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Ateneo de Davao University

School of Business and Governance

A Feasibility Study on the Establishment of a


Davao Polyethylene (PET) Flakes Terephthalate Processing Plant
Submitted by:
Ariane Gail Cezar
Dominic Carl Gepiga
Canille Matuguinas
Beverly Anne Navales
Dorin Dana Toloy
Neil Yee

Submitted to:
Rhea Jane Carpio
October 2014

Acknowledgement

We would like to take this opportunity to thank and acknowledge the persons behind the
accomplishment of this project feasibility study.

First and above all, we praise and thank God for giving us the ability to do this project,
the strength and courage to face the challenges given to us.

To our parents, who did not only support us financially, but also encouraged us to go
beyond our comfort zone just to finish this undertaking.

To our friends who believed in us.

To our panelists, Ms. Cleofe Arib and Ms. Jocelyn Joson for the recommendations and
suggestions for the betterment our work.

To our instructor, Ms. Rhea Jane Carpio for sharing with us her knowledge, for
entertaining our questions and for giving advice on how to improve our work.

Finally, a big thank you for all the people whose names we failed to mention, who
contributed in one way or another for the success of this project.

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Table of Contents
Acknowledgement ........................................................................................................................................ 2
Chapter 1 Summary of the Project ................................................................................................................ 5
1.1 Name of the Project ............................................................................................................................ 5
1.2 Location .............................................................................................................................................. 5
1.3 Descriptive Definition of the Project .................................................................................................. 6
1.4 Projects Long Range Objectives ........................................................................................................ 7
1.5 Feasibility Criteria.............................................................................................................................. 8
1.6 Highlights of the Project ..................................................................................................................... 9
1.7 Major assumptions and summary of findings and conclusion .......................................................... 11
Chapter 2 Market Study .............................................................................................................................. 15
2.1 Product Description .......................................................................................................................... 15
2.2 Market Description ........................................................................................................................... 16
2.3 Demand ............................................................................................................................................. 19
2.4 Supply................................................................................................................................................ 21
2.5 Demand-Supply Analysis .................................................................................................................. 25
2.6 Price Study ........................................................................................................................................ 26
2.7 Marketing Program .......................................................................................................................... 28
Chapter 3 Technical Feasibility .................................................................................................................. 32
3.1 The Product....................................................................................................................................... 32
3.2 Manufacturing Process ..................................................................................................................... 34
3.3 Plant size and Production Schedule.................................................................................................. 38
3.4 Machinery and Equipment ................................................................................................................ 41
3.5 Plant Location................................................................................................................................... 57
3.6 Plant Layout ...................................................................................................................................... 58
3.7 Building and Facilities ...................................................................................................................... 60
3.8 Raw Materials and Supplies ............................................................................................................. 60
3.9 Utilities.............................................................................................................................................. 66
3.10 Waste Disposal................................................................................................................................ 75
3.11 Production Cost .............................................................................................................................. 76
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3.12 Labor Requirements ....................................................................................................................... 77


Chapter 4 Financial Feasibility ................................................................................................................... 80
4.1 Major Assumptions ........................................................................................................................... 80
4.2 Total Project Cost ............................................................................................................................. 82
4.3 Initial working capital requirements................................................................................................. 83
4.4 Alternative Sources of Financing ...................................................................................................... 85
4.5 Sources of financing the project........................................................................................................ 85
4.6 Pro-forma financial statements ........................................................................................................ 87
4.7 Financial Analyses .......................................................................................................................... 171
4.8 Accounting and Control Plan ......................................................................................................... 198
Chapter 5 Socio-Economic Study ............................................................................................................. 212
5.1 Social and Economic Development................................................................................................. 212
5.2 Government Revenues ..................................................................................................................... 213
5.3 Supply of Commodities ................................................................................................................... 216
Chapter 6 Organization and Management Study ...................................................................................... 218
6.1 Basic consideration in forming the organization ............................................................................ 218
6.2 Form of ownership .......................................................................................................................... 219
6.3 Organizational Chart ...................................................................................................................... 220
6.4 Officers and Key Personnel ............................................................................................................ 220
6.5 Project Schedule ............................................................................................................................. 224
Chapter 7 Recommendation ...................................................................................................................... 227
Appendices................................................................................................................................................ 228
Bibliography: ............................................................................................................................................ 229

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Chapter 1 Summary of the Project


1.1 Name of the Project
This project is named Davao Polyethylene Terephthalate (PET) Flakes Processing
Plant. Polyethylene Terephthalate (PET) is included in the business name because the
proposed business entity processes PET plastic bottles into PET flakes. Furthermore,
Davao is included in the name of the project since it is the place where the project is to
be established. Also, its purpose is for suppliers, customers and other stakeholders to
easily locate and identify the company. Lastly, Davao is included in the name to
acknowledge that this project, if implemented, will be the pioneering PET flakes
processing plant in Davao City.
1.2 Location
The location of the plant is at Malagamot, Panacan, Davao City. It is 1.8
kilometers away from the highway.
The main reasons for choosing this location are the following. First, it is within
the industrial zone. Second, it is also near the port where we can ship or export our end
product. Third, it allows for truck transportation which is the mode of procuring supplies
from the various suppliers and delivering end product to the shipping port. Fourth, the
location does not require too much landscaping. Lastly, it is near other neighboring cities,
such as Panabo and Tagum, in case the business expands in terms of supply.

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1.3 Descriptive Definition of the Project


Polyethylene terephthalate (PET) is a thermoplastic polymer resin of the polyester
family which is used in synthetic fibers; beverage, food and other liquid containers;
thermoforming applications; and engineering resins.
This project proposes to establish a PET recycling plant. This plant will process
PET plastic into PET flakes. These flakes will be shipped outside the country for further
processing. The project is concerned with processing plastic with resin identification code
number 1which is found in the middle of the universal recycling symbol at the bottom of
the bottle. The PET flakes, which is the end product of the proposed business, is fiber
grade which is a raw material for making PET pellets which in turn is used in
manufacturing products like carpet, fillers for cushions, insulations in sleeping bags and
textiles for clothing, upholstery and fabrics.
Only few recycling plants are situated in Davao City and all of them are not
involved in producing PET flakes according to the data gathered from the Business
Bureau (see Appendix J). Thus this project will have great potential particularly in Davao
City, provided the fact that Davao City is the fourth progressive and competitive city in
the Philippines, according to the National Competitiveness Council.1 Moreover, not only
will it cater to Davaos supply of PET recyclables, it can also maximize Davao Citys
potential to minimize waste and thereby promoting a green environment. In conjunction
with this, the establishment of this project can also contribute positively to employment
and increase in gross domestic product in Davao City.

http://www.sunstar.com.ph/davao/business/2014/08/08/davao-4th-most-competitive-cities-358650

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1.4 Projects Long Range Objectives


To ensure the progress and continuous development of the proposed project, it is
very important to establish a clear set of objectives. This will serve as a guide that will
provide awareness of what the business must do to survive.
The proposed project aims to achieve the following goals after 10 years of operation:

To operate nationwide through creating contracts with suppliers from


different parts of the country. This means that the business will extend its
operations by creating contractual relations with junk shops in the nearby
cities and eventually in the different places of the country. The business
currently gets the raw materials from junk shops within Davao City only.

To be one of the leading suppliers of PET flakes from the Philippines. The
company expects to fully utilize its capacity to be able to cater more
customers in the international market.

To provide additional job opportunities by hiring competent and skilled


Filipinos. Since the business will be continually expanding, it is expected to
need more workers from the labor force. In achieving this goal, the company
also aims to prevent job mismatch.

To continually help and promote a sustainable environment and conduct


research to improve its operations.

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1.5 Feasibility Criteria


1.5.1 Market Feasibility

There is enough demand for the product outside the country.

A competitive advantage is enjoyed by the business.

There must be a stable supply for the business operations.

1.5.2 Technical Feasibility

The machineries employed by the business are functioning properly and of high
quality.

The process for recycling PET bottles can be determined and described.

Experts in handling machineries and operations are available.

Appropriate precautionary measures and/or devices are employed in the project.

1.5.3 Financial Feasibility

The initial cost of the project and capital requirements can be determined.

There are available alternative sources of financing.

The payback period must be congruent to the industrys payback period

1.5.4 Socio-economic Feasibility

The business must be able to employ workers in the community and help
improve their living.

The company must be able to help the community through payment of taxes to the
government.

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The project can help promote a safer and cleaner environment.

1.5.5 Organization and Management Feasibility

Appropriate training and seminars for employees are available.

Organizational chart with corresponding job descriptions are prepared in the


project.

1.6 Highlights of the Project


1.6.1 History
Plastics are inexpensive, lightweight and durable materials, which can readily be
used into a variety of products that find use in a wide range of applications which led to
an increase of production. However, levels of their usage and disposal generate several
environmental problems. Around 4 per cent of world oil and gas production, a nonrenewable resource, is used as feedstock for plastics and a further 34% is expended to
provide energy for their manufacture.2 A major portion of plastic produced each year is
used to make disposable items of packaging or other short-lived products that are
discarded within a year of manufacture. These two observations alone indicate that our
current use of plastics is not sustainable. In addition, because of the durability of the
polymers involved, substantial quantities of discarded end-of-life plastics are
accumulating as debris in landfills and in natural habitats worldwide.
Recycling is one of the most important actions currently available to reduce these
impacts. Recycling provides opportunities to reduce oil usage, carbon dioxide emissions
and the quantities of waste requiring disposal.

http://rstb.royalsocietypublishing.org/content/364/1526/2115.full

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One kind of plastics used today is the Polyethylene Terephthalate. PET plastics
are used as raw materials for packaging materials such as bottles and other containers for
packing a wide range of food, beverages, and other consumer products. Davao PET
Flakes Processing plant will be the first in Davao City that does the crushing process of
recycling PET plastic materials and to be exported thereafter. The proponents decided to
create this project because this kind of business does not exist yet in Davao City.
Moreover, the proponents, in setting up this business, based their success in the
increasing demand of PET flakes in the global business.
1.6.2 Nature of the Industry
According to the Davao City Business Bureau, there is no existing PET Flakes
Processing Company in the city. Globally, PET bottle flake business is increasing every
year. In fact, one of the highly potential & growing businesses of Bangladesh is PET
bottle flakes. The available raw good in 2009 was approximately 27,900 tons. The usages
of PET bottles are increasing up to 22% every year and the world market has chosen the
opportunity to use this PET for recycling and in many other purposes since the demand is
huge especially in China where there is a need for a large amount of PET flakes for
making fiber which is used in garments. PET Flakes can be used for the production of
new bottles, fibers, foils and other packages. Above 50% of Bangladesh flake is exported
to China.3 Also, Shazil Pakistan (PVT) Ltd. in Pakistan also became successful in their
recycling business which started only by producing PET flakes as a small processing unit

http://www.opexintbd.com/petflakes.html

10 | P a g e

and later became one of the large scale processing units in Pakistan, capable of producing
high quality PET bottle flakes of different colors and specs.4

1.6.3 Mode of Financing


Davao PET Flakes Processing Plants primary source of financing will be the
capital contribution of the partners. It will also consider short term debt from suppliers of
raw materials.

1.7 Major assumptions and summary of findings and conclusion


1.7.1 Market Feasibility
Based on the study, the polyester fibers demand has an average growth of 5%
during 2011-2025. It is assumed that the particular demand is correlated to PET flakes
demand. With respect to this, the demand for PET flakes is also increasing by 5% per
year. However, the current supply is not adequate which opens an opportunity for a PET
flakes processing plant. The unsatisfied demand of this particular product will be filled in
by the venture through providing a rising monthly supply of such. Hence, it is also
assumed that there is an existing market for the product due to its excess demand.
In terms of supply, there is no direct competitor in Davao City for there is no PET
flakes manufacturing company that is existing presently. Even though there are similar
plants in the Philippines, the intense competition is in the global market since the product

www.shazilpakistan.com/pbf.php

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will be marketed outside the Philippines. With this regard, the business will be offering
high quality products with a competitive price which will make it penetrate the industry.
As regards to demand-supply analysis, the demand growth of PET flakes will
continue as long as the polyester fibers demand will further rise in the coming years. The
supply growth is also expected to escalate for other business people will grab the chance
to take a share of the excess demand of PET flakes.
As part of its marketing program, the mode of advertisement to be utilized that
will suit this type of business is online advertisement and through website since many
customers of PET flakes place their orders via internet.

1.7.2 Technical Feasibility


DPET produces a fiber quality of flakes. The machineries to be used in processing
the particular product will be imported from a reliable company that is an established
manufacturer of the appropriate processing line. This serves as a factor of ensuring that
the standard of output will be met. Also, the raw materials will all be procured within
Davao City particularly from different junkshops near the location of the business which
meet the volume that the business needs thus securing its continuous operation. In
addition, it is assumed that there will be sufficient raw materials to be used in the
production because of the result of the survey and data gathered from the Business
Bureau of Davao City shown in the Appendix section of this study. It is also assumed that
the suppliers or junkshops listed can supply the company 100% of the volume stated in
the survey sheets. Moreover, the entity will implement appropriate production
supervision, proper maintenance and efficient usage of utilities. Furthermore, the

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processing line is big enough to produce a huge production volume. It can produce 500
kilos of PET flakes per hour.
1.7.3 Financial Feasibility
The project will incur losses in its first year of operations due to the high
investment costs, but will start to earn profit on its second year. It is assumed that the
initial investment will be enough for the business to start its operations. Also, it is
assumed that other sources of financing will be available in case of financial difficulties.
The business will be liquid from the start of its operation. Its current ratio on its five years
of operation is positive. It means that there are enough current assets to cover its current
liabilities thereby indicating that it will be able to pay its short-term payables as they
become due.

1.7.4 Socio-economic Feasibility


The establishment of DPET in the Philippines will have contributions on the
countrys social and economic development. These contributions are in line with the
Philippine Development Plan that pursues for sustainable economic growth, improved
quality of life of the Filipinos, empowered poor and marginalized and enhanced social
cohesion as a nation.5 These will affect particularly on employment and income, taxes,
supply of commodities and demand for materials. As a result, the establishment of this
business will give positive effects to the society.

http://www.neda.gov.ph/?p=1128

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1.7.5 Management Feasibility


The organizational structure of Davao Polyethylene Terephthalate (PET) Flakes
Processing Plant will comprise of the following:

Figure 1.7.5 Organizational Structure

This organizational structure is suitable for management need considering


DPETs type of business. Also, it presents segregation of duties which will make the
operations operate as desired with lesser chances for any unethical behavior. In addition,
supervision will be implemented to strengthen the internal control.

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Chapter 2 Market Study


2.1 Product Description
Davao Polyethylene Terephthalate Flakes Processing Plant (DPET) processes
used PET bottles into PET flakes which will be used as raw materials for certain products
which are enumerated in Chapter 3 Technical Aspect under Uses. PET stands for
Polyethylene Terephthalate. It is a thermoplastic polyether of terephthalic acid and
ethylene glycol. It is processed with certain quality and specification depending on its end
product, whether for fiber, food or non-food containers. DPET processes PET flakes in
fiber grade. (The specifications of this type of grade are described in full in Chapter 3
Technical Aspect under Properties, Uses and Quality.)
Because of its economic and environmental aspects, processing PET flakes is a
very attractive investment venture. They have high commercial value and are considered
good export commodity. Having low operating cost and low labor requirement in
manufacturing industry are some of the economic advantages of this process. 6 Moreover,
this process is environment friendly. In addition to recycling used bottles, no harmful
substances will be released during and after processing.
Research done by the proponents shows that PET flakes-producing companies are
prominent in Asia, particularly in China, Bangladesh and Pakistan. Some companies are
also located in Europe and India. Percentages for geographical dispersion of PET flakes
cannot be estimated brought about by limited data resources.

Retech Recycling Technology AB. System redoma, 2002. PET 700 PET bottle recycling plant.

15 | P a g e

2.2 Market Description


Based on the research conducted by the proponents, generally the major
consumers of the product are companies who produce polyester fibers, polyester sheets
strapping, and these consumers are mostly situated in China, India and in the US. The
product will be exported overseas which means shipping will be used as the means of
transportation. The tables below show the companies that buy PET flakes, fiber-grade.
The annual purchase volume given in the tables below gives a relative estimation of how
much each company demands.
Table 2.2.1a List of Potential Buyers
1

Company Name
Business Type
Location
Main Products:
Size (based on):
Annual Turnover
Number of
Employees
Main Markets
Product Quality
Selling Price:
Min Order (tons)
Annual Purchase
Volume
Unit Price

2
3
4
Zhejiang Jiali
Shanghai clean
Fujian Minrui
Renewable Resources D.K.Internation technology co.,
Chemical Fibre Co.,Ltd Co., Ltd
al Company
LTD.
Manufacturing
Manufacturing
Manufacturing Manufacturer
Shanghai port,
Fujian, China
CNF, Shanghai
China
Shanghai, China
PET Fibre
PET Fibre

Fibre

24,000 Tons

http://importer.ec21.com/buy

Reference

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_lead/Buy_PET_Flake-23639026.html

Clear Colored

Clear colored

15,600 Tons

6,000-12,000
Tons

http://importer.ec2
1.com/buy_lead/B
http://www.recyclechina.co uy_PET_Flakes-m/leads/details80384.htm
23490861.html

30,000 Tons
$800/MT

http://www.petflakespsf.com/?gclid=CMv
KpYryrcACFZcDvA
oda3kANg

Table 2.2.1b List of Potential Buyers


5

Company Name W.W Textile PET Flakes Genius Group


Steve Hong
Business Type Manufacturer Manufacturer
Manufacturing
Mazhen
Industrial Zone
Shanhai,
Wuxi, Anhui, 21000
Location
China
China
Busan, Korea
Main Products: PET Fibre
PET Fibre
Size (based on):
Annual Turnover
Number of
Employees
Main Markets
Product Quality
Fibre
Selling Price:
Min Order (tons)
Annual Purchase
Volume
18,000 Tons 96,000 Tons
3,600 Tons
Unit Price
$750/MT

Reference

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8
Optuniversal Llc
Manufacturer

Russia

6,000 Tons

http://europe.bloombiz.
http://www.2wte
http://importer.ec21.com/com/default.cgi/action/
xtile.com/Import.http://www.fuzing.com/vli/001buy_lead/Buy_PET_Flakviewcompanies/compan
htm
458c42250/PET-Flakes
es--23656299.html
yid/992656/

Table 2.2.1c List of Potential Buyers


9

10

Company Name

N/A

N/A

Business Type

Manufacturer

Location
Main Products:
Size (based on):
Annual Turnover
Number of Employees
Main Markets

Hongkong

Manufacturer
Flowery Branch
Georgia, USA

Product Quality
Selling Price:
Min Order (tons)

Clear, White PET Clear, White PET

Reference

Rushabh
International

12

Manufacturer

Zen Fasteners
Trading
Company

India

Delhi, India

5-50

Annual Purchase Volume 2,400 Tons


Unit Price

11

US $991 / MT

432 Tons
US $1212 / Metric
Ton

Clear, White PET

600 Tons

http://globalbuyersonl
ine.com/tradeleads/det
http://www.recycle.net http://www.recycle.net/c ails.asp?xpyr=702341
/cgigi&obj=SGDFGDFUJJ
bin/exview.cgi?item=L bin/exview.cgi?item=L 453BJHJ34JVBJBJ23
W1100258&w=01
W1101102&w=01
4BJ5H

$600-700/ Ton
http://www.recyclei
nme.com/rimzenfast19/buyoffer23819.aspx

From the tables above, the relative average annual purchase volume in China is
32,600 tons; in Korea, 3,600 tons; in Russia, 6,000 tons; in Hong Kong 2,400 tons; in
United States, 432 tons; and in India, 600 tons. Furthermore, the average price per ton in
China is $755; in Hong Kong, $991; in United States, $1,212; and in India $700. To
convert the dollar amounts to Philippine Peso, the proponents used the average exchange
rate found in Bangko Sentral ng Pilipinas in the past five years, which is 44.147 Php.

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Thus, the average price per ton in China is 33,330.99 Php; in Hong Kong, 43,749.68 Php;
in United States, 53,506.16; and in India 30,902.90 Php.

2.3 Demand
The target market of DPET is polyester fiber manufacturing companies. In the
first five years, companies in China are the companys target market, and in succeeding
years, the company will expand to other countries like Bangladesh, India, and Pakistan.
Thus in forecasting the subsequent five years global demands, DPET will use the
projected global average growth on demand for polyester fibers for the period covering
2011-2025 which is 5% per year.7 Furthermore, global statistics shows that in 2009, 3.4
million tons of flakes were used to produce fiber, 500,000 tons to produce bottles,
500,000 tons for APET sheet, 200,000 tons for strapping tape, and 100,000 tons for
miscellaneous applications.8 Thus, in 2009, a total of 4.7 million tons of PET were
collected. Further, in 2011, approximately 7.5 million tons of PET was collected, which
gave 5.9 million tons of PET flakes. So as basis for projection, the proponents used the
ratio of PET used to produce fiber with the total PET in 2009, and multiplied it with 2011
PET flakes. This gives us the formula, (3.4/4.7)*5.9, which results to 4.268085 (in
million tons). This then is the demand of PET flakes in 2011. The table in the next page
shows the estimated demand in years 2011 to 2014.

7
8

http://www.apic2014.com/download/SF%204%20-APIC2014_Global%20Fibers%20Overview.pdf
PCI, www.pcipetpackaging.co.uk

19 | P a g e

Table 2.3.1 Demand


Demand (in million
Year

metric tons)

2011

4.26809

2012

4.48149

2013

4.70556

2014

4.94084

Following this approach, assuming that the growth rate is still 5% for the next five
(5) years, the supply is 5.18788, 5.44728, 5.71964, 6.00562, 6.30590 (in million tons), in
years 2015, 2016, 2017, 2018, 2019, respectively. Table 2.3.2 and graph 2.3.1 is shown to
illustrate clearly the projected supply

Table 2.3.2 Demand Projection


Projected Demand
Year

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(in million tons)


2015

5.18788

2016

5.44728

2017

5.71964

2018

6.00562

2019

6.30590

Graph 2.3.1 Projected Demand

in Million Tons

Projected Demand (2015-2019)


7
6
5
4
3
2
1
0
Demand

5.18788

5.44728

5.71964

6.00562

6.3059

Year

2.4 Supply
According to the research conducted by the proponents, through searches in the
World Wide Web, major producers of PET flakes are located mostly in China, India,
Bangladesh and Pakistan. Furthermore, though plastic industry in general is prominent in
the Philippines, PET flakes processing in particular is not common in the country.
Nevertheless, research shows that there are, more or less, twenty (20) companies which
process PET flakes in the Philippines (Alibaba.com). A list of companies that produce
PET flakes in the Philippines is shown in Appendix A.5
In Appendix A, it also shows the list of PET producers in China, India,
Bangladesh and Pakistan with their description in terms of business location, main
products, company size (based on annual revenue and number of employees), main
markets, PET flake specification or quality, selling price, and supply ability. Although the
table does not comprise the worldwide supply of PET flakes, it is useful in determining

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the relative volume of PET flakes a company can supply, which will then be helpful in
estimating the capacity the proposed business should have if it is to compete with
national and international markets. Further, some parts of the table may be unfilled due to
insufficient source of data.
Based on the tables in Appendix A, most target markets are in Europe, Africa,
Middle East, Southeast Asia, and Eastern Asia. Also, the selling price depends on the
minimum order quantity; the larger the bulk of order, the lower the unit price. Also, the
average selling price varies in the different countries. In China, the average selling price
is US $ 1,117 or 49,312 in Philippine Peso. In Bangladesh the selling price per ton is US
$ 881.25 or 38,904.54 Php, US $ 813.75 or 35,925 Php in Pakistan,US $ 900 or
39,732.30 Php in India, and US $ 1,130 or 49,886.11 Php in the Philippines.

2.4.1 Supply Projection


To further analyse the supply for PET-flakes, the proponents decided to use the
historical global consumption of commercial beverages that used plastic bottles as basis
to project the supply for PET flakes. This is because these PET bottles are the most used
material in processing PET flakes. Since the year 2005, the world population has
increased at a rate of 1.2% per year, and the consumption of commercial beverages has
grown 3.6% annually.9 Furthermore, global statistics shows that in 2009, 3.4 million tons
were used to produce fiber, 500,000 tons to produce bottles, 500,000 tons for APET

http://link.springer.com/chapter/10.3920/978-90-8686-739-4_31

22 | P a g e

sheet, 200,000 tons for strapping tape, and 100,000 tons for miscellaneous applications.10
Thus, in 2009, a total of 4.7 million tons of PET were collected. Further, in 2011,
approximately 7.5 million tons of PET was collected, which gave 5.9 million tons of PET
flakes. So as basis for projection, the proponents used the ratio of PET used to produce
fiber with the total PET in 2009, and multiplied it with 2011 PET flakes. This gives us
the formula, (3.4/4.7) x 5.9, which results to 4.268085 (in million tons). This then is the
supply of pet flakes used to produce fiber in 2011. The succeeding years supply is
derived from the 3.6% growth rate per year of the commercial beverages. The proponents
assumed that the rate, 3.6% is constant in the succeeding years. The table below shows
the supply in years 2011 to 2014.
Table 2.4.2 Supply

Year

Supply (in million metric tons)

2011

4.26809

2012

4.42174

2013

4.58092

2014

4.74583

Following this approach, assuming that the growth rate is still 3.6% for the next
five (5) years, the supply is 4.916687, 5.093688, 5.277061, 5.467035, 5.663848 (in
million tons), in years 2015, 2016, 2017, 2018, 2019, respectively. Table 2.4.3 and graph
2.4.1 is shown to illustrate clearly the projected supply.

10

PCI, www.pcipetpackaging.co.uk

23 | P a g e

Table 2.4.3 Projected Supply


Year

Projected Supply (in million tons)


2015

4.91668

2016

5.09368

2017

5.27706

2018

5.46703

2019

5.66384

Graph 2.4.1 Projected Supply

Projected Supply (2015-2019)


5.8

In Million Tons

5.6
5.4
5.2
5
4.8
4.6
4.4
Supply

4.916687

5.093687732

5.27706049

5.467034668

5.663847916

Year

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2.5 Demand-Supply Analysis


The table below shows the global demand exceeding the global supply throughout
the five years. In the first year the demand exceeds the supply by approximately 271,193
MT, 353,592 MT in 2016, 442,580 MT in 2017, 538,585 MT in 2018, and 642,052 MT
in 2019. This shows that there is still an opportunity for new businesses to enter the
market.
Table 2.5.1 Gap of Supply and Demand

Year
2015
2016
2017
2018
2019

Demand
(in Million
Metric tons)
5.18788
5.44728
5.71964
6.00562
6.3059

Supply (in
Million Metric
Tons)
4.916687
5.093688
5.27706
5.467035
5.663848

Gap (in Million


Metric Tons)
0.271193
0.353592
0.44258
0.538585
0.642052

Graph 2.5.1 Projected Demand and Supply

Projected Demand and Supply (2015-2019)


7

in Million Tons

6
5
4
3
2
1
0

Demand

5.18788

5.44728

5.71964

6.00562

6.3059

Supply

4.916687

5.093687732

5.27706049

5.467034668

5.663847916

Year

25 | P a g e

Furthermore, the proponents matched the unit prices in the countries that are
present in both supply and demand data. The table below shows the average unit price
both for selling price and purchase price in the three countries.
Table 2.5.2 Average Unit Price and Volume for Demand and Supply
Unit Price (in Php)
Demand

Supply

Unit Price (in USD)


Demand

Supply

China

33, 330.99

49, 312.00

755.00

1, 117.00

India

30, 902.90

39, 732.30

700.00

900.00

United States

53, 506.16

49, 886.11

1, 212.00

1, 130.00

2.6 Price Study


Based on Appendix A, the rates fluctuate as based from different factors. The first
of these is the availability of post-consumer PET bottles. These post-consumer bottles are
being stocked at suppliers junkshop, and these suppliers are also depending on different
households, organizations, and other sources for their supplies of PET bottles. Another
factor is the quality, purity, and sizes of the available PET bottles.11
These three are the results of different factors such as the collecting system of the
supplier - this includes the selection of PET bottles from the main source. Where the raw
materials are still in the junkshops, they have been checked whether or not the bottles are
still in good quality capable of being crushed into flakes and qualified to be sold and
exported to the customers for further processing. Another factor is the sorting of these

11

Retech Recycling Technology AB. System redoma, 2002. PET 700 PET bottle recycling plant.

