Financial Analysis of Cren Top Snackhaus for Business Expansion

FAR EASTERN UNIVERSITY FERN COLLEGE
PAGE
A STUDY ON FINANCIAL PERFORMANCE OF THE CREN TOP

SNACKHAUS FOR FUTURE EXPANSION
A Business Research
Presented to the
Far Eastern University FERN College
In Partial Fulfillment
Of the Requirements of the Degree on
Financial Management
By
BOBIS, John Romezel R.
BRILLANTES, Sophia Kyla D.
CALUB, Shane Abigail G.
MELARPIS, Michael I.
NITOR, Vanessa Eimee B.
TULANA, John David M.
FMG-22
AUGUST 2016
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TABLE OF CONTENTS
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Executive Summary
UNIT I
INTRODUCTION
Chapter 1
Background of the Study

Introduction
1.1
Rationaleof the Study
1.2
Purpose of the Study
8
8
8
8
Chapter 2
The Research Problem

2.1
Research Questions
9
9
2.2
2.3
10
Significance of theStudy
Scope and Limitations
11
Chapter 3
Review of Related Literature

3.1
Business Expansion
13
3.2
14
13
3.3
3.4
Chapter 4
23
Advantages and Risks of Business

Expansion
Financial Ratios
Asset Management Ratio
Profitability Ratio
Working Capital
14
14
15
18
Frameworks of the Study

22
4.1
Theoretical Framework
22
4.2
Conceptual Framework
4.3
Operational Definition of Terms
24
UNIT II
RESEARCH METHODOLOGY
Chapter 1
Research Design
1.1
Research Design
1.2
Research Instrument
1.3
Study Locale
1.4
Sampling Technique
1.5
Statistical Treatment
27
27
27
28
28
28
29
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UNIT III FINDINGS, ANALYSIS, CONCLUSION &

RECOMMENDATIONS
31
Bibliography
45
Appendices
49
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LIST OF TABLES
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Table 3.1 Cash Turnover Ratio of Cren Top Snackhaus
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Table 3.2Net Profit Margin of Cren Top Snackhaus
33
Table 3.3 Operating Income Margin of Cren Top Snackhaus
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Table 3.4Return on Investment Ratio of Cren Top Snackhaus
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Table 3.5Return on Equity Ratio of Cren Top Snackhaus
35
Table 3.6Du Pont Return On assets of Cren Top Snackhaus
36
Table 3.7Gross Profit Margin of Cren Top Snackhaus
36
Table 3.8Working Capital of Cren Top Snackhaus
37
Table 3.9 Current Ratio of Cren Top Snackhaus
38
Table 3.10 Quick Ratio of Cren Top Snackhaus
38
Table 3.11 Debt to Equity Ratio Cren Top Snackhaus
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Table 3.12 Total Debts to Assets Cren Top Snackhaus
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LIST OF FIGURES
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Figure 4.1Theoretical Framework on Strategy Theory
22
Figure 4.2Conceptual Framework on the Analysis
23
of Financial Statements of Cren Top

Snackhaus based on their financial ratios
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LIST OF APPENDICES
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Appendix 1Proposed Budget
49
Appendix 2Balance Sheet of Cren Top Snackhaus
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Appendix 3Income Statement of Cren Top Snackhaus
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EXECUTIVE SUMMARY
An entrepreneur is referred to as endless seekers. Once their

business is doing great, growth is the next exciting level of challenge. Expanding
your business brings you to the peak of success but often, business needs adequate
funds to implement expansion ideas.
This thesis provides an evaluation of the financial performance of

Cren Top Snackhaus in the future expansion of their business. Methods of
analysis include quantitative research regarding the analysis of financial
statements using the appropriate financial ratios. These analysis are presented to
be able to validate whether Cren Top Snackhaus is profitable or not for making
future expansion.
This research would be beneficial to all entrepreneurs who are

aspiring to put their business into the next level. Specifically for Cren Top
Snackhaus who would be able to make rational decisions in managing its business
and be able to make it on top.
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UNIT I
INTRODUCTION
CHAPTER I
Background of the Study
Globally, one of the most common businesses is food establishments.
Numerous food establishments are built along different areas in the Philippines
but only few have the ability to expand their business. Typically, one of the
primary goals of these business establishments is to grow and expand. Expanding
your business allows your business to be known locally, nationally or even
internationally if it is really doing great.
Cren Top Snackhaus is a newly established food business which is known
for its delicious Black Burger. Although Cren Top operates for almost one year
and two months, still, it was able to expand in to two more branches. Cren Top
became popular specifically to the students of FEU Diliman since its main branch
is located along Victorian Heights which is only 3.1 km away from the campus.
This discourse aims to perform an analysis of the financial performance of
Cren Top Snackhaus to expand. Specifically, the research delves in the financial
performance of Cren Top expansion by building realistic revenue projections and
identifying the financial ratios.
CHAPTER 2
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THE RESEARCH PROBLEM
Expanding a business always have a corresponding cost, one reason why

among many businesses only few were able to expand. Expansion encompasses a
wide range of preparation specifically in the financial aspects of your business.
An analysis of the corresponding financial statement through

profitability ratios, financial leverage, liquidity, asset management ratios and
working capital will help the Cren Top SnackHaus broaden their comprehension
about the financial position and the result of its operations. This study aims to
analyze the competitive financial strength and weaknesses of Cren Top
Snackhaus, to determine their financial performance through the use of
appropriate financial and statistical tools as to expanding business and to provide
recommendations for improvements on the basis of the findings.
2.1Research Questions
The study focused on the study of financial performance of Cren Top
SnackHaus for future expansion.
Specifically, it seeks to answer following questions:
1. Is the operation of Cren Top Snackhaus efficient and effective?
2. Based on the analysis of financial statements, doesCren Top Snackhaus
have the adequate working capital that will support their business
expansion?
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2.2 Objectives of the Study

