FINANCIAL PLAN

This chapter is a financial statement that goes by a few different names profit

loss statement, income statement and essentially an explanation of how your

business made a profit over a certain period of time. Simply an overview of your

current business financials and projections for growth.

Financial Assumptions

The following concerns composed the major assumptions of the business

proposal.

 We assume a steadily growing market in line with growth at the

university and trends
 We assume industry standard gross margin
 We assume relative status quo regarding technology and trends in
coffee industry

1. The proposed business is started on September 1, 2018.

2. The proposed business targets 35% as its market share and it increments

1.03% annually.

3. Straight line method is used to compute the depreciation expense.

4. Budget for marketing amounting to P 2,350.00 is the same for the next years.

The proposed business will not increase its budget for marketing.

5. Production tools are expected to have a 1% increase annually.

6. Administrative supplies are expected to have a 1% increase annually.

7. Ram materials purchased are expected to increase 1% annually.

8. Inventories are expected to have 10% in the first year and 20% in the

succeeding years.

9. Cleaning supplies are expected to have 3% increase annually.

10. Utilities expense is expected to increase by 3% annually.

11. There will be increase of P 1,500.00 for the repair and maintenance annually

which starts from P 3,000.00.

12. Rent expense will be constant for the next 5 years

13. The effect of inflation in labour will be ignored

14. Permits and Licenses are expected to increase by 1% annually.

15. Mobility expense is expected to be constant for the next 5 years.

16. There will be no withdrawal on the first-year operation of the business. Cash

withdrawal will start from the second year of the operation amounting of

P100,000.

17. Average Selling Price will be P500.00 on the first year, P510.00 on the second

and third year and P520.00 on the fourth and fifth year.

Project Cost

The total capitalization requirement of the proposed business, Bread and

Brewed is P371,717.00. The composition of which is presented on the table below:

Table 1

Allocation of Capital Requirements

Category Description Estimated Cost

Legal expense Legal fees 50, 700.00

Marketing promotion Marketing and promotion fees 84,509.00

Consultant fee Consultant fees 71,499,00

Labor expense Labor expense fees 35,009.00

Operating capital Operating capital fees 50,000.00

Start- up capital Startup inventory fees 20,000.00

Equipment Equipment fees 60,000.00

 TOTAL 371,717.00

Table 1 presents the category description, estimated cost. The breakdown of

the capitalization of the proposed business. It will cover the acquisition of necessary

business legalization.

Project Financing

The project will be financed through the savings of the sole proprietor.

Financial Statements

Table 2

Bread and Brewed

Comprehensive Income

For the Years Ended September 1, 2018-2022

2018 2019 2020 2021 2022

Revenue 150,000 154,500 159,135 167,092 175,446

Cost of 67,500 69,525 71,611 75,191 78,951

sale

Gross 82,500 84,975 87,534 91,900 96,400

margin

Insurance 3,000 3,600 4,000 4,000 4,000

expense

Interest 1,800 1,200 - - -

expense

Income 38,100 40,995 36,676 36,787 41,098

before

taxes

Income 13,335 14,376 12,676 12,887 14,577

 taxes

net 24,789 26,098 24,098 23,009 26,700

income

Table 2 shows the projected comprehensive income for five years operation.

This calculation shows the overall profitability of the company as well as how

efficiently the company is at generating profits from total revenues. It indicates that

the proposed business has profit from the year 2018 to 2022.

Table 3

Bread and Brewed

Cash Flow
For the Years Ended September 1,2018-2022
2018 2019 2020 2021 2022
Net income 25,765 26,647 24,034 23,978 26,700
Add back 3,000 3,000 3,000 3,000 3,000
depreciation
Changes in
working in
capital
Accounts 10,000 2,000 4,000 2,000 4,000
receivable
Prepaid - 12,000 4,000 4,000 4,000
expenses
Accounts 2,000 2,000 1,000 1,000 3,000
payable
Customer 1,500 1,000 1,000 1,000 1,000
deposit
Interest 1,800 600 600 600 -
payable
Taxes payable 13,335 1,013 1,412 - 1,491
Cash flow 36,400 18,560 36,423 34,423 35,192
from operating
activities
Amount paid 10,000 - - - -
for equipment
Amount paid 15,000 - - - -
for furniture&
fixtures
Cash flow 25,000
from investing
activities
Proceeds from 60,000 - - - -
bank loan
Proceeds from - - 10,000 - -
issuing capital
Repayment of - 20,000 20,000 20,000 -
bank loan
Cash flow 60,000 20,000 20,000 20,000 -
from financing
activities
 Net increase 101, 400 1,440 24,023 14,282 35,192
(decrease in
cash
add beg. Cash - 101,400 99,960 123,983 141,994
bal.
Ending cash b 101,400 99,960 123,983 138,264 177,136