26 | P a g e

bottles classifying into colors and quality. Since there are different colors of pet bottles
available in the supplier, there is a need to separate them because there are some
customers who buy pet flakes in one color only, or more, separately. Lastly, the
processing of these bottles into flakes this is the final process of the business. Some
parts of the bottles are already considered wastes and not included in weighing for
packaging. This factor leads to the lighter mass of the PET flakes produced thus
necessitating additional bottles to accomplish the supply for the customers.
Below are the prices of different substitutes in producing synthetic fibers.
Table 2.6.1 Substitutes
Polyamide Resin
Anhui Sincerely Titanium Industry Co., Ltd.
(China)

80,347.54 - 110,367.50 Php/Ton

Shandong Huijin Chemical Co., Ltd. (China)

92,708.70 123,611.60 Php/Ton

Polyvinyl chloride
Henan Fengbai Commercial Co., Ltd.
(China)

35,317.60 48,561.70 Php/Ton

Zibo Aiheng New Material Co., Ltd. (China)

35,317.60 57,391.10 Php/Ton

Phenol-formaldehyde
Henan Xinxiang No. 7 Chemical Co., Ltd.
(China)

64,013.15 81,671.95Php/Ton

Dalian Star Grace Mining Co., Ltd. (China)

88,294.00 101,538.10Php/Ton

27 | P a g e

The data presented in the previous page shows that PET flakes as raw materials
for synthetic fibers are cheaper than Polyamide, Polyvinyl chloride, and Phenolformaldehyde. Also, the supply of PET flakes is greater than its substitute because of the
availability of post-consumer PET bottles. Polyester fibers have several advantages over
alternatives there is ample availability, an advantaged cost position and favorable
performance characteristics relative to competing materials. Combined, these advantages
have positioned polyester fiber to achieve the largest gains in the natural and synthetic
fiber market.12
2.7 Marketing Program
One important factor that should be considered in engaging in the business world
is the companys marketing strategy. A market strategy is a technique which is aimed at
gaining competitive advantage. In order to be recognized and earn a place in the market
the company should advertise and promote its products.
Most of the companies engaged in selling PET flakes market their products via
the internet. They sell their products through online web markets like Alibaba and
Recyclers World. They also create their own website and advertise their products online.
DPET will market its products by creating contractual relations with its
customers. The company will contact potential buyers via their website or search for
prospective buyers through online web markets. Because the demand for PET flakes is
prevalent in the web markets, it would be more efficient to get potential buyers from the
web.

12

http://press.ihs.com/press-release/chemicals/rising-fiber-and-packaging-demand-developing-countries-keepsglobal-polyeste

28 | P a g e

Proposed Marketing Program


A. Product
The company will assure through quality assurance proceduresthat its products
are of high quality and meet customer needs and standards. It will have a quality
assurance officer who will conduct activities to assure that the end products meet
customer requirements. Aside from having an assurance personnel,the company will also
conduct proper training and seminars to enhance its employees skills and competence.
This quality control strategy will improve customer satisfaction and confidence which
will eventually strengthen customer-supplier relationship.

Quality Assurance Procedures in Manufacturing PET flakes:


1. Materials Qualification
This procedure is performed immediately after the raw materials arrive in the
factory. The receiving officer will ensure that the quality of raw materials acquired is the
same quality needed to produce the fiber-grade PET flakes.
2. Process control
In this procedure, the personnel assigned in the production line (sorter, feeder, and
packer) are assigned by the quality assurance officer to make sure that the standard flow
of the raw materials in the production line is followed.
3. In line testing
Before the product reaches the final stage of the process, the packer in the
production line is supervised by the quality assurance officer, who is given the
responsibility to ensure that the materials entering the packing stage are the properly

29 | P a g e

crushed and processed PET bottles. Finally, the quality assurance officer together with
the shipping officer will conduct the final checking of quality and quantity before the
products are shipped to customers.
Additional Guidelines in Quality Assurance:
Documentation
Documentation of traces of failure starting from the receiving of raw
materials up to the packing should be maintained for future production references.

B. Price
Most of the customers in the online web market provide the price that they are
willing to pay for the PET flakes. To make sure that the price is reasonable and
advantageous to both parties, the company will send a company representative to
personally communicate and contract with the customer. For the company to gain
competitive advantage, its preliminary price for the product will be 45 Php per kilo which
is lower than the average price of 49 Php. The average price of 49 Php is derived from
the prices offered in the global market (see Note 8: Sales).

C. Place
There two government seaports in Davao City namely Sasa International Wharf
and Santa Ana Domestic Wharf. Since the project involves exportation of goods, the
company will ship its finished products via Sasa International Wharf. This wharf operates
mainly for container and shipping, which makes it a suitable means of transporting the
finished products of the business to its customers.
30 | P a g e

D. Promotion
As means of promoting its product, the company finds it more suiting and
efficient to contact its prospective customers by getting their contact number or email
address from the online web markets. This will be the preliminary part of the promotion
where the company will introduce and offer its products to the customer. If the
customers response is positive the company will then send its representative to present
the sample of the product. If the client is satisfied with the products quality, the contract
and agreement will then be finalized. This will ensure that both sides are given the
opportunity to be heard, thus, will make the agreement clear and fair to both parties. The
policies which will govern the sale of the product will depend on the agreement of the
parties in the contract. The company will also advertise its products online by creating its
own website. A marketing analyst will be hired to handle and maintain the promotional
activities of the company.

31 | P a g e

Chapter 3 Technical Feasibility


3.1 The Product
3.1.1Properties
PET, which stands for Polyethylene Terephthalate, is the most common type of
polyester. It is a thermoplastic polyether of terephtalic acid and ethylene glycol. It is
generally extruded and molded into fibers, sheeting, foamed containers and bottle
containers for food and non-food products. This type of plastic is labeled with #1 code
which is usually found on or near the bottom of the container.13
This type of plastic then can be recycled to form other new products. In order for
plastics to be suitable for reuse, they have to undergo systematic recycling process with
certain qualities from turning old or scrap plastics into useable products. The first step in
recycling PET plastics is to process them into flakes, which is the product of DPET.
DPET processes PET flakes in a fiber-grade type.

3.1.2 Uses
PET flakes have a high commercial value and is considered a good export
commodity. DPET finished goods can be used as raw material for certain technical
purposes and for manufacturing a wide range of products.14 Examples of these products
are listed in the next page.

13

National Association for PET Container Resources (NAPCOR)


http://www.napcor.com/PET/whatispet.html
14

Retech Recycling Technology AB. System redoma, 2002. PET 700 PET bottle recycling plant.

32 | P a g e

Fibers
Carpeting
Filler (stuffing) for cushions, pillows, stuffed toys, etc.
Insulation in sleeping bags, clothing, etc.
Textiles for clothing, upholstery, fabrics, etc.

3.1.3 Quality
In processing PET flakes, quality is the first thing to be given emphasis. This is
because processing PET flakes is the first step in recycling plastics which thereby serves
as raw material for further processing into end products such as those mentioned in the
preceding paragraph. The business, then, would be able to assure the type of quality,
which is fiber-grade flakes, by hiring a qualified professional, such as a chemist to verify
and monitor the specified standard. The table in the next page shows the characteristics of
PET flakes that the business must follow.

33 | P a g e

Table 3.1.1PET Flakes Characteristics15


Characteristic

Measurement

Flakes size

6 12 millimeters

Bulk Density

350 400 Kilogram/cubic meter

Intrinsic Viscosity (IV)


Moisture Content

0.55 to 0.62 Deciliters/gram


50 parts-per-million(ppm)

Acetaldehyde

9.9 to 10.7 parts-per-million(ppm)

Melting Point

247 to 253 Celsius

3.2 Manufacturing Process


Diagram 3.2.1 shows the flow of the product from junkshops to shipping port.
Diagram 3.2.1 Product Flow

15

Nadkarni, V. M. (2002) . Handbook of Thermoplastic Polymers: Homopolymers, Copolymers, Blends, and


Composites

34 | P a g e

After the raw materials are transported to processing plant, they are processed into
PET flakes. The processing of PET flakes has five main stages: Sorting, Shredding,
Washing, Rinsing, and Drying. However, prior to doing the main processes, an
organized collecting system, efficient pre-handling and pre-sorting must be observed.
Table 3.2.1 shows the different phases in processing PET flakes and Diagram 3.2.1further
illustrates the process. For machineries and equipment to be used in each phase, see Table
3.4.1 Machinery and Equipment.
Table 3.2.1 PET Flakes Process16
DESCRIPTION
PET plastics must not be unnecessarily mixed with
Collecting, Pre-

different colors, other sorts of plastic, undesirable

handling, and Pre-

materials and contaminants. Whenever possible, they

sorting

should be collected in a pre-separated way already at


collection points (junk shops).
Further sorting to detect foreign matter, PVC

Manual Sorting on
Site

plastics, and colored plastics must be done in the plant


location. This involves a manual operation.
PET plastics sorted out are chopped down to a

Shredding

flake size of around 6 to 12 mm. This process is done by


using the Plastic Crusher.

16

http://nett21.gec.jp/Ecotowns/data/et_a-03.html
http://composite.about.com/od/Plastics/a/Recycling-Plastics.htm

35 | P a g e

This process involves the removal of labels and


washing the flakes with water. To remove labels,
pressurized air is used using the Label Remover Machine.
Washing

Washing is achieved through using hot water jet streams.


Flakes are scrubbed using friction washer to remove dirt.
Then again, flakes are washed and scrubbed. By using
Floating Washer, dirt and other contaminants are separated
according to their densities.
After the flakes got washed, rinsing them is the

Rinsing

next step.

Plastics are put in the Dehydrator for the

removal of moisture from plastics.


This step involves drying of flakes. They are put in
Drying

Hot Air Drying System to remove the remaining water by


the use of very dry air. Dry air absorbs the water and
eventually evaporates to the atmosphere.

36 | P a g e

Figure 3.2.1 PET Flakes Process

37 | P a g e

3.3 Plant size and Production Schedule


Davao Polyethylene Terephthalate (PET) Flakes Processing Plant will occupy a
land are of 1400 square meters. The company will divide the area into five (5). The first
portion will be utilized for the general operations with a total lot area of 390 square
meters. Second portion will be occupied by storage for input and output materials with a
total area of 197.50 square meters. The third portion will be used for office with a total
area of 50 square meters. The fourth portion will be for the employees quarter where the
employees, excluding those in the office, can stay during their breaks which will occupy
50 square meters. The fifth portion will be for the parking lot which will occupy 50
square meters.
The business will operate five days a week. Further, it will have a 9-hour
operation day from 8:00 am to 5:00 pm. There will be two schedules that only differ in
terms of break time. This is made so that the machines will operate continually even
during break time. The overlapping of schedules is acceptable since each step of
operation process requires one to two workers. In addition, each employee will have an 8hour working day and a total of 40 hours a week.
The table in the next page shows the schedule of first batch composed of four (4)
operations workers (one feeder, two sorters, and one packer) and one (1) maintenance
personnel.

38 | P a g e

Table 3.3.1a Daily time schedule for employees


Time

Monday

Tuesday

Wednesday

Thursday

Friday

8 hours

8 hours

8:00 am - 9:00 am
9:01 am - 10:00 am
10:01 am- 11:00 am
11:01 am - 11:45 am

Break

11:46 nn - 12:45 pm
12:46 pm - 1:45 pm
1:46 pm - 2:00 pm

Break

2:01 pm - 3:00 pm
3:01 pm - 4:00 pm
4:01 pm - 5:00 pm
Total Hours Worked

8 hours

8 hours

8 hours

The table below shows the schedule of second batch composed of all employees
excluding those having the schedule in Table 3.1a.
Table 3.3.1b Daily time schedule for employees
Time

Monday

Tuesday

Wednesday

Thursday

Friday

8 hours

8 hours

8:00 am - 9:00 am
9:01 am - 10:00 am
10:01 am- 11:00 am
11:01 am - 12:00 nn
12:01 nn - 12:45 pm

Break

12:46 pm - 1:45 pm
1:46 pm - 2:45 pm
2:46 pm - 3:00 pm

Break

3:01 pm - 4:00 pm
4:01 pm - 5:00 pm
Total Hours Worked
39 | P a g e

8 hours

8 hours

8 hours

The table below shows the expected daily production volume which varies every
day and every two weeks.
Table 3.3.2a Daily production schedule
Week

Monday

Tuesday

Wednesday

Thursday

Friday

1st Week

1,600
Kilos
1,600
Kilos
1,600
Kilos
1,600
Kilos

1,600
kilos
1,600
kilos
1,600
kilos
1,600
kilos

1,600
kilos
1,600
kilos
1,600
kilos
1,600
kilos

3,200
kilos
1,600
kilos
3,200
kilos
1,600
Kilos

3,200
kilos
1,600
kilos
3,200
kilos
1,600
kilos

2nd Week
3rd Week
4th Week

The table below shows the expected monthly production of 38,400 kilos and a
total of 422,400 kilos for 2016. There is no output in the month of January since the
operation will start on February.
Table 3.3.2b Monthly production schedule

Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

40 | P a g e

Total
Production
38,400 kilos
38,400 kilos
38,400 kilos
38,400 kilos
38,400 kilos
38,400 kilos
38,400 kilos
38,400 kilos
38,400 kilos
38,400 kilos
38,400 kilos
422,400 kilos

The table below shows the expected yearly production with a discretionary
increase of 5% yearly.
Table 3.3.2c Yearly production schedule

Year
2016
2017
2018
2019
2020

Total
Production
422,400 kilos
483,840 kilos
508,032 kilos
533,434 kilos
560,105 kilos

3.4 Machinery and Equipment


The machineries and equipment to be used in processing PET flakes will be
acquired as a processing line set. The set consists of machineries enumerated in table
3.4.1 with their specific functions. They will be purchased in Dongguan Yinghao
Machinery Co., Ltd. and in a new condition. Dongguan Yinghao Machinery Co., Ltd.
will deliver the set either by air or by sea with payment terms of 30% down payment on
order and 70% will be paid before shipping. Tools needed for maintenance are included
in the package.
This set has a capacity of 500 kg/hr with a requirement of ten (10) man powers.
Three (3) personnel will be assigned for feeding materials, five (5) for sorting, and two
(2) for packing the materials. Water supply of 1.5 cubic meters for each ton of raw
materials is required. The water can be recycled again. The total rated power is 110.3
kilowatt.

41 | P a g e

The following table shows the machineries and equipments for processing PET
flakes with their specific functions. They are categorized in different stages: General,
Sorting, Shredding, Washing, Rinsing, and Drying.

Table 3.4.1 Machinery17


Machinery

Specification
General Equipment

Belt Conveyor

Width:

800mm

Length:

4,000mm

Motor power:

2.2Kw

Model of reducer:

80# 1:40

Materials of belt:

pvc+pa 3mm
thickness

Transports PET bottles for infeeding with


frequency control and adjusts speed within the

Speed:

24 rpm

Quantity:

2 units

Diameter:

400mm

requirements from control panel


Screw Conveyor

Length:

4,000mm/5,000mm

Motor of main power: 4Kw-4 1:60


Speed of rotation:

24 rpm

Materials of mesh:

stainless steel

304. Hole size:

3mm

Discharged port:

3 inch ball valve

Transports PET flakes from one machine to the

Thickness of screw:

5mm

other

Thickness of body:

5mm

Quantity:

3 units

17

Dongguan Yinghao Machinery Co., Ltd.

42 | P a g e

Control Cabinet

Main switch LS20 (brands of


Sino-foreign joint ventures) belong
to Korea LG brand
Contractor:

LS GMC-150/GMC1810 (brands of Sinoforeign joint ventures)


belong to Korea LG
brand

Thermo relayGHT6385
Press-buttonShuangke brand
Brand and size
This control cabinet equips the overload device. It

of electric cabinet800mm x

protects every motor to work well.

400mm x
1,700mm
(Zenfon brand)
Quantity:

1 unit

Sorting Process Equipment

Sorting Conveyor
Length:

7,000mm

Width:

800mm

Motor of power:

2.2Kw

Model of reducer:

wpa80

Speed:

24 rpm

Materials of belt:

pvc+pa 3mm

Used for sorting out different color bottles and


PVC bottles and removing the remaining labels
from bottles by labor manually

43 | P a g e

thickness
Quantity:

1 unit

Shredding Process Equipment


Model:

600B

Motor of main power: 22Kw-4


Forcible feeding
Plastic Crusher

device:

2.2Kw-4

Size of crushing room: 610mm x


620mm
Pulley diameter:

600mm

Amount of blades:

10pcs (4 fixed

blades, 6 moving blades)


Size of blades:

295mm x
85mm x 18mm

Speed of rotation:

600 rpm

Thickness of body:

20mm each
side

Used for size reduction of material into flakes


Materials of blades:

9crsi

Thickness of mesh:

12mm

Overall dimension: 1,650mm x


1,400mm x 1,750mm
Quantity:

1 unit

Washing Process Equipment


Label Remover Machines

Length:

4,500mm

Diameter:

500mm

Amount of blades:

118pcs each
blades consists
of 118 small
alloy knives

Motor of main power: 15Kw-4


Motor of fan power: 3Kw

44 | P a g e

Used for scrapping labels from plastic bottles by


high speed blades

Motor of fan power2: 1.5Kw


Diameter of
separating room:

1,000mm

Height of feeding
mouths:

1,600mm

Overall dimension: 5,700mm x


1,800mm x 2,300mm

Hot Washing Tank

Quantity:

1 unit

Diameter:
Height:

1,600mm
1,500mm

Motor power:

5.5Kw

Reducer:

BLD3-59-5.5

Speed of rotation:

24rpm

Overall dimension:

1,680mm x

1,680mm x 2,500mm
Quantity:

1 unit

Diameter:

400mm

Length:

5,000mm

Motor power:

4Kw-4

Reducer:

WPA100#

Removes glue and greasy dirt from flakes

Floating Washer

1:60

Used for washing flakes, and floating out dirt and

Speed of rotation:

24 rpm

Maximum width:

1,200mm

Maximum height:

1,200mm

Thickness of body:

5mm and
3mm

chemical water from flakes


Thickness of screw:

5mm

Discharged port: 3 inch ball valve

45 | P a g e

Overall dimension: 5,300mm x


1,200mm x 1,250mm
Quantity:

3 units

Length:

3,500mm

Diameter:

400mm

Motor power:

5.5Kw-4

Speed of rotation:

442rpm

Friction Washer

Amount water inlet: 1pcs


The hole size:

3mm
The sieve
mesh made of

Used for scrubbing flakes and removing dirt and


chemical water

stainless steel
Quantity:

1 unit

Rinsing Process Equipment


Dehydrator
Model:

Horizontal

Diameter:

500mm

Length:

2700mm

Motor power:

15Kw-4

The hole size of mesh: 3mm


The water remained: About 2%
The mesh made of stainless steel
304
Rinses flakes by removing of moisture from
products

46 | P a g e

Quantity:

1 unit

Drying Process Equipment

Hot Air Drying Systems

Diameter of pipe:

160mm

The length of blowing


system:

4,000mm

Motor power:

4Kw

Power of heating:

6Kw

Capacity of silo:

500-800kg

The parts contacting with


materials is stainless steel
Dries flakes in an air recycling system by removing
remaining moisture content in the finished product

47 | P a g e

Quantity:

1 unit

Table 3.4.2 Factory Equipments


EQUIPMENT

ISUZU ELF
TRUCK

MITSUBISHI FD30N FORKLIFT

JINMAI TCS-3000
FLOOR SCALE

48 | P a g e

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used to collect raw


materials from
junkshops
4,330cc(4HF1)
engine, 2000
kilograms capacity,
1998 model,
4.69mx1.69mx1.95 m,
manual transmission,
diesel fuel

160,000.00
per unit

1 unit

160,000.00

Used to transfer
finished goods from
one location to
another (e.g from
storage room to truck)
up to 11.8 mph, 126
feet per minute lift
speed, 2500 kilograms
capacity,
254cmx114cmx254cm

998,000.00
per unit

1 unit

998,000.00

Used to run the


electrical equipments
in case of power
outage and other
emergency
Rated Power: 125kw
Rated Voltage: 400v
Speed: 1500/1800rpm

66, 198.43
per unit

1 unit

66,198.43

Used to weigh the raw


materials and the
finished goods
3000 kilograms
capacity, 2m x 1.5m,
DC12V\AC220V

441.47 per
unit

1 unit

441.47

EQUIPMENT

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used as platform of
export-ready finished
goods
2000 kilograms
dynamic capacity,
1.2m x 1.2m x 0.155m

1,545.15
per unit

50 units

77,257.50

RXP-1212WCA+8
PALLET
Table 3.4.3 Factory Furniture and Fixtures
FURNITURE AND
FIXTURES

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used as dining table


of the employees
11'6" x 4'6", 12-seater
table

5,000.00 per
unit

2 unit

10,000.00

Used for employees


convenience at
employees quarter

233.00 per
unit

25 units

5,825.00

WOODEN TABLE

URATEX #101
CLASSIC CHAIR

49 | P a g e

Table 3.4.4 Office Equipments


OFFICE
EQUIPMENT

HP PAVILION
P6107C DESKTOP
PC
COMPUTER SET

HP DESKJET INK
CARTRIDGE 2510

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used to input and


store information of
the business e.g.
accounting records
Up to 2.5 GHz data
transfer speeds, dual
core, 800 MHz Bus
speed, 6 GB memory,
up to 54 Mbps Data
transfer speeds,802.11
a/b/g/n, 250 watts
power supply

22,990.00
per set

5 sets

114,950.00

1 unit

4,000.00

1 unit

27,148.00

Used to print, scan and 4,000.00 per


copy files
unit
Color: Up to 4800 x
1200 optimized dpi
from 1200 dpi input
data (when printing
from a computer on
photo paper)
Black: Up to 600 dpi
power consumption:10
watts maximum, 10
watts (Active), 0.3
watts (Auto-Off,
Manual-Off), 1.3 watts
(Sleep), 2.3 watts
(Standby)

Used to ventilate the


administration office
1.0HP split type
with remote control
KOLIN KSM-10MB1
INV AIR
CONDITIONER
50 | P a g e

27,148.00
per unit

OFFICE
EQUIPMENT

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used to writing board


during meetings
4ft x 8ft

4,150.00 per
piece

1 pc

4,150.00

Used to store and


dispense water as
either hot or cold
Stainless Steel Tank,
Deodorizer Cabinet,R134A Compressor
Heating:550 watts
cooling:80 watts.

4,798.00 per
unit

2 units

9,596.00

Used to ventilate the


employees quarter
and production line
area oscillating action;
3 speed settings,6-feet
power cord; 55-watts

1,545.15 per
unit

5 units

7,725.75

TOTAL

WHITE BOARD

DOWELL WDS58AWATER
DISPENSER

ACF16 ACTIVE AIR


WALL MOUNT FAN

Table 3.4.5 Office Furniture and Fixtures


FURNITURE AND
FIXTURES

OFFICE CHAIR
51 | P a g e

DESCRIPTION

PRICE/
UNIT

QUANTITY

Used for sitting


purposes while the
employee do his/her
job

3,640.00 per
unit

7 units

25,480.00

FURNITURE AND
FIXTURES

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used as support when


using desktop, writing
or filing

882.94 per
unit

16 units

14,127.04

Used to store hard


copies of files

7,200.00 per
unit

1 unit

7,200.00

OFFICE DESK

FILE CABINET
Table 3.4.6 Operations Supplies
OPERATIONS
SUPPLY

EGP-SUPER SACK

PAMO NYLON
TWINE
52 | P a g e

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used for packaging


the finished product
2500 kilograms
capacity,
100cmx100cmx120cm
120g/m2-220g/m2
fabric weight

22.07 per
piece

1,000pcs

22,070.00

Used to seal the


packaging
60gsm, 105 m

47.00 per
roll

2 rolls

94.00

Table 3.4.7 Office Supplies


OFFICE SUPPLY

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used to record day to


day transactions,
signing letters or other
writing activity needed
during the business
operation

47.00 per
piece

10 pcs

470.00

Used to refill the sign


pen instead of buying
new ones when the ink
fades

29.70 per
piece

10 pcs

297.00

Used to write points


during meeting on the
white board

54.00 per
piece

2 pcs

108.00

Used to refill the


markers instead of
buying new ones when
the ink fades

125.00 per
piece

2 pcs

250.00

PILOT V7
HITECPOINT SIGN
PEN

PILOT BXS V7RT


REFILL

PILOT BLACK
WYTEBOARD
MARKER

PILOT BLACK
WYTEBOARD INK
REFILL
53 | P a g e

OFFICE SUPPLY

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used for filing and for


sending formal
documents

Short-1.85
per piece

Short-50pcs

Short-92.50

Long-50pcs

Long100.00

Long-2.00
per piece

SHORT AND LONG


ENVELOPES

SHORT AND LONG


BOND PAPER-(500
PCS)

Used to print
documents such as
financial statements,
letters, etc.
Short- 70gsm,
8.5x11
Long-70gsm,
8.5x13

Short149.00 per
ream

Used to store files for


filing purposes

Short-3.75
per piece

Short-1 ream

Short149.00

Long-1 ream

Long175.00

Short-50pcs

Short187.50

Long-50pcs

Long212.50

Long175.00 per
ream

Long-4.25
per piece
SHORT AND LONG
FOLDERS
Used to put holes on
papers and folders for
filing

145.00 per
piece

1 pc

145.00

Used to fasten papers


for filing

32.00 per
box

1 box

32.00

HBW HEAVY
DUTY PUNCHER

HBW FASTENER- 1
BOX(50 PIECES)
54 | P a g e

OFFICE SUPPLY

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used for manual


computation
5.375" x 4 x 1 .25,
8-digit big display

287.50 per
piece

2 pcs

575.00

Used for sanitation


purposes

150.00 per
pack

1 pack

150.00

Used as container of
mineral water in the
water dispenser

150.00 per
unit

2 units

300.00

Used as container for


beverages

60.00 per
set

1 set

60.00

CASIO MS 80TV
CALCULATOR

TISSUE PAPERS-1
PACK

5-GALLON
DISTILLED
WATER
CONTAINER

GLASS SET (6PCS)


55 | P a g e

OFFICE SUPPLY

DESCRIPTION

PRICE/
UNIT

QUANTITY

TOTAL

Used as container for


hot beverages

80.00 per
set

1 set

80.00

Used for as container


of water in the comfort
rooms

30.00 per
piece

2 pcs

60.00

Used to carry water in


the comfort rooms

15.00 per
piece

2 pcs

30.00

Used as documents
when having sales
transactions

1,750.00 per
set

1 Set

1,750.00

Used by the
bookkeeper to record
the day-to-day
transactions of the
business

400.00 per
set

1 Set

400.00

CUP SET
(6PCS)

PAIL

DIPPER

RECEIPT AND
SALES INVOICE
SLIPS

COLUMNAR
BOOKS
56 | P a g e

3.5 Plant Location


The location of the plant is at Malagamot, Panacan, Davao City. It is 1.8
kilometers away from the highway. Figure 3.5.1shows the appearance of the chosen
location, and Figure 3.5.2 shows the map of the location.

Figure 3.5.1 Plant Location

57 | P a g e

Figure 3.5.2 Map of plant location

3.6 Plant Layout


The lot area of the proposed project is 1,400 square meters. 390 of which is for
the machineries for processing PET flakes, and 100 and 97.5 for storage of input (raw
plastic) and output PET flakes, respectively. Also, 50 square meters is allotted for
administrative purposes, such as the office building. Figure 3.6.1 shows the proposed
plant layout for the project.