1. To be able to assess the effectivity and efficiency operation of Cren Top
Snackhaus for business expansion.
2.To evaluate their financial performance based on the analysis of their financial
statement as to expansion of their business.
2.3Significance of the Study

This research will provide useful information to the following parties
about the possible opportunities that can be achieved through expansion:
To the Students. Financial Management majors will be given an idea on
how the expansion of the Cren Top Snackhaus works. This study will help them
understand what they will encounter in life after graduation and the dilemmas
they may encounter in the business world.
To the Professors. This research can be one of their resources that would
give them an idea of what had happened on the said business and their story or
reasons of expanding their business. Thus, it will give them their students a better
understanding in the business expansion process.
To Businessmen. If ever a businessmen will encounter problems such as

deficits in his/her business, by reading this they will have an idea that expansion
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could be a possible solution. They will also have possible ideas on how business
expansion happens.
To the Cren Top Snackhaus clients. For those who are having doubts or
second thoughts whether to eat at Cren Top Snackhaus in the process of
expanding, this thesis will give them informationto sort their benefit of the doubt
to eat at Cren Top Snackhaus.
To the Society. This will be a sneak peak for the society about the concept
of expanding the business of Cren Top Snackhaus as well as their financial
aspects. This study will also help them understand the process of expanding a
business and how it will affect their customers as well as their financial aspects.
To Future Researchers. This will give an idea for future researchers and
also this can be an example for the expansion process in the food chains industry
that may be the basis of their study.
2.4Scope and Limitations

This study only focused on the financial performance of Cren Top
Snackhaus. The researchers assessed how Cren Top Snackhaus fared with respect
to operational processes, facilities & equipment, management, financial
performance and business expansion.
The control of this approach is the financial benefits, business risks,
different financial ratios and the working capital that supports the future business
expansion of Cren Top SnackHaus. This research was conducted during the month
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of June to August of 2016 and limited to Cren Top SnackHaus and its personnel.
The researchers observed and were interviewed regarding the management
practices of Cren Top SnackHaus. The participants were interviewed regarding
the management, operational processes and financial aspects of the company. The
results of this study cannot be generalized beyond this population. Data gathered
from this research instrument were analyzed and the results were interpreted.
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CHAPTER 3
REVIEW OF RELATED LITERATURE
The review of literature of this research focuses on the financial
factors needed to be considered for future expansion of a business. Business
expansion is discussed to give the readers a general description of growing a
business. A review of advantages and risks of expanding business provides a
background for studying the opportunity of a business to expand.
3.1 Business Expansion

Business expansion offers a wide variety of opportunities for the
business itself. It allows businesses in becoming nationally and globally
competitive towards the countrys economic advancement. Success in the field of
business does not stop by just being able to put up and start a small business.
"There always has to be a next thing," says Bruce Lynske, clinical
professor of management at Vanderbilt University's Owen Graduate School of
Management in Nashville, Tennessee.
According to Julie Monahan (2005) the key to your next move is
choosing the expansion method that best fits your company's product or service,
your strengths and weaknesses as a business owner, and the limitations of cash,
credit and existing resources. A business taking on a new growth strategy should
be walking on steady legs, not looking for ways to avoid unresolved problems.
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Growth is the central tenet of business development, be willing to apply the

brakes when the expansion rate is too much to handle.
3.2 Advantages and Risks of Business Expansion

Growing your business always has a corresponding impact to your
business either good or bad. One of the major advantages of business expansion is
that you will be able to increase the wealth of your business thus making the
economy more productive.
Moving your business to the next stage such as enlarging it may not
seem easy because of the possible negative outcomes once you made a wrong
decision
3.3 Financial Ratios
Asset Management Ratio
According to Jansen, Ramnath and Yohn (2012) identifying earnings
management is important for financial statement users to assess current economic
performance, to predict future profitability, and to determine firm value.
Current financial performance of a business is a significant tool in
indicating whether a particular business is feasible for future expansion. One way
to measure the Financial performance of a business is through computing the asset
management ratios.Asset management ratios are computed for different assets and
varying purposes. Common examples of these ratios include inventory
turnover, Total asset turnover and cash conversion cycle. These ratios provide
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relevant information into different financial areas of the business and highlight its
strengths and weaknesses.
a
Cash Turnover
OsmandVitez, What is Cash turnover the article discussed that
Cash turnover is an efficiency ratio that allows a company to determine how it

used cash to generate sales. Month-end financial statements contain the
information necessary to compute this figure, namely the income statement
and balance sheet. Basically, the cash turnover formula tells a company how many
times the company went through its cash balance for the period, whether monthly
or annual. Accountants often use the formula to help create budgets for estimating
and controlling business operations.
Profitability ratio
According to Spaulding (2016) Profitability is the best measure for a
company for lack of it, it cannot grow, and if it doesnt grow, then its stock will
trend downward. Increasing profits are the best indication that a company can pay
dividends and that the share price will trend upward. The common profitability
measures compare profits with sales, assets, or equity: net profit margin, return on
assets, and return on equity.
15

