Chapter VI FINANCIAL ASPECT

Investment Cost: Php 411,000.00

Assumptions:

Kitski Agrivet & Agricultural Supplies is a newly establish business in Lake

Sebu, South Cotabato.
It is managed and owned by Mr. Yves U. Ski, a Business Management
graduate of RMMC.
Its Initial Investment Amounted to Php 411,000.00 pesos more or less than
the amount specified.
It has five (5) existing competitors and Kitski will be the sixth player in
this business.
It will offer Agrivet and Agricultural Supplies to corn, rice farmers and
Tilapia Growers.
It will use Straight Line Depreciation Method in Depreciating its
Equipment.
As starter in this business, renting is the best alternative for a minimum
cost.
It will avail loan either from local banks, lending or financing institutions
to finance its operations.
Selling price for all commodities will be offered 30 % above cost.
It has four (4) employees, one store manager, two sales attendant and one
driver.

Fixed Assets Cost Lifespan Yearly

Depreciation

Multicab Php 150,000 10 years Php 15,000

Agrivet and Initial Inventory Monthly Sales Yearly Sales

Agricultural (Supplies) (Approximate) (Approximate)
Supplies

Formulated feeds Php 150,000 Php 260,000 x 12 Php

Medicines months yearly 3,120,000.00
/Insecticides/ Php 24,500
herbicides Php 25,500
Agricultural
Fertilizers

Prepaid Rent 1000 monthly x 12 12 months Php 12,000

(Public Market months
Ground Rental) Php 12,000
Salaries & Wages Php 24,000 12 months Php 216,000

Operating Php 25,000 12 months Php 108,000

Expenses

Total Initial Cost Php 411,000.00

Direct Materials: Cost per unit Subtotal Total

Inventories

Formulated Feeds 120 bags @ 500 Php 60,000

120 bags @ 400 Php 60,000 Php 150,000
23 sacks @1300 Php 30,000

Medicines 25 packs / bottle @ Php 24,500 Php 24,500

/Insecticides/ 980
herbicides

Agricultural 30 sacks @ 850 Php 25,500 Php 25,500

Fertilizers

Total Inventories Php 200,000

Salaries & Wages Monthly Yearly Annual Total

Manager / Owner 24 days x 350 = Php 100,800

Php 8,400

Sales Attendant (2) 24 days x 200 x 2= Php 187, 200 Php 288,000
+ Php 9,600 + 250 x
Driver (1) = 3 in 24 days = Php
Total 6,000 = Php 15,600

Operating Monthly Yearly Annual Total

Expenses:

Electricity Php 1,000 @ 12 Php 12,000

months

Water Php 500 @ 12 Php 6,000

months

Gasoline Php 15,000 @ 12 Php 180,000

months

Rent Expense Php 1,000 @ 12 Php 12,000

months
Taxes & Licenses Php 416.67 @ 12 Php 5,000
months

Salaries and Wages: 24 days x 350 = Php 100,800

Manager + Sales Php 8,400 Php 187, 200
attendant + Driver 24 days x 200 x 2=
Php 9,600 + 250 x
24 = Php 6,000=
Php 24,000

Repair and Php 2,500 @ 12 Php 30,000

Maintenance months

Depreciation Php 1,250 @ 12 Php 15,000

Expense months

Total Monthly Php 45, 666.67 Php 548,000.00 Php 548,000.00

Operating
Expenses
Monthly Sales

Inventories Sales - Cost of Sales Gross Margin

Agrivet + Agricultural Php 260,000 200,000 = Php 60,000.00

Supplies Php 60,000.00

Direct Labor / Salaries Php 24,000

& Wages

Operating Expenses Php 21,666.67 (Php 45, 666.67)

/Overhead

Gross Profit Php 14,333.33

Interest Expense (Php 1,000.00)

Net Profit before tax Php 13,333.33

Return of Investment Yearly net profit before 0.3893or 38.93%

tax / Total Initial
Investment
Payback period Total initial investments /
Monthly net profit before
tax + Monthly
Depreciation expense
28.18 months
2.35 years
2 years, 4 months, 4
days, 3 hours, 53
minutes, 14 seconds
and 8 milliseconds.