58 | P a g e

Figure 3.6.1 Plant Layout

59 | P a g e

3.7 Building and Facilities


The land intended for the plant is already flat and is cleared of trees, making it
ideal for immediate construction. The land costs 3,000 Php per square meter, and since
1,400 square meters is proposed to be acquired, a total of 4,200,000 Php. This amount is
assumed to be exclusive of other fees in acquiring the title, such as construction-related
permits and fees, capital gains tax, brokers fee and other fees.
The building used for operations is a one-storey building. The dimension of the
building for processing plant is 19.75 *19.75 meters, which is 4.50 meters. in height. This
is intended to suit the specifications of the machineries to be used.
3.8 Raw Materials and Supplies
3.8.1 Raw Materials and supplies required and its basis
Because the project is processing PET plastic into PET flakes, the main raw
material needed for the operation of the business is recyclable PET plastic. This can be
acquired through junkshops, other garbage collecting organizations, and practically every
business or organization, such as malls, schools and the like. The proponents interviewed
junkshops (Table 3.8.1.1), businesses and organizations (Gaisano Mall of Davao, Ateneo
de Davao University, University of Immaculate Conception, Holy Cross College of
Davao, and University of Mindanao). Due to information that PET bottles of businesses
and organizations are sold to junkshops, it was decided to only consider junk shops as list
of potential suppliers. Another raw material required in the process especially during the
washing process is water supply. Since the capacity of the operations of the project is
dependent on the quantity of supply acquired, specifically the PET plastics. The
proponents, decided to utilize only 60% of the capacity of the machinery for processing
60 | P a g e

PET flakes. This will then affect the quantity of other materials or supplies needed to
operate.
In the survey conducted by the proponents during the market study, a total of ten
junkshops were interviewed regarding the price they are willing to sell and the volume
they are able to supply in a period of time. The result of the survey shows 40% of the
junkshops are able to supply at least 1,000 kilograms per week and 34% of which sell at a
price of Php 18.00. The summary of the findings are shown in the table below and
graphical representation are presented to further the analysis.
Table 3.8.1.1 Interviewed Junkshops

Junkshop Name
J1 MAA Junkshop
J2 BCA-A Junkshop
J3 Dom's Junkshop
J4 Rosita Junkshop
J7 Mookey Metal Supply
J10 Kobe Junkshop
G13 Marky Junkshop
G15 Esben Junkshop
G16 Nieves Junkshop
G22 BCY Junkshop

61 | P a g e

Selling Price /
Kilograms
Location
Kilograms
sold per week
Ma-a
13.00
31.25
Ma-a
18.00
230
Ma-a
17.00
150
Cabaguio, Agdao Proper
20.00
167.5
Brgy. Gov. Vicente Duterte, R.Castillo High way Agdao
18.00
1,000
18.00
3,250
Erlinda St. Landmark
22.00
166.67
Km. 13 Panacan
17.00
400
Km. 13 North Diversion Road Panacan
18.00
1,000
Km. 13 Panacan, D.C
19.00
1,250

Collection/selling period
125 kilograms/ month
450-470 kilograms/ 2 weeks
300 kilograms/ 2 weeks
335 kilograms/ 2 weeks
1,800-2,200 kilograms/ 2 weeks
1,300 kilograms/ 2-3 times a week
2,000 kilograms/ 3 months
1,600 kilograms/ month
2,000 kilograms/ 2 weeks
1,200-1,300 kilograms/ week

Willing to Sell
for a higher
price?
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes

Figure 3.8.1.1 Supply of PET bottles

Supply of PET bottles

40%
60%

At least 1,000 Kilograms per week

Less than 1,000 Kilograms per week

According to the information and as shown in only four of the ten junkshops meet
the criteria that at least 1,000 kilograms be supplied per week. So, the proponents decided
to procure information from the Business Bureau with the list of registered junkshops in
Davao. The lists of potential suppliers are identified in table 3.8.1.2 with its relative
distance from the plant.

62 | P a g e

Table 3.8.1.2 Junkshops registered in the Business Bureau

Having the information above, an estimation of the daily procurement of raw


materials can be made. The proponents assume that there are a total of ten junkshops with
alternating schedule of procurement. Four of which are from the list of junkshops
interviewed and the other six junkshops are from the list of junkshops from the Business
Bureau within the 14.9-kilometer radius. The criteria for procurement of raw materials be

63 | P a g e

limited within the 14.9-kilometer radius is due to the farthest junkshop interviewed in
table 3.8.1.1.

The table below shows the estimated daily procurement of raw materials which
varies every day and every two weeks.
Table 3.8.1.3a Daily procurement schedule
Week

Monday

Tuesday

Wednesday

Thursday

Friday

Total

Week 2,000 kilos 2,000 kilos


(supplier 1) (supplier 2)
1
Week 2,000 kilos 2,000 kilos
(supplier 6) (supplier 7)
2

2,000 kilos
(supplier 3)

4,000 kilos
(supplier 4)

4,000 kilos
(supplier 4 &5)

14,000
kilos

2,000 kilos
(supplier 8)

2,000 kilos
(supplier 9)

2,000 kilos
(supplier 10)

10,000
kilos

Week 2,000 kilos 2,000 kilos


(supplier 1) (supplier 2)
3
Week 2,000 kilos 2,000 kilos
(supplier 6) (supplier 7)
4

2,000 kilos
(supplier 3)

4,000 kilos
(supplier 4)

4,000 kilos
(supplier 4 &5)

14,000
kilos

2,000 kilos
(supplier 8)

2,000 kilos
(supplier 9)

2,000 kilos
(supplier 10)

10,000
kilos

Total

48,000
kilos

Differing volumes are acquired due to the different volume supplied by the
identified four suppliers, which are highlighted in table 3.8.1.1. Supplier 2 and 3 are those
junkshops which can supply 1,000 kilograms per week. Supplier 4 is the junkshop which
supplies 3,250 kilograms per week, and supplier 5 is the junkshop which supplies 2,500
kilograms per week. Suppliers 6 to 10 are assumed to be one of the junkshops listed in
Table 3.8.1.2.
Table 3.8.1.3b shows the estimated monthly procurement of 48,000 kilograms
with a total of 576,000 kilograms for 2016.

64 | P a g e

Table 3.8.1.3b Monthly procurement schedule

Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

Total
Production
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
48,000 kilos
576,000 kilos

The table below shows the expected yearly procurement with a discretionary
increase of 5 %.
Table 3.8.1.3c Yearly procurement schedule

Year
2016
2017
2018
2019
2020

65 | P a g e

Total
Production
576,000 kilos
576,000 kilos
576,000 kilos
576,000 kilos
576,000 kilos

3.9 Utilities
3.9.1 Electricity
Table 3.9.1.1 Davao Light and Power Company18
Average Rates per kWh from January to June 2014

The companys electric power provider will be Davao Light and Power Company,
which is also the source of the data above. According to the data, the rate that will be
used in the computation of the electric power consumption is 5.8375 Php/kWh. This is
the average rate from January to June 2014 for consumers belonging to the 69 kV-B
category.
The formula for the computation of electric consumption is:

Wattage x No. of Units x Hours Used per Day x 20 days = Estimated kWh per Month
1000

The formula for the computation of the cost:


Estimated kWh per Month x 5.8375 = Cost of Electric Consumption per Month

18

http://www.davaolight.com/index.php?view=article&catid=45%3Amonthly-rateschedule&id=2071%3Amonthly-rates-per-schedule-from-january-to-august2014&option=com_content&Itemid=76

66 | P a g e

The inflation rate of 3.74% is considered in the computation of the cost of


electricity and water expenses.
The data below is related to the electric consumption in the plant facility:
Table 3.9.1.2a Monthly Electric Consumption of Plant Facility

Total electric consumption per month of the plant facility is 19,902.40 kWh and the total
consumption cost is 116,180 Php per month. Using the inflation rate of 3.74% the cost for the
first year will be 1,500,397 Php (19,902.4 x 12 x 5.8375 x 1.0374 x 1.0374). The inflation rate is
multiplied twice because the operations will start 2 years from 2014, the year when the data was
taken.

67 | P a g e

Table 3.9.1.2b Plant Facility Electric Consumption for the First Year of Operation

Table 3.9.1.2c Plant Facility Electric Consumption


for the First Five Years of Operation

The electric consumption of the company is constant for the first five years of
operation because regardless of the volume of the PET flakes processed, the electric
power required for the machines and equipment to operate and the number of hours they
are used per day is constant. The changes in the total cost of electric consumption are due
to the inflation rate.

68 | P a g e

The following data is related to the electric consumption in the Administrative facility:
Table 3.9.1.3a Monthly Electric Consumption of Administrative Facility

The total electric consumption per month of the companys administrative facility
is 690.24 kWh with a total cost of 4,029 Php. Reflective of the inflation rate, the total
cost for the first year will be 52,036 Php (690.24 x 12 x 5.8375 x 1.0374 x 1.0374) . Just
like the data from the previous page, the data above was gathered in 2014 which is why
the inflation rate is multiplied twice.

69 | P a g e

Table 3.9.1.3b Administrative Facility Electric Consumption for the First Year of
Operation

Table 3.9.1.3c Plant Facility Electric Consumption for the First Five Years of
Operation

The changes in the amounts are still due to the inflation rate.

70 | P a g e

3.9.2 Water
Table 3.9.2.1 Davao City Water District
Rates for 2014

Davao City Water District will be the companys water provider. The data
presented in the previous page are the rates for 2014 and based on the companys chosen
connection size the rate is 72 per cubic meter with a fixed minimum charge of 5,492.00
Php per month.
The formula for the computation of water consumption cost is:
(Cubic Meters of Water Consumed x 72.00 Php) + 5,492.00 Php = Cost of Water Consumption
Table 3.9.2.2 Water Consumption Rates Reflecting Inflation Rate of 3.74%

The variable rate of 77.49 Php is computed by multiplying the current rate of
72.00 Php by 1.0374 twice. The other rates also reflect the inflation rate of 3.74%. The
same goes with the fixed rate of 5.910.48 Php (5,492.00 Php x 1.0374 x 1,0374). This
rate will be the basis in computing the costs found in the following table.

71 | P a g e

Table 3.9.2.3 Plant Facility Water Consumption in the First Year of Operation

The companys machines and equipment will require 1.5 cubic meter of water per
ton of raw materials used in production. Since the companys raw materials used in
production is 48,000 kilos or 48 tons in the first year, the monthly water consumption
will be 72m3 (48x 1.5) or a total of 792 tons in the first year. This will result to a total
water consumption cost of 132,295 Php which is computed by multiplying 792m3 by
77.49 Php inflated cost per cubic meter and adding the inflated fix minimum charge of
70,925.76 Php (5,910.48 Php x 12), the difference is due to rounding off.
Plant Facility Water Consumption in the First Five Years of Operation

The increase in water consumption is due to the increase in production for the
succeeding years. The information on the increase in production is found in Table 3.3.2c
under technical feasibility.

72 | P a g e

Cost of Consumption of Drinking Water for the First Five Years of Operations

The estimated drinking water consumption is two (2) 5-gallon containers per day.
Since there are 20 working days per month, a total of forty (40) 5-gallon containers will
be consumed. Each container costs 30.00 Php, which means that a total cost of 1,200.00
Php will be spent each month or 14,400 Php per year for drinking water. This is 15,497
Php with inflation in the first year.

50 liters is consumed by each employee.19Since the company has 33 employees, a


total of 1,650 liters per day or 396,000 liters per year will be consumed. 396,000 liters is
equivalent to 396 cubic meters which means that the cost of water consumption for nondrinking water is 30,685 Php (396 x 72x 1.0374 x 1.0374) with inflation for year one.

19

http://www.south-staffs-water.co.uk/publications/your_business/WaterUseBusiness.pdf

73 | P a g e

Table 3.9.2.4a Consumption of Non-drinking Water for the First Year of Operations

Table 3.9.2.4b Cost of Consumption of Non-drinking Water for the First Five Years
of Operations

Table 3.9.2.5 Total Consumption of Drinking and Non-drinking Water


for the First Five Years of Operation

74 | P a g e

3.10 Waste Disposal


3.10.1 Manner of Disposal
In the collection, pre-sorting, and manual sorting process, detected contaminants
like PVC plastics and other materials may be sold or not. PVC and other types of plastics
can be sold to junkshops. Other materials, which are considered to be of no use, must be
disposed through collection in bins.
After processing PET flakes, no harmful substances will be released into the
environment. Water waste and contaminants must be separated for proper disposal. The
float/sink tank is used to separate materials according to their density. This will result for
remaining fine dirt and paper label pulps to sink into the bottom and eventually to be
discharged by screw conveyor and to be pumped by vibrating screen. These contaminants
will be collected in bins. The filtered water will go into the sewerage system, which is
composed of large PVC pipelines, and then will be release into the canal. The sewerage
system is to be set underground, starting at the back of the processing plant.

3.10.2 Quantity to be Disposed


In the sorting process, PVC plastics and other contaminants will be detected. Out
of the supply to be collected, an estimate of 20% will be detected. This estimate was
gathered from the recycling ratio of an existing PET flakes processing company.20
Water to be supplied for the processing is 1.5 cubic meters per one ton of raw
materials. This water supply can be used again for further processing.

20

http://nett21.gec.jp/Ecotowns/data/et_a-03.html

75 | P a g e

3.10.3 Cost of Disposal


PVC and other plastics will be sold to junkshops. This will present another
income for the company.
Wastes, which are gathered in bins, will be collected by garbage collectors of City
Environment and Natural Resources Office (CENRO). Payment for this collection is
already included in the business registration fees as garbage fee.
3.11 Production Cost
NOTES

2016

2017

2018

2019

2020

3.2.B.3

12,397,810
12,397,810
1,033,151
11,364,659

1,033,151
13,504,562
14,537,713
1,033,151
13,504,562

1,033,151
14,710,114
15,743,265
1,033,151
14,710,114

1,033,151
16,023,286
17,056,437
1,033,151
16,023,286

1,033,151
17,453,685
18,486,836
1,033,151
17,453,685

1,044,341

1,142,559

1,185,291

1,229,620

1,275,608

3.1
10
11.1
5
12
13

5,067
1,117,596
1,626,781
623,164
792,189
55,000
4,219,797

5,896
1,159,394
1,696,883
679,815
836,890
60,500
4,439,377

6,419
1,202,755
1,764,129
679,815
884,334
66,550
4,604,002

7,000
1,247,738
1,834,228
679,815
934,711
73,205
4,776,697

7,627
1,294,404
1,907,316
679,815
988,223
80,526
4,957,909

16,628,797
16,628,797
15,747

19,086,498
15,747
19,102,245
9,468

20,499,407
9,468
20,508,875
10,975

22,029,604
10,975
22,040,579
70,437

23,687,202
70,437
23,757,640
76,583

16,613,050

19,092,778

20,497,899

21,970,142

23,681,057

Direct Materials Used:


Raw Materials Inventory, beginning
Add: Purchases
Raw Materials Available for Use
Less: Raw Materials Inventory, end
Raw Materials Used

3.2.B.3

Direct Labor
Manufacturing Overhead
Indirect Material
Indirect Labor
Plant Utilities
Depreciation
Repairs and Maintenance
Miscellaneous Factory Expense
Total Manufacturing Overhead
TOTAL MANUFACTURING COSTS
ADD: WORK IN PROCESS, BEGINNING
TOTAL COST OF GOODS PLACED IN PROCESS
LESS: WORK IN PROCESS, ENDING
COST OF GOODS MANUFACTURED

76 | P a g e

3.3
3.3

3.12 Labor Requirements


List of Company Personnel
Position
Feeder

No. of
Workers
3

Sorter

Packer

Maintenance
Personnel

Driver Procurement

Forklift Driver/
Warehouse
Officer

Helper

Receiving/
Shipping
Officer

Operations
Manager

Quality
Assurance
Personnel

Managing
Partner

Job Description

Labor
Classification

Net Pay21

Qualifications

Direct

6,331.70

High School Graduate

Direct

6,331.70

High School Graduate

Direct

6,331.70

High School Graduate

Direct

6,331.70

Has at least 2 years


experience in handling
and repairing machines

Feeds raw materials


into the process
Sorts PET bottles from
other plastics and
contaminants
Packages the end
product, PET flakes
Ensures the proper
functioning of the
machines and
equipment
Transports the raw
materials from the
suppliers to the plant

Indirect

6,331.70

Transfers finished
goods to the output
storage

Indirect

6,331.70

Indirect

6,331.70

High School Graduate

Indirect

12,459.17

Graduate of any
business related course

Indirect

19,839.53

Business Management
Graduate with
excellent leadership
skills

Indirect

16,151.95

Graduate of Chemical
Engineering

Administrative

30,214.53

Specified in the
Articles of Partnership

Assists the driver in


carrying and
transporting the raw
materials to the plant
Ensures quality and
quantity of raw
materials before receipt
and finished goods
before shipment
Manages the operation
of the business
specifically in the plant
area and procurement
of raw materials
Ensures that the quality
of the PET flakes or
end product of the
business Chemical
and Mechanical
Engineers
Manages the company
as a whole

21http://www.bles.dole.gov.ph/PUBLICATIONS/Current%20Labor%20Statistics/STATISTICAL%20TABLES/PDF/tab24.pdf

77 | P a g e

High School Graduate


- Licensed Driver and
has experience of at
least 3 years in driving
6-wheeler vehicles
High School Graduate
- Licensed Driver and
has experience of at
least 3 years in driving
forklift

Position
Internal
Auditor

No. of
Workers
1

Cost
Accountant

Human
Resource
Officer
Payroll
Accountant/
Cash Receipt

General
Accountant

Bookkeeper

Treasurer

Marketing
Analyst

Sales/Purchase
Order Officer

Inventory/
Supply Analyst

Cash
Disbursements
Officer

Customer
Remittance/
Billing Officer

Security Guard
1

Security Guard
2

78 | P a g e

Job Description

Net Pay

Qualifications

Administrative

23,277.03

Graduate of
Bachelor of Science
in Accountancy preferably CPA

Administrative

19,839.53

Certified Cost
Accountant

Administrative

16,151.95

Administrative

16,151.95

Administrative

8,703.37

Certified
Bookkeeper

Administrative

8,703.37

Certified
Bookkeeper

Administrative

12,459.17

College Graduate
and has experience
in cash management

Administrative

16,151.95

Marketing Graduate

Administrative

12,459.17

Graduate of any
business related
course

Administrative

12,459.17

Graduate of any
business related
course

Administrative

12,459.17

Graduate of any
business related
course

Records sales in sales


journal and makes
remittance list

Administrative

12,459.17

Graduate of any
business related
course

Provides protection and


security from
trespassers

Administrative

6,526.70

Criminology
Undergraduate

Provides protection and


security from
trespassers

Administrative

6,808.80

Criminology
Undergraduate

Helps assess and


improve the operational
efficiency of the
business
Assigned for product
costing and cost
allocation
Tasked to hire qualified
employees
Prepares payroll and
records cash receipts

Keeps the general


books and records of
the company
Keeps the subsidiary
books and records of
the company
Keeps custody of the
financial assets of the
business
Maintains and handles
the marketing of the
product through
advertisement and other
promotional activities
Prepares purchase order
and sales order
Ensures that there is
enough supply of raw
materials needed for
production
Tasked to prepare cash
disbursement checks
ans update check
register

Labor
Classification

Graduate of Human
Resource
Management
Graduate of
Bachelor of Science
in Accountancy preferably CPA

The minimum wage for non-agricultural companies is 312.00 per day according to the
data gathered from the Department of Labor and Employment. The data relating to the pay of
each personnel can be seen in the Payroll Schedule presented in Appendix H.

79 | P a g e

Chapter 4 Financial Feasibility


4.1 Major Assumptions

Cash will be composed of Cash in Bank and Petty Cash. The Cash in Bank is used for the
receipts of payment from customers. The same shall be used for disbursements to
suppliers and payments for the companys expenses. The Petty Cash shall be used for
disbursement of minute expenses.

Accounts receivable will be 98% collectible in the following month. Thus, an allowance
of 2% of Accounts Receivable is established.

Accounts payable will be settled within one month after incurrence.

Acquisition of all assets will be taken from partners personal investments.

Start-up costs will be expensed in the first year of operations.

Sales and purchases will be 50% cash and 50% on credit.

Sales price will be constant for five years but is subject to managements discretion.

Inflation rate will be 3.74% annually. The basis of which is the average of inflation rates
from 2009-2013 as provided by National Statistics Coordination Board22.

Selling Expenses, such as freight out, website maintenance expense, and traveling and
transportation expense are subject to inflation rate. Further, traveling and transportation
expenses related to selling is assumed to increase by 10% per year.

Administrative expenses, such as salaries and wages, utilities expense, office supplies
expense, telecommunications expense, and repairs and maintenance are projected with
inflation rate. Further, the proponents assume that the repairs and maintenance for the
first year is 20% of the cost and increases by 5% yearly to reflect more repairs as

22

http://www.nscb.gov.ph/secstat/d_price.asp

80 | P a g e

equipments are being used. The maximum repairs are assumed to be up to 50% of the
cost only.

The cost of goods is projected to reflect inflation rate.

Electricity consumption will be the same for five years and is assumed to be distributed
equally on each month every year.

Water consumption for the processing plant will vary each year depending on the
utilization rate of the production line. However, water consumption in the office will be
the same for five years.

Salaries and wages are payable every 15th and 30th of the month.

Depreciation expense will be computed using straight line method.

The useful lives of depreciable assets are provided in the notes to financial statements.
Each asset has no salvage value. The depreciation cost will be allocated as either
operating or administrative expense depending of its usage.

The employees are assumed to be single for the purpose of computing the mandatory
contributions.

The cash deposited in bank is deposited in a checking account.

81 | P a g e

4.2 Total Project Cost


The total cost of the project is 21,136,755.00 Php, the information regarding this
amount is presented below:

Table 4.2.1

The composition of the total operating cost for the first quarter are as follows:

Table 4.2.2

The breakdown of each item is presented in the notes to financial statements.

82 | P a g e

4.3 Initial working capital requirements


DPET Processing Plant is to have an initial working capital that consists of cash which
will be used to procure the necessary assets for the operation of the business. To meet the
necessary requirements, the partners are to contribute 4,000,000 Php each to sustain the first year
of operations.
4.3.1

Working capital policy


The working capital of the business is quite high because the partnership does not

incur any liabilities aside from the mandatory payables and utilities payable each month
that has accrued which are constituted in the normal operations of the business.
Mandatory payables include SSS, HDMF, PHIC Contributions Payables, withholding tax
payable, VAT payable, and income tax payable.
4.3.2 Cash management
The management of the companys cash involves the maintenance of a cash
investment level which enhances the ability of the company to meet its cash requirement
for its expenditures and payables. Moreover a five year cash flow statement was
presented for five years in planning the amount and timing of cash requirements and
availability of the company that would help in projecting the forecast of how much
inflows are expected at a particular timing of cash payments. If the company then will
incur a cash deficit, acquiring a loan will be considered as an alternative.
Regarding the control system of the company, proper authorization for the
handling of cash will be ensured. Monitoring and verification of cash sources will be
implemented in order to minimize the actual losses associated with misappropriations and
improper handling of cash. Cash receipts each day will also be deposited in the bank.
83 | P a g e

DPET Processing Plant will require and hold a petty cash fund of 10,000 each
month to facilitate the normal operations of the business and to provide a buffer if any
contingencies occur.
4.3.3 Inventory management
The company is to procure its direct materials on a daily basis whereas office
supplies are bought depending on the nature of the office supplies. Both are projected
reflecting the inflation rate.
For office supplies:
Office supplies are procured depending based on its relative use. For
example, pens are purchased quarterly. Further, ink for pens are purchased to
cover the months ball pens are not purchased. Therefore the inks which cost
more or less half of the cost of ball pens are purchased twice every quarter.
Markers, because of their relatively long usage are purchased twice a year,
however ink for markers are purchased. Some office supplies however are
purchased monthly such as bond papers, folders, envelopes and the like. Other
supplies such as glass set, cup set and the like are purchased in January.
For direct materials:
The management of direct materials shall be under the control of the
supply analyst who shall make sure that enough raw materials be stored to sustain
the continuity of operations. Inventory of raw materials are specifically stored in
the input storage building of the company.

84 | P a g e

4.3.4 Credit policy and receivable management


The credit policy of the company is 50% down payment upon order and
the remaining 50% are paid within one month after ordering. The manner the
company gets its clients is through contract agreement. Through this, the
capacity and ability of the clients to pay are assured.

4.4 Alternative Sources of Financing


The partners contributions for the company is sufficient to cover the costs needed to start
the operations which will not necessitate any borrowing from lending institutions. In case the
company needs to purchase inventories and other basic items in order to continue with the
company operations, it will engage in short term debt with its suppliers. Furthermore, in case of
company expansion, the partners will consider short term or long term financing from available
lending and/or financial institutions in the Philippines.

4.5 Sources of financing the project


The company mainly obtains its capital from the contributions of each of
the six partners. The total contribution would amount to 21,000,000.00 Php.

4.5.1 Capital structure policy


The capital structure of the company is composed the partners cash
contribution which amounts the total of 2,000,000.00 Php. Since the companys
capital is sufficient to cover the initial investment cost, there is no need to engage
85 | P a g e

in short term or long term loan from financial institutions in order to start with the
construction and further company operations.
Partner A = 4,000,000.00 Php
Partner B = 4,000,000.00 Php
Partner C = 4,000,000.00 Php
Partner D = 4,000,000.00 Php
Partner E = 4,000,000.00 Php
Partner F = 4,000,000.00 Php
Total

= 24,000,000.00 Php

4.5.2 Cost of capital


The cost of capital cannot be applied in this business because the source of
capital is mainly from the partners cash contribution only.

4.5.3 Profit/Loss Sharing


It is agreed by the partners that the profits and losses of the company shall
be borne by each partners based on their capital contribution.