a
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Net Profit Margin
Net Profit Margin was defined by JoshuKennon as the amount after tax
profit the business keeps for every dollar it generates in revenue or sales. He
added that profit margins vary by sector and industry, but all else being equal, the
higher a company's net profit margin compared to competitors, the better.
b Operating Income Margin
Wilkinson (2013) in his article Operating Income Margin tells that the
operating profit margin ratio indicates how much profit a company makes after
paying for variable costs of production such as wages, raw materials and other
factors. It is expressed as a percentage of sales and shows the efficiency of a
company controlling the costs and expenses associated with business operations.
Phrased more simply, it is the return achieved from standard operations and does
not include unique or one time transactions. Terms used to describe operating
profit margin ratios this includes operating margin, operating income margin,
operating profit margin or return on sales (ROS).
c
Return on Equity
Gallo (2016) in her article A Refresher on Return on Assets and Return

on Equity she stated that that ROE tells you what percentage of profit you make
for every dollar of equity invested in your company. According to her ROE is an
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important ratio regardless of what industry youre in, and is more relevant than
ROA for some businesses.
d Return on Investment
Elliotte (2016) in Investors Business Daily discussed the Return
on Equity Measures a Companys Profit making efficiency it its elaborated there
that ROE is a rough measure for how efficiently management is investing capital
to use. According to him high return on equity is a positive indication but must
also be determined against a companys debt and gross margin performance.
e
Dupont Return on assets

According Professor Cram (2007) Return on assets (ROA) is a
percentage of the after-tax income as compared to the total assets of the company.
Management at Du Pont came up with Return on Assets (Du Pont), an approach
that determines the impact of asset turnover and profit margin on profits. This
interactive tutorial explains the concept by walking you through the calculations,
including where to find the numbers on the financial statements.
f
Gross Profit Margin

Wilkinson (2013) Defined gross profit ratio also known as gross
margin, is the ratio of gross margin expressed as a percentage of sales. Gross

margin, alone, indicates how much profit a company makes after paying off its
Cost of Goods sold. It is a measure of the efficiency of a company using its raw
materials and labor during the production process. According to him value of
gross profit margin varies from company and industry. The higher the profit
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margin, the more efficient a company is. Gross profit margin can be assigned to
single products or an entire company. Wilkinson also discussed the disadvantages
of gross profit margin. He stated that many see gross profit margin disadvantages
despite the common use of gross profit margin ratios. The issue is that certain
production costs are not entirely variable. Some believe that only direct materials
should be included as they are the only variable to change in proportion to
revenue. When applied, this new gross profit margin causes all other related costs
to be transferred to operational and administrative cost categories. This tends to
cause a higher gross margin percentage than originally. It is applied by certain
industries and businesses instead of the more common application.
Working Capital
Wolfe (2016) elaborated that working capital is the amount of liquid
assets that a company has on hand and it is necessary to pay for planned and
unexpected expenses, meet the short-term obligations of the business, and to build
the business. He explained that working capital are obtained through net income,
long term loan (non-current liabilities), Sale of capital (non-current assets) and
fund contributed by the owners and investors (stockholders). He summarizes his
idea about working capital as the money that firms need in order to cover
business expenses, meet short term obligations, and to grow your business.
Liquidity Ratios
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Nelson (2010) discussed in his book Quick Books 2011 in All-in-one for
dummies that liquidity ratio evaluate how easily does a firm can pay its short
term debt obligations and also how to take advantage of immediate financial
opportunities. He also cite an example saying that everything else being equal,
the firm that's sitting on a large hoard of cash (high liquidity) can more easily pay
its bills and can take advantage of great opportunities that pop up. Meaning, once
a competitor gets in to trouble and wants to sell assets at a discounted price, a firm
with high liquidity and more cash on hand can easily take advantage of such an
opportunity.
a
Current ratio
Gallo (2015) stated in her article that Current ratio that it is one of
several liquidity ratios that measure whether you sufficient cash to make payroll
in the upcoming year. It also measures a firms capacity to pay off its short term
debts with its current assets. It is closely related to the quick ratio, which is often
called the acid test because people use it to understand if things got really ugly,
could you stay afloat? She added.
b Quick Ratio
Whalley (2015) described Quick Ratio as a very useful measurement
instrument, presenting immediate insight into a companys financial success and
trend over time. According to him, Organizations that can gather a 4.0 or better
ratio are adding revenue at four times the rate its leaving at, creating a very
compelling growth story and showing clear mastery of its sales process.
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Financial Leverage ratio

As stated by Peavler (2016) Financial leverage ratios are also called
debt ratios or you may also find them called long-term solvency ratios. They
measure of the capacity of the business to meet its long term debt obligations such
as interest payments on debt, the final principal payment on debt, and any other
fixed obligations like lease payments. Long-term debt is defined as obligations to
repay with a maturity of more than one year. These ratios compare the overall
debt load of a company to its assets or equity, showing how much of the company
assets below to investors versus creditors. If shareholders own more assets, the
company is said to be less leveraged. If creditors own a majority of assets, the
company is said to be high leveraged. Clearly, financial leverage ratios help
management and investors to understand how risk level of the capital structure of
a company.
a
Total Debt to Equity

Gallo (2015) stated in her article A Refresher on Debt-equity
Ratio that debt-to-equity ratio is the measure of how much debt you use to run
your business. The ratio tells you, for every dollar you have of equity, how much
debt you have. Its one of a set of ratios called leverage ratios that let you see how
extensively a company uses debt. Every company has a debt-to-equity and any
company that wants to borrow money or interact with investors should be paying
attention to it.
b Total Debt to asset
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Rosemary Peavler, The Debt to Asset Ratio, Its Importance and