Table 3 shows the cash disbursement and allocation for the five years. Cash

flow statement is consisting of three activities namely operating activities,

investing activities and financing activities. The table shows cash flow’s net

increase(decrease) from the year 2018– 2022.

Table 4
Bread and Brewed
Changes in Owners’ Equity
As of September 1,2018-2022

Capital 2018 2019 2020 2021 2022

Beginning Capital 410,000.00 512,296.12 545,752.77 572,178.82 637,768.52
Add: Income 102,296.12 133,456.65 126,426.05 165,589.70 187,191.96
Less: Withdrawals - 100,000.00 100,000.00 100,000.00 100,000.00
Ending Capital 512,296.12 545,752.77 572,178.82 637,768.52 724,960.48

Table 4 shows the projected owners’ equity of Bread and Brewed. The

statement begins with the opening equity balance for the period, adding and

subtracting items over time such as income and withdrawals. The ending balance

from the year 2018 – 2022.

 Table 5
Bread and Brewed
Financial Position
As of September 1, 2018 - 2022

Notes 2018 2019 2020 2021 2022

Assets
Current Assets
Cash SCF 392,297.30 384,769.85 508,763.74 588,165.46 589,982.54
Inventory Note 72,682.72 112,970.79 124,655.50 130,156.96 134,789.69
4
Prepaid Rent 6,000.00 6,000.00 6,000.00 6,000.00 6,000.00
Total Current Assets 550,980.02 593,740.64 599,419.24 674,322.42 800,772.23

Non-Current Assets

Factory Equipment Note 18,659.20 13,994.40 9,329.60 4,664.80 -

5
Furniture and Fixtures Note 57,998.40 43,498.80 28,999.20 14,499.60 -
6

Total Non-Current Assets 76,657.60 57,493.20 38,328.80 19,164.40 -

Total Assets 517,637.62 551,233.84 577,748.04 643,486.82 730,772.23

Liabilities and Equity

Current Liabilities

Percentage Tax Payable Note 2,139.00 2,278.57 2,366.72 2,515.80 2,609.25

7
Other Current Liability Note 3,202.50 3,202.50 3,202.50 3,202.50 3,202.50
8
Total Current Liability 5,341.50 5,481.07 5,569.22 5,718.30 5,811.75

Total Liabilities 5,341.50 5,481.07 5,569.22 5,718.30 5,811.75

Capital 512,296.12 545,752.77 572,178.82 637,768.52 724,960.48

Total Liabilities and 520,637.62 581,233.84 587,748.04 663,486.82 800,772.23
Capital

Table 5 presents the projected statement of financial position for five years.

The total assets from 2018 to 2019. The total liabilities and owner's equity are

equivalent to the total assets.

 Table 6

Bread and Brewed

Financial Statements
As of September 1,2018 - 2022
Note 1

Sales

2018 2019 2020 2021 2022

Total Sales in
units 3,267.00 3,233.00 3,009.00 3,565.00 2,500.00
x Selling Price 500.00 510.00 510.00 520.00 520.00
Total Sales 899,009.00 915,345.00 988,009.00 250,320.00 1,053,800.00