86 | P a g e

4.6 Pro-forma financial statements


4.6.1 Projected balance sheet
Table 4.6.1.1 Monthly Balance Sheet
Davao Polyethylene Terephthalate (PET) Flakes Processing Plant
Statement of Financial Position
As of the months
JANUARY
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets
Non Current
Property Plant and Equipment
Deferred Tax Asset
Total Non Current Assets
TOTAL ASSETS
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
TOTAL LIABILITIES
Parners' Equity
Partner's Equity, beginning
Add: Net Income (Loss)
Total:
Less: Withdrawal
Partner's Equity, ending
TOTAL LIABILITIES AND
PARTNERSHIP EQUITY

87 | P a g e

FEBRUARY

MARCH

NOTES
1
2
3
4

7,224,041
1,033,151
55,000.00
8,312,192

5,911,165
484,289
1,766,375
50,000.00
8,211,830

5,364,132
958,893
1,702,927
45,000.00
8,070,952

5
6

15,317,908
249,392
15,567,300
23,879,492

15,253,111
313,382
15,566,492
23,778,323

15,188,313
384,189
15,572,503
23,643,455

581,406
581,406

749,546
749,546

899,896
899,896

24,000,000
(581,914)
23,418,086
120,000
23,298,086

23,298,086
(149,310)
23,148,776
120,000
23,028,776

23,028,776
(165,217)
22,863,559
120,000
22,743,559

23,879,492

23,778,323

23,643,455

17

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Statement of Financial Position
As of the months
APRIL
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets
Non Current
Property Plant and Equipment
Deferred Tax Asset
Total Non Current Assets
TOTAL ASSETS
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
TOTAL LIABILITIES
Parners' Equity
Partner's Equity, beginning
Add: Net Income (Loss)
Total:
Less: Withdrawal
Partner's Equity, ending
TOTAL LIABILITIES AND
PARTNERSHIP EQUITY

88 | P a g e

MAY

JUNE

NOTES
1
2
3
4

120,000
18,000.00
138,000

120,000
484,289
8,864
16,500.00
629,654

120,000
968,579
8,403
15,000.00
1,111,982

5
6

15,825
6
15,831
153,831

15,561
6
15,567
645,221

15,298
6
15,304
1,127,286

1,614
1,614

3,659
3,659

3,659
3,659

20,000
(20,000)

(20,000)
(20,000)
20,000
(40,000)

(40,000)
(40,000)
20,000
(60,000)

(18,386)

(36,341)

(56,341)

17

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Statement of Financial Position
As of the months
JULY
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets
Non Current
Property Plant and Equipment
Deferred Tax Asset
Total Non Current Assets
TOTAL ASSETS
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
TOTAL LIABILITIES
Parners' Equity
Partner's Equity, beginning
Add: Net Income (Loss)
Total:
Less: Withdrawal
Partner's Equity, ending
TOTAL LIABILITIES AND
PARTNERSHIP EQUITY

89 | P a g e

AUGUST

SEPTEMBER

NOTES
1
2
3
4

4,782,947
949,207
1,449,133
25,000.00
7,206,287

4,710,517
949,207
1,385,684
20,000.00
7,065,409

4,638,088
949,207
1,322,236
15,000.00
6,924,531

5
6

14,929,124
532,241
15,461,365
22,667,652

14,864,327
557,943
15,422,270
22,487,679

14,799,530
628,751
15,428,280
22,352,811

749,546
749,546

749,546
749,546

899,896
899,896

22,098,275
(60,169)
22,038,105
120,000
21,918,105

21,918,105
(59,973)
21,858,132
120,000
21,738,132

21,738,132
(165,217)
21,572,915
120,000
21,452,915

22,667,652

22,487,679

22,352,811

17

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Statement of Financial Position
As of the months
OCTOBER
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets
Non Current
Property Plant and Equipment
Deferred Tax Asset
Total Non Current Assets
TOTAL ASSETS
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
TOTAL LIABILITIES
Parners' Equity
Partner's Equity, beginning
Add: Net Income (Loss)
Total:
Less: Withdrawal
Partner's Equity, ending
TOTAL LIABILITIES AND
PARTNERSHIP EQUITY

90 | P a g e

NOVEMBER

DECEMBER

NOTES
1
2
3
4

4,415,136
949,207
1,258,787
10,000.00
6,633,130

4,342,706
949,207
1,195,339
5,000.00
6,492,252

4,270,276
949,207
1,131,890
6,351,374

5
6

14,734,732
654,505
15,389,238
22,022,368

14,669,935
680,208
15,350,143
21,842,395

14,605,138
751,015
15,356,153
21,707,527

749,546
749,546

749,546
749,546

899,896
899,896

21,452,915
(60,094)
21,392,821
120,000
21,272,821

21,272,821
(59,973)
21,212,848
120,000
21,092,848

21,092,848
(165,217)
20,927,631
120,000
20,807,631

22,022,368

21,842,395

21,707,527

17

Table 4.6.1.2 Yearly Balance Sheet


Davao Polyethylene Terephthalate (PET) Flakes Processing Plant
Statement of Financial Position
As of the years
2016
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets
Non Current
Property Plant and Equipment
Deferred Tax Asset
Total Non Current Assets
TOTAL ASSETS
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
TOTAL LIABILITIES
Parners' Equity
Partner's Equity, beginning
Add: Net Income (Loss)
Total:
Less: Withdrawal
Partner's Equity, ending
TOTAL LIABILITIES AND
PARTNERSHIP EQUITY

91 | P a g e

2017

2018

NOTES
1
2
3
4

4,270,277
949,207
1,131,890
6,351,375

2,392,375
984,708
1,321,969
4,699,052

310,190
1,532,304
1,691,127
3,533,620

5
6

14,605,138
751,015
15,356,153
21,707,528

13,827,570
1,072,076
14,899,647
19,598,699

13,050,003
1,245,173
14,295,177
17,828,796

899,897
899,897

980,211
980,211

1,054,201
1,054,201

24,000,000
(1,752,369)
22,247,631
1,440,000
20,807,631

20,807,631
(749,143)
20,058,489
1,440,000
18,618,489

18,618,489
(403,893)
18,214,595
1,440,000
16,774,595

21,707,528

19,598,699

17,828,796

17

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Statement of Financial Position
As of the years
2019
Assets
Current Assets

2020

NOTES

Cash
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets

1
2
3
4

864,370
1,589,612
1,475,735
3,929,718

1,337,619
1,649,063
1,531,053
4,517,735

5
6

12,272,436
494,158
12,766,594
16,696,312

11,494,868
173,097
11,667,965
16,185,700

1,127,915
1,127,915

1,254,113
1,254,113

16,774,595
233,802
17,008,397
1,440,000
15,568,397

15,568,397
803,190
16,371,587
1,440,000
14,931,587

16,696,312

16,185,700

Non Current
Property Plant and Equipment
Deferred Tax Asset
Total Non Current Assets
TOTAL ASSETS
Liabilities and Stockholders' Equity
Liabilities
Current Liabilities
TOTAL LIABILITIES
Parners' Equity
Partner's Equity, beginning
Add: Net Income (Loss)
Total:
Less: Withdrawal
Partner's Equity, ending
TOTAL LIABILITIES AND PARTNERSHIP
EQUITY

92 | P a g e

17

4.6.2 Projected income statement


Table 4.6.2.1 Monthly income statement
Davao Polyethylene Terephthalate (PET) Flakes Processing Plant
Income Statement
For the months ended

Sales
Less: Cost of Goods Sold
Gross Income
Add: Other Income
Total Gross Income

NOTES
8.1
19

Less: Expenses
Selling Expenses
Administrative Expenses
Other Expenses
TOTAL EXPENSES
Net Income before Tax
Less: Provision for Income Tax (30%)
Add: Income Tax Benefit
Net Income After Tax

93 | P a g e

8.2

14
15
16

JANUARY
-

FEBRUARY
968,579
787,348
181,231
82,652
263,883

MARCH
1,937,158
1,574,697
362,461
82,652
445,113

86,861
333,829
410,617

140,467
330,298
6,417

194,074
330,298
156,766

831,306

477,182

681,138

(831,306)
249,392

(213,299)
63,990

(236,025)
70,807

(581,914)

(149,310)

(165,217)

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Income Statement
For the months ended
APRIL
1,937,158
1,574,697
362,461
82,652
445,113

MAY
1,937,158
1,574,697
362,461
82,652
445,113

JUNE
1,937,158
1,574,697
362,461
82,652
445,113

194,074
330,471
6,417

194,074
330,298
6,417

194,074
330,298
156,766

TOTAL EXPENSES

530,962

530,789

681,138

Net Income before Tax


Less: Provision for Income Tax (30%)
Add: Income Tax Benefit
Net Income After Tax

(85,848)
25,755

(85,675)
25,703

(236,025)
70,807

(60,094)

(59,973)

(165,217)

Sales
Less: Cost of Goods Sold
Gross Income
Add: Other Income
Total Gross Income

NOTES
8.1
19

Less: Expenses
Selling Expenses
Administrative Expenses
Other Expenses

94 | P a g e

8.2

14
15
16

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Income Statement
For the months ended

Sales
Less: Cost of Goods Sold
Gross Income
Add: Other Income
Total Gross Income

NOTES
8.1
19

Less: Expenses
Selling Expenses
Administrative Expenses
Other Expenses

8.2

AUGUST
SEPTEMBER
1,937,158
1,937,158
1,574,697
1,574,697
362,461
362,461
82,652
82,652
445,113
445,113

194,074
330,579
6,417

194,074
330,298
6,417

194,074
330,298
156,766

TOTAL EXPENSES

531,070

530,789

681,138

Net Income before Tax


Less: Provision for Income Tax (30%)
Add: Income Tax Benefit
Net Income After Tax

(85,956)
25,787

(85,675)
25,703

(236,025)
70,807

(60,169)

(59,973)

(165,217)

95 | P a g e

14
15
16

JULY
1,937,158
1,574,697
362,461
82,652
445,113

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Income Statement
For the months ended

Sales
Less: Cost of Goods Sold
Gross Income
Add: Other Income
Total Gross Income

NOTES OCTOBER NOVEMBER DECEMBER


8.1
1,937,158
1,937,158
1,937,158
19
1,574,697
1,574,697
1,574,697
362,461
362,461
362,461
8.2
82,652
82,652
82,652
445,113
445,113
445,113

Less: Expenses
Selling Expenses
Administrative Expenses
Other Expenses

194,074
330,471
6,417

194,074
330,298
6,417

194,074
330,298
156,766

TOTAL EXPENSES

530,962

530,789

681,138

Net Income before Tax


Less: Provision for Income Tax (30%)
Add: Income Tax Benefit
Net Income After Tax

(85,848)
25,755

(85,675)
25,703

(236,025)
70,807

(60,094)

(59,973)

(165,217)

96 | P a g e

14
15
16

Table 4.6.2.2 Yearly income statement


Davao Polyethylene Terephthalate (PET) Flakes Processing Plant
Income Statement
For the years ended

Sales
Less: Cost of Goods Sold
Gross Income
Add: Other Income
Total Gross Income

NOTES
8.1
19

Less: Expenses
Selling Expenses
Administrative Expenses
Other Expenses
TOTAL EXPENSES
Net Income before Tax
Less: Provision for Income Tax (30%)
Add: Income Tax Benefit
Net Income After Tax

97 | P a g e

8.2

14
15
16

2016
20,340,157
16,534,315
3,805,841
909,173
4,715,014

2,168,066
3,967,734
1,082,597

2017
24,115,290
18,896,683
5,218,606
1,080,365
6,298,971
1.1856
1.1429
2,410,259
4,120,882
838,033

2018
26,059,585
20,130,221
5,929,364
1,176,809
7,106,173
1.0806
1.0653
2,498,432
4,289,318
895,414

7,218,398

7,369,175

7,683,163

(2,503,384)
751,015

(1,070,204)
321,061

(576,990)
173,097

(1,752,369)

(749,143)

(403,893)

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Income Statement
For the years ended

Sales
Less: Cost of Goods Sold
Gross Income
Add: Other Income
Total Gross Income

NOTES
8.1
19

Less: Expenses
Selling Expenses
Administrative Expenses
Other Expenses
TOTAL EXPENSES
Net Income before Tax
Less: Provision for Income Tax (30%)
Add: Income Tax Benefit
Net Income After Tax

98 | P a g e

8.2

14
15
16

2019
29,196,950
22,245,155
6,951,796
1,281,863
8,233,659
1.1204
1.1051
2,594,033
4,473,608
932,216

2020
31,410,728
23,631,961
7,778,767
1,396,295
9,175,062
1.0758
1.0623
2,697,755
4,680,534
993,584

7,999,857

8,371,872

233,802
(70,141)
70,141
233,802

803,190
(240,957)
240,957
803,190

4.6.3

Project cash flow statement


Davao Polyethylene Terephthalate (PET) Flakes Processing Plant
Projected Cash Flows
For the months ended

Notes

JANUARY

FEBRUARY

MARCH

Operating Activities
Net Income
Adjustments to convert net income to cash basis:
Depreciation Expense
Decrease (Increase) in Accounts Receivable
Decrease (Increase) in Inventories
Decrease (Increase) in Deferred Tax Asset
Decrease (Increase) in Prepaid Expenses
Increase (Decrease) in Current Liabilities

(581,914)

(149,310)

(165,217)

8,146
(1,033,151)
(249,392)
(55,000)
581,406

64,797
(484,289)
(733,225)
(63,990)
5,000
168,140

64,797
(474,604)
63,449
(70,807)
5,000
150,349

Net cash provided by operating activities

(1,329,905)

(1,192,876)

(427,033)

Investing Activities
Additons to Property, Plant and Equipment:
Land
Land Improvements
Office Building
Plant Building
Factory Equipment and Machineries
Factory Furniture and Fixtures
Office Equipment
Office Furniture and Fixtures
Website Cost
Net cash used in investing activities
Financing Activities
Investment of Partners
Withdrawals
Net cash used in financing activities
Net Increase (Decrease) in Cash
Cash, Beginning Balance
Cash, Ending Balance

99 | P a g e

9.1.A
9.1.B
9.1.C
9.1.C
9.1.D
9.1.E
9.1.F
9.1.G
9.1.H

(5,000,000)
(350,000)
(909,091)
(5,090,909)
(3,451,856)
(15,825)
(167,570)
(75,927)
(264,876)
(15,326,054)

24,000,000
120,000
23,880,000
7,224,041
0
7,224,041

120,000
(120,000)
(1,312,876)
7,224,041
5,911,165

120,000
(120,000)
(547,033)
5,911,165
5,364,132

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Projected Cash Flows
For the months ended

Notes

APRIL

MAY

JUNE

Operating Activities
Net Income
Adjustments to convert net income to cash basis:
Depreciation Expense
Decrease (Increase) in Accounts Receivable
Decrease (Increase) in Inventories
Decrease (Increase) in Deferred Tax Asset
Decrease (Increase) in Prepaid Expenses
Increase (Decrease) in Current Liabilities

(60,094)

(59,973)

(165,217)

64,797
9,686
63,449
(25,755)
5,000
(150,349)

64,797
63,449
(25,703)
5,000
-

64,797
63,449
(70,807)
5,000
150,349

Net cash provided by operating activities

(93,266)

47,570

47,570

Investing Activities
Additons to Property, Plant and Equipment:
Land
Land Improvements
Office Building
Plant Building
Factory Equipment and Machineries
Factory Furniture and Fixtures
Office Equipment
Office Furniture and Fixtures
Website Cost
Net cash used in investing activities
Financing Activities
Investment of Partners
Withdrawals
Net cash used in financing activities
Net Increase (Decrease) in Cash
Cash, Beginning Balance
Cash, Ending Balance

100 | P a g e

9.1.A
9.1.B
9.1.C
9.1.C
9.1.D
9.1.E
9.1.F
9.1.G
9.1.H

120,000
(120,000)
(213,266)
5,364,132
5,150,866

120,000
(120,000)
(72,430)
5,150,866
5,078,436

120,000
(120,000)
(72,430)
5,078,436
5,006,007

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Projected Cash Flows
For the months ended

Notes

JULY

AUGUST

SEPTEMBER

Operating Activities
Net Income
Adjustments to convert net income to cash basis:
Depreciation Expense
Decrease (Increase) in Accounts Receivable
Decrease (Increase) in Inventories
Decrease (Increase) in Deferred Tax Asset
Decrease (Increase) in Prepaid Expenses
Increase (Decrease) in Current Liabilities

(60,169)

(59,973)

(165,217)

64,797
63,449
(25,787)
5,000
(150,349)

64,797
63,449
(25,703)
5,000
-

64,797
63,449
(70,807)
5,000
150,349

Net cash provided by operating activities

(103,060)

47,570

47,570

Investing Activities
Additons to Property, Plant and Equipment:
Land
Land Improvements
Office Building
Plant Building
Factory Equipment and Machineries
Factory Furniture and Fixtures
Office Equipment
Office Furniture and Fixtures
Website Cost
Net cash used in investing activities
Financing Activities
Investment of Partners
Withdrawals
Net cash used in financing activities
Net Increase (Decrease) in Cash
Cash, Beginning Balance
Cash, Ending Balance

101 | P a g e

9.1.A
9.1.B
9.1.C
9.1.C
9.1.D
9.1.E
9.1.F
9.1.G
9.1.H

120,000
(120,000)
(223,060)
5,006,007
4,782,947

120,000
(120,000)
(72,430)
4,782,947
4,710,517

120,000
(120,000)
(72,430)
4,710,517
4,638,088

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Projected Cash Flows
For the months ended

Notes

OCTOBER

NOVEMBER

DECEMBER

Operating Activities
Net Income
Adjustments to convert net income to cash basis:
Depreciation Expense
Decrease (Increase) in Accounts Receivable
Decrease (Increase) in Inventories
Decrease (Increase) in Deferred Tax Asset
Decrease (Increase) in Prepaid Expenses
Increase (Decrease) in Current Liabilities

(60,094)

(59,973)

(165,217)

64,797
63,449
(25,755)
5,000
(150,349)

64,797
63,449
(25,703)
5,000
-

64,797
63,449
(70,807)
5,000
150,349

Net cash provided by operating activities

(102,952)

47,570

47,570

Investing Activities
Additons to Property, Plant and Equipment:
Land
Land Improvements
Office Building
Plant Building
Factory Equipment and Machineries
Factory Furniture and Fixtures
Office Equipment
Office Furniture and Fixtures
Website Cost
Net cash used in investing activities
Financing Activities
Investment of Partners
Withdrawals
Net cash used in financing activities
Net Increase (Decrease) in Cash
Cash, Beginning Balance
Cash, Ending Balance

102 | P a g e

9.1.A
9.1.B
9.1.C
9.1.C
9.1.D
9.1.E
9.1.F
9.1.G
9.1.H

120,000
(120,000)
(222,952)
4,638,088
4,415,136

120,000
(120,000)
(72,430)
4,415,136
4,342,706

120,000
(120,000)
(72,430)
4,342,706
4,270,276

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Projected Cash Flows
For the years ended

Notes
Operating Activities
Net Income
Adjustments to convert net income to cash basis:
Depreciation Expense
Decrease (Increase) in Accounts Receivable
Decrease (Increase) in Inventories
Decrease (Increase) in Deferred Tax Asset
Decrease (Increase) in Prepaid Expenses
Increase (Decrease) in Current Liabilities
Net cash provided by operating activities
Investing Activities
Additons to Property, Plant and Equipment:
Land
Land Improvements
Office Building
Plant Building
Factory Equipment and Machineries
Factory Furniture and Fixtures
Office Equipment
Office Furniture and Fixtures
Website Cost
Net cash used in investing activities
Financing Activities
Investment of Partners
Withdrawals
Net cash used in financing activities
Net Increase (Decrease) in Cash
Cash, Beginning Balance
Cash, Ending Balance

103 | P a g e

9.1.A
9.1.B
9.1.C
9.1.C
9.1.D
9.1.E
9.1.F
9.1.G
9.1.H

2016

2017

2018

(1,752,369)

(749,143)

(403,893)

720,916
(949,207)
(1,131,890)
(751,015)
899,897

777,567
(35,500)
(190,079)
(321,061)
80,314

777,567
(547,596)
(369,158)
(173,097)
73,991

(2,963,669)

(437,902)

(642,186)

(5,000,000)
(350,000)
(909,091)
(5,090,909)
(3,451,856)
(15,825)
(167,570)
(75,927)
(264,876)
(15,326,054)

24,000,000
1,440,000
22,560,000
4,270,277
4,270,277

1,440,000
(1,440,000)
(1,877,902)
4,270,277
2,392,375

1,440,000
(1,440,000)
(2,082,186)
2,392,375
310,190

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Projected Cash Flows
For the years ended

Notes
Operating Activities
Net Income
Adjustments to convert net income to cash basis:
Depreciation Expense
Decrease (Increase) in Accounts Receivable
Decrease (Increase) in Inventories
Decrease (Increase) in Deferred Tax Asset
Decrease (Increase) in Prepaid Expenses
Increase (Decrease) in Current Liabilities
Net cash provided by operating activities
Investing Activities
Additons to Property, Plant and Equipment:
Land
Land Improvements
Office Building
Plant Building
Factory Equipment and Machineries
Factory Furniture and Fixtures
Office Equipment
Office Furniture and Fixtures
Website Cost
Net cash used in investing activities
Financing Activities
Investment of Partners
Withdrawals
Net cash used in financing activities
Net Increase (Decrease) in Cash
Cash, Beginning Balance
Cash, Ending Balance

104 | P a g e

2019

2020

233,802

803,190

777,567
(57,308)
215,391
751,015
73,713

777,567
(59,451)
(55,318)
321,061
126,199

1,994,181

1,913,248

9.1.A
9.1.B
9.1.C
9.1.C
9.1.D
9.1.E
9.1.F
9.1.G
9.1.H
-

1,440,000
(1,440,000)
554,181
310,190
864,370

1,440,000
(1,440,000)
473,248
864,370
1,337,619

4.6.4 Notes to financial statement

Note 1: Cash
Assumptions:
Cash will be composed of Cash in Bank and Petty Cash. The Cash in Bank is used for the
receipts of payment from customers. The same shall be used for disbursements to suppliers and
payments for the companys expenses. The Petty Cash shall be used for disbursement of minute
expenses.
Sales and purchases will be 50% cash and 50% on credit. Accounts receivable will be
98% collectible in the following month. The cash deposited in bank is deposited in a checking
account.
JANUARY
Cash in Bank

7,214,041.10

Petty Cash Fund


Total Cash

FEBRUARY
5,901,165.34

5,068,436.31

4,996,006.71

10,000.00

10,000.00

10,000.00

10,000.00

10,000.00

5,364,132.08

5,150,865.92

5,078,436.31

5,006,006.71

AUGUST

4,772,946.76

SEPTEMBER

4,700,517.16

OCTOBER

4,628,087.55

NOVEMBER

4,405,135.60

DECEMBER

4,332,706.00

4,260,276.39

10,000.00

10,000.00

10,000.00

10,000.00

10,000.00

10,000.00

4,782,946.76

4,710,517.16

4,638,087.55

4,415,135.60

4,342,706.00

4,270,276.39

Petty Cash Fund

105 | P a g e

5,140,865.92

JUNE

5,911,165.34

Cash in Bank
Total Cash

5,354,132.08

MAY

10,000.00

Petty Cash Fund


Total Cash

APRIL

7,224,041.10

JULY
Cash in Bank

MARCH

2016

2017

4,150,277.40

2,272,375.38

2018
190,189.59

2019
744,370.40

2020
1,217,618.53

120,000.00

120,000.00

120,000.00

120,000.00

120,000.00

4,270,277.40

2,392,375.38

310,189.59

864,370.40

1,337,618.53

Note 2: Accounts Receivables


Assumption: The agreement with customers is 50% down payment, 50% to be paid
within 30 days. Accounts receivable will be 98% collectible.
Sales
Downpayment

NOTES
8.10

Accounts Receivable,
Beginning
Add: Accounts
Receivable for the period
(credit sales)
Less: Collection
Accounts Receivable
Balance
Less: Allowance for
Doubtful Accounts
Accounts Receivable,
End

Sales
Downpayment
Accounts Receivable,
Beginning
Add: Accounts
Receivable for the period
(credit sales)
Less: Collection
Accounts Receivable
Balance
Less: Allowance for
Doubtful Accounts
Accounts Receivable,
End

106 | P a g e

JANUARY
-

FEBRUARY
968,578.88
484,289.44

APRIL
1,937,157.77
968,578.88

MAY
1,937,157.77
968,578.88

JUNE
1,937,157.77
968,578.88

484,289.44

968,578.88

968,578.88

968,578.88

484,289.44
-

968,578.88
484,289.44

968,578.88
968,578.88

968,578.88
968,578.88

968,578.88
968,578.88

484,289.44

968,578.88

968,578.88

968,578.88

968,578.88

9,685.79

19,371.58

19,371.58

19,371.58

958,893.10

949,207.31

949,207.31

949,207.31

484,289.44

NOTES
8.10

MARCH
1,937,157.77
968,578.88

JULY
1,937,157.77
968,578.88

AUGUST
1,937,157.77
968,578.88

SEPTEMBER
1,937,157.77
968,578.88

OCTOBER
1,937,157.77
968,578.88

NOVEMBER
1,937,157.77
968,578.88

DECEMBER
1,937,157.77
968,578.88

968,578.88

968,578.88

968,578.88

968,578.88

968,578.88

968,578.88

968,578.88
968,578.88

968,578.88
968,578.88

968,578.88
968,578.88

968,578.88
968,578.88

968,578.88
968,578.88

968,578.88
968,578.88

968,578.88

968,578.88

968,578.88

968,578.88

968,578.88

968,578.88

19,371.58

19,371.58

19,371.58

19,371.58

19,371.58

19,371.58

949,207.31

949,207.31

949,207.31

949,207.31

949,207.31

949,207.31

NOTES
8.10

Sales
Downpayment
Accounts Receivable,
Beginning
Add: Accounts
Receivable for the period
(credit sales)
Less: Collection
Accounts Receivable
Balance
Less: Allowance for
Doubtful Accounts
Accounts Receivable,
End

2016
20,340,156.56
10,170,078.28

2017
24,115,289.62
12,057,644.81

2018
26,059,584.85
13,029,792.42

2019
29,196,950.39
14,598,475.19

2020
31,410,728.05
15,705,364.02

968,578.88

1,004,803.73

1,563,575.09

1,622,052.80

10,170,078.28
9,201,499.40

12,057,644.81
12,021,419.96

13,029,792.42
12,471,021.07

14,598,475.19
14,539,997.49

15,705,364.02
15,644,699.25

968,578.88

1,004,803.73

1,563,575.09

1,622,052.80

1,682,717.57

19,371.58

20,096.07

31,271.50

32,441.06

33,654.35

949,207.31

984,707.66

1,532,303.59

1,589,611.74

1,649,063.22

Note 3: Inventories
Assumption: FIFO costing method is used.
NOTES
Operation Supplies
Inventory, End
Raw Materials
Inventory, End
Work in Process
Inventory, End
Finished Goods
Inventory, End

3.2

1,033,150.81

MARCH

APRIL

MAY

JUNE

8,864.07

8,403.41

7,942.75

7,482.09

7,021.44

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

3.3

15,746.97

31,493.93

47,240.90

62,987.87

3.4

708,613.51

629,878.68

551,143.84

472,409.01

472,409.01

1,033,150.81

1,766,375.36

1,702,926.83

1,639,478.31

1,576,029.78

1,512,581.26

JULY

AUGUST

SEPTEMBER

OCTOBER

NOTES

107 | P a g e

FEBRUARY

3.1

Total Inventory, End

Operation Supplies
Inventory, End
Raw Materials Inventory,
End
Work in Process
Inventory, End
Finished Goods
Inventory, End
Total Inventory, End

JANUARY

NOVEMBER

DECEMBER

3.1

6,560.78

6,100.12

5,639.47

5,178.81

4,718.15

4,257.49

3.2

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

3.3

15,746.97

31,493.93

47,240.90

62,987.87

3.4

15,746.97

393,674.17

314,939.34

236,204.50

157,469.67

157,469.67

78,734.83

1,449,132.73

1,385,684.21

1,322,235.68

1,258,787.16

1,195,338.63

1,131,890.10

NOTES
Operation Supplies
Inventory, End
Raw Materials Inventory,
End
Work in Process
Inventory, End
Finished Goods Inventory,
End

2016

2017

2018

2019

2020

3.1

4,257.49

4,521.61

4,493.13

4,652.53

4,728.57

3.2

1,033,150.81

1,071,790.65

1,111,875.62

1,153,459.77

1,196,599.16

3.3

15,746.97

9,448.34

10,953.91

70,304.47

76,443.77

3.4

78,734.83

236,208.56

563,804.07

247,318.73

253,281.63

1,131,890.10

1,321,969.17

1,691,126.73

1,475,735.49

1,531,053.13

Total Inventory, End

Note 3.1: Operation Supplies


Operation Supplies are composed of EGP-Super Sack and Nylon. The tables below show
the computation of Operation Supplies in monthly and yearly values.
EGP-Super Sack Computation:
Assumed FIFO
EGP-Super Sack

JANUARY

FEBRUARY

EGP-Super Sack, Beginning (in sacks)

Add: Purchases

350

Available for Use

MARCH

APRIL

MAY

JUNE

331

312

292

273

350

331

312

292

273

Less:Used

19

19

19

19

19

EGP-Super Sack, End (in sacks)

331

312

292

273

254

Assumed FIFO
EGP-Super Sack
EGP-Super Sack, Beginning (in sacks)

JULY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

254

235

216

196

177

158

254

235

216

196

177

158

19

19

19

19

19

19

235

216

196

177

158

139

Add: Purchases
Available for Use
Less:Used
EGP-Super Sack, End (in sacks)

108 | P a g e

Assumed FIFO
EGP-Super Sack
EGP-Super Sack, Beginning (in sacks)
Add: Purchases
Available for Use
Less:Used
EGP-Super Sack, End (in sacks)

2016

2017

350
350
211
139

EGP-Super Sack

2018

139
250
389
242
147

2019
147
250
397
254
143

JANUARY FEBRUARY MARCH

Unit Price

2020

143
270
413
267
146

APRIL

146
280
426
280
146

MAY

JUNE

23.75

23.75

EGP-Super Sack, Beginning (in pesos)