Calculation She discussed that Debt to asset ratio is the percentage of total assets
that were paid for with borrowed money - creditors, liabilities and debt. Some see
it as an indicator of financial leverage, some interpret is as a measure of solvency,
some see it as critical to financial health or financial distress. The ratio is
expressed as a percentage.
CHAPTER 4
FRAMEWORKS OF THE STUDY
4.1Theoretical Framework
21
nternal Growth
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22
Based on the review of related literature,thisstudy aims to connect the

researchers to existing knowledge and it will give basis for the hypotheses and
choice of research methods of the researchers. Also, it helps to identify the limits
to those generalizations particularly in the Profitability of Cren Top Snackhaus for
the future expansion along Mapayapa Village.
Figure 4.1 Theoretical Framework on Strategy Theory
Franchising
where a business will lease its ideas to franchises, allowing new branches to open b
External Growth
(here mergers or take-overs combine two firms, increasing the scale of operation)
Grows by hiring more staff and equipment in order to increase the output)
4.2Conceptual Framework
This study is to determine the Financial Profitability of Cren Top
Snackhaus for the Future Expansion and the possible factors that they can
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23
maximize the profit for expanding their business. We will study more on the
possibilityof Cren Top Snackhaus to expand and to gain profit that can
accumulate it for the future expansion.
Figure 4.2 Conceptual Framework on the Analysis of Financial Statements of

Cren Top Snackhaus based on their financial ratios
PROCESS
OUTPUT
Gathering of data; analysis and interpretation
through
financial
ratios for Future
Study of
of financial
Financialstatements
Performance
of Cren
Top Snackhaus
Statements of Cren Top Snackhaus as for the months of May 2015 - January 2016
4.4 Operational Definition of Terms

1. Business
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It is the way to earn money by providing goods and services to the

customers or buyers.
2. Expansion
It is a strategy of extending the business by offering to other places
that has not been reach of their goods and services. Expansion can
be done locally or in overseas.
3. Profitability
The situation in which a business is producing a profit.Also used to
determine the productivity of the business.
4. Competition
In business, competition occurs between two or more parties that has
only one goal to achieve: To get more potential customers that will
increase the earnings.
5. Profitability Ratio
Measures probability and measures a companys performance.
6. Asset Management Ratios

Indicate the ability of a company to translate assets into sales.
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7. Feasibility Study
An assessment and analysis of the suggested project to find out if it is
profit making or gainful.
8. Diversity
Ability to adjust in a modern world of business improving its
profitability and growth.
9. Covenants
Is a mutual agreement between two or more parties to execute
activity limits.
10. Rapid Growth
Means hiring more people, furnishing more offices and perhaps
renting new quarters with the use of money.
11. Technical Competence
Skill and knowledge needed to accomplish a task, job or business.
12. Interactive Competence

Concept describing the competence needed for participation in face-toface interaction.
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UNIT II
RESEARCH METHODLOY
CHAPTER I - RESEARCH DESIGN
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26
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The research problems were answered clearly by the review of related

literature. However, related literatures indicated limited information and some
points are still needed to be investigated regarding the capability of Cren Top
Snackhaus as a food establishment in expanding their business. Therefore, the
researchers provided further evidences to further increase the validity of the topic
being studied.
The purpose of this study is to assess and analyze the financial statements
in terms of profitability, asset management ratios, liquidity and financial leverage
or solvency ratios as well as its working capital for business expansion. To be able
to gather the necessary data, the researchers utilized the quantitative approaches.
Through this, the researchers use the authorized financial statements of the Cren
Top Snackhaus from the owner.
Specifically, this chapter deals and describes the research design, research
instruments, study locale, sampling technique and statistical treatments that are
used in this study.
1.1
Research Design
The study adopted the quantitative exploratory research design to establish
a concrete and evident data in conducting a study regard to the potential of Cren
Top Snackhaus to expand. Using this method, it is easy for the researchers to
validate the findings in this study.
1.2
Research Instrument
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Research instruments are used for data collection to attain the point of
view of this study which is the potential of Cren Top Snackhaus for business
expansion. The intruments included questionnaires, interview, observation and
secondary sources.
The researchers focused on reading documents as a method of data
collection. This method enabled the researchers to diverge in order to come up
into more precise detail. The researchers asked the owner of Cren Top Snackhaus
for their financial statements needed for analyzing the opportunity and capability
for business expansion.
1.3
Study Locale
The researchers proceed to the main branch of Cren Top Snackhaus that is
located at Dahlia near BIR Village to gather data. Respondents for the research
will be the financial statements coming from Cren Top Snackhaus.
1.4 Sampling Technique
The researchers used self-selection sampling technique which is under
convenience sampling in order to come up with reliable information. The basis of
selection of the researchers for the source of data is from the financial statements
given by the owner of Cren Top Snackhaus.
1.5 Statistical Treatment
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In this study, the researchers used these kinds of financial analysis

ratios to analyze and determine the financial performance of Cren Top
Snackhausfor an opportunity to expand.
1. Asset management ratio it indicates how successfully a company is

utilizing its assets to generate revenues. It tells how efficiently and
effectively a company is using its assets in the generation of revenues.
They indicate the ability of a company to translate its assets into the sales.
(readyratios.com)
2. Profitability Ratio used to assess a business's ability to generate earnings

as compared to its expenses and other relevant costs incurred during a
specific period of time.
3. Working Capital- indicates whether the business has a short term assets to
cover its short term debt. This is the cash available for daily basis
operation of the business. (businessdictionary.com)
4. Liquidity Ratio- In accounting, the term liquidity is defined as the ability

of a company to meet its financial obligations as they come due.
The liquidity ratio, then, is a computation that is used to measure a
company's ability to pay its short-term debts. (study.com)
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5. Financial Leverage Ratio is any one of several financial measurements