Note 2

Cost of Sales

2018 2019 2020 2021 2022

Raw Materials, Beginning - 11,608.51 24,610.04 27,082.65 28,561.00
Purchases of Raw Materials 232,170.20 234,491.90 246,216.50 258,527.32 271,453.69
Total Raw Materials Available 232,170.20 246,100.41 270,826.54 285,609.97 300,014.69
Less: Raw Materials, end 11,608.51 24,610.04 27,082.65 28,561.00 30,001.47
Total Raw Materials Used 220,561.69 221,490.37 243,743.89 257,048.97 270,013.22
Direct Labor (Schedule 1) 115,350.00 115,350.00 115,350.00 115,350.00 115,350.00
Manufacturing Overhead (Schedule 2) 85,289.80 86,096.05 86,910.36 87,732.81 88,563.50
Total Manufacturing Cost 421,201.49 422,936.42 446,004.25 460,131.78 473,926.72
Add: Work in Process, Beginning - 21,060.07 44,399.65 49,040.39 50,917.22
Goods Placed in Progress 421,201.49 443,996.49 490,403.90 509,172.17 524,843.94
Less: Work in Process, Ending 21,060.07 44,399.65 49,040.39 50,917.22 52,484.39
Cost of Goods Manufactured 400,141.42 399,596.84 441,363.51 458,254.95 472,359.55
Add: Finished Goods, Beginning - 40,014.14 43,961.10 48,532.46 50,678.74
Total Goods Available for Sale 400,141.42 439,610.98 485,324.61 506,787.41 523,038.29
Less: Finished Goods, Ending 40,014.14 43,961.10 48,532.46 50,678.74 52,303.83
Total Cost of Sales 360,127.28 395,649.88 436,792.15 456,108.67 470,734.46

Schedule 1

Direct Labour

2018 2019 2020 2021 2022

Bakers' Salary 104,680.00 104,680.00 104,680.00 104,680.00 104,680.00
SSS 8,570.00 8,570.00 8,570.00 8,570.00 8,570.00
PHIC 1,800.00 1,800.00 1,800.00 1,800.00 1,800.00
HDMF 1,300.00 1,300.00 1,300.00 1,300.00 1,300.00
Total Direct Labor 116,350.00 116,350.00 116,350.00 116,350.00 116,350.00

Schedule 2

Manufacturing Overhead

2018 2019 2020 2021 2022

34,025. 36,375. 36,729. 37,086. 38,447.
Production Tools 00 25 00 29 16
33,200. 33,512. 33,827. 33,145. 33,466.
Electricity 00 00 12 39 85
24,400. 24,544. 24,689. 24,836. 24,984.
Water 00 00 44 33 69
Depreciation of Manufacturing 5,664. 5,664. 5,664. 5,664. 5,664.
Equipment 80 80 80 80 80
88,289. 89,096. 90,910. 91,732. 92,563.
Total Factory Overhead 80 05 36 81 50

Note 3

Selling and Administrative Expenses

2018 2019 2020 2021 2022

Salaries and Wages 240,880.0 240,880.0 240,880.0 240,880.0 240,880.0
0 0 0 0 0
Contributions 26,760.00 26,760.00 26,760.00 26,760.00 26,760.00
Depreciation of F&F 14,499.60 14,499.60 14,499.60 14,499.60 14,499.60
Taxes and Licenses 5,740.00 5,797.40 5,855.37 5,913.93 5,973.70
Rent Expense 72,000.00 72,000.00 72,000.00 72,000.00 72,000.00
Repairs and Maintenance 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00
Cleaning Expenses 3,428.00 3,462.28 3,496.90 3,531.87 3,567.19
Admin supplies 5,519.00 5,574.19 5,629.93 5,686.23 5,743.09
Advertising Expenses 2,350.00 2,350.00 2,350.00 2,350.00 2,350.00
Mobility Expenses 8,000.00 8,000.00 8,000.00 8,000.00 8,000.00
Renovation Expenses 12,000.00 - - - -
Total Selling and Administrative 366,176.6 367,323.4 388,471.8 399,621.6 399,773.5
Expenses 0 7 0 3 8

Note 4

Inventories

2018 2019 2020 2021 2022

Raw Materials end 11,608.51 24,610.04 27,082.65 28,561.00 30,001.47
Work in Process
end 21,060.07 44,399.65 49,040.39 50,917.22 52,484.39
Finished Goods end 40,014.14 43,961.10 48,532.46 50,678.74 52,303.83
Total Inventories 82,682.72 115,970.79 130,655.50 136,156.96 138,789.69