Add: Purchases

8,313.10

Available for Use

8,313.10

7,857.06

7,401.03

6,945.00

6,488.97

Used

456.03

456.03

456.03

456.03

456.03

EGP-Super Sack, End (in pesos)

7,857.06

7,401.03

6,945.00

6,488.97

6,032.93

EGP-Super Sack
Unit Price
EGP-Super Sack, Beginning (in pesos)

JULY

23.75

23.75

23.75

23.75

7,857.06

7,401.03

6,945.00

6,488.97

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

23.75

23.75

23.75

23.75

23.75

23.75

6,032.93

5,576.90

5,120.87

4,664.84

4,208.80

3,752.77

Add: Purchases

Available for Use

6,032.93

5,576.90

5,120.87

4,664.84

4,208.80

3,752.77

Used

456.03

456.03

456.03

456.03

456.03

456.03

5,576.90

5,120.87

4,664.84

4,208.80

3,752.77

3,296.74

EGP-Super Sack, End (in pesos)

EGP-Super Sack
Unit Price
EGP-Super Sack, Beginning (in pesos)

2016
23.75
-

2017

2018

2019

2020

24.64

25.56

26.52

27.51

3,296.74

3,619.13

3,651.83

3,875.47

Add: Purchases

8,313.10

6,160.01

6,390.39

7,159.74

7,702.61

Available for Use

8,313.10

9,456.74

10,009.52

10,811.57

11,578.08

Used

5,016.36

5,837.62

6,357.69

6,936.10

7,559.11

EGP-Super Sack, End (in pesos)

3,296.74

3,619.13

3,651.83

3,875.47

4,018.96

109 | P a g e

Nylon Computation:
Nylon
JAN
Nylon, Beginning
(in roll)

FEB

Add:Purchases

20

Available for Use


Less: Used
Nylon, End (in
roll)

MAR

APR

MAY

JUNE

JULY

AUG

SEPT

OCT

NOV

DEC

20

20

20

20

20

19

19

19

19

19

20

20

20

20

20

20

19

19

19

19

19

0.0914

0.0914

0.0914

0.0914

0.0914

0.0914

0.0914

0.0914

0.0914

0.0914

0.0914

20

20

20

20

20

19

19

19

19

19

19

Nylon
2016
Nylon, Beginning
(in roll)

2017

2018

19

2019

18

2020

17

15

Add:Purchases

20

Available for Use

20

19

18

17

15

1.0057

1.1520

1.2096

1.2701

1.3336

19

18

17

15

14

Less: Used
Nylon, End (in
roll)

Nylon

JANUARY FEBRUARY

Unit Price

MARCH

APRIL

MAY

JUNE

50.58

50.58

Nylon, Beginning (in pesos)

Add: Purchases

1,011.63

Available for Use

1,011.63

1,007.00

1,002.38

997.75

993.13

4.62

4.62

4.62

4.62

4.62

1,007.00

1,002.38

997.75

993.13

988.50

Less: Used
Nylon, End (in pesos)

Nylon
Unit Price
Nylon, Beginning (in pesos)
Add: Purchases
Available for Use
Less: Used
Nylon, End (in pesos)

110 | P a g e

JULY

50.58

50.58

50.58

50.58

1,007.00

1,002.38

997.75

993.13

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

50.58

50.58

50.58

50.58

50.58

50.58

988.50

983.88

979.25

974.63

970.01

965.38

988.50

983.88

979.25

974.63

970.01

965.38

4.62

4.62

4.62

4.62

4.62

4.62

983.88

979.25

974.63

970.01

965.38

960.76

Nylon

2016

Unit Price

2017

2018

2019

2020

50.58

50.58

50.58

50.58

50.58

Nylon, Beginning (in pesos)

960.76

902.49

841.30

777.06

Add: Purchases

1,011.63

Available for Use

1,011.63

960.76

902.49

841.30

777.06

50.87

58.27

61.18

64.24

67.45

960.76

902.49

841.30

777.06

709.61

Less: Used
Nylon, End (in pesos)

Note 3.2 Raw Materials


Assumption: The procurement of raw materials starts at the month of January. The
production starts at the month of February. The current month procurement will be used as
production for the following month.
(Note: please check the detailed schedule of procurement in the Raw Materials section of
Chapter 3, Technical Aspect.)
THURSDAY

FRIDAY

TOTAL

1st week

A. Schedule of Procurement

MONDAY TUESDAY WEDNESDAY


2,000

2,000

2,000

4,000

4,000

14,000

2nd week

2,000

2,000

2,000

2,000

2,000

10,000

3rd week

2,000

2,000

2,000

4,000

4,000

14,000

4th week

2,000

2,000

2,000

2,000

2,000

TOTAL

10,000
48,000

B.1 Schedule of Processing


(IN KILOGRAMS)
Raw Materials Inventory, Beginning

JANUARY 2016
1st week

2nd week

3rd week

4th week

TOTAL

Add: Purchases

14,000

10,000

14,000

10,000

48,000

Raw Materials available for use

14,000

10,000

14,000

10,000

48,000

Raw Materials Used


Raw Materials Inventory, End

111 | P a g e

14,000

10,000

14,000

10,000

48,000

B.1 Schedule of Processing


(IN KILOGRAMS)

FEBRUARY - DECEMBER 2016


1st week

2nd week

3rd week

4th week

48,000.0

48,000.0

48,000.0

48,000.0

62,000.0

Add: Purchases

14,000

10,000

14,000

10,000

48,000

Raw Materials available for use

62,000

58,000

62,000

58,000

110,000

Raw Materials Used

14,000

10,000

14,000

10,000

48,000

48,000

48,000

48,000

48,000

62,000

11,200

8,000

11,200

8,000

38,400

Raw Materials Inventory, Beginning

Raw Materials Inventory, End


Produced Goods

TOTAL

B.1 Schedule of Processing


(IN KILOGRAMS)
Raw Materials Inventory, Beginning

2016
-

2017

2018

2019
-

2020
-

Add: Purchases

576,000

604,800

635,040

666,792

700,132

Raw Materials available for use

576,000

604,800

635,040

666,792

700,132

Raw Materials Used

528,000

604,800

635,040

666,792

700,132

Raw Materials Inventory, End

48,000

Produced Goods
Machine Capacity Used (machine
capacity is 112,500 kgs [input] per
month)

422,400

42.67%

483,840

44.80%

508,032

47.04%

533,434

49.39%

560,105

51.86%

(Note that the capacity of the machine is 500 kgs per hour, so considering 9 hours of operation
per day, the maximum PET to be placed in process is 5,625 kilograms per day, or 25,000
kilograms per week, which is derived by dividing 500 by .8, which is the percentage of output per
PET processed and multiplied by the number of period.)

January
Produced Goods (in kilograms)

112 | P a g e

February to
December
38,400 per
month

B.2 (WEEKLY SCHEDULE)

JANUARY
1st week

Price per kilogram

2nd week

21.52

Raw Materials Inventory, Beginning

3rd week

21.52

4th week

21.52

301,335.65

516,575.40

TOTAL

21.52

21.52

817,911.06

Add: Purchases

301,335.65

215,239.75

301,335.65

215,239.75

1,033,150.81

Raw Materials available for use

301,335.65

516,575.40

817,911.06

1,033,150.81

1,033,150.81

Raw Materials Used

Ending Inventory

301,335.65

516,575.40

B.2 (WEEKLY SCHEDULE)

817,911.06

1,033,150.81

1,033,150.81

FEBRUARY-DECEMBER 2016
1st week

Price per kilogram


Raw Materials Inventory, Beginning
Add: Purchases
Raw Materials available for use
Raw Materials Used

2nd week

3rd week

4th week

TOTAL

21.52

21.52

21.52

21.52

21.52

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

301,335.65

215,239.75

301,335.65

215,239.75

1,033,150.81

1,334,486.46

1,248,390.56

1,334,486.46

1,248,390.56

2,066,301.62

301,335.65

215,239.75

301,335.65

215,239.75

1,033,150.81

Ending Inventory

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

B.3 (MONTHLY and YEARLY SCHEDULE)

JANUARY

Price per kilogram

FEBRUARY

21.52

Raw Materials, Beginning (in pesos)

MARCH

APRIL

MAY

JUNE

21.52

21.52

21.52

21.52

21.52

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

Add: Purchases

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

Available for use

1,033,150.81

2,066,301.62

2,066,301.62

2,066,301.62

2,066,301.62

2,066,301.62

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

Less: Goods placed in Process


Ending Inventory

B.3 (MONTHLY and YEARLY SCHEDULE)


Price per kilogram

1,033,150.81

JULY

1,033,150.81 1,033,150.81 1,033,150.81

AUGUST

SEPTEMBER

OCTOBER

1,033,150.81 1,033,150.81

NOVEMBER

DECEMBER

21.52

21.52

21.52

21.52

21.52

21.52

Raw Materials, Beginning (in pesos)

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

Add: Purchases

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

Available for use

2,066,301.62

2,066,301.62

2,066,301.62

2,066,301.62

2,066,301.62

2,066,301.62

Less: Goods placed in Process

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

Ending Inventory

113 | P a g e

B.3 (MONTHLY and YEARLY SCHEDULE)

2016

Price per kilogram

2017
21.52

Raw Materials, Beginning (in pesos)

2018
22.33

2019
23.16

2020
24.03

24.93

1,033,150.81

1,071,790.65

1,111,875.62

1,153,459.77

Add: Purchases

12,397,809.72

13,504,562.19

14,710,114.46

16,023,286.37

17,453,685.15

Available for use

12,397,809.72

14,537,713.00

15,781,905.10

17,135,161.99

18,607,144.92

Less: Goods placed in Process

11,364,658.91

13,465,922.35

14,670,029.48

15,981,702.22

17,410,545.75

Ending Inventory

1,033,150.81

1,071,790.65

1,111,875.62

1,153,459.77

1,196,599.16

Note 3.3 Work-in-Process


(In Kilograms)

JANUARY FEBRUARY

MARCH

400

800

1,200

1,600

Total Goods Placed in Process

38,400

38,800

39,200

39,600

40,000

Goods ready to be sold

38,000

38,000

38,000

38,000

40,000

Work in Process Inventory, End

400

800

1,200

1,600

Produced Goods

38,400

Work in Process Inventory, Beginning

AUGUST

SEPTEMBER

38,400

JUNE

Work in Process Inventory, Beginning

JULY

38,400

MAY

(In Kilograms)

38,400

APRIL

Produced Goods

38,400

OCTOBER

NOVEMBER

38,400

DECEMBER

38,400

38,400

38,400

38,400

38,400

400

800

1,200

1,600

Total Goods Placed in Process

38,400

38,800

39,200

39,600

40,000

38,400

Goods ready to be sold

38,000

38,000

38,000

38,000

40,000

38,000

400

800

1,200

1,600

Work in Process Inventory, End

(In Kilograms)
Produced Goods
Work in Process Inventory, Beginning
Total Goods Placed in Process
Goods ready to be sold
Work in Process Inventory, End

114 | P a g e

2016

2017

2018

2019

2020

422,400
422,400
422,000
400

483,840
400
484,240
484,000
240

508,032
240
508,272
508,000
272

533,434
272
533,706
532,000
1,706

560,105
1,706
561,811
560,000
1,811

400

JANUARY
Cost of WIP
Work in Process,
beginning
Total Manufacturing
Costs
Total Cost of Goods
Placed in Process
Cost of Goods
Manufactured
Work in Process, end

FEBRUARY

39.37

115 | P a g e

MAY

JUNE

39.37

39.37

39.37

39.37

15,746.97

31,493.93

47,240.90

62,987.87

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

1,527,455.80

1,543,202.77

1,558,949.73

1,574,696.70

1,495,961.86

1,495,961.86

1,495,961.86

1,495,961.86

1,574,696.70

15,746.97

31,493.93

47,240.90

62,987.87

AUGUST

NOVEMBER

DECEMBER

39.37

39.37

39.37

39.37

15,746.97

31,493.93

47,240.90

62,987.87

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

1,527,455.80

1,543,202.77

1,558,949.73

1,574,696.70

1,511,708.83

1,495,961.86

1,495,961.86

1,495,961.86

1,495,961.86

1,574,696.70

1,495,961.86

15,746.97

31,493.93

47,240.90

62,987.87

SEPTEMBER

2017

39.37

OCTOBER

39.37

39.37

2016
Cost of WIP
Work in Process,
beginning
Total Manufacturing
Costs
Total Cost of Goods
Placed in Process
Cost of Goods
Manufactured
Work in Process, end

APRIL

JULY
Cost of WIP
Work in Process,
beginning
Total Manufacturing
Costs
Total Cost of Goods
Placed in Process
Cost of Goods
Manufactured
Work in Process, end

MARCH

2018

2019

15,746.97

2020

39.37

40.27

41.22

42.21

15,746.97

9,448.34

10,953.91

70,304.47

16,628,797.15

19,047,858.55

20,459,322.22

21,988,019.76

23,644,062.99

16,628,797.15

19,063,605.52

20,468,770.57

21,998,973.67

23,714,367.46

16,613,050.18

19,054,157.18

20,457,816.66

21,928,669.20

23,637,923.69

15,746.97

9,448.34

10,953.91

70,304.47

76,443.77

Note 3.4: Finished Goods


One sack of PET Flakes is equal to 2,000 kilograms.
(In Sacks)

JANUARY FEBRUARY

Finished Goods, beginning

MARCH

APRIL

MAY

JUNE

Add: Finished Goods produced

19

19

19

19

20

Finished Goods available for shipment

19

28

27

26

26

Less: Finished Goods shipped

10

20

20

20

20

Finished Goods, ending

Number of shipment (in container van)

(In Sacks)

JULY

OCTOBER

NOVEMBER

Add: Finished Goods produced

19

19

19

19

20

19

Finished Goods available for shipment

25

24

23

22

22

21

Less: Finished Goods shipped

20

20

20

20

20

20

Finished Goods, ending

Number of shipment (in container van)

Finished Goods, beginning

AUGUST

(In Sacks)

2016

Finished Goods, beginning

Add: Finished Goods produced


Finished Goods available for shipment
Less: Finished Goods shipped
Finished Goods, ending
Number of shipment (in container van)

Cost of FGI

NOTES

Finished Goods, Beginning (in pesos)

JANUARY

2017

2018

2019

DECEMBER

2020

211

242

254

266

280

211

243

257

273

283

210

240

250

270

280

21

24

25

27

28

FEBRUARY

APRIL

MAY

JUNE

708,613.51

629,878.68

551,143.84

472,409.01

1,495,961.86

1,495,961.86

1,495,961.86

1,495,961.86

1,574,696.70

Cost Goods Available for Sale

1,495,961.86

2,204,575.38

2,125,840.54

2,047,105.71

2,047,105.71

Less: Cost of Goods Sold

787,348.35

1,574,696.70

1,574,696.70

1,574,696.70

1,574,696.70

Finished Goods,End (in pesos)

708,613.51

629,878.68

551,143.84

472,409.01

472,409.01

116 | P a g e

3.3

MARCH

Add: Cost of Goods Manufactured

SEPTEMBER

Cost of FGI

NOTES

JULY

Finished Goods, Beginning (in pesos)

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

472,409.01

393,674.17

314,939.34

236,204.50

157,469.67

157,469.67

1,495,961.86

1,495,961.86

1,495,961.86

1,495,961.86

1,574,696.70

1,495,961.86

Cost Goods Available for Sale

1,968,370.87

1,889,636.04

1,810,901.20

1,732,166.37

1,732,166.37

1,653,431.53

Less: Cost of Goods Sold

1,574,696.70

1,574,696.70

1,574,696.70

1,574,696.70

1,574,696.70

1,574,696.70

393,674.17

314,939.34

236,204.50

157,469.67

157,469.67

78,734.83

Add: Cost of Goods Manufactured

3.3

Finished Goods,End (in pesos)

Cost of FGI

NOTES

2016

Finished Goods, Beginning (in pesos)

2017

2019

2020

78,734.83

236,208.56

563,804.07

247,318.73

16,613,050.18

19,054,157.18

20,457,816.66

21,928,669.20

23,637,923.69

Cost Goods Available for Sale

16,613,050.18

19,132,892.01

20,694,025.22

22,492,473.27

23,885,242.41

Less: Cost of Goods Sold

16,534,315.35

18,896,683.45

20,130,221.15

22,245,154.55

23,631,960.78

78,734.83

236,208.56

563,804.07

247,318.73

253,281.63

Add: Cost of Goods Manufactured

2018

3.3

Finished Goods,End (in pesos)

Note 4: Prepaid Expenses


Assumptions: The insurance will be paid every beginning of the year. The paid
insurance will be fully expense for that year, divided equally throughout the year.
Insurance for the building is assumed to be .7% of the cost of the building insured, while
the insurance for the truck is assumed to be 18,000 which is paid during the renewal of the truck.
The values are assumed to be fixed therefore no inflation is to be applied.
Per Year
Insurance - building

42,000.00

Insurance - truck

18,000.00

TOTAL

60,000.00

Prepaid Insurance Building Computation:

Beginning
Insurance Expense
Prepaid Insurance-Building

117 | P a g e

JANUARY

FEBRUARY

42,000.00

38,500.00

MARCH
35,000.00

31,500.00

APRIL

28,000.00

MAY

24,500.00

JUNE

3,500.00

3,500.00

3,500.00

3,500.00

3,500.00

3,500.00

38,500.00

35,000.00

31,500.00

28,000.00

24,500.00

21,000.00

JULY
Beginning
Insurance Expense
Prepaid Insurance-Building

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

21,000.00

17,500.00

14,000.00

10,500.00

7,000.00

3,500

3,500.00

3,500.00

3,500.00

3,500.00

3,500.00

3,500

17,500.00

14,000.00

10,500.00

7,000.00

3,500.00

2016

2017

2018

2019

2020

Beginning

42,000

Insurance Expense

42,000

42,000

42,000

42,000

42,000

Prepaid Insurance-Building

Prepaid Insurance Truck Computation:

Beginning
Insurance Expense
Prepaid Insurane-Truck

JANUARY

FEBRUARY

18,000.00

16,500.00

Insurance Expense
Prepaid Insurane-Truck

15,000.00

MAY

13,500.00

JUNE

12,000.00

10,500.00

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

15,000.00

13,500.00

12,000.00

10,500.00

9,000.00

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

9,000.00

7,500.00

6,000.00

4,500.00

3,000.00

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

7,500.00

6,000.00

4,500.00

3,000.00

1,500.00

2016
Beginning
Insurance Expense
Prepaid Insurane-Truck

118 | P a g e

APRIL

16,500.00

JULY
Beginning

MARCH

2017
-

18,000.00
-

2018
-

18,000.00
-

2019
-

18,000.00
-

2020
-

18,000.00
-

18,000.00
-

Note 5: Property, Plant, and Equipment


Assumptions: Straight-line method is used for depreciation.
The amounts reflected in the financial statements for long-term assets are net of
accumulated depreciation. Monthly and Yearly computations of PPE are shown below.
NOTES
Land
Land
Improvements
Plant Building,
net
Office
Building,net
Factory
Equipment and
Machineries, net
Factory Furniture
and Fixtures, net
Office
Equipment,net
Office Furniture
and Fixtures,net
Website Cost
TOTAL
Depreciation
Expense-Plant
Depreciation
Expenseadministration
Depreciation
Expense-others
Total
Depreciation

119 | P a g e

JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

5.2

5,000,000.00

5,000,000.00

5,000,000.00

5,000,000.00

5,000,000.00

5,000,000.00

5.2

347,083.33

344,166.67

341,250.00

338,333.33

335,416.67

332,500.00

5.2

5,090,909.09

5,076,767.68

5,062,626.26

5,048,484.85

5,034,343.43

5,020,202.02

5.2

906,565.66

904,040.40

901,515.15

898,989.90

896,464.65

893,939.39

5.2

3,451,856.30

3,409,610.23

3,367,364.17

3,325,118.10

3,282,872.04

3,240,625.97

5.2

15,825.00

15,561.25

15,297.50

15,033.75

14,770.00

14,506.25

5.2

166,071.07

164,572.38

163,073.70

161,575.01

160,076.33

158,577.64

5.2

74,721.59

73,516.14

72,310.69

71,105.24

69,899.79

68,694.34

5.2

264,876.00

264,876.00

264,876.00

264,876.00

264,876.00

264,876.00

15,317,908.04

15,253,110.75

15,188,313.47

15,123,516.18

15,058,718.90

14,993,921.61

56,651.23

56,651.23

56,651.23

56,651.23

56,651.23

5,229.39

5,229.39

5,229.39

5,229.39

5,229.39

5,229.39

2,916.67

2,916.67

2,916.67

2,916.67

2,916.67

2,916.67

8,146.05

64,797.28

64,797.28

64,797.28

64,797.28

64,797.28

5.2

JULY
5,000,000.00

AUGUST
5,000,000.00

SEPTEMBER
5,000,000.00

OCTOBER
5,000,000.00

NOVEMBER
5,000,000.00

DECEMBER
5,000,000.00

5.2

329,583.33

326,666.67

323,750.00

320,833.33

317,916.67

315,000.00

5.2

5,006,060.61

4,991,919.19

4,977,777.78

4,963,636.36

4,949,494.95

4,935,353.54

5.2

891,414.14

888,888.89

886,363.64

883,838.38

881,313.13

878,787.88

5.2

3,198,379.91

3,156,133.84

3,113,887.78

3,071,641.71

3,029,395.64

2,987,149.58

5.2

14,242.50

13,978.75

13,715.00

13,451.25

13,187.50

12,923.75

5.2

157,078.96

155,580.27

154,081.59

152,582.90

151,084.22

149,585.53

5.2

67,488.89
264,876.00
14,929,124.33

66,283.43
264,876.00
14,864,327.05

65,077.98
264,876.00
14,799,529.76

63,872.53
264,876.00
14,734,732.48

62,667.08
264,876.00
14,669,935.19

61,461.63
264,876.00
14,605,137.91

56,651.23

56,651.23

56,651.23

56,651.23

56,651.23

56,651.23

5,229.39

5,229.39

5,229.39

5,229.39

5,229.39

5,229.39

2,916.67

2,916.67

2,916.67

2,916.67

2,916.67

2,916.67

64,797.28

64,797.28

64,797.28

64,797.28

64,797.28

64,797.28

NOTES
Land
Land
Improvements
Plant Building,
net
Office
Building,net
Factory
Equipment and
Machineries, net
Factory Furniture
and Fixtures, net
Office
Equipment,net
Office Furniture
and Fixtures,net
Website Cost
TOTAL
Depreciation
Expense-Plant
Depreciation
Expenseadministration
Depreciation
Expense-others
Total
Depreciation

120 | P a g e

5.2

5.2

2016
5,000,000.00

2017
5,000,000.00

2018
5,000,000.00

2019
5,000,000.00

2020
5,000,000.00

5.2

315,000.00

280,000.00

245,000.00

210,000.00

175,000.00

5.2

4,935,353.54

4,765,656.57

4,595,959.60

4,426,262.63

4,256,565.66

5.2

878,787.88

848,484.85

818,181.82

787,878.79

757,575.76

5.2

2,987,149.58

2,480,196.79

1,973,244.00

1,466,291.22

959,338.43

5.2

12,923.75

9,758.75

6,593.75

3,428.75

263.75

5.2

149,585.53

131,601.32

113,617.10

95,632.88

77,648.67

5.2

61,461.63
264,876.00
14,605,137.91

46,996.22
264,876.00
13,827,570.50

32,530.82
264,876.00
13,050,003.08

18,065.41
264,876.00
12,272,435.67

3,600.00
264,876.00
11,494,868.26

623,163.53

679,814.76

679,814.76

679,814.76

679,814.76

62,752.65

62,752.65

62,752.65

62,752.65

62,752.65

35,000.00

35,000.00

35,000.00

35,000.00

35,000.00

720,916.18

777,567.41

777,567.41

777,567.41

777,567.41

NOTES
Land
Land
Improvements
Plant Building,
net
Office
Building,net
Factory
Equipment and
Machineries, net
Factory Furniture
and Fixtures, net
Office
Equipment,net
Office Furniture
and Fixtures,net
Website Cost
TOTAL
Depreciation
Expense-Plant
Depreciation
Expenseadministration
Depreciation
Expense-others
Total
Depreciation

5.2

Note 5.1:
A. Land
The cost of land is 4,200,000 Php, plus other acquisition fees, estimated to be 800,000
Php, such as appraisal fee, special assessment fee, title acquisition fee, broker's fee and other fees
directly attributable to the acquisition of land. This gives a total of 5,000,000 Php as capitalizable
value of the land. The cost per unit of land is based on the price stated in Davao Real Estate
website.

121 | P a g e

Cost per unit


Land
Other Acquistion costs
TOTAL

3,000.00

Quantity
1,400.00

Total Cost
4,200,000.00
800,000.00
5,000,000.00

B. Land Improvements
The land improvements include the concreting of the parking space and other space
necessary for moving around the area.
Cost

Land Improvements

Useful Life
(years)
350,000
10

Monthly computation of Land Improvements is shown below. Yearly Projections are


presented in Note 5.2: Lapsing Schedule.
Land Improvements, beg
Depreciation
Land Improvements, end

Land Improvements, beg


Depreciation
Land Improvements, end

JANUARY
350,000.00
2,916.67
347,083.33

FEBRUARY
347,083.33
2,916.67
344,166.67

MARCH
344,166.67
2,916.67
341,250.00

APRIL
341,250.00
2,916.67
338,333.33

MAY
338,333.33
2,916.67
335,416.67

JUNE
335,416.67
2,916.67
332,500.00

JULY
332,500.00
2,916.67
329,583.33

AUGUST
329,583.33
2,916.67
326,666.67

SEPTEMBER
326,666.67
2,916.67
323,750.00

OCTOBER
323,750.00
2,916.67
320,833.33

NOVEMBER
320,833.33
2,916.67
317,916.67

DECEMBER
317,916.67
2,916.67
315,000.00

C. Building
The cost of building amounting to 5,000,000 Php is estimated according to the current
practice of estimation in the Engineering Department, based on the low cost construction of
commercial or industrial areas which is 7,500 Php per square meter. Further, the allocation of the
total cost of the building to plant and office building is based on their respective lot area, which
in this case is 560 square meters and 100 square meters respectively.
Cost
Building
Other construction costs
TOTAL

122 | P a g e

5,000,000.00
1,000,000.00
6,000,000.00

Useful Life
(years)

30

Plant Building
5,090,909.09

Total Cost of Building

Office
Building
909,090.91

Total
6,000,000.00

Monthly computation of Land Improvements is shown below. Yearly Projections are


presented in Note 5.2: Lapsing Schedule
Plant Building, beg
Depreciation
Plant Building, end
Office Building, beg
Depreciation
Office Building, end

Plant Building, beg


Depreciation
Plant Building, end
Office Building, beg
Depreciation
Office Building, end

123 | P a g e

JANUARY
5,090,909.09
5,090,909.09

FEBRUARY
5,090,909.09
14,141.41
5,076,767.68

MARCH
5,076,767.68
14,141.41
5,062,626.26

APRIL
5,062,626.26
14,141.41
5,048,484.85

MAY
5,048,484.85
14,141.41
5,034,343.43

JUNE
5,034,343.43
14,141.41
5,020,202.02

909,090.91
2,525.25
906,565.66

906,565.66
2,525.25
904,040.40

904,040.40
2,525.25
901,515.15

901,515.15
2,525.25
898,989.90

898,989.90
2,525.25
896,464.65

896,464.65
2,525.25
893,939.39

JULY
5,020,202.02
14,141.41
5,006,060.61

AUGUST
5,006,060.61
14,141.41
4,991,919.19

SEPTEMBER
4,991,919.19
14,141.41
4,977,777.78

OCTOBER
4,977,777.78
14,141.41
4,963,636.36

NOVEMBER
4,963,636.36
14,141.41
4,949,494.95

DECEMBER
4,949,494.95
14,141.41
4,935,353.54

893,939.39
2,525.25
891,414.14

891,414.14
2,525.25
888,888.89

888,888.89
2,525.25
886,363.64

886,363.64
2,525.25
883,838.38

883,838.38
2,525.25
881,313.13

881,313.13
2,525.25
878,787.88

D. Factory Equipment and Machineries


The breakdown of Factory Equipment and Machineries is shown in the table below.