that look at how much capital comes in the form of debt (loans), or
assesses the ability of a company to meet financial obligations.
(investopedia.com)
UNIT III
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
CHAPTER I FINDINGS AND ANALYSIS
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It is this chapter that the results of the data analysis are presented.
The data were collected and then processed in response to the research problems
posed in Unit 1 of this paper. The objective of this study is to conduct a financial
analysis of the financial statements of Cren Top Snackhaus for the opportunity of
expanding its business, to be able to assess the effectively and efficiently
operation of Cren Top Snackhaus for business expansion,to evaluate their
financial performance based on the analysis of their financial statement as to
expansion of their business, and to provide recommendations for improvements
on the basis of the findings.
The findings shown in this chapter validates the potentiality for Cren
Top Snackhaus to expand.
Balance Sheet of Cren Top Snackhaus (refer to Appendix 1) presents the
balance sheet of Cren Top Snackhaus. As depicted in the table, there is an
increasing trend in the current and total assets for Cren Top Snackhaus. Total
current asset as of May 2015 increased by P535,327.22 in January 2016. Its total
assets range from P287,093.31 in May 2015 to P740,830.63 in January 2016. The
liabilities and equity section of the balance sheet as shown in the column of the
month of September, it rose to about P844,122.99 due to advances from Claire
Sorio.
Income Statement of Cren Top Snackhaus (refer to Appendix 2)depicts the
results of operations of CrenTopSnackhaus. As seen in the table, the business
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fluctuates from period to period depending upon the revenues, expenses and
operating costs.
Furthermore, during the month of May 2015 the total net income after tax
range from P19,883.30 with 47% of its gross profit, 31% of its expense and 16%
of the profit increasing to P24,225.14. Because of the profitable operation, the
owner of Cren Top Snackhauswas able to put up those branches along Quezon
City.
Aside from looking at basic financial statements of Cren Top Snackhaus,
the researchersadministered an analysis of its financial statements using authentic
and accurate financial ratios applicable in this study.
Efficiency Ratios or Asset Management Ratios
I.
Cash Turnover
Table 3.1 Cash Turnover Ratio of Cren Top Snackhaus

Ratio
May
June
July
August
September
Cash
Turnover
Ratio
1.29
0.68
0.43
0.30
0.23
Ratio
Cash
Turnover
Ratio
October
November
December
January
1.64
0.61
0.37
0.40
From the month May, June, July, August and September, the cash turnover
ratio is declining. Meaning that the company isnt using its assets efficiently and
most likely some management or production problems. For the months October,
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November and December, the cash turnover ratio becomes constant because the
company is using its assets more efficiently.
Profitability Ratios
II.
Net Profit Margin
Table 3.2Net Profit Margin of Cren Top Snackhaus

Ratio
Net
Profit
Margin
May
June
July
August
September
0.16
0.15
0.16
0.15
0.16
Ratio
October
November
December
January
Net
Profit
Margin
0.17
0.16
0.15
0.18
Net profit margin measures the total success of a business. Table 3.2 shows
the net profit margin ratio of Cren Top Snackhaus. Cren Top Snackhaus, as seen
on the table above, managed to maintain a positive net profit margin ratio to
convert its sales to profits ranging from 0.16- 0.18 during the month of May, July,
September, October, November (2015), January (2016) and obtain a lowest net
profit margin ratio of 0.15 in the month of June, August, December 2015.
III.
Operating Income Margin
Table 3.3Operating Income Margin of Cren Top Snackhaus

Ratio
May
June
July
August
September
33

Operatin
g Income
Margin
0.16
0.15
PAGE
0.16
0.15
0.16
Ratio
October
November
December
January
Operatin
g Income
Margin
0.17
0.16
0.15
0.18
Table 3.3 shows the percentage of sales and the efficiency of the busines
operation of Cren Top Snackhaus. Cren Top Snackhaus, as seen on the table
above, managed to maintain a positive operating income margin ratio ranging
from 0.16- 0.18 in the months of May, July, September, October, November
(2015), January (2016) and obtain a lowest operating income margin ratio of 0.15
in the months of June, August, December 2015.
IV.
Return on Investment
Table 3.4Return on Investment Ratio of Cren Top Snackhaus

Ratio
May
June
July
August
September
ROI
0.45
0.07
0.07
0.07
0.07
Ratio
October
November
December
January
ROI
0.07
0.06
0.05
0.06
Table 3.4 shows that from the month of July, August, September and October,
the Return on Investment Ratio 0.7 remains constant meaning that the company is
using their investment profitability efficiently. From the month November and
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December, there is a declining point meaning that they use their assets more
efficiently.
V.
Return On Equity
Table 3.5Return on Equity Ratio of Cren Top Snackhaus

Ratio
May
June
July
August
September
ROE
0.45
0.07
0.07
0.07
0.07
Ratio
October
November
December
January
ROE
0.07
0.06
0.05
0.06
Table 3.5 shows the effectiveness of the management of Cren Top

Snackhaus. Cren Top Snackhaus, as seen on the table above, managed to maintain
the highest return on equity ratio of 0.7 in the month of June 2015 to October
2015 and decrease a little during the month of November 2015 to January 2016.
VI.
Du Pont Return On assets
Table 3.6Du Pont Return On assets of Cren Top Snackhaus

Ratio
May
June
July
August
September
Operatin
g Income
Margin
0.16
0.15
0.16
0.15
0.16
Ratio
October
November
December
January
35
PAGE
Operatin
g Income
Margin
0.18
0.17
0.16
0.15
Table 3.6 shows that there is always a change in the Return on Assets. From
the month of May to December, maintain an increase/decrease of ratio by 0.01.
And from the month of January obtain its highest ROA meaning that the company
handles the asset turnover and profit margin inconsistent.
VII.
Gross Profit Margin
Table 3.7Gross Profit Margin of Cren Top Snackhaus

