FINANCIAL ASPECT
The financial aspect of the project feasibility study quantifies the results of the
marketing, technical, management, taxation and legal phase of the project study and
expresses in peso terms the possible outcome of operating the project.
1. Statements of assumptions;
2. Possible sources of outside financing, if the capital requirements cannot be met
entirely by the proponents;
3. Projected financial statements;
4. Details of various amounts contained in the projected financial statements; and
5. Analysis of the financial projections
Basically, project studies consist of the skillful coordination of the various information
on all the factors in the form of financial projections. It covers all the factors that are pertinent
to an intended venture having established the existence of a sample market and the feasibility
of the production facilities to supply this market, the investigation should move on the study of
finance cost. What remains is to study the result of the market and technical studies. The
projected financial statements are based on the following assumptions:
1. The expenses on utilities such as light and water, internet and telephone bills and
maintenance are expected to remain unchanged.
2. Straight-line method is used in depreciating identifiable assets. The useful life of
the identifiable assets are the following:
a. Property, Plant and Equipment
i. Desktop Computer 5 years
ii. Transportation Van 10 years
iii. Telephone 10 years
iv. Cellphone 10 years
v. Vacuum Cleaner 4years
vi. Air conditioning unit 10 years
b. Furniture and fixtures
i. Office chair 6 years
ii. Office tables 6 years
iii. Sofa 8 years
3. Also, the following levels of current assets are assumed as follows:
a. Supplies
4. Service revenue for the first year is expected to increase 20% every month. After
the first year of operation, the capacity level is expected to be at 60%. The service
fee is expected to increase by 10% annually after the first year of operation
Storekeeper 1 5,000
Gardener 2 60/hour 3 hours 2 720 18,000
Laundry 2 35/kilo 10 kilo 2 1,400 35,000
Cook 2 60/hour 2 hours 3 720 18,000
All-around 2 100/hour 3 hours 2 1,200 30,000
Total Service fee 1st month 101,000
5. The Salaries expense is estimated as follows: it will increase accordingly with the
service fee.
6. Average service fee is expected to increase 20% annually based on the expected
capacity level to be render.
7. Fixed Selling and Administrative Expenses annually are estimated as follows:
a. Advertising will be once every month. The advertising cost is estimated to
be 2,000 per month. The Flyers and Calling Cards will only be used for the
first two months of operation. Flyers and Calling Cards estimated cost is
400 and 500 respectively. Advertising will only be implemented on the first
two years of operation of the business.
9. Depreciation Expense was not included from fixed expenses. The depreciation for
the Property, Plant and Equipment and the Furniture and Fixture are estimated as
follows:
12. The 7 partners are willing to invest Php500,000 each at the start of the business.
13. A term loan of Php500, 000 may be obtained from United Coconut Planters Bank
(UCPB) at the beginning of year 2. Interest rate per annum is 10%. The loan will
be amortized within one year, principal plus interest beginning at year 2.
14. Another loan of Php 1,000,000 may be obtained from UCPB at the beginning of
year 3. The loan will be amortized over 5 years, principal plus interest beginning at
year 3.
15.
Pre-operating expenses
Business registration
SEC legal researcher fee 1,015.00
Business registration 500
.00
Name reservation SEC 120.00
Community Tax certificate 500.00
Barangay Clearance 500.00
Business Permit/Mayor's permit 1,000.00
Registration of Books of Account 400.00
Registration with Bureau of Internal
Revenue 500.00
Printing of invoices and receipts 2,000.00 6,535.00
Advertising materials
Flyers 400
Calling Cards 500
Signage 1000
Radio advertisement 1000 2,900.00
Total Pre-operating Expenses 9,435.00