Cost per unit Qty


PET-Flakes machine

Total Cost

Useful
Life
(years)

2,149,958.90

Isuzu Elf Truck

160,000.00

160,000.00

mitsubishi fd-30n forklift

998,000.00

998,000.00

10

441.47

441.47

1,545.15

50

77,257.50

66,198.43

66,198.43

10

JINMAI TCS-3000 FLOOR SCALE


RXP-1212WCA+8 PALLET
Generator
TOTAL

3,451,856.30

Monthly computation of Factory Equipment and Machineries according to useful life is


shown below. Yearly Projections are presented in Note 5.2: Lapsing Schedule.
Useful life of 5 years
Factory Equipment and Machineries,
beg
Depreciation
Factory Equipment and Machineries,
end

JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

77,698.97
-

77,698.97
1,294.98

76,403.99
1,294.98

75,109.00
1,294.98

73,814.02
1,294.98

72,519.04
1,294.98

77,698.97

76,403.99

75,109.00

73,814.02

72,519.04

71,224.06

Useful life of 6 years


Factory Equipment and Machineries,
beg
Depreciation
Factory Equipment and Machineries,
end

2,309,958.90
-

2,309,958.90
32,082.76

2,277,876.14
32,082.76

2,245,793.38
32,082.76

2,213,710.61
32,082.76

2,181,627.85
32,082.76

2,309,958.90

2,277,876.14

2,245,793.38

2,213,710.61

2,181,627.85

2,149,545.09

Useful life of 10 years


Factory Equipment and Machineries,
beg
Depreciation
Factory Equipment and Machineries,
end

1,064,198.43
-

1,064,198.43
8,868.32

1,055,330.11
8,868.32

1,046,461.79
8,868.32

1,037,593.47
8,868.32

1,028,725.15
8,868.32

1,064,198.43

1,055,330.11

1,046,461.79

1,037,593.47

1,028,725.15

1,019,856.83

3,451,856.30

3,409,610.23

3,367,364.17

3,325,118.10

3,282,872.04

3,240,625.97

TOTAL FACTORY EQT. AND


MACHINERIES

124 | P a g e

Useful life of 5 years


Factory Equipment and Machineries,
beg
Depreciation
Factory Equipment and Machineries,
end

JULY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

71,224
1,295

69,929
1,295

68,634
1,295

67,339
1,295

66,044
1,295

64,749
1,295

69,929

68,634

67,339

66,044

64,749

63,454

Useful life of 6 years


Factory Equipment and Machineries,
beg
Depreciation
Factory Equipment and Machineries,
end

2,149,545
32,083

2,117,462
32,083

2,085,380
32,083

2,053,297
32,083

2,021,214
32,083

1,989,131
32,083

2,117,462

2,085,380

2,053,297

2,021,214

1,989,131

1,957,049

Useful life of 10 years


Factory Equipment and Machineries,
beg
Depreciation
Factory Equipment and Machineries,
end

1,019,857
8,868

1,010,989
8,868

1,002,120
8,868

993,252
8,868

984,384
8,868

975,515
8,868

1,010,989

1,002,120

993,252

984,384

975,515

966,647

3,198,380

3,156,134

3,113,888

3,071,642

3,029,396

2,987,150

TOTAL FACTORY EQT. AND


MACHINERIES

E. Factory Furniture and Fixtures


The breakdown of Factory Furniture and Fixtures is presented below.
Cost per unit
Wooden Table
Uratex Monoblock Chair
Total

Qty

Total Cost

Useful
Life
(years)

5,000.00

10,000.00

233.00

25

5,825.00
15,825.00

Monthly computation of Factory Furniture and Fixtures according to useful life is shown
below. Yearly Projections are presented in Note 5.2: Lapsing Schedule.

125 | P a g e

JANUARY
Factory Furniture
and Fixtures, beg
Depreciation
Factory Furniture
and Fixtures, end

MARCH

APRIL

MAY

JUNE

15,825.00
-

15,825.00
263.75

15,561.25
263.75

15,297.50
263.75

15,033.75
263.75

14,770.00
263.75

15,825.00

15,561.25

15,297.50

15,033.75

14,770.00

14,506.25

JULY
Factory Furniture
and Fixtures, beg
Depreciation
Factory Furniture
and Fixtures, end

FEBRUARY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

14,506.25
263.75

14,242.50
263.75

13,978.75
263.75

13,715.00
263.75

13,451.25
263.75

13,187.50
263.75

14,242.50

13,978.75

13,715.00

13,451.25

13,187.50

12,923.75

F. Office Equipment
The breakdown of Office Equipment is shown below.

Computer
Ventilation (Air-conditioner)
Printer
Dispenser
Wall Mount Fan
White board
TOTAL Office Equipment

Cost per unit Qty


22,990.00
27,148.00
4,000.00
4,798.00
1,545.15
4,150.00

5
1
1
2
5
1

Useful
Total Cost
Life
114,950.00
10
27,148.00
15
4,000.00
5
9,596.00
5
7,725.75
5
4,150.00
10
167,569.75

Monthly computation of Office Equipment according to useful life is shown below.


Yearly Projections are presented in Note 5.2: Lapsing Schedule.

126 | P a g e

Useful life of 5 years


Office Equipment,beg
Depreciation
Office Equipment, end

JANUARY
21,321.75
355.36
20,966.39

FEBRUARY
20,966.39
355.36
20,611.03

MARCH
20,611.03
355.36
20,255.66

APRIL
20,255.66
355.36
19,900.30

MAY
19,900.30
355.36
19,544.94

JUNE
19,544.94
355.36
19,189.58

Useful life of 10 years


Office Equipment,beg
Depreciation
Office Equipment, end

119,100.00
992.50
118,107.50

118,107.50
992.50
117,115.00

117,115.00
992.50
116,122.50

116,122.50
992.50
115,130.00

115,130.00
992.50
114,137.50

114,137.50
992.50
113,145.00

Useful life of 15 years


Office Equipment,beg
Depreciation
Office Equipment, end

27,148.00
150.82
26,997.18

26,997.18
150.82
26,846.36

26,846.36
150.82
26,695.53

26,695.53
150.82
26,544.71

26,544.71
150.82
26,393.89

26,393.89
150.82
26,243.07

166,071.07

164,572.38

163,073.70

161,575.01

160,076.33

158,577.64

TOTAL OFFICE
EQUIPMENT

Useful life of 5 years


Office Equipment,beg
Depreciation
Office Equipment, end

JULY
19,189.58
355.36
18,834.21

AUGUST
18,834.21
355.36
18,478.85

SEPTEMBER
18,478.85
355.36
18,123.49

OCTOBER
18,123.49
355.36
17,768.13

NOVEMBER
17,768.13
355.36
17,412.76

DECEMBER
17,412.76
355.36
17,057.40

Useful life of 10 years


Office Equipment,beg
Depreciation
Office Equipment, end

113,145.00
992.50
112,152.50

112,152.50
992.50
111,160.00

111,160.00
992.50
110,167.50

110,167.50
992.50
109,175.00

109,175.00
992.50
108,182.50

108,182.50
992.50
107,190.00

Useful life of 15 years


Office Equipment,beg
Depreciation
Office Equipment, end

26,243.07
150.82
26,092.24

26,092.24
150.82
25,941.42

25,941.42
150.82
25,790.60

25,790.60
150.82
25,639.78

25,639.78
150.82
25,488.96

25,488.96
150.82
25,338.13

157,078.96

155,580.27

154,081.59

152,582.90

151,084.22

149,585.53

TOTAL OFFICE
EQUIPMENT

G. Office Furniture and Fixtures


The breakdown of Office Furniture and Fixtures is shown below.
Cost per unit

127 | P a g e

Qty

Total Cost

Useful Life

Desks

882.94

16

14,127.04

Chairs

3,640.00

15

54,600.00

Cabinet
Total

7,200.00

7,200.00

10

75,927.04

Monthly computation of Office Furniture and Fixtures according to useful life is shown
below. Yearly Projections are presented in Note 5.2: Lapsing Schedule.
Useful life of 5 years
Office Furniture and Fixtures, beg
Depreciation
Office Furniture and Fixtures, end

JANUARY
68,727.04
1,145.45
67,581.59

FEBRUARY
67,581.59
1,145.45
66,436.14

MARCH
66,436.14
1,145.45
65,290.69

APRIL
65,290.69
1,145.45
64,145.24

MAY
64,145.24
1,145.45
62,999.79

JUNE
62,999.79
1,145.45
61,854.34

Useful life of 10 years


Office Furniture and Fixtures, beg
Depreciation
Office Furniture and Fixtures, end

7,200.00
60.00
7,140.00

7,140.00
60.00
7,080.00

7,080.00
60.00
7,020.00

7,020.00
60.00
6,960.00

6,960.00
60.00
6,900.00

6,900.00
60.00
6,840.00

74,721.59

73,516.14

72,310.69

71,105.24

69,899.79

68,694.34

TOTAL OFFICE FURNITURE AND FIXTURES

Useful life of 5 years


Office Furniture and Fixtures, beg
Depreciation
Office Furniture and Fixtures, end

JULY
61,854.34
1,145.45
60,708.89

AUGUST
60,708.89
1,145.45
59,563.43

SEPTEMBER
59,563.43
1,145.45
58,417.98

OCTOBER
58,417.98
1,145.45
57,272.53

NOVEMBER
57,272.53
1,145.45
56,127.08

DECEMBER
56,127.08
1,145.45
54,981.63

Useful life of 10 years


Office Furniture and Fixtures, beg
Depreciation
Office Furniture and Fixtures, end

6,840.00
60.00
6,780.00

6,780.00
60.00
6,720.00

6,720.00
60.00
6,660.00

6,660.00
60.00
6,600.00

6,600.00
60.00
6,540.00

6,540.00
60.00
6,480.00

67,488.89

66,283.43

65,077.98

63,872.53

62,667.08

61,461.63

TOTAL OFFICE FURNITURE AND FIXTURES

H. Website Cost
The website development cost is based on the estimated basic website cost as stated in a
website developer, Executionist Company. The proponents assume that there will be no more
amortization cost for the website since the website is being maintained and updated as broken
down in the website maintenance expense. The website cost is 264,876 Php.

128 | P a g e

Note 5.2: Lapsing Schedule for Property, Plant, and Equipment


The tables below show the computation of annual depreciation of PPE accounts.
Land

Cost of Asset

Land
Improvements

Plant Building

350,000.00

5,090,909.09

5,000,000.00

Additions:

Disposals:
Total:
Useful Life
Annual
Depreciation

5,000,000.00

Factory Equipment and Machineries


with useful
with useful life with useful life
life of 5 years of 6 years
of 10 years
TOTAL

Office
Building

909,090.91

77,698.97

2,309,958.90

1,064,198.43

3,451,856.30

350,000.00
10

5,090,909.09
30

909,090.91
30

77,698.97
5

2,309,958.90
6

1,064,198.43
10

3,451,856.30

35,000.00

169,696.97

30,303.03

15,539.79

384,993.15

106,419.84

506,952.79

Factory
Office Equipment
Office Furniture and Fixtures
Website Cost
Furniture and with useful life of with useful life of with useful life of
with useful life of with useful life of
Fixtures
5 years
10 years
15 years
TOTAL
5 years
10 years
TOTAL
15,825.00
21,321.75
119,100.00
27,148.00
167,569.75
68,727.04
7,200.00
75,927.04
264,876.00

Cost of Asset
Additions:

Disposals:
Total:
Useful Life
Annual
Depreciation

15,825.00
5

21,321.75
5

119,100.00
10

27,148.00
15

167,569.75

68,727.04
5

7,200.00
10

75,927.04

3,165.00

4,264.35

11,910.00

1,809.87

17,984.22

13,745.41

720.00

14,465.41

264,876.00

Presented in tables below are the yearly carrying values of PPE accounts.

Land
Improvements

Land
(Year 2016)
Cost of Asset

5,000,000.00

Annual Depreciation

Accumulated Depreciation, beg

Additions:

Disposal:

Accumulated Depreciation, end


Carrying Value, December 31,
2016

129 | P a g e

5,000,000.00

350,000.00

5,090,909.09

Factory
Factory
Office
Equipment and Furniture and Office Furniture and
Machineries
Fixtures
Equipment Fixtures
Website Cost
909,090.91
3,451,856.30
15,825.00 167,569.75
75,927.04
264,876.00

35,000.00

155,555.56

30,303.03

35,000.00
-

Plant Building

155,555.56
-

Office Building

30,303.03
-

464,706.72
464,706.72
-

35,000.00

155,555.56

30,303.03

464,706.72

315,000.00

4,935,353.54

878,787.88

2,987,149.58

2,901.25
2,901.25
2,901.25

17,984.22
17,984.22
-

14,465.41
14,465.41
-

17,984.22

14,465.41

12,923.75 149,585.53

61,461.63

TOTAL
15,326,054.09
720,916.18
720,916.18
720,916.18

264,876.00 14,605,137.91

Land
(Year 2017)
Cost of Asset
Annual Depreciation
Accumulated Depreciation, beg
Additions:
Disposal:
Accumulated Depreciation, end
Carrying Value, December 31,
2017

Land Improvements

Factory
Factory
Equipment and Furniture and Office Office Furniture and
Machineries
Fixtures Equipment
Fixtures

Office Building

Website Cost

TOTAL

5,000,000.00
-

315,000.00
35,000.00
35,000.00
35,000.00
70,000.00

4,935,353.54
169,696.97
155,555.56
169,696.97
325,252.53

878,787.88 2,987,149.58
30,303.03 506,952.79
30,303.03 464,706.72
30,303.03 506,952.79
60,606.06 971,659.51

12,923.75
3,165.00
2,901.25
3,165.00
6,066.25

149,585.53
17,984.22
17,984.22
17,984.22
35,968.43

61,461.63
14,465.41
14,465.41
14,465.41
28,930.82

264,876.00 14,605,137.91
777,567.41
777,567.41
777,567.41

5,000,000.00

280,000.00

4,765,656.57

848,484.85 2,480,196.79

9,758.75 131,601.32

46,996.22

264,876.00 13,827,570.50

Land
(Year 2018)
Cost of Asset

Plant Building

280,000.00

4,765,656.57

Factory
Factory
Equipment and Furniture and Office Office Furniture and
Machineries
Fixtures Equipment
Fixtures
848,484.85 2,480,196.79
9,758.75 131,601.32
46,996.22

Land Improvements

5,000,000.00

Plant Building

Office Building

Website Cost
264,876.00

Annual Depreciation

35,000.00

169,696.97

30,303.03

506,952.79

3,165.00

17,984.22

14,465.41

Accumulated Depreciation, beg

70,000.00

325,252.53

60,606.06

971,659.51

6,066.25

35,968.43

28,930.82

Additions:

35,000.00

169,696.97

30,303.03

506,952.79

3,165.00

17,984.22

14,465.41

Disposal:

Accumulated Depreciation, end


Carrying Value, December 31,
2018

5,000,000.00

Land
(Year 2019)
Cost of Asset
Annual Depreciation
Accumulated Depreciation, beg
Additions:
Disposal:
Accumulated Depreciation, end
Carrying Value, December 31,
2019

130 | P a g e

105,000.00

494,949.49

90,909.09

1,478,612.30

245,000.00

4,595,959.60

818,181.82

1,973,244.00

Land Improvements

Plant Building

Office Building

9,231.25

53,952.65

43,396.22

6,593.75 113,617.10

32,530.82

Factory
Factory
Equipment and Furniture and Office Office Furniture and
Machineries
Fixtures Equipment
Fixtures

TOTAL
13,827,570.50
777,567.41
777,567.41

777,567.41

264,876.00 13,050,003.08

Website Cost

TOTAL

5,000,000.00
-

245,000.00
35,000.00
105,000.00
35,000.00
140,000.00

4,595,959.60
169,696.97
494,949.49
169,696.97
664,646.46

818,181.82 1,973,244.00
30,303.03 506,952.79
90,909.09 1,478,612.30
30,303.03 506,952.79
121,212.12 1,985,565.08

6,593.75
3,165.00
9,231.25
3,165.00
12,396.25

113,617.10
17,984.22
53,952.65
17,984.22
71,936.87

32,530.82
14,465.41
43,396.22
14,465.41
57,861.63

264,876.00
-

13,050,003.08
777,567.41
777,567.41
777,567.41

5,000,000.00

210,000.00

4,426,262.63

787,878.79 1,466,291.22

3,428.75 95,632.88

18,065.41

264,876.00 12,272,435.67

Land
(Year 2020)
Cost of Asset
Annual Depreciation
Accumulated Depreciation, beg
Additions:
Disposal:
Accumulated Depreciation, end
Carrying Value, December 31,
2020

Land Improvements

Plant Building

Factory
Factory
Equipment and Furniture and Office Office Furniture and
Machineries
Fixtures Equipment
Fixtures

Office Building

5,000,000.00
-

210,000.00
35,000.00
140,000.00
35,000.00
175,000.00

4,426,262.63
169,696.97
664,646.46
169,696.97
834,343.43

787,878.79 1,466,291.22
30,303.03 506,952.79
121,212.12 1,985,565.08
30,303.03 506,952.79
151,515.15 2,492,517.87

5,000,000.00

175,000.00

4,256,565.66

757,575.76

959,338.43

3,428.75
3,165.00
12,396.25
3,165.00
15,561.25

Website Cost

TOTAL

95,632.88
17,984.22
71,936.87
17,984.22
89,921.08

18,065.41
14,465.41
57,861.63
14,465.41
72,327.04

264,876.00
-

12,272,435.67
777,567.41
777,567.41
777,567.41

263.75 77,648.67

3,600.00

264,876.00 11,494,868.26

Note 6: Deferred Tax Asset


Deferred Tax Asset is computed as by multiplying the Income Tax rate of 30% to the Net
Loss. The result is an Income Tax Benefit which is deductible to the Income Tax Provision
within three years from the period.
NOTES
NET INCOME BEFORE TAX

JANUARY FEBRUARY

IS

Deferred Tax Asset

249,391.88

NOTES
NET INCOME BEFORE TAX

JULY

IS

Deferred Tax Asset

NOTES
NET INCOME BEFORE TAX
Deferred Tax Asset

131 | P a g e

MARCH

(831,306.26) (213,299.31) (236,024.76)

IS

63,989.79

AUGUST

70,807.43

APRIL

MAY

JUNE

(85,848.41)

(85,675.41) (236,024.76)

25,754.52

25,702.62

70,807.43

SEPTEMBER OCTOBER NOVEMBER DECEMBER

(85,956)

(85,675)

(236,025)

(85,848)

(85,675)

(236,025)

25,787

25,703

70,807

25,755

25,703

70,807

2016

2017

2018

2019

2020

(2,503,384)

(1,070,204)

(576,990)

233,802

803,190

751,015

321,061

173,097

70,141

240,957

Note 7: Current Liabilities


Assumption: Current Liabilities is for the first five years composed only of Accounts
Payable, SSS Payable, PHIC Payable, HDMF Payable, Taxes and Licenses Payable, and
Accrued Liabilities. Income Tax Payable is not included in the balance sheet since the company
incurred loss for the first five years of its operations.
Accounts Payable
SSS Payable
PHIC Payable
HDMF Payable
Taxes and Licenses Payable
Accrued Liabilities
TOTAL

NOTES JANUARY FEBRUARY MARCH


APRIL
MAY
JUNE
6.1 516,575.40
516,575.40 516,575.40 516,575.40 516,575.40 516,575.40
6.2
8,035.12
14,251.54
14,251.54
14,251.54
14,251.54
14,251.54
6.3
3,511.10
6,039.73
6,039.73
6,039.73
6,039.73
6,039.73
6.4
1,614.30
3,658.64
3,658.64
3,658.64
3,658.64
3,658.64
6.5
40,043.82
49,505.49 199,854.84
49,505.49
49,505.49 199,854.84
6.6
11,626.47
159,515.66 159,515.66 159,515.66 159,515.66 159,515.66
581,406.21
749,546.46 899,895.81 749,546.46 749,546.46 899,895.81

Accounts Payable
SSS Payable
PHIC Payable
HDMF Payable
Taxes and Licenses Payable
Accrued Liabilities
TOTAL

AUGUST
SEPTEMBER OCTOBER NOVEMBER DECEMBER
NOTES JULY
516,575.40
516,575.40
516,575.40
516,575.40
516,575.40
516,575.40
6.1
6.2
14,251.54
14,251.54
14,251.54
14,251.54
14,251.54
14,251.54
6.3
6,039.73
6,039.73
6,039.73
6,039.73
6,039.73
6,039.73
6.4
3,658.64
3,658.64
3,658.64
3,658.64
3,658.64
3,658.64
49,505.49
49,505.49
199,854.84
49,505.49
49,505.49
199,854.84
6.5
159,515.66
159,515.66
159,515.66
159,515.66
159,515.66
159,515.66
6.6
749,546.46
749,546.46
899,895.81
749,546.46
749,546.46
899,895.81

Accounts Payable
SSS Payable
PHIC Payable
HDMF Payable
Taxes and Licenses Payable
Accrued Liabilities
TOTAL

132 | P a g e

NOTES
6.1
6.2
6.3
6.4
6.5
6.6

2016
516,575
14,252
6,040
3,659
199,855
159,516
899,897

2017
562,690
14,785
6,266
3,796
226,350
166,323
980,211

2018
612,921
15,338
6,500
3,938
242,616
172,888
1,054,201

2019
667,637
15,911
6,744
4,085
253,809
179,728
1,127,915

2020
727,237
16,506
6,996
4,238
312,278
186,858
1,254,113

Note 7.1: Accounts Payable


Assumption: Accounts Payable is composed of the accounts incurred for the purchase of
raw materials. Purchases are assumed to be paid 50% down payment and the remaining 50% is
accounts payable to be paid within 1 month after purchase.
Accounts Payable
Purchases
Downpayment(50%)

NOTES
3.1.B.3

Accounts Payable, Beginning


Add: Accounts Payable for the period
Balance
Less: Payments of Accounts Payable
Accounts Payable, End

Accounts Payable
Purchases
Downpayment(50%)

516,575.40
516,575.40
516,575.40

Accounts Payable, Beginning


Add: Accounts Payable for the period
Balance
Less: Payments of Accounts Payable
Accounts Payable, End

133 | P a g e

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
NOTES JULY
3.1.B.3
1,033,150.81
1,033,150.81
1,033,150.81
1,033,150.81
1,033,150.81
1,033,150.81
516,575.40
516,575.40
516,575.40
516,575.40
516,575.40
516,575.40

Accounts Payable, Beginning


Add: Accounts Payable for the period
Balance
Less: Payments of Accounts Payable
Accounts Payable, End

Accounts Payable
Purchases
Downpayment(50%)

JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
1,033,150.81
1,033,150.81
1,033,150.81
1,033,150.81
1,033,150.81
1,033,150.81
516,575.40
516,575.40
516,575.40
516,575.40
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

NOTES
3.1.B.3

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

516,575.40
516,575.40
1,033,150.81
516,575.40
516,575.40

2016
12,397,809.72
6,198,904.86

2017
13,504,562.19
6,752,281.09

2018
14,710,114.46
7,355,057.23

2019
16,023,286.37
8,011,643.19

2020
17,453,685.15
8,726,842.57

6,198,904.86
6,198,904.86
5,682,329.45
516,575.40

516,575.40
6,752,281.09
7,268,856.50
6,706,166.41
562,690.09

562,690.09
7,355,057.23
7,917,747.32
7,304,825.88
612,921.44

612,921.44
8,011,643.19
8,624,564.62
7,956,927.69
667,636.93

667,636.93
8,726,842.57
9,394,479.51
8,667,242.62
727,236.88

Note 7.2: SSS Payable


Assumption: The employees are assumed to be single for the purpose of computing the
following mandatory contributions.
Below is the breakdown of amounts under the account title SSS Payable.
SSS Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

SSS Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

SSS Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

134 | P a g e

JANUARY
8,035.12
8,035.12

NOTES
9
10
15.1

NOTES
9
10
15.1

FEBRUARY
3,284.00
2,932.43
8,035.12
14,251.54

MARCH
3,284.00
2,932.43
8,035.12
14,251.54

APRIL
3,284.00
2,932.43
8,035.12
14,251.54

MAY
3,284.00
2,932.43
8,035.12
14,251.54

JUNE
3,284.00
2,932.43
8,035.12
14,251.54

JULY
AUGUST SEPTEMBER OCTOBER NOVEMBERDECEMBER
3,284.00
3,284.00
3,284.00
3,284.00
3,284.00
3,284.00
2,932.43
2,932.43
2,932.43
2,932.43
2,932.43
2,932.43
8,035.12
8,035.12
8,035.12
8,035.12
8,035.12
8,035.12
14,251.54
14,251.54
14,251.54
14,251.54
14,251.54
14,251.54

NOTES
9
10
15.1

2016
3,284.13
2,932.43
8,035.12
14,251.67

2017
3,406.95
3,042.10
8,335.63
14,784.68

2018
3,534.37
3,155.87
8,647.38
15,337.63

2019
3,666.56
3,273.90
8,970.79
15,911.26

2020
3,803.69
3,396.35
9,306.30
16,506.34

Note 7.3: PHIC Payable


Below is the breakdown of amounts under the account title PHIC Payable.