Ratio
May
June
July
August
September
Gross
Profit
Margin
0.47
0.46
0.46
0.47
0.48
Ratio
October
November
December
January
Gross
Profit
Margin
0.47
0.48
0.48
0.50
Table 3.7 shows how CrenTop SnackHaus percentage in the effectiveness

in keeping its earnings. In a span of nine months, from May to January, its profit
margin continues to increase.
VIII. Working Capital
Table 3.8 Working Capital of Cren Top Snackhaus
Ratio
May
June
July
August
September
Working
Capital
-86,048.01
134,726.61
157,971.28
179,986.49
203,312.87
36
PAGE
Ratio
October
November
December
January
Working
Capital
229,412.74
252,673.27
274,614.09
301,039.23
According to Weston and Brigham, "Working capital generally stands for

excess of current assets over current liabilities. Working capital management
therefore refers to all aspects of the administration of both current assets and
current liabilities. Table 3.8 shows the working capital of Cren Top
Snackhaus. Cren Top Snackhaus, as seen on the table above, managed to
maintain a positive working capital ranging from -P86,048.01 to P301, 039.23
at the month of January 2016. From the month of May, the liability is greater
than the assets meaning that they have a loss. From the month of June to
January, the current asset is greater than the current liability meaning that
there is an increase in their working capital and as the business runs, their
working capital increases.
Liquidity Ratios
IX.
Current Ratio
Table 3.9 Current ratio of Cren Top Snackhaus

Ratio
May
June
July
August
September
Current
Ratio
0.65
1.71
1.53
1.44
1.39
Ratio
Current Ratio
October
2.69
November
2.02
December
1.78
January
1.77
37
PAGE
In Table 3.9 from the month of October to January has the highest Current
Ratio and the month of May has the lowest current ratio. The current ratio is
computed by dividing the Current Assets over the Current Liability which means
that the higher the Current ratio is, the more income that the company earned. The
higher the current ratio, the more capable the company is of paying its
obligations, as it has a greater asset than the liability.
X.
Quick Ratio
Table 3.10 Quick Ratio of Cren Top Snackhaus

Ratio
May
June
July
August
September
Quick Ratio
0.40
0.98
1.05
1.09
1.11
Ratio
October
November
December
January
Quick Ratio
0.64
0.90
1
0.88
Quick ratios test the ability of the business to settle current obligations
without placing reliance on inventory since it is the most stringent and difficult
test of measuring financial strength (Kennon, 2006). Table 3.10 presents the
quick ratio for Cren Top Snackhaus for the month May 2015 to January 2016. As
can be seen, the quick ratio of Cren Top Snackhaus during the month of
September is the highest in 2003, when it registered 1.11. It, however, declined in
October 2015 with a ratio of 0.64.
Financial Leverage Ratios
XI.
Debt to Equity Ratio
Table 3.11 Debt to Equity Ratio of Cren Top Snackhaus
38
Debt to
Equity
Ratio
Debt to
Equity
PAGE
May
June
July
August
September
5.56
0.72
1.06
1.36
1.60
October
November
December
January
0.39
0.67
0.90
0.95
In the month; May, July, August, September, the majority of assets are
financed through debt. While, for the month; June, October, November, December
and January, assets are fundamentally financed through equity
I.
Total Debts to Asset
Table 3.12 Total Debts to Asset of Cren Top Snackhaus

Ratio
Debt
Ratio
Ratio
Debt Ratio
May
June
July
August
September
0.85
0.42
0.51
0.56
0.62
October
0.28
November
0.40
December
0.47
January
0.49
In table 3.12 indicates that a higher percentage indicates more leverage

and more risky, it also specifies that total debt to total assets tells you the
percentage of total assets that were financed by creditors, liabilities, and debt.
39
PAGE
CONCLUSIONS
Since food is one of the important needs of a person, the food
establishment will continue to grow and prevail in providing the demand of the
consumers. The success of every food establishments cannot entirely be
determined by the number of its customers and the variety of the menu items and
services they offered. The performance of Cren Top Snackhaus is measured by
analyzing their financial statements specifically through computing the
appropriate financial ratios to see how they operate and manage their resources
and obligations to generate profitable earnings for the business in order to expand.
Cren Top Snackhaus, with one year of its existence in the business
industry, have proven its proficiency in introducing unique products to draw
attention to the market.
40
PAGE
Analyzing the financial statements through computing the asset

management ratio identifies that the Cren Top Snackhaus is able to operate its
management efficiently and effectively at the span of 9 months in the business
industry. The ratios calculated monthly at some point varies but majority is an
increasing ratio which is a good indication that the business is using its assets,
controlling, managing and directing production and sales effectively.
Profits earned by the business as of the month of May 2015 to January
2016 continue to boost forming a conclusion that Cren Top Snackhaus profit will
be beneficial in expansion. Businesses can only expand if it is earning large profit.
Cren Top Snackhaus is sufficient enough to be reinvested to increase the scope of
the business to expand.
Based on the analysis of the financial statements of Cren Top Snackhaus,
Cren Tops working capital as of May which is the outset of the business have a
greater liability than its assets but were able to recover as of the month of January
2016 having P301,039.23 working capital. The Liquidity and Financial Leverage
ratios of Cren Top Snackhaus shows that the business is capable enough in setting
their current obligations and that they use more of their equity rather than relying
on debts.
In summary, the main conclusion that can be drawn in this study is that
Cren Top Snackhaus has a great opportunity for expansion. The business, which
has a great performance in terms of financing and operating in business may lead
41
PAGE
to future expansion because of it, being highly competitive and having a strong
stand in the food industry with only a year of existence in the business industry.
RECOMMENDATIONS
With the results and findings obtained in analyzing its financial
statements, Cren Top Snackhaus, however, object to improve its standing
regardless of its stability in order to make progress in the business industry. Cren
Top Snackhaus should pursue to strive for having a better quality of managing its
production and excellence in gaining customer satisfaction leading to earn large
profits. They should also manage its resources and obligations scrupulous
preventing complication in running the business.
Having analyzed the financial statements of Cren Top Snackhaus for future
expansion, the study enumerates the following recommendations.
1. Cren Top Snackhaus should increase its sales and products.
42
PAGE
This is the easiest way to expand the business. This approach

