FINANCIAL FEASIBILITY

This chapter discusses the financial aspects of the study to

determine whether the future industry will remain profitable through the

existence of competitors and unfavorable economic condition, the

researchers have to project a five-year financial statement.

Assumptions:

Revenue and Costs

1. Sales will increase by 15% each year starting from the second year.

2. Ingredients and packaging costs will increase by 5% every year.

3. Kitchen supplies, cleaning materials, and office supplies will

increase 5% starting from the second year.

4. Salaries and wages will increase by 8% each year.

5. Equipment will depreciate according to its lifespan.

6. Partners will withdraw capital in the third year.

Inventory and Operations

1. From the second year, starting inventory will be 10% of production

cost.

2. The bakery will acquire 75% of its target customer base within the

first year.

3. A 35% income tax will be applied.

4. Rent is fixed at ₱240,000 per year.

5. Utilities (electricity, water, and gas) and promotional expense are

variable costs. Their expenses will increase or decrease depending

 on the bakery's activity level. If the bakery's operations increase,

causing the cost to increase. If operations decrease, the cost will

decrease.

Funding

1. The business starts with ₱1,800,000.00 in capital, which is equally

contributed by partners for setup and expenses.

Capital Requirements/Amount of Funding Required

Cost and Expense Schedule

Production cost and packaging will rise by 5% each year

Schedule 1: Pre-Operating Expenses

Year 1 Year 2 Year 3 Year 4 Year 5
₱769,980. ₱808,479. ₱848,902. ₱891,348. ₱935,915.
Production Cost
00 00 95 10 50
6,960 7,308 7,673 8,057 8,459
Packaging
.00 .00 .40 .07 .92
Total Pre-
₱776,94 ₱815,78 ₱856,57 ₱899,40 ₱944,37
Operating
0.00 7.00 6.35 5.17 5.43
Expenses

Schedule 2: Kitchen Supplies

Year 1 Year 2 Year 3 Year 4 Year 5
₱
₱ ₱ ₱ ₱
Kitchen Supplies 221,602.5
201,000.00 211,050.00 232,682.63 244,316.76
0

Schedule 3: Rent Expense

Monthly Annual Cost
20,000 ₱240,000.00

Schedule 4: Salaries and Wages

Year 1 Year 2 Year 3 Year 4 Year 5
₱ ₱ ₱ ₱ ₱
Operation Manager
172,800.00 186,624.00 201,553.92 217,678.23 235,092.49
Baker 158,400.00 171,072.00 184,757.76 199,538.38 215,501.45
Assistant Baker 139,680.00 150,854.40 162,922.75 175,956.57 190,033.10
Salesperson 139,680.00 150,854.40 162,922.75 175,956.57 190,033.10
Packaging
139,680.00 150,854.40 162,922.75 175,956.57 190,033.10
Personnel
Rolling Cart Driver 279,360.00 301,708.80 325,845.50 351,913.14 380,066.20
Total Salaries ₱1,029,600. ₱1,111,968. ₱1,200,925. ₱1,296,999. ₱1,400,759.
and Wages 00 00 43 46 44

Schedule 5: Cleaning Materials

Year 1 Year 2 Year 3 Year 4 Year 5
₱ ₱ ₱ ₱ ₱
Cleaning Materials
2,028.00 2,129.40 2,235.87 2,347.66 2,465.04

Schedule 6: Office Supplies

Year 1 Year 2 Year 3 Year 4 Year 5
₱ ₱ ₱ ₱ ₱
Office Supplies
1,351.00 1,418.55 1,489.48 1,563.95 1,642.15

Schedule 7: Utilities Expense

Monthly Annual
Expenses Expenses
Electric Bill ₱ 3,000.00 ₱ 36,000.00
Water Bill 2,500.00 30,000.00
Gas Bill 2,000.00 24,000.00
₱ ₱
Total
7,500.00 90,000.00

Schedule 8: Promotional Expenses

No. of
Cost Annual Cost
Duration
Free bundle 16,800.00 1 month 16,800.00
Poster 500.00 1 year 60,000.00
Social Media Campaign 500.00 1 year 60,000.00
₱
Total
28,800.00

Schedule 9: Office Furniture and Fixtures

Depreciation Expense
Item Amount Year 1 Year 2 Year 3 Year 4 Year 5

Office 1,910.00 955.00 1,910.00 0 0 0

Chair
Office 4,500.00 900.00 1,800.00 2,700.00 3,600.00 4,500.00
Table
Ceilin 3,950.00 1,975.00 3,950.00 0 0 0
g fan
Cabin 13,000.00 2,600.00 5,200.00 7,800.00 10,400.00 13,000.00
et
Total 23,360.00 ₱ 6,430.00 ₱ ₱ ₱ ₱
12,860.00 10,500.00 14,000.00 17,500.00

Schedule 10: Equipment

Depreciation Expense
Item Amount Year 1 Year 2 Year 3 Year 4 Year 5
 Computer 15,000.00 3,000.00 6,000.00 9,000.00 12,000.00 15,000.00
Oven 36,000 3,600.00 7,200.00 10,800.00 14,400.00 18,000.00
Bakery Rack 5,000 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00
Trolley
Spiral Dough 45,000.00 4,500.00 9,000.00 13,500.00 18,000.00 22,500.00
Mixer (8kg)
Dough Roller 59,000.00 5,900.00 11,800.00 17,700.00 23,600.00 29,500.00
(5x20)
Kneading table 14,000.00 1,400.00 2,800.00 4,200.00 5,600.00 7,000.00
Bakery Display 1,500.00 300.00 600.00 900.00 1,200.00 1,500.00
Case
Rolling Cart (bike 40,000 4,000.00 8,000.00 12,000.00 16,000.00 20,000.00
not included)
E-bike 30,000 3,000.00 6,000.00 9,000.00 12,000.00 15,000.00
Total ₱ 245,500.00 ₱ ₱ ₱ ₱ ₱
26,700.00 53,400.00 80,100.00 106,800.0 133,500.0
0 0