PHIC Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

PHIC Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

PHIC Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

135 | P a g e

NOTES
9
10
15.1

NOTES
9
10
15.1

JANUARY
3,511.10
3,511.10

FEBRUARYMARCH
1,291.00
1,291.00
1,237.63
1,237.63
3,511.10
3,511.10
6,039.73
6,039.73

APRIL
1,291.00
1,237.63
3,511.10
6,039.73

MAY
1,291.00
1,237.63
3,511.10
6,039.73

JUNE
1,291.00
1,237.63
3,511.10
6,039.73

JULY
AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,237.63
1,237.63
1,237.63
1,237.63
1,237.63
1,237.63
3,511.10
3,511.10
3,511.10
3,511.10
3,511.10
3,511.10
6,039.73
6,039.73
6,039.73
6,039.73
6,039.73
6,039.73

NOTES
9
10
15.1

2016
1,291.44
1,237.63
3,511.10
6,040.17

2017
1,339.74
1,283.92
3,642.41
6,266.07

2018
1,389.84
1,331.93
3,778.64
6,500.42

2019
1,441.82
1,381.75
3,919.96
6,743.53

2020
1,495.75
1,433.43
4,066.57
6,995.74

Note 7.4: HDMF Payable


Below is the breakdown of amounts under the account title HDMF Payable.
HDMF Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

HDMF Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

HDMF Payable
Direct Labor
Indirect Labor
Administrative
TOTAL

136 | P a g e

NOTES
9
10
15.1

NOTES
9
10
15.1

JANUARY
1,614.30
1,614.30

FEBRUARY
1,291.00
753.34
1,614.30
3,658.64

MARCH
1,291.00
753.34
1,614.30
3,658.64

APRIL
1,291.00
753.34
1,614.30
3,658.64

MAY
1,291.00
753.34
1,614.30
3,658.64

JUNE
1,291.00
753.34
1,614.30
3,658.64

JULY
AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
753.34
753.34
753.34
753.34
753.34
753.34
1,614.30
1,614.30
1,614.30
1,614.30
1,614.30
1,614.30
3,658.64
3,658.64
3,658.64
3,658.64
3,658.64
3,658.64

NOTES
9
10
15.1

2016
1,291.44
753.34
1,614.30
3,659.08

2017
1,339.74
781.51
1,674.67
3,795.93

2018
1,389.84
810.74
1,737.31
3,937.89

2019
1,441.82
841.06
1,802.28
4,085.17

2020
1,495.75
872.52
1,869.69
4,237.96

Note 7.5: Taxes and Licenses Payable


Below is the breakdown of amounts under the account title Taxes and Licenses Payable.
Taxes and Licenses Payable
Withholding Tax-Indirect Labor
Withholding Tax- Administrative
Other Taxes and Licenses
TOTAL

APRIL
MAY
JUNE
NOTES JANUARY FEBRUARY MARCH
10
9,461.67
9,461.67 9,461.67 9,461.67
9,461.67
15
40,043.82
40,043.82
40,043.82 40,043.82 40,043.82
40,043.82
16
150,349.35
150,349.35
40,044
49,505
199,855
49,505
49,505
199,855

Taxes and Licenses Payable


Withholding Tax-Indirect Labor
Withholding Tax- Administrative
Other Taxes and Licenses
TOTAL

AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER


NOTES JULY
10
9,461.67
9,461.67
9,461.67
9,461.67
9,461.67
9,461.67
15
40,043.82
40,043.82
40,043.82
40,043.82
40,043.82
40,043.82
16
150,349.35
150,349.35
49,505.49
49,505.49
199,854.84
49,505.49
49,505.49
199,854.84

Taxes and Licenses Payable


Withholding Tax-Indirect Labor
Withholding Tax- Administrative
Other Taxes and Licenses
TOTAL

137 | P a g e

NOTES
10
15
16

2016
9,461.67
40,043.82
150,349.35
199,854.84

2017
9,815.54
41,541.46
174,993.36
226,350.36

2018
10,182.64
43,095.11
189,338.38
242,616.12

2019
10,563.47
44,706.86
198,539.06
253,809.39

2020
10,958.54
46,378.90
254,940.88
312,278.32

Note 7.6: Accrued Liabilities


Below is the breakdown of amounts under the account title Accrued Liabilities.
Accrued Liabilities
Plant Utilities
Administrative Utilities
Telecommunications Expense
TOTAL

APRIL
MAY
JUNE
NOTES JANUARY FEBRUARY MARCH
11.1
147,889.19
147,889.19
147,889.19
147,889.19
147,889.19
11.2
8,184.79
8,184.79
8,184.79
8,184.79
8,184.79
8,184.79
15.2
3,441.68
3,441.68
3,441.68
3,441.68
3,441.68
3,441.68
11,626.47
159,515.66
159,515.66
159,515.66
159,515.66
159,515.66

Accrued Liabilities
Plant Utilities
Administrative Utilities
Telecommunications Expense
TOTAL

AUGUST
SEPTEMBER OCTOBER NOVEMBER DECEMBER
NOTES JULY
11.1
147,889.19
147,889.19
147,889.19
147,889.19
147,889.19
147,889.19
11.2
8,184.79
8,184.79
8,184.79
8,184.79
8,184.79
8,184.79
15.2
3,441.68
3,441.68
3,441.68
3,441.68
3,441.68
3,441.68
159,515.66
159,515.66
159,515.66
159,515.66
159,515.66
159,515.66

Accrued Liabilities
Plant Utilities
Administrative Utilities
Telecommunications Expense
TOTAL

138 | P a g e

11.1
11.2
15.2

2016
147,889.19
8,184.79
3,441.68
159,515.66

2017
154,262.09
8,490.90
3,570.40
166,323.39

2018
160,375.36
8,808.46
3,703.94
172,887.76

2019
166,747.97
9,137.90
3,842.46
179,728.33

2020
173,392.36
9,479.65
3,986.17
186,858.18

Note 8: Sales
Assumption: Sales price increases every year by 3.74% due to inflation. In addition,
80% of the raw materials are the companys main product which the PET flakes while 20% of it
are the scrap materials. Lastly, the basis of sales price of 45 Php is 3Php below the average
selling price of the foreign competitors. Since the companys start of operations will still be on
2016, 45 Php will be affected by the inflation for two years.
Company
Beijing Ou Yuan Sheng Fa Plastic Proucts Co. Ltd
Shijiazhuang Aojie Trading Co., Ltd
Shijiazhuang Refining an Plastic Trading Co., Ltd
Lanzhou Qianmiaonuo
Average Price
Selling Price Used

Price Per Ton


Price Per Kilogram
51,080
51
66,626
67
37,754
38
42,380
42
49,460
49
45

Note 8.1: Sale of PET Flakes


NOTES JANUARY FEBRUARY
MARCH
APRIL
MAY
JUNE
3.3
38,000
56,000
54,000
52,000
52,000
20,000
40,000
40,000
40,000
40,000
48
48.43
48.43
48.43
48.43
48.43
968,578.88
1,937,157.77
1,937,157.77
1,937,157.77
1,937,157.77

Goods Ready to be Sold


Goods Sold
Sales Price
Total Sales

Goods Ready to be Sold


Goods Sold
Sales Price
Total Sales

NOTES JULY
3.3

Goods Ready to be Sold


Goods Sold
Sales Price
Total Sales

139 | P a g e

AUGUST
50,000
40,000
48.43
1,937,157.77

NOTES
3.3

48,000
40,000
48.43
1,937,157.77

2016
422,000
420,000
48
20,340,157

SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
46,000
44,000
44,000
42,000
40,000
40,000
40,000
40,000
48.43
48.43
48.43
48.43
1,937,157.77
1,937,157.77
1,937,157.77
1,937,157.77

2017
486,000
480,000
50
24,115,290

2018
514,000
500,000
52
26,059,585

2019
546,000
540,000
54
29,196,950

2020
566,000
560,000
56
31,410,728

Note 8.2: Sales of Scrap


Assumption: The sales price of the scrap materials is based on the selling price of the
junk shops the proponents surveyed during their data gathering,
NOTES

JANUARY FEBRUARY MARCH


APRIL
MAY
JUNE
8.61
8.61
8.61
8.61
8.61
9,600
9,600
9,600
9,600
9,600
82,652.06
82,652.06
82,652.06
82,652.06
82,652.06

NOTES

JULY
8.61
9,600
82,652.06

Sales Price-Scrap
PVC scrap-Sales (in Kilograms)
PVC scrap-Sales (in Peso)

Sales Price-Scrap
PVC scrap-Sales (in Kilograms)
PVC scrap-Sales (in Peso)

NOTES
Sales Price-Scrap
PVC scrap-Sales (in Kilograms)
PVC scrap-Sales (in Peso)

140 | P a g e

AUGUSTSEPTEMBER OCTOBER NOVEMBER DECEMBER


8.61
8.61
8.61
8.61
8.61
9,600
9,600
9,600
9,600
9,600
82,652.06
82,652.06
82,652.06
82,652.06
82,652.06

2016
9
105,600
909,173

2017
9
120,960
1,080,365

2018
9
127,008
1,176,809

2019
10
133,358
1,281,863

2020
10
140,026
1,396,295

Note 9: Direct Labor


JANUARY FEBRUARY MARCH
Gross Pay
94,940.10
94,940.10
SSS
3,284.00
3,284.00
PHIC
1,291.00
1,291.00
HDMF
1,291.00
1,291.00
Net Pay (with 13th month)
89,074.10
89,074.10

Gross Pay
SSS
PHIC
HDMF
Net Pay (with 13th month)

Gross Pay
SSS
PHIC
HDMF
Net Pay (with 13th month)

141 | P a g e

APRIL
94,940.10
3,284.00
1,291.00
1,291.00
89,074.10

MAY
94,940.10
3,284.00
1,291.00
1,291.00
89,074.10

JUNE
94,940.10
3,284.00
1,291.00
1,291.00
89,074.10

JULY
AUGUST
SEPTEMBEROCTOBER NOVEMBERDECEMBER
94,940.10
94,940.10
94,940.10
94,940.10
94,940.10
94,940.10
3,284.00
3,284.00
3,284.00
3,284.00
3,284.00
3,284.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
1,291.00
89,074.10
89,074.10
89,074.10
89,074.10
89,074.10
89,074.10

2016
1,044,341
39,410
15,497
15,497
973,937

2017
1,142,559
40,883
16,077
16,077
1,010,362

2018
1,185,291
42,412
16,678
16,678
1,048,150

2019
1,229,620
43,999
17,302
17,302
1,087,351

2020
1,275,608
45,644
17,949
17,949
1,128,018

Note 10: Indirect Labor


Gross Pay
SSS
PHIC
HDMF
Withholding Tax
Net Pay (with 13th month)

Gross Pay
SSS
PHIC
HDMF
Withholding Tax
Net Pay (with 13th month)

Gross Pay
SSS
PHIC
HDMF
Withholding Tax
Net Pay (with 13th month)

142 | P a g e

JANUARY FEBRUARY MARCH


APRIL
MAY
JUNE
101,599.62
101,599.62
101,599.62
101,599.62
101,599.62
2,932.43
2,932.43
2,932.43
2,932.43
2,932.43
1,237.63
1,237.63
1,237.63
1,237.63
1,237.63
753.34
753.34
753.34
753.34
753.34
9,461.67
9,461.67
9,461.67
9,461.67
9,461.67
87,214.56
87,214.56
87,214.56
87,214.56
87,214.56

JULY
101,599.62
2,932.43
1,237.63
753.34
9,461.67
87,214.56

AUGUST SEPTEMBER
101,599.62
101,599.62
2,932.43
2,932.43
1,237.63
1,237.63
753.34
753.34
9,461.67
9,461.67
87,214.56
87,214.56

2016
1,117,596
35,189
14,852
9,040
113,540
944,975

2017
1,159,394
36,505
15,407
9,378
117,786
980,317

OCTOBER NOVEMBER DECEMBER


101,599.62
101,599.62
101,599.62
2,932.43
2,932.43
2,932.43
1,237.63
1,237.63
1,237.63
753.34
753.34
753.34
9,461.67
9,461.67
9,461.67
87,214.56
87,214.56
87,214.56

2018
1,202,755
37,870
15,983
9,729
122,192
1,016,981

2019
1,247,738
39,287
16,581
10,093
126,762
1,055,016

2020
1,294,404
40,756
17,201
10,470
131,503
1,094,474

Note 11: Utilities


Assumptions: Electricity consumption will be the same for five years and is assumed to
be distributed equally on each month every year. Water consumption for the processing plant
will vary each year depending on the utilization rate of the production line. However, water
consumption in the office will be the same for five years.
Note 11.1: Plant Utilities
Plant Facilities - Electricity Consumption
Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

Consumption
19,902
19,902
19,902
19,902
19,902
19,902
19,902
19,902
19,902
19,902
19,902
19,902
238,829

Year 1
125,033
125,033
125,033
125,033
125,033
125,033
125,033
125,033
125,033
125,033
125,033
125,033
1,500,397

The amount shown below is based on the table above which is to be inflated for two
years.
Plant Facility - Electricity Consumption

Plant Facility - Electricity Consumption

Plant Facility - Electricity Consumption

143 | P a g e

January February
136,400

March
136,400

April
136,400

May
136,400

June
136,400

July
August
September October
November
December
136,399.69 136,399.69 136,399.69 136,399.69 136,399.69
136,399.69
2016
1,500,396.62

2017
1,556,511.45

2018
1,614,724.98

2019
1,675,115.70

2020
1,737,765.02

The table below shows the computation of Plant facility water consumption.
January
Price-Variable
Price- Fixed
Consumption
TOTAL
July
77.49
5,910.48
72
11,489.50

Price-Variable
Price- Fixed
Consumption
TOTAL

February
March
April
May
June
77.49
77.49
77.49
77.49
77.49
5,910.48
5,910.48
5,910.48
5,910.48
5,910.48
72
72
72
72
72
11,489.50
11,489.50
11,489.50
11,489.50
11,489.50
August
77.49
5,910.48
72
11,489.50

2016
77.49
65,015.32
792
126,384.48

Price-Variable
Price- Fixed
Consumption
TOTAL

September
77.49
5,910.48
72
11,489.50

2017
80.38
67,446.89
907
140,371.53

October
77.49
5,910.48
72
11,489.50

2018
83.39
69,969.41
953
149,404.02

November
77.49
5,910.48
72
11,489.50

2019
86.51
72,586.26
1,000
159,112.01

December
77.49
5,910.48
72
11,489.50

2020
89.74
75,300.99
1,050
169,550.89

Total Plant Utilities


January
-

February
March
April
May
June
July
August
September October November December
147,889.19 147,889 147,889 147,889 147,889 147,889 147,889 147,889 147,889 147,889 147,889
2016
1,626,781

144 | P a g e

2017
1,696,883

2018
1,764,129

2019
1,834,228

2020
1,907,316

Note 11:2: Administrative Utilities Expense


Administrative Facility - Non-drinking Water
Consumption
Month
January
February
March
April
May
June
July
August
September
October
November
December
TOTAL

Consumption
33
33
33
33
33
33
33
33
33
33
33
33
396

Year 1
2,557.05
2,557.05
2,557.05
2,557.05
2,557.05
2,557.05
2,557.05
2,557.05
2,557.05
2,557.05
2,557.05
2,557.05
30,684.58

The amount shown below is based on the table above which is to be inflated for two years.
Administrative-Water Expense

January February March April


May
June
July
August September October November December
3,848
3,848
3,848
3,848
3,848
3,848
3,848
3,848
3,848
3,848
3,848 3,848.49

2016
46,181.84

2017
47,909.04

2018
49,700.84

2019
51,559.65

2020
53,487.98

The table below shows the computation of Administrative facility water consumption.
Administrative Facilities - Electricity Consumption
Month
Consumption
Year 1
January
690.24
4,336.30
February
690.24
4,336.30
March
690.24
4,336.30
April
690.24
4,336.30
May
690.24
4,336.30
June
690.24
4,336.30
July
690.24
4,336.30
August
690.24
4,336.30
September
690.24
4,336.30
October
690.24
4,336.30
November
690.24
4,336.30
December
690.24
4,336.30
TOTAL
8,282.88
52,035.62

145 | P a g e

Administrative-Electricity Expense

January
February March
April
May
June
4,336.30
4,336.30
4,336.30
4,336.30
4,336.30
4,336.30

Administrative-Electricity Expense

July
August
September October
November December
4,336.30
4,336.30
4,336.30
4,336.30
4,336.30
4,336.30

2016
52,035.62

Administrative-Electricity Expense

2017
53,981.75

2018
56,000.67

2019
58,095.10

2020
60,267.85

Total Administrative Utilities


January February March
April
May
June
July
August
September October November December
8,184.79 8,184.79 8,184.79 8,184.79 8,184.79 8,184.79 8,184.79 8,184.79 8,184.79 8,184.79 8,184.79 8,184.79

2016
98,217

2017
101,891

2018
105,702

2019
109,655

2020
113,756

Note 12: Repairs and Maintenance


The proponents assume that repairs and maintenance of the plant building is 2% of the
building cost and increases 10% per year and assumes to have a maximum of repairs and
maintenance of 5% of the cost of the building.
It is also assumed that repairs and maintenance of the plant equipment is 20% of the
equipment cost and it increases 5% per year. While the repairs and maintenance of the equipment
and furniture and fixtures for administrative purposes is 20% of the equipment cost and it
increases 5% per year. The maximum repairs and maintenance is assumed to be 50%.
January
Repairs and Maintenance
Plant Building
Repairs and Maintenance
equipment
Total Repairs and
Maintenance-Plant
Repairs and Maintenance administration

146 | P a g e

February

March

April

May

June

9,256.20

9,256.20

9,256.20

9,256.20

9,256.20

62,761.02

62,761.02

62,761.02

62,761.02

62,761.02

72,017.22

72,017.22

72,017.22

72,017.22

72,017.22

3,440.51

3,440.51

3,440.51

3,440.51

3,440.51

3,440.51

Note 13: Miscellaneous Factory Expense


The miscellaneous Factory Expenses is estimated only, 60,000 per year or 5,000 per
month. There is 10% additional increase every year. In the case of the month of January, there is
no production yet, there will be no cost allocated for the month. Any related expenses incurred in
January shall be treated as an outright expense and not part of the COGS (part of company
policy).
January

February

March

April

May

June

5,000.00

5,000.00

5,000.00

5,000.00

5,000.00

August

September

October

November

December

5,000.00

5,000.00

5,000.00

5,000.00

5,000.00

2016

2017

2018

2019

2020

55,000

60,500

66,550

73,205

80,526

Miscellaneuos Factory Expenses

July
Miscellaneuos Factory Expenses

Miscellaneuos Factory Expenses

Note 14: Selling Expenses


Selling Expenses are composed of Freight-Out, Website Maintenance Expense, Market
Website Online Expense, and Traveling and Transportation Expense. The breakdowns of these
expenses are presented below.
NOTES JANUARY FEBRUARY
Freight-out

MARCH

APRIL

MAY

JUNE

Transportation Cost

5,380.99

10,761.99

10,761.99

10,761.99

10,761.99

Shipping Fee

47,510.95

95,021.89

95,021.89

95,021.89

95,021.89

Legal Fees
Website Maintenance
Expense
B
Marketing Website
Online Expense
C
Traveling and
Transportation Expense D
TOTAL SELLING
EXPENSES

714.70

1,429.40

1,429.40

1,429.40

1,429.40

1,227.37

1,227.37

1,227.37

1,227.37

1,227.37

1,227.37

35,633.21

35,633.21

35,633.21

35,633.21

35,633.21

35,633.21

50,000.00

50,000.00

50,000.00

50,000.00

50,000.00

50,000.00

86,860.58

140,467.22

194,073.86

194,073.86

194,073.86

194,073.86

147 | P a g e

NOTES
Freight-out

JULY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

Transportation Cost

10,761.99

10,761.99

10,761.99

10,761.99

10,761.99

10,761.99

Shipping Fee

95,021.89

95,021.89

95,021.89

95,021.89

95,021.89

95,021.89

1,429.40

1,429.40

1,429.40

1,429.40

1,429.40

1,429.40

1,227.37

1,227.37

1,227.37

1,227.37

1,227.37

1,227.37

35,633.21

35,633.21

35,633.21

35,633.21

35,633.21

35,633.21

50,000.00

50,000.00

50,000.00

50,000.00

50,000.00

50,000.00

194,073.86

194,073.86

194,073.86

194,073.86

194,073.86

194,073.86

Legal Fees
Website Maintenance
Expense
B
Marketing Website
Online Expense
C
Traveling and
Transportation Expense D
TOTAL SELLING
EXPENSES

NOTES
Freight-out

2016

2017

2018

2019

2020

Transportation Cost

113,000.87

133,973.83

138,984.45

144,182.47

149,574.90

Shipping Fee

997,729.88

1,140,262.72

1,140,262.72

1,140,262.72

1,140,262.72

15,008.70

17,152.80

17,152.80

17,152.80

17,152.80

14,728.39

15,279.24

15,850.68

16,443.49

17,058.48

427,598.52

443,590.70

460,181.00

477,391.77

495,246.22

600,000.00

660,000.00

726,000.00

798,600.00

878,460.00

2,168,066.36

2,410,259.29

2,498,431.65

2,594,033.25

2,697,755.11

Legal Fees
Website Maintenance
Expense
B
Marketing Website
Online Expense
C
Traveling and
Transportation Expense D
TOTAL SELLING
EXPENSES

A. Freight-Out
Freight-Out is composed of Transportation Cost, Shipping Fee, and Legal Fees.
Presented below are the computations of these expenses.
Transportation Cost
Transportation cost signifies the transportation from the plant (Panacan) to Sasa wharf,
which is 5,000 Php per travel. The company will outsource trucking services; therefore the
amount of the cost is inclusive of wages for the driver and helper, fuel and any other related
costs. The number of travel depends on the number of sack to be shipped. The container van that
will transport the products to the wharf has a capacity of 20,000 kgs or 20 tons and each sack
contain 2000 kgs, so the maximum capacity of the truck is 10 sacks. The increase per year is due
to inflation rate.
148 | P a g e

Transportation Cost

Notes

Number of sacks to be shipped

January

February
0

***

Transportation Cost

Notes

20

20

20

5,380.99

5,380.99
5,380.99

5,380.99
10,761.99

5,380.99
10,761.99

5,380.99
10,761.99

5,380.99
10,761.99

July

August

Total Transportation Cost

Transportation Cost

Notes

Number of sacks to be shipped

8.1

Number of Shipment
Cost per Shipment
Total Transportation Cost

***Basis of Cost

149 | P a g e

***

September

October

November

December

20

20

20

20

20

20

5,380.99
10,761.99

5,380.99
10,761.99

5,380.99
10,761.99

5,380.99
10,761.99

5,380.99
10,761.99

5,380.99
10,761.99

8.1
***

June

20

Number of Shipment
Cost per Shipment

May

Total Transportation Cost

Number of sacks to be shipped

April

10

8.1

Number of Shipment
Cost per Shipment

March

2016

2017
210

2018
240

2019
250

2020
270

280

21

24

25

27

28

5,380.99

5,582.24

5,791.02

6,007.60

6,232.29

113,000.87

133,973.83

138,984.45

144,182.47

149,574.90

Shipping Cost
Shipping cost is 44,147 Php per container van, which the information is based on
shipping equipment from China. Container van contains 10 sacks of 2,000-kilogram PET flakes.
Shipping Cost
Number of Sacks to
be shipped

NOTES

Shipping Cost
NOTES
Number of Sacks to be
shipped
8.1

Number of Shipment
Shipping cost
Total Shipping Cost

150 | P a g e

8.1

JUNE

47,510.95
47,510.95

47,510.95
95,021.89

47,510.95
95,021.89

47,510.95
95,021.89

47,510.95
95,021.89

JULY

AUGUST
20

20

MAY

47,510.95

47,510.95
95,021.89

NOTES

APRIL

10

SEPTEMBER

20

Number of Shipment
Shipping cost
Total Shipping Cost

MARCH

8.1

Number of Shipment
Shipping cost
Total Shipping Cost

Shipping Cost
Number of Sacks to be
shipped

JANUARY FEBRUARY

2016

21

24

NOVEMBER

25

DECEMBER
20

2
47,510.95
95,021.89

2019
250

20

20

2
47,510.95
95,021.89

2018
240

20

20

2
47,510.95
95,021.89

2017
210

OCTOBER

20

2
47,510.95
95,021.89

20

2
47,510.95
95,021.89

2020
270
27

280
28

47,510.95

47,510.95

47,510.95

47,510.95

47,510.95

997,729.88

1,140,262.72

1,140,262.72

1,140,262.72

1,140,262.72

Legal Fees
Legal Fees

COST

(PhilExport-XI)
Processing Fee

200.00

(Bureau of Customs)
Documentation, stamp
processing, examination,
stuffing, weighing,
authority to load
Post-Loading (upon
request)

115.00

Certificate of Origin Forms

25.00

Certificate of Shipment
(Philipping Ports
Authority)

115.00

Wharfage/Storage Fees

259.70
714.70

TOTAL

Notes
Number of sacks to be shipped

February

January

8.1

Legal Fees per Shipment

10
714.70
714.70

714.70

Total Legal Fees

Notes
Number of sacks to be shipped

8.1

Legal Fees per Shipment


Total Legal Fees

Notes
Number of sacks to be shipped
Legal Fees per Shipment
Total Legal Fees

151 | P a g e

8.1

March

April

May

June

20
714.70
1,429.40

20
714.70
1,429.40

20
714.70
1,429.40

20
714.70
1,429.40

September

October

November December

July

August

20
714.70
1,429.40

20

20

20

20

20

714.70
1,429.40

714.70
1,429.40

714.70
1,429.40

714.70
1,429.40

714.70
1,429.40

2016

2017

2018

2019

2020

210

240

250

270

280

714.70

714.70

714.70

714.70

714.70

15,008.70

17,152.80

17,152.80

17,152.80

17,152.80

B. Website Maintenance Expense

Website Maintenance Expense is based on the breakdown of expenses for website


components and costs stated in the Executionist Company, the business' prospective web
developer.
Website Maintenance

Cost per Year

Domain Name

441.47

Hosting

2,207.35

Website maintenance
TOTAL

11,036.75
14,728.39

The table below shows the Website Maintenance Expense with the consideration of
inflation rate. (Inflation rate = 3.74%)
Cost per Year

2016
14,728.39

2017
15,279.24

2018
15,850.68

2019
16,443.49

2020
17,058.48

C. Marketing Website Online Expense


The Marketing Website Online Expense (MWOE) signifies the company's web developer
cost for marketing the webpage online, since the business' target market is China, the marketing
for the company's website is necessary as the business' preliminary marketing strategy.
Cost per month
MWOE

35,633.21

The table below shows the MWOE with the consideration of inflation rate. (Inflation rate
= 3.74%)
MWOE

152 | P a g e

2016
427,598.52

2017
443,590.70

2018
460,181.00

2019
477,391.77

2020
495,246.22

D. Traveling and Transportation Expense


This account includes the business travels of the partners for getting clients. This also
include expenses for checking on the current clients, and continuing business trips for getting
new clients, as the business is expected to grow. The budget allotted for this is 50,000 Php per
month, subject to 10% increase per year to reflect changes in prices.
Cost per month
Traveling and Transportation
Expense

50,000.00

The table below shows the Traveling and Transportation Expense with the consideration
of inflation rate. (Inflation rate = 3.74%)
Traveling and
Transportation
Expense

2016

2017

2018

2019

2020

600,000.00

660,000.00

726,000.00

798,600.00

878,460.00

Note 15: Administrative Expenses


Administrative Expenses are composed of Salaries and Wages Administrative, Utilities
Expense, Office Supplies Expense, Telecommunications Expense, Depreciation Expense, and
Repairs and Maintenance Expense Administrative.