requires a different pricing strategies, bigger location and improved
marketing techniques.
2. Cren Top Snackhaus should move into a new geography or location.
Introducing variety of products in different locations can gain
profits for additional investments
3. Cren Top Snackhaus should open its business for more investors
This will allow Cren Top Snackhaus put its business to the next
level of success.
4. Cren Top Snackhaus should offer franchise.
Offering a franchise will always be a great idea to grow your
business thus it helps you to bring your business into the peak of success.
5. Cren Top Snackhaus has a great opportunity for expansion
This will allow Cren Top Snackhaus maximize their profit.
43
PAGE
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Appendix 1
A Study on Business Profitability of the Cren Top SnackHaus for Future
Expansion
(1st Trimester S.Y 2016-207)
PROPOSED BUDGET
PRINTING/ PHOTOCOPYING EXPENSE
PHP 1,500.00
TRANSPORTATION EXPENSE
PHP 500.00
FOOD EXPENSE
PHP 1,500.00
TOTAL BUDGET
PHP 3,500.00
48

Appendix 2
Balance Sheet of Cren Top Snackhaus
PAGE
49

Appendix 3
Income Statement of Cren Top Snackhaus
PAGE
50
J
H
ROMEZEL R. BOBIS
Block 3 Lot 4 Pamana Ville
Sta. Lucia, Novaliches Quezon City
352-71-73 || 09155085385
O
N
bobis909@gmail.com
PERSONAL INFORMATION
Date of Birth:
Place of Birth:
Civil Status:
July 28, 1998

Blumentritt Sta. Cruz, Manila
SINGLE
Religion:
Roman Catholic
Age:
18
SKILLS
Computer literate and highly proficient in the use of MS Excel, Word, Powerpoint.
Prioritizing and managing multiple task simultaneously.
Excellent written and verbal communication skills.
EDUCATION
TERTIARY
FAR EASTERN UNIVERSITY-DILIMAN (2015-PRESENT)

BSBA major in FINANCIAL MANAGEMENT
INTERMEDIARY
Saint Joseph School of Fairview (2011-2015)
BASIC
Good Shepherd Cathedral School (2008-2011)

Dominican School Manila (2005-2008)
SOPHIA KYLA D.
BRILLANTES
Blk. 46 lot 14 Tatlong Hari St.

Lagro Quezon City
09998425500
sophiakylabrillantes@gmail.com
Date of Birth:
Place of Birth:
Civil Status:
September 25, 1999

San Jose Del Monte, Bulacan
SINGLE
Religion:
Roman Catholic
Age:
16
SKILLS
Maintaining confidentiality when handling customer requests and transactions.

Ability to create rapport with customers.
Ability to work quickly and accurately.
Analyzing information and making decisions
Knowledgeable about basic computer skills.
EDUCATION
TERTIARY

INTERMEDIARY
Lagro High School Flores De Mayo, Quezon City 2011-2015
BASIC
Lagro Elementary School Ascension, Greater Lagro, Quezon City 20052011
SHANE ABIGAIL G.
CALUB
Blk 7 lot 5 Camia street, Merry Homes II Subd.
Camarin, Caloocan city
09296891111/09951744070/9617415
Calub_shane@yahoo.com
Date of Birth:
Place of Birth:
November 5, 1997
Caloocan
Civil Status:
Born-Again Christian
Religion:
Roman Catholic
Age:
18
SKILLS
Can operate basic Microsoft applications such as MS Word, MS Power point, MS

Excel, etc.
Can operate office equipment such as printer and photo copying machine.
EDUCATION
TERTIARY

INTERMEDIARY
Holy Angel School of Caloocan, Inc. (2010-2012)

National College of Business and Arts Fairview (2012-2014)
MICHAEL MELARPIS
7-B Sunstone St. Northview 1 Subdivision, Quezon City.
0905-468 4467 / 951-2242
mmelarpis100@yahoo.com
Date of Birth: July 27, 1998
Nationality: Filipino
Religion: Catholic
Age: 18
Civil Status: Single
SKILLS
Good Listener and can cope up with other people easily
Problem- Solving and Mathematical Skills
Basic Skills in MS Word and Powerpoint
EDUCATION
Tertiary
Far Eastern University Diliman, Quezon City 2015 Present
BS in Accountancy (June 2015 September 2015)

BSBA Business Administration, Major in Financial Management
Intermediary
San Lorenzo Ruiz De Manila School of Marikina City
Date Graduated April 2015

BASIC
San Lorenzo Ruiz De Manila School of Marikina City

Capitol Hills Christian School, Batasan Hills Quezon City
VANESSA EIMEE B.
NITOR
Block 3 Lot 3 Phase 4 Grieg Street
North Olympus Subd., Novaliches Quezon City
990-38-63 || 09750958579
vanessaeimeenitor@gmail.com
Date of Birth:
December 29, 1998
Place of Birth:
SAN FERNANDO, Pampanga
Civil Status:
SINGLE
Religion:
Born Again Christian
Age:
17
SKILLS
Proficient in MS Applications (MS Word, MS PowerPoint, MS Excel)