Schedule 11: Building Renovation

Item Cost Depreciation Expense
Year 1 Year 2 Year 3 Year 4 Year 5
Building 100,000.00 20,000.00 40,000.00 60,000.00 80,000.00 100,000.0
Renovation 0
Total ₱ ₱ 20,000.00 ₱ ₱ ₱ ₱100,000
100,000.0 40,000.0 60,000.0 80,000.0 .00
0 0 0 0

Working Capital Summary

Production Cost ₱ 769,980.00

Packaging 6,960.00

Kitchen Supplies 201,000.00

Rent Expense 240,000.00

Cleaning Materials 2,028.00

Office Supplies 1,351.00

Utilities Expense 90,000.00

Promotional 28,800.00

Office Furniture & 23,360.00

Fixtures

Equipment 245,500.00

Building Renovation 100,000

Total ₱ 1,708,979.00
 Schedule 12: Statement of Goods Sold

Year 1 Year 2 Year 3 Year 4 Year 5

Beg. - 76,998.00 88,547.70 93,745.07 98,509.32
Inventory
Add:
Pre- 769,980.00 808,479.00 848,902.95 891,348.10 935,915.50
Operating
Supplies
Cost of 769,980.00 885,477.00 937,450.65 985,093.17 1,034,424.8
Good Sold 2

Source of Financing

Pan de Cucurbita
Initial Capital Requirements

Partners Percentage Invested Amount

Basco, Riza Jane 17% ₱ 300,000.00
De Leon, Mary Gayle 17 % 300,000.00
Geroche, Kaye Cassandra 17 % 300,000.00
Ocag; Alisa Marie 17 % 300,000.00
Salimbot, Howard Brian 17 % 300,000.00
Solidad, Gerlie 17 % 300,000.00
Total ₱ 1,800,000.00

Financial Projections:

Production cost and selling price

Bread Unit Producti No. of Unit Overhead Mark Mark Selling

(per on cost Producti Cost Cost 10% up % up Price
kilos) per day on price
Squashdesal 10 2,084.00 700 pcs 3 0.30 52% 1.71 5.00

Veggie 6 1,558.20 240 pcs 6.50 0.65 26% 1.86 9.00

Spanish Bread
Binangkal 6 928.20 210 pcs 4.42 0.44 23% 1.12 6.00

Ube Pan de 6 1,610.40 240 pcs 6.70 0.67 22% 1.62 9.00
Coco
Mongo 6 1,739.40 240 pcs 7.25 0.73 12% 0.96 9.00
Ensaymada

Revenue

Pan de Cucurbita Production

Bread Daily ( 8 Weekly ( 6 Monthly Annually

hours days
operation ) operation )
 Squasdesal 700 4,200 16,800 69,120.00
Veggie Spanish 240 1,440 5,760 69,120.00
Bread
Ube Pan de Coco 240 1,440 5,760 69,120.00
Monggo 240 1,440 5,760 69,120.00
Ensaymada
Binangkal 210 1,260 5,040 69,120.00

Projection Demand and Sales for 5 years

Demand Year 1 Year 2 Year 3 Year 4 Year 5

Squasdesal 201,600 231,840 266,616 306,608 352,599
Veggie Spanish 69,120 79,488 91,411 105,122 120,891
Bread
Ube Pan de Coco 69,120 79,488 91,411 105,122 120,891
Monggo 69,120 79,488 91,411 105,122 120,891
Ensaymada
Binangkal 60,480 69,552 79,984 91,982 105,779
Total

Sales
Squasdesal 1,008,000.0 1,159,200.0 1,333,080.0 1,533,040.0 1,762,995.0
0 0 0 0 0
Veggie Spanish 622,080.00 715,392.00 822,699.00 946,098.00 1,088,019.0
Bread 0
Ube Pan de Coco 622,080.00 715,392.00 822,699.00 946,098.00 1,088,019.0
0
Monggo 622,080.00 715,392.00 822,699.00 946,098.00 1,088,019.0
Ensaymada 0
Binangkal 362,880.00 417,312.00 479,904.00 551,892.00 634,674.00
Total Sales ₱ 3,722,688. 4,282.081. 4,923,226. 5,661,726.
3,237,120. 00 00 00 00
00

Cash Flow Projection

Pan de Cucurbita
CashbFlow Projection
The year ended December 31 of the year

Referenc Year 1 Year 2 Year 3 Year 4 Year 5

es
Cash
Inflows
Cash
Beg
Sales

Total
Cash
Inflows

Less:
Cash
Outflows

Owner’s
Draw
Total
Cash
Outflow
Ending
Cash
Balance

Pan de Cucurbita
Projected Income Statement
The year ended December 31 of the year

Referenc Year 2 Year 2 Year 3 Year 4 Year 5

es
Sales 3,237,120 3,722,688. 4,282.081. 4,923,226. 5,661,726.0
S13
.00 00 00 00 0
Less: Cost of S12 769,980.00 885,477.00 937,450.65 985,093.17 1,034,424.82
Good Sold
Gross
Income

Less:
Operating
Expense
Rent
Expense
Salaries
and Wages
Packaging
Costs
Cleaning
Materials
Office
Supplies
Utilities
 Expense
Promotion
al Expense
Depreciati
on Expense
Total
Operation
Expense
Income Before
Tax
Less: Income
Tax(35%)
Net Income

Projected Balance Sheet

Financial Analysis

Payback Period

Return of Investment