Projected Financial Statements

Kitski Agrivet & Agricultural Supplies

Statement of Financial Position (Balance Sheet)
As of the Beginning of the Year 2017

Assets:
Current Assets
Cash Php 50,000
Prepaid Rent 12,000
Prepaid Taxes 5,000
Accounts Receivables 0
Inventories 200,000
Total Current Assets Php 267,000

Non-Current Assets
Equipment Php 150,000
Total Non-Current Asset 150,000
 Php
Total Assets
417,000.00

Liabilities:
Current Liabilities
Accounts Payables Php 11,066.67
Interest Payable 3,333.33
Taxes Payable 2,600
Non-Current Liabilities
Loan (Bank) @ 6% per annum for 5 years 200,000
Total Liabilities 267,000

Owners Equity Php 200,000

Php
Total Liabilities & Owners Equity
417,000.00

Kitski Agrivet & Agricultural Supplies

Statement of Financial Performance (Income Statement)
For the Month ended January 31, 2017

Php
Sales: 260,000

(Php200,
Cost of Sales:
000)

Php
Gross Margin: 60,000

Operating Expenses:
Electricity Php
1,000
Water 500
Gasoline 15,000
Rent Expense 1,000
Taxes & Licenses 416.67
 Salaries and Wages 24,000
Repair and Maintenance 2,500
Depreciation Expense
(Equipment-Multicab) 1,250
44666.6 Php44,6
Total Operating Expenses
7 66.67
Gross Php15,3
Profit 33.33
(Php
Interest Expense
1,000)
Php14,3
Profit before Taxes 33.33
(Php
Taxes Incurred 2,600)
Php11,7
Net Profit 33.33

Kitski Agrivet & Agricultural Supplies

Cash Flow Statement
For the Month ended January 31, 2017

Sources of Cash
Sales Php 260,000
Loan Proceeds 200,000
Total Cash In Php 460,000

Uses of Cash
Cost of Goods Sold Php 200,000
Equipment (Multicab) 150,000
Operating Expense 44,666.67
 Interest Expense 1,000
Loan (Principal Payments 3,333.33
Taxes (1% of Gross Sales) 2,600
Total Cash Out Php 401,600
Net Change in Cash 58,400
Plus Beginning Cash on Hand 50,000
Php
Ending Cash on Hand 108,400.00

Kitski Agrivet & Agricultural Supplies

Statement of Changes in Capital
For the Month ended January 31, 2017

Kitski Capital Beginning (01-01-

Php 200,000
17)
Net Profit Php 14,333.33
Kitski Capital Ending (01-31-17) Php 214,333.33

Financial Analyses
Ratio Analysis

Profitability Ratio Analysis

Net Profit Php 128,800

Return on Investment =
Total Assets Php 642,800

Return on Investment = 0.2003 or 20.03 %

 Net Profit Php 128,800
Return on Equity =
Net Worth Php 328,800

Return on Equity = 0.3917 or 39.17 %

Liquidity Ratio Analysis

Php
Current Assets 507,800
Current Ratio =
Php
Current Liabilities 154,000

Current Ratio = 3.2974 : 1

Solvency Ratio Analysis

Current Assets Php 277,800

Quick Ratio =
Current Liabilities Php 154,000

Quick Ratio = 1.8038 : 1

Investment Analysis

Net Present Value

1
Net Present Value = Initial Investment x
(1+r)^n

Payback Period
 Total Initial Investment Php 411,000
Payback Period =
Profit before Taxes+ Php175,000
Depreciation Expenses

2.3486 years or 2 years

Payback Period =
& 4 months

Financial Statement Supporting Schedules