Fluent in both English and Filipino (oral and written)
Proficient in Adobe Photoshop
Can work under pressure
Fast Learner
EDUCATION
TERTIARY

INTERMEDIARY
St. Theresa's School of Novaliches (2011-2015)
BASIC
St. Theresa's School of Novaliches (BATCH 2005)
JOHN DAVID M. TULAA

Block 16 Lot 44 Gladiola Street
Villa Magdalena III Subd. Camarin, Caloocan City
930-29-03 || 09262303316
johndavidmtulana@gmail.com
Date of Birth:
July 2, 1999
Place of Birth:
Manila
Civil Status:
SINGLE
Religion:
Roman Catholic
Age:
17
SKILLS
Proficient in MS Applications (MS Word, MS PowerPoint, MS Excel)
Can write reports and essays
Typing
EDUCATION
TERTIARY

INTERMEDIARY
Holy Angel School of Caloocan Inc. (2011-2015)
BASIC
Holy Angel School of Caloocan Inc. (2005-2011)

Corpus Christi Learning Center
Blessed Angels School of Caloocan
FEU-FERN COLLEGE
THESIS/APPROJ
The thesis attached hereto, entitled A STUDY ON FINANCIAL PERFORMANCE OF

THE CREN TOP SNACKHAUS FOR FUTURE EXPANSION, prepared and submitted by John
Romezel R. Bobis, Sophia Kyla D. Brillantes, Shane Abigail G. Calub, Michael I. Melarpis, Vanessa
Eimee B. Nitor, John David M. Tulaa in partial fulfillment of the requirements of the thesis course
BUSRESC (Business Research) is hereby accepted.
Prof. Joan J. Peaflor

Technical Adviser
Prof. Aleli V. Dorado

English Adviser
Prof. Jose Arsenio G. Adriano

Panel Member
Prof. Jose Jesus V. Buenagua

Panel Member
Maribel B. Ruiz
Panel Member
Prof. Ma. Fluellen F. Bautista
DAB Research Coordinator
Accepted in partial fulfillment of the requirements for the degree(s) of BSBA Major in Financial
Management.
Maribel B. Ruiz
Chair, Department of Accounts & Business
Lakan-Asa R. Bautista
Dean

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FAR EASTERN UNIVERSITY FERN COLLEGE

A STUDY ON FINANCIAL PERFORMANCE OF THE CREN TOP

FAR EASTERN UNIVERSITY FERN COLLEGE

Background of the Study

The Research Problem

Review of Related Literature

Advantages and Risks of Business

Frameworks of the Study

FAR EASTERN UNIVERSITY FERN COLLEGE

UNIT III FINDINGS, ANALYSIS, CONCLUSION &

FAR EASTERN UNIVERSITY FERN COLLEGE

Table 3.2Net Profit Margin of Cren Top Snackhaus

Table 3.3 Operating Income Margin of Cren Top Snackhaus

Table 3.4Return on Investment Ratio of Cren Top Snackhaus

Table 3.5Return on Equity Ratio of Cren Top Snackhaus

Table 3.6Du Pont Return On assets of Cren Top Snackhaus

Table 3.7Gross Profit Margin of Cren Top Snackhaus

Table 3.8Working Capital of Cren Top Snackhaus

Table 3.9 Current Ratio of Cren Top Snackhaus

Table 3.10 Quick Ratio of Cren Top Snackhaus

Table 3.11 Debt to Equity Ratio Cren Top Snackhaus

Table 3.12 Total Debts to Assets Cren Top Snackhaus

FAR EASTERN UNIVERSITY FERN COLLEGE

Figure 4.1Theoretical Framework on Strategy Theory

Figure 4.2Conceptual Framework on the Analysis

of Financial Statements of Cren Top

FAR EASTERN UNIVERSITY FERN COLLEGE

Appendix 2Balance Sheet of Cren Top Snackhaus

Appendix 3Income Statement of Cren Top Snackhaus

FAR EASTERN UNIVERSITY FERN COLLEGE

An entrepreneur is referred to as endless seekers. Once their

This thesis provides an evaluation of the financial performance of

This research would be beneficial to all entrepreneurs who are

FAR EASTERN UNIVERSITY FERN COLLEGE

FAR EASTERN UNIVERSITY FERN COLLEGE

THE RESEARCH PROBLEM

Expanding a business always have a corresponding cost, one reason why

An analysis of the corresponding financial statement through

FAR EASTERN UNIVERSITY FERN COLLEGE

2.2 Objectives of the Study

2.3Significance of the Study

To Businessmen. If ever a businessmen will encounter problems such as

FAR EASTERN UNIVERSITY FERN COLLEGE

2.4Scope and Limitations

FAR EASTERN UNIVERSITY FERN COLLEGE

FAR EASTERN UNIVERSITY FERN COLLEGE

3.1 Business Expansion

FAR EASTERN UNIVERSITY FERN COLLEGE

Growth is the central tenet of business development, be willing to apply the

3.2 Advantages and Risks of Business Expansion

FAR EASTERN UNIVERSITY FERN COLLEGE

Cash turnover is an efficiency ratio that allows a company to determine how it

FAR EASTERN UNIVERSITY FERN COLLEGE

Net Profit Margin

Gallo (2016) in her article A Refresher on Return on Assets and Return

FAR EASTERN UNIVERSITY FERN COLLEGE

Dupont Return on assets

Gross Profit Margin

margin, is the ratio of gross margin expressed as a percentage of sales. Gross

FAR EASTERN UNIVERSITY FERN COLLEGE

FAR EASTERN UNIVERSITY FERN COLLEGE

FAR EASTERN UNIVERSITY FERN COLLEGE

Financial Leverage ratio