,686,849.05 - Retained Earnings (₱68,058,793.20)
Total Equity (₱47,808,793.20)
Total Liabilities & Equity ₱25,686,849.05

4.4.4 Financial Analysis

To test the feasibility, stability and profitability of their company, the proponents have
done financial analysis by using their prepared financial statements. These reports will serve as
their basis whether this project is worth the cost or not.

4.4.4a Ratios

Liquidity ratios are used to measure a company’s ability to repay both short- and long-term
obligations.
• Current Ratio
For an ideal current ratio is 2:1, stating that in every Php 1.00 current
liability there must be Php 2.00 available current asset to settle the due. And by
observation of values stated below we can prove that firm has the capability to
settle its current liability for the next five years. When Current assets double the
current liabilities, it is satisfactory. Higher value of current ratio indicates more
liquid of the firm’s ability to pay its current obligation in time.
Table 4.28 Current Ratio
Year Current Assets Current Liabilities Current Ratio
 2024 ₱15,500,000.00 ₱630,019.32 24.61
2025 ₱15,500,000.00 ₱593,947.77 26.08
2026 ₱15,500,000.00 ₱557,876.22 27.81
2027 ₱15,500,000.00 ₱521,804.67 29.72
2028 ₱15,500,000.00 ₱485,733.12 31.95
:
• Quick or Acid Test Ratio

For the ideal Quick Ratio is 1: 1 and is appropriate. High Acid Test Ratio
is an accurate indication that the firm has relatively better financial position and
adequacy to meet its current obligation in time. Table 4.29 shows how quick
DCS Incorporated can pay for their short-term debts.

Table 4.29 Quick or Acid Test Ratio

Year Current Assets Inventory Current Liabilities Acid-Test Ratio

2024 ₱15,500,000.00 ₱500,000.00 ₱630,019.32 23.81
2025 ₱15,500,000.00 ₱500,000.00 ₱593,947.77 25.25
2026 ₱15,500,000.00 ₱500,000.00 ₱557,876.22 26.87
2027 ₱15,500,000.00 ₱500,000.00 ₱521,804.67 28.74
2028 ₱15,500,000.00 ₱500,000.00 ₱485,733.12 30.89

Profitability ratios are used to measure a company’s ability to generate income relative to
revenue, balance sheet assets, operating costs, and owner’s equity.
 Gross Margin Ratio
The gross margin ratio compares the gross profit of a company to its net sales to
show how much profit a company makes after paying off its cost of goods sold.
According to an article written by Richard Morgan, most of the small businesses operate
 within the parameters of having between a gross profit margin of 25% and 35%. The
table shows that DCS Incorporated makes a reasonable profit on sales which can be used
in covering the company’s expenses.
Table 4.30 Gross Margin Ratio
Year Revenue (₱) COGS (₱) Gross Profit Gross Margin Ratio (%)
(₱)
2024 ₱50,000,000.00 ₱11,014,730.47 ₱38,985,269.53 77.97%
2025 ₱55,000,000.00 ₱15,935,483.57 ₱39,064,516.43 71.00%
2026 ₱60,000,000.00 ₱20,856,236.67 ₱39,143,763.33 65.24%
2027 ₱65,000,000.00 ₱25,777,989.77 ₱39,222,010.23 60.34%
2028 ₱70,000,000.00 ₱30,697,742.87 ₱39,302,257.13 56.10%

Leverage Ratios measure the amount of capital that comes from debt. These are used to
evaluate a company’s debt levels.
 Debt Ratio
Debt Ratio helps to measure the amount of a company’s assets that are provided
from debt. The decrease of debt ratio for each year indicates that the number of liabilities
decreases while the number of assets increases.The decreasing behaviour of debt ratio
shows that DCS Incorporated have the ability to pay for their debts.

Table 4.31 Gross Margin Ratio

Yea Total Liabilities (₱) Total Assets (₱) Debt Ratio (%)
r
202 ₱2,880,019.32 ₱25,686,849.05 11.2%
4
202 ₱2,250,000.00 ₱25,686,849.05 8.8%
5
202 ₱1,656,051.23 ₱25,686,849.05 6.5%
6
202 ₱1,538,174.01 ₱25,686,849.05 6.0%
7
 202 ₱1,414,297.34 ₱25,686,849.05 5.5%
8

Efficiency ratios also known as activity ratios, are used to measure how well a company
is utilizing its assets and resources.
 Inventory Turnover Ratio
Inventory Turnover Ratio measures how many times a company’s inventory is
sold and replaced over a given period. It is also used to know how fast inventory sells and
how effectively it meets the market demand. Higher inventory turnover ratio means that
less inventory is required to support sales, therefore less warehouse space. The average
sale period also shows that inventories are not being stocked inside the warehouse for a
long period of time.
Table 4.32 Inventory Turnover Ratio
Yea COGS (₱) Average Inventory (₱) Inventory Turnover Ratio
r
202 ₱10,147,841.15 ₱500,000 20.3
4
202 ₱10,147,961.15 ₱500,000 20.3
5
202 ₱10,148,082.35 ₱500,000 20.3
6
202 ₱10,148,203.56 ₱500,000 20.3
7
202 ₱10,148,325.73 ₱500,000 20.3
8

 Average Collection Period

The average collection period is the average number of days between the date that a
credit sale is made, and the date that the money is received from the customer. Based on the
computed values, the Accounts Receivables are being collected within a month.
Table 4.33 Inventory Turnover Ratio
Year Inventory (₱) COGS (₱) Average Allocation Period (days)
2024 ₱500,000.00 ₱10,147,841.1 18.27
 5
2025 ₱500,000.00 ₱10,147,961.1 18.27
5
2026 ₱500,000.00 ₱10,148,082.3 18.27
5
2027 ₱500,000.00 ₱10,148,203.5 18.27
6
2028 ₱500,000.00 ₱10,148,325.7 18.27
3

 Total Asset Turnover

The total asset turnover ratio is an efficiency ratio that measures a company's ability to
generate sales from its assets. It ranges from 60% to 70%.
Table 4.34 Total Asset Turnover
Yea Net Sales (₱) Total Assets (₱) Total Asset Turnover
r
202 ₱4,000,000.00 ₱25,686,849.05 0.156
4
202 ₱4,500,000.00 ₱25,686,849.05 0.175
5
202 ₱5,000,000.00 ₱25,686,849.05 0.195
6
202 ₱5,500,000.00 ₱25,686,849.05 0.214
7
202 ₱6,000,000.00 ₱25,686,849.05 0.233
8
4.4.5 Brean Even Analysis

To determine how many units to sell annually to cover the cost of doing business, the
proponents have done the breakeven analysis. By using this, they came up with the breakeven
point of 7,100-8,700 units.
Table 4.35 Break Even Analysis
Year Revenue Fixed Costs (₱) Variable Selling Break- Break-Even
(₱) Costs (₱ per Price per Even Revenue (₱)
unit) Unit (₱) Point
(Units)

2024 4,000,000 13,517,465.90 2,537.79 2,500 5,407 units 13,517,465.90

2025 4,500,000 13,517,705.90 2,537.77 2,500 5,408 units 13,518,705.90

2026 5,000,000 13,518,049.30 2,537.79 2,500 5,408 units 13,518,049.30

2027 5,500,000 13,518,190.72 2,537.79 2,500 5,408 units 13,518,190.72

2028 6,000,000 13,518,435.06 2,537.80 2,500 5,409 units 13,518,435.06