Note 5

Factory Equipment

2018 2019 2020 2021 2022

Factory Equipment 24,324.00 24,324.00 24,324.00 24,324.00 24,324.00

Less: Accumulated
Equipment 5,774.80 5,369.60 15,900.40 20,900.20 25,333.00

Total Book Value 20,999.20 16,794.40 10,389.60 5,864.80 -

Note 6

Furniture and Fixtures

2018 2019 2020 2021 2022

Furniture and Fixtures 88,990.00 88,990.00 88,990.00 88,990.00 88,990.00

Less: Accumulated
Equipment 24,499.60 38,899.20 55,498.80 67,898.40 88,990.00

Total Book Value 77,998.40 53,498.80 30,999.20 24,499.60 -

Note 7

Percentage Tax Payable

Percentage Tax
Payables 2018 2019 2020 2021 2022
755,600 811,430 846,690 2,006,320 2,093,700
Net Sales .00 .00 .00 .00 .00
Multiply: 3% 3% 3% 3% 3% 3%
Annual Percentage 25,668. 27,342. 28,400. 30,189. 31,311.
Tax 00 90 70 60 00
Divided by 12 months 12 12 12 12 12
Percentage Tax 2,134. 2,278. 2,366. 2,515. 2,609.
Payable 00 58 73 80 25
 Note 8

Other Current Liability

2018 2019 2020 2021 2022

Contribution 3,202.5 3,202.5 3,202.5 3,202.5
Beginning - 0 0 0 0
38,430.0 38,430.0 38,430.0 38,430.0 38,430.0
Contribution Expense 0 0 0 0 0
35,227.5 38,430.0 38,430.0 38,430.0 38,430.0
Contribution Paid 0 0 0 0 0
3,202.5 3,202.5 3,202.5 3,202.5 3,202.5
Contribution End 0 0 0 0 0

Financial Ratios

Financial Ratios play a vital role in the decision making of the business.

Financial ratios have great contributions to the proponent because it is the turning

points of the proposed business. Financial ratios are determining factors in the

decision making for feasibility studies. Whether a project is feasible or not, financial

ratios can answer it.

The following tables and graphs show the financial ratios of the proposed
business.

Return on Investment

The return on investment (ROI) is the most common profitability ratio. ROI

deals with the money invested in the company and the return that will realize on that
money based on the net profit of the business. It is a performance measure used to

evaluate the efficiency of investment.

Profit
Formula: ROI =
Investmet

Table 7

Return on Investment

2018 2019 2020 2021 2022

Net Income 202,296.12 233,456.65 226,426.05 265,589.70 287,191.96

Investment 371,717.00 371,717.00 371,717.00 371,717.00 371,717.00

Return on
Investment 25% 33% 31% 40% 46%

Return on Investment
46%

40%

31%

33%

25%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Figure 13

Return on Investment

Table 6 shows the trend of return on investment of the proposed business

from the year of 2018- 2022. It illustrates that Bread and Brewed is efficient in using

its investment for the first 5 years of its business operation.

Return on Equity
 Return on equity (ROE) is more than a measure of profit; it's a measure of

efficiency. A rising ROE suggests that a company is increasing its ability to generate

profit without needing as much capital. It also indicates how well a business

management is deploying the owner's capital. In other words, the higher the RO the

better.

Profit
Formula: ROE =
Equity

Table 8

Return on Equity

2018 2019 2020 2021 2022

Net Income 102,296.12 133,456.65 126,426.05 165,589.70 187,191.96

Equity 512,296.12 545,752.77 572,178.82 637,768.52 724,960.48

Return on
Equity 20% 24% 22% 26% 26%

Return on Equity
26%

26%

22%

24%

20%

0% 5% 10% 15% 20% 25% 30%

Figure 14

Return on Equity

Table 8 shows the computed return on equity of the proposed business from

the year 2018 – 2022. The higher the percentage the higher the cash generation,
therefore, the business is profitable. It also exemplifies that the Bread and Brewed

has its ability to produce profit without requiring as much capital

Return on Total Assets

Return on assets is a profitability ratio that provides how much profit a

company is able to generate from its assets. In other words, return on assets

measures how efficient a company's management in generating earnings from their

economic resources or assets on their balance sheet. ROA is shown as a

percentage, and the higher the number, the more efficient a company's management

is at managing its balance sheet to generate profits.

Profit
Formula: ROTA =
Average Total Assets
 Table 9

Return on Total Assets

2018 2019 2020 2021 2022

Net Income 102,296.12 133,456.65 126,426.05 165,589.70 187,191.96

Average Total
Assets 517,637.62 534,435.73 564,490.94 610,617.43 687,129.53
Return on Total
Assets 20% 25% 22% 27% 27%

Return on Total Assets

27%

27%

22%

25%

20%

0% 5% 10% 15% 20% 25% 30%

Figure 15

Return on Total Assets

Table 9 shows the computed return on total assets of the proposed business

from the year of 2018 to 2022. It depicts that Bread and Brewed will be efficient in

using its assets for the first 5 years of its business operation.

Current Ratio
 The current ratio is probably the best known and most often used of the

liquidity ratios, which use to evaluate the firm's ability to pay its short-term debt

obligations.

Current Assets
Formula: Current Ratio =
Current Liabilities

Table 10

Current Ratio

2018 2019 2020 2021 2022

Current Assets 440,980.02 493,740.64 539,419.24 624,322.42 730,772.23
Current Liabilities 5,341.50 5,481.07 5,569.22 5,718.30 5,811.75
Current Ratio 82.56 90.08 96.86 109.18 125.74

Current Ratio
125.74

109.18

96.86

90.08

82.56

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00

Figure 16

Current Ratio
 Table 10 shows the current ratio of the proposed business from the year 2018

to 2022. It indicates that the company is able to satisfy its current liabilities through

current assets.

Gross Profit Margin

Gross profit margin is a metric used to assess a company's financial health

and business model by revealing the amount of money left over from sales after

deducting the cost of goods sold.

Gross Profit
Formula: GPM =
Sales

Table 11

Gross Profit Margin Ratio

2018 2019 2020 2021 2022

Gross Profit 595,472.7 555,780.1 510,897.8
2 2 5 550,211.33 572,965.54
Sales 855,600.0 911,430.0 946,690.0 1,006,320.0 1,043,700.0
0 0 0 0 0
Gross Profit Margin
Ratio 58% 57% 54% 55% 55%

Gross Profit Margin

55%

55%

54%

57%

58%

50% 52% 54% 56% 58% 60%

Figure 17
 Gross Profit Margin Ratio

Table 11 that gross profit margin shows an above 50% which entails financial

stability and overall health of the business.

Net Profit Margin

Net profit margin is the percentage of revenue left after all expenses have

been deducted from sales. The measurement reveals the amount of profit that

business can extract from its total sales.

Net Profit
Formula: NPM =
Sales

Table 12

Net Profit Margin Ratio

2018 2019 2020 2021 2022

Net Profit 102,296.12 133,456.65 126,426.05 165,589.70 187,191.96

1,006,320.0 1,043,700.0
Sales 855,600.00 911,430.00 946,690.00 0 0
Net Profit Margin
Ratio 12% 15% 13% 16% 18%
 Net Profit Margin
18%

16%

13%

15%

12%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Figure 18

Net Profit Margin Ratio

Table 12 shows the net profit margin of the proposed business from the year

2018 to 2022. It illustrates that the proposed business is more efficient at converting

sales into actual profit.

Annual Cash Inflow

Cash flow is the direct result of the cash transactions that a company has

carried out in operations, investments and financing.

Table 13

Annual Cash Inflow

2018 2019 2020 2021 2022

182,296.1 135,456.6 139,426.0 169,589.7 197,191.9
Income 2 5 5 0 6
Add: Non-Cash
Expenses 19,164.40 19,164.40 19,164.40 19,164.40 19,164.40
121,460.5 152,621.0 145,590.4 184,754.1 206,356.3
Annual Cash Inflow 2 5 5 0 6
 Annual Cash Inflow
206,356.36

184,754.10

145,590.45

152,621.05

121,460.52

- 50,000.00 100,000.00 150,000.00 200,000.00 250,000.00

Axis Title

Figure 19

Annual Cash Inflow

Table 13 shows the computed annual cash inflow of the proposed business

from the year 2018 to 2022. It indicates positive cash flow and represents that the

business is enabled to settle debts, reinvest in its business, return money to the

owner, pay expenses, and provide a buffer against future financial challenges.

Payback Period

The payback period states to the amount of time it takes to recover the cost of

an investment.

Table 14

Payback Period
 Unrecovered Annual Cash Time Needed for
Year Investment Inflow Payback (Years)
2018 371,717.00 131,675.52 1
2019 388,899.48 252,631.05 1
2020 238,968.43 245,590.45 0.93
2021
2022
Total 2.93

Table 14 shows the Investment of P371,717.00 will be recovered by the

proposed business in 2 years, 11 months and 5 days.