153 | P a g e

Notes

January

February

March

April

May

308,098.66

308,098.66

308,098.66

308,098.66

8,184.79

8,184.79

8,184.79

8,184.79

8,184.79

5,434.00

1,903.00

1,903.00

2,076.00

1,903.00

1,903.00

15.3

3,441.68

3,441.68

3,441.68

3,441.68

3,441.68

3,441.68

Depreciation Expense

15.4

5,229.39

5,229.39

5,229.39

5,229.39

5,229.39

5,229.39

Repairs and Maintenance


Expense-Admin

12

3,440.51

3,440.51

3,440.51

3,440.51

3,440.51

3,440.51

333,829.02

330,298.02

330,298.02

330,471.02

330,298.02

330,298.02

Salaries and WagesAdministrative

15.1

308,098.66

308,098.66

Utilities Expense

11.2

8,184.79

Office Supplies Expense


Telecommunications
Expense

15.2

TOTAL

Notes

July

August

September

October

November

June

December

Salaries and WagesAdministrative

15.1

308,098.66

308,098.66

308,098.66

308,098.66

308,098.66

308,098.66

Utilities Expense

11.2

8,184.79

8,184.79

8,184.79

8,184.79

8,184.79

8,184.79

Office Supplies Expense


Telecommunications
Expense

15.2

2,184.00

1,903.00

1,903.00

2,076.00

1,903.00

1,903.00

15.3

3,441.68

3,441.68

3,441.68

3,441.68

3,441.68

3,441.68

Depreciation Expense

15.4

5,229.39

5,229.39

5,229.39

5,229.39

5,229.39

5,229.39

Repairs and Maintenance


Expense-Admin

12

3,440.51

3,440.51

3,440.51

3,440.51

3,440.51

3,440.51

330,579.02

330,298.02

330,298.02

330,471.02

330,298.02

330,298.02

TOTAL

Notes

2016

2017

2018

2019

2020

Salaries and WagesAdministrative

15.1

3,697,183.87

3,835,458.55

3,978,904.70

4,127,715.74

4,282,092.31

Utilities Expense

11.2

98,217.46

101,890.80

105,701.51

109,654.75

113,755.84

Office Supplies Expense


Telecommunications
Expense

15.2

26,994.00

24,397.57

25,310.04

26,256.64

27,238.64

15.3

41,300.20

42,844.83

44,447.23

46,109.55

47,834.05

Depreciation Expense

15.4

62,752.65

62,752.65

62,752.65

62,752.65

62,752.65

Repairs and Maintenance


Expense-Admin

12

TOTAL

154 | P a g e

41,286.07

53,537.71

72,202.02

101,118.21

146,860.04

3,967,734.26

4,120,882.11

4,289,318.16

4,473,607.54

4,680,533.53

Note 15.1: Salaries and Wages Administrative


Presented in the table below is the monthly computation of salaries and wages by using
year 2014 data.
Position

Regular Pay

Qty

Total

Overtime Night Shift

Gross Pay

Managing Partner

40,000.00

40,000.00 -

40,000.00

Internal Auditor

30,000.00

30,000.00 -

30,000.00

Cost Accountant

25,000.00

25,000.00 -

25,000.00

Human Resource Officer

20,000.00

20,000.00 -

20,000.00

Payroll Accountant/Cash Receipts

20,000.00

20,000.00 -

20,000.00

Bookkeeper

10,000.00

20,000.00 -

20,000.00

Treasurer

15,000.00

15,000.00 -

15,000.00

Marketing Analyst

20,000.00

20,000.00 -

20,000.00

Sales Order/Purchase Order Officer

15,000.00

15,000.00 -

15,000.00

Inventory/Supply Analyst

15,000.00

15,000.00 -

15,000.00

Cash Disbursements Officer

15,000.00

15,000.00 -

15,000.00

Customer Remittance/Billing Officer

15,000.00

15,000.00 -

15,000.00

Security Guard 1

6,786.00

6,786.00

4 -

Security Guard 2

6,786.00

6,786.00

6,981.00
7

Total

7,281.30
264,262.30

Position

DEDUCTIONS
WHT

SSS

PHIC

HDMF

Total Deductions

Net Pay

Per Person

Managing Partner

8,666.67

581.30

437.50

100.00

9,785.47

30,214.53

30,214.53

Internal Auditor

5,666.67

581.30

375.00

100.00

6,722.97

23,277.03

23,277.03

Cost Accountant

4,166.67

581.30

312.50

100.00

5,160.47

19,839.53

19,839.53

Human Resource Officer

2,916.75

581.30

250.00

100.00

3,848.05

16,151.95

16,151.95

Payroll Accountant/Cash Receipts

2,916.75

581.30

250.00

100.00

3,848.05

16,151.95

16,151.95

Bookkeeper

1,416.66

726.60

250.00

200.00

2,593.26

17,406.74

8,703.37

Treasurer

1,708.33

545.00

187.50

100.00

2,540.83

12,459.17

12,459.17

Marketing Analyst

2,916.75

581.30

250.00

100.00

3,848.05

16,151.95

16,151.95

Sales Order/Purchase Order Officer

1,708.33

545.00

187.50

100.00

2,540.83

12,459.17

12,459.17

Inventory/Supply Analyst

1,708.33

545.00

187.50

100.00

2,540.83

12,459.17

12,459.17

Cash Disbursements Officer

1,708.33

545.00

187.50

100.00

2,540.83

12,459.17

12,459.17

Customer Remittance/Billing Officer

1,708.33

545.00

187.50

100.00

2,540.83

12,459.17

12,459.17

Security Guard 1

254.30

100.00

100.00

454.30

6,526.70

6,526.70

Security Guard 2

272.50

100.00

100.00

472.50

6,808.80

6,808.80

7,466.20

3,262.50

1,500.00

49,437.27

214,825.03

Total

155 | P a g e

37,208.57

With Inflation

2016 Monthly Expenses

Gross Pay

308,098.66

Withholding Tax

40,043.82

SSS

8,035.12

PHIC

3,511.10

HDMF

1,614.30

Net Pay (with 13th month)

294,938.14

The table below shoes the yearly computation of Salaries and Wages Administrative,
with inflation rate.
Assumption: The 13th month pay is to be paid 50% on June and 50% on December.
Gross Pay
Withholding Tax
SSS
PHIC
HDMF
Net Pay (with 13th month)

156 | P a g e

2016
3,697,183.87
480,525.80
96,421.38
42,133.18
19,371.58
3,539,257.73

2017
3,835,458.55
498,497.47
100,027.54
43,708.96
20,096.07
3,671,625.97

2018
3,978,904.70
517,141.27
103,768.57
45,343.68
20,847.67
3,808,944.78

2019
4,127,715.74
536,482.36
107,649.52
47,039.53
21,627.37
3,951,399.32

2020
4,282,092.31
556,546.80
111,675.61
48,798.81
22,436.23
4,099,181.65

Note 15.2: Office Supplies Expense


JANUARY

FEBRUARY

MARCH

APRIL

MAY

JUNE

Ballpen

470.00

470.00

Ink

150.00

297.00

297.00

297.00

297.00

Marker

108.00

Bond paper

324.00

324.00

324.00

324.00

324.00

324.00

Folder

400.00

400.00

400.00

400.00

400.00

400.00

Envelope

200.00

200.00

200.00

200.00

200.00

200.00

Puncher

145.00

Fastener

32.00

32.00

32.00

32.00

32.00

32.00

Calculator

575.00

Tissue

150.00

150.00

150.00

150.00

150.00

150.00

Water

300.00

300.00

300.00

300.00

300.00

300.00

Glass Set

60.00

Cup Set

80.00

Pail

60.00

Dippper

30.00

Receipts

1,750.00

Columnar Books

400.00

Other Supplies^

200.00

200.00

200.00

200.00

200.00

200.00

5,434.00

1,903.00

1,903.00

2,076.00

1,903.00

1,903.00

5,434.00

1,903.00

1,903.00

2,076.00

1,903.00

1,903.00

TOTAL OFFICE SUPPLIES EXPENSE


TOTAL with inflation (3.74% )

157 | P a g e

JULY
Ballpen

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

470.00

470.00

297.00

297.00

297.00

297.00

Marker

108.00

Bond paper

324.00

324.00

324.00

324.00

324.00

324.00

Folder

400.00

400.00

400.00

400.00

400.00

400.00

Ink

Envelope
Puncher

200.00

Fastener
Calculator

200.00

200.00
-

32.00

32.00

200.00
-

32.00
-

200.00
-

32.00
-

200.00
-

32.00
-

32.00
-

Tissue

150.00

150.00

150.00

150.00

150.00

150.00

Water

300.00

300.00

300.00

300.00

300.00

300.00

Glass Set

Cup Set

Pail

Dippper

Receipts

Columnar Books

Other Supplies^
TOTAL OFFICE SUPPLIES EXPENSE
TOTAL with inflation (3.74% )

200.00

200.00

200.00

200.00

200.00

200.00

2,184.00

1,903.00

1,903.00

2,076.00

1,903.00

1,903.00

2,184.00

1,903.00

1,903.00

2,076.00

1,903.00

1,903.00

2016
Ballpen

1,880.00

Ink

2,526.00

2017

2018

1,880.00

2019

1,880.00

2020

1,880.00

1,880.00

216.00

216.00

216.00

216.00

216.00

Bond paper

3,888.00

3,888.00

3,888.00

3,888.00

3,888.00

Folder

4,800.00

4,800.00

4,800.00

4,800.00

4,800.00

Envelope

2,400.00

2,400.00

Marker

Puncher

145.00

Fastener

384.00

384.00

Calculator

575.00

2,400.00
-

2,400.00
-

384.00
-

2,400.00
-

384.00
-

384.00
-

Tissue

1,800.00

1,800.00

1,800.00

1,800.00

1,800.00

Water

3,600.00

3,600.00

3,600.00

3,600.00

3,600.00

Glass Set

60.00

Cup Set

80.00

Pail

60.00

Dippper

30.00

Receipts

1,750.00

1,750.00

1,750.00

1,750.00

1,750.00

400.00

400.00

400.00

400.00

400.00

Columnar Books
Other Supplies^
TOTAL OFFICE SUPPLIES EXPENSE
TOTAL with inflation (3.74% )

158 | P a g e

2,400.00

2,400.00

2,400.00

2,400.00

2,400.00

26,994.00

23,518.00

23,518.00

23,518.00

23,518.00

26,994.00

24,397.57

25,310.04

26,256.64

27,238.64

Note 15.3: Telecommunications Expense


Monthly Telecommunications Expense for the year 2016 is shown below.

Cost per month


Telecommunications Expense

35,633.21

Yearly Telecommunications Expense is shown below with the consideration of inflation


rate.
2016
41,300.20

Telecommunications Expense

2017
42,844.83

2018
44,447.23

2019
46,109.55

2020
47,834.05

Note 16: Other Expenses


Other Expenses are composed of Insurance Expense, Taxes and Licenses, Start up
Expenses and Depreciation of Land Improvement.
Notes

January

Insurance Expense

Taxes and Licenses

16.1

10,000.00

Start up Expenses

16.2

394,200.00

Depreciation of Land Improvement

5.1.B

TOTAL

Notes
Insurance Expense

Taxes and Licenses

16.1

Start up Expenses
Depreciation of Land Improvement
TOTAL

159 | P a g e

3,500.00

February
3,500.00
-

March
3,500.00
150,349.35

April

May

3,500.00

3,500.00

June

3,500.00
150,349.35

2,916.67

2,916.67

2,916.67

2,916.67

2,916.67

2,916.67

410,616.67

6,416.67

156,766.02

6,416.67

6,416.67

156,766.02

July

August

September

October

November

December

3,500.00
-

3,500.00
-

3,500.00
150,349.35

3,500.00
-

3,500.00
-

3,500.00
150,349.35

16.2
5.1.B

2,916.67

2,916.67

2,916.67

2,916.67

2,916.67

2,916.67

6,416.67

6,416.67

156,766.02

6,416.67

6,416.67

156,766.02

Notes

2016

2017

2018

2019

2020

Insurance Expense

42,000.00

42,000.00

42,000.00

42,000.00

42,000.00

Taxes and Licenses

16.1

611,397.40

761,033.45

818,413.51

855,216.23

916,583.51

Start up Expenses

16.2

394,200.00

Depreciation of Land Improvement

5.1.B

TOTAL

35,000.00

35,000.00

35,000.00

35,000.00

35,000.00

1,082,597.40

838,033.45

895,413.51

932,216.23

993,583.51

Note 16.1: Taxes and Licenses


The cost for the renewal of the business is taken from The World Bank Groups website,
namely Doing business in the Philippines, Davao City 2014. Local Business tax is equal to 2%
of Gross Receipts. Real Property Tax is 2% of Assessed Values. Assessed Values are 50% of
cost of Land and 75% of cost of the Building. These percentages are obtained from RA 7160
Local Government Code of the Philippines.
Assumptions: Local Business Tax and Real Property tax are expensed quarterly, but paid
at the month following the quarter. Environmental tax is expensed and paid on the month of
January.
Notes
Renewal of Business Permit A
Local Business Tax
Real Property Tax
Environmental Tax
Total Taxes and Licenses

160 | P a g e

2016

2017
-

2018

2019

2020

51,060.00

51,060.00

51,060.00

51,060.00

461,397.40

559,973.45

617,353.51

654,156.23

715,523.51

140,000.00

140,000.00

140,000.00

140,000.00

140,000.00

10,000.00

10,000.00

10,000.00

10,000.00

10,000.00

611,397.40

761,033.45

818,413.51

855,216.23

916,583.51

A. Renewal of Business Permit


Barangay Clearance***

100.00

Notarization of encoded business permit


application form at the City Legal Office*

50.00

Temporary Authority to Operate and Compliance Form from Business Bureau*


Business Tax (1/20 of 1% of Capitalization)

10,500.00

Solid Waste Management Fee

300.00

Garbage Fee

3,000.00

Electrical Fee

1,000.00

Delivery Vehicle Fee

500.00

Health Certification Fee

50.00

Laboratory Fee

100.00

Mayor's Permit Fee

1,000.00

Occupational Permit Fee

15,000.00

Plumbing Fee

100.00

Sanitary Permit Fee

200.00

Sanitary Inspection Fee

600.00

Zoning Fee

300.00

License Plate

150.00

Tax Clearance

50.00

Fire Safety Inspection Fee

300.00

33,150.00

Apply for Certificate of Registration (COR) and


Taxpayer Identification Number (TIN) at the BIR
Annual Registration Fee - BIR****

500.00

Certification Fee*****

200.00

Bureau of Internal Revenue (BIR) - Documentary Stamp Tax******

15.00

Print receipts and invoices at the print shops*

1,750.00

Special books of account at bookstore*

400.00

Community Tax Certificate from City Treasurers Office********

10,500.00

Other Expenses

4,395.00

Total Cost of Renewal of the Business

51,060.00

B. Real Property Tax (2% of Assessed Values)


Assessed Values
Land (50% of Cost)

2,500,000.00

Building (75% of Cost)

4,500,000.00

Total Assessed Value


Source: Section 233, RA 7160 Local Government
Code of the Philippines, Book II

161 | P a g e

715.00

7,000,000.00

Note 16.2: Start-up Expenses


Start-up Expenses are composed of Advertising Expense, Training Expense, and
Business Registration.
Start up Expenses
Start up-Advertising Expense
Start up-Training Expense

250,000.00
50,000.00

Start Up- Business Registration


TOTAL

94,200.00
394,200.00

Note 17: Profit Distribution


Assumption: The Profit/Loss sharing is agreed to be distributed equally among the
partners.
January

February

March

April

May

June

Net Income(Loss) Sharing


Partner 1

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 2

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 3

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 4

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 5

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 6

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

TOTAL

(581,914.39)

(149,309.51)

(165,217.33)

(60,093.89)

(59,972.79)

(165,217.33)

July

August

September

October

November

December

Net Income(Loss) Sharing


Partner 1

(10,028.25)

(9,995.46)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 2

(10,028.25)

(9,995.46)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 3

(10,028.25)

(9,995.46)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 4

(10,028.25)

(9,995.46)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 5

(10,028.25)

(9,995.46)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

Partner 6

(10,028.25)

(9,995.46)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

TOTAL

(60,169.49)

(59,972.79)

(165,217.33)

(60,093.89)

(59,972.79)

(165,217.33)

162 | P a g e

2016

2017

2018

2019

2020

Net Income(Loss) Sharing


Partner 1

(292,061.48)

(124,857.10)

(67,315.55)

38,966.96

133,864.99

Partner 2

(292,061.48)

(124,857.10)

(67,315.55)

38,966.96

133,864.99

Partner 3

(292,061.48)

(124,857.10)

(67,315.55)

38,966.96

133,864.99

Partner 4

(292,061.48)

(124,857.10)

(67,315.55)

38,966.96

133,864.99

Partner 5

(292,061.48)

(124,857.10)

(67,315.55)

38,966.96

133,864.99

Partner 6

(292,061.48)

(124,857.10)

(67,315.55)

38,966.96

133,864.99

TOTAL

(1,752,368.87)

(749,142.59)

(403,893.32)

233,801.73

803,189.93

Withdrawals of the partners are presented below.


January

February

March

April

May

June

Withdrawal
Partner 1

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 2

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 3

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 4

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 5

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 6

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

120,000.00

120,000.00

120,000.00

120,000.00

120,000.00

120,000.00

July

August

September

October

November

December

TOTAL

Withdrawal
Partner 1

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 2

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 3

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 4

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 5

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 6
TOTAL

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

120,000.00

120,000.00

120,000.00

120,000.00

120,000.00

120,000.00

2016

2017

2018

2019

2020

Withdrawal
Partner 1

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 2

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 3

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 4

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 5

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 6

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

1,440,000.00

1,440,000.00

1,440,000.00

1,440,000.00

1,440,000.00

TOTAL

163 | P a g e

Changes in each partners equity are presented below.


January

February

March

April

May

June

4,000,000.00

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

Changes in Equity
Partner 1 Equity, Beginning
Add: Net Income (Loss) Share
Total

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

3,903,014.27

3,858,129.35

3,810,593.13

3,780,577.48

3,750,582.01

3,703,045.79

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 1 Equity, End

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

3,683,045.79

Partner 2 Equity, Beginning

4,000,000.00

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

Less: Withdrawal

Add: Net Income (Loss) Share


Total

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

3,903,014.27

3,858,129.35

3,810,593.13

3,780,577.48

3,750,582.01

3,703,045.79

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 2 Equity, End

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

3,683,045.79

Partner 3 Equity, Beginning

4,000,000.00

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

Less: Withdrawal

Add: Net Income (Loss) Share


Total

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

3,903,014.27

3,858,129.35

3,810,593.13

3,780,577.48

3,750,582.01

3,703,045.79

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 3 Equity, End

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

3,683,045.79

Partner 4 Equity, Beginning

4,000,000.00

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

Less: Withdrawal

Add: Net Income (Loss) Share


Total

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

3,903,014.27

3,858,129.35

3,810,593.13

3,780,577.48

3,750,582.01

3,703,045.79

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 4 Equity, End

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

3,683,045.79

Partner 5 Equity, Beginning

4,000,000.00

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

Less: Withdrawal

Add: Net Income (Loss) Share


Total

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

3,903,014.27

3,858,129.35

3,810,593.13

3,780,577.48

3,750,582.01

3,703,045.79

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 5 Equity, End

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

3,683,045.79

Partner 6 Equity, Beginning

4,000,000.00

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

Less: Withdrawal

Add: Net Income (Loss) Share


Total
Less: Withdrawal
Partner 6 Equity, End

164 | P a g e

(96,985.73)

(24,884.92)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

3,903,014.27

3,858,129.35

3,810,593.13

3,780,577.48

3,750,582.01

3,703,045.79

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

3,883,014.27

3,838,129.35

3,790,593.13

3,760,577.48

3,730,582.01

3,683,045.79

July

August

S eptember

October

November

December

3,683,045.79

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

Changes in Equity
Partner 1 Equity, Beginning
Add: Net Income (Loss) Share
Total

(10,028.25)

(9,995.46)

(27,536.22)

(10,015.65)

(9,995.46)

(27,536.22)

3,673,017.54

3,643,022.08

3,595,485.86

3,565,470.21

3,535,474.74

3,487,938.52

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 1 Equity, End

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

3,467,938.52

Partner 2 Equity, Beginning

3,683,045.79

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

Less: Withdrawal

Add: Net Income (Loss) Share


Total
Less: Withdrawal

(10,028.25)
3,673,017.54

(9,995.46)
3,643,022.08

(27,536.22)
3,595,485.86

(10,015.65)
3,565,470.21

(9,995.46)
3,535,474.74

(27,536.22)
3,487,938.52

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 2 Equity, End

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

3,467,938.52

Partner 3 Equity, Beginning

3,683,045.79

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

Add: Net Income (Loss) Share


Total
Less: Withdrawal

(10,028.25)
3,673,017.54

(9,995.46)
3,643,022.08

(27,536.22)
3,595,485.86

(10,015.65)
3,565,470.21

(9,995.46)
3,535,474.74

(27,536.22)
3,487,938.52

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 3 Equity, End

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

3,467,938.52

Partner 4 Equity, Beginning

3,683,045.79

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

Add: Net Income (Loss) Share


Total
Less: Withdrawal

(10,028.25)
3,673,017.54

(9,995.46)
3,643,022.08

(27,536.22)
3,595,485.86

(10,015.65)
3,565,470.21

(9,995.46)
3,535,474.74

(27,536.22)
3,487,938.52

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 4 Equity, End

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

3,467,938.52

Partner 5 Equity, Beginning

3,683,045.79

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

Add: Net Income (Loss) Share


Total
Less: Withdrawal

(10,028.25)
3,673,017.54

(9,995.46)
3,643,022.08

(27,536.22)
3,595,485.86

(10,015.65)
3,565,470.21

(9,995.46)
3,535,474.74

(27,536.22)
3,487,938.52

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

Partner 5 Equity, End

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

3,467,938.52

Partner 6 Equity, Beginning

3,683,045.79

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

Add: Net Income (Loss) Share


Total
Less: Withdrawal
Partner 6 Equity, End

165 | P a g e

(10,028.25)
3,673,017.54

(9,995.46)
3,643,022.08

(27,536.22)
3,595,485.86

(10,015.65)
3,565,470.21

(9,995.46)
3,535,474.74

(27,536.22)
3,487,938.52

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

20,000.00

3,653,017.54

3,623,022.08

3,575,485.86

3,545,470.21

3,515,474.74

3,467,938.52

2016

2017

2018

2019

2020

4,000,000.00

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

38,966.96

133,864.99

Changes in Equity
Partner 1 Equity, Beginning
Add: Net Income (Loss) Share
Total

(292,061.48)

(124,857.10)

(67,315.55)

3,707,938.52

3,343,081.42

3,035,765.87

2,834,732.82

2,728,597.81

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 1 Equity, End

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

2,488,597.81

Partner 2 Equity, Beginning

4,000,000.00

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

38,966.96

133,864.99

2,834,732.82

2,728,597.81

Less: Withdrawal

Add: Net Income (Loss) Share


Total
Less: Withdrawal

(292,061.48)
3,707,938.52

(124,857.10)
3,343,081.42

(67,315.55)
3,035,765.87

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 2 Equity, End

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

2,488,597.81

Partner 3 Equity, Beginning

4,000,000.00

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

38,966.96

133,864.99

2,834,732.82

2,728,597.81

Add: Net Income (Loss) Share


Total
Less: Withdrawal

(292,061.48)
3,707,938.52

(124,857.10)
3,343,081.42

(67,315.55)
3,035,765.87

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 3 Equity, End

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

2,488,597.81

Partner 4 Equity, Beginning

4,000,000.00

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

38,966.96

133,864.99

2,834,732.82

2,728,597.81

Add: Net Income (Loss) Share


Total
Less: Withdrawal

(292,061.48)
3,707,938.52

(124,857.10)
3,343,081.42

(67,315.55)
3,035,765.87

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 4 Equity, End

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

2,488,597.81

Partner 5 Equity, Beginning

4,000,000.00

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

38,966.96

133,864.99

2,834,732.82

2,728,597.81

Add: Net Income (Loss) Share


Total
Less: Withdrawal

(292,061.48)
3,707,938.52

(124,857.10)
3,343,081.42

(67,315.55)
3,035,765.87

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

Partner 5 Equity, End

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

2,488,597.81

Partner 6 Equity, Beginning

4,000,000.00

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

38,966.96

133,864.99

2,834,732.82

2,728,597.81

Add: Net Income (Loss) Share


Total
Less: Withdrawal
Partner 6 Equity, End

166 | P a g e

(292,061.48)
3,707,938.52

(124,857.10)
3,343,081.42

(67,315.55)
3,035,765.87

240,000.00

240,000.00

240,000.00

240,000.00

240,000.00

3,467,938.52

3,103,081.42

2,795,765.87

2,594,732.82

2,488,597.81

Note 18: Cost of Goods Manufactured


NOTES

JANUARY

3.2.B.3

FEBRUARY

MARCH

APRIL

MAY

JUNE

Direct Materials Used:


Raw Materials Inventory, beginning

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

Add: Purchases

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

Raw Materials Available for Use

1,033,150.81

2,066,301.62

2,066,301.62

2,066,301.62

2,066,301.62

2,066,301.62

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

3.2.B.3

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

1,033,150.81

94,940.10

94,940.10

94,940.10

94,940.10

94,940.10

Indirect Material

3.1

460.66

460.66

460.66

460.66

460.66

Indirect Labor

10

101,599.62

101,599.62

101,599.62

101,599.62

101,599.62

Plant Utilities

11.1

147,889.19

147,889.19

147,889.19

147,889.19

147,889.19

Depreciation

56,651.23

56,651.23

56,651.23

56,651.23

56,651.23

Repairs and Maintenance

12

72,017.22

72,017.22

72,017.22

72,017.22

72,017.22

Miscellaneous Factory Expense

13

5,000.00

5,000.00

5,000.00

5,000.00

5,000.00

Total Manufacturing Overhead

383,617.92

383,617.92

383,617.92

383,617.92

383,617.92

Total Manufacturing Costs

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

1,511,708.83

Less: Raw Materials Inventory, end


Raw Materials Used
Direct Labor
Manufacturing Overhead

Add: Work-in-Process, Beginning

3.3

Total Cost of Goods Placed in Process


Less: Work-in-Process, Ending
COST OF GOODS MANUFACTURED

167 | P a g e

3.3

15,746.97

31,493.93

47,240.90

62,987.87

1,511,708.83

1,527,455.80

1,543,202.77

1,558,949.73

1,574,696.70

15,746.97

31,493.93

47,240.90

62,987.87

1,495,961.86

1,495,961.86

1,495,961.86

1,495,961.86

1,574,696.70

NOTES

JULY

AUGUST

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

Direct Materials Used:

1,033,151
1,033,151
2,066,302
1,033,151
1,033,151

1,033,151
1,033,151
2,066,302
1,033,151
1,033,151

1,033,151
1,033,151
2,066,302
1,033,151
1,033,151

1,033,151
1,033,151
2,066,302
1,033,151
1,033,151

1,033,151
1,033,151
2,066,302
1,033,151
1,033,151

1,033,151
1,033,151
2,066,302
1,033,151
1,033,151

94,940

94,940

94,940

94,940

94,940

94,940

Indirect Material

3.1

Indirect Labor

10

Plant Utilities

11.1

461
101,600
147,889
56,651
72,017
5,000
383,618

461
101,600
147,889
56,651
72,017
5,000
383,618

461
101,600
147,889
56,651
72,017
5,000
383,618

461
101,600
147,889
56,651
72,017
5,000
383,618

461
101,600
147,889
56,651
72,017
5,000
383,618

461
101,600
147,889
56,651.23
72,017
5,000
383,618

1,511,709
1,511,709
15,747

1,511,709
15,747
1,527,456
31,494

1,511,709
31,494
1,543,203
47,241

1,511,709
47,241
1,558,950
62,988

1,511,709
62,988
1,574,697
-

1,511,709
1,511,709
15,747

1,495,962

1,495,962

1,495,962

1,495,962

1,574,697

1,495,962

Raw Materials Inventory, beginning

3.2.B.3

Add: Purchases
Raw Materials Available for Use
Less: Raw Materials Inventory, end
Raw Materials Used
Direct Labor

3.2.B.3

Manufacturing Overhead

Depreciation

Repairs and Maintenance

12

Miscellaneous Factory Expense

13

Total Manufacturing Overhead


Total Manufacturing Costs
Add: Work-in-Process, Beginning

3.3

Total Cost of Goods Placed in Process


Less: Work-in-Process, Ending
COST OF GOODS MANUFACTURED

168 | P a g e

3.3

NOTES

2016

2017

2018

2019

2020

Direct Materials Used:

3.2.B.3

12,397,810
12,397,810
1,033,151
11,364,659

1,033,151
13,504,562
14,537,713
1,071,791
13,465,922

1,071,791
14,710,114
15,781,905
1,111,876
14,670,029

1,111,876
16,023,286
17,135,162
1,153,460
15,981,702

1,153,460
17,453,685
18,607,145
1,196,599
17,410,546

1,044,341

1,142,559

1,185,291

1,229,620

1,275,608

Indirect Material

3.1

Indirect Labor

10

Plant Utilities

11.1

5,067
1,117,596
1,626,781
623,164
792,189
55,000
4,219,797

5,896
1,159,394
1,696,883
679,815
836,890
60,500
4,439,377

6,419
1,202,755
1,764,129
679,815
884,334
66,550
4,604,002

7,000
1,247,738
1,834,228
679,815
934,711
73,205
4,776,697

7,627
1,294,404
1,907,316
679,815
988,223
80,526
4,957,909

16,628,797
16,628,797
15,747

19,047,859
15,747
19,063,606
9,448

20,459,322
9,448
20,468,771
10,954

21,988,020
10,954
21,998,974
70,304

23,644,063
70,304
23,714,367
76,444

16,613,050

19,054,157

20,457,817

21,928,669

23,637,924

Raw Materials Inventory, beginning

3.2.B.3

Add: Purchases
Raw Materials Available for Use
Less: Raw Materials Inventory, end
Raw Materials Used
Direct Labor
Manufacturing Overhead

Depreciation

Repairs and Maintenance

12

Miscellaneous Factory Expense

13

Total Manufacturing Overhead


Total Manufacturing Costs
Add: Work-in-Process, Beginning

3.3

Total Cost of Goods Placed in Process


Less: Work-in-Process, Ending
COST OF GOODS MANUFACTURED

169 | P a g e

3.3

Note 19: Cost of Goods Sold


NOTES JANUARY FEBRUARY
Finished Goods
Inventory, beginning
Add: Cost of Goods
Manufactured
Goods Available for Sale
Less: Finished Goods
Inventory, ending
COST OF GOODS
SOLD

3.4

18

3.4

Goods Available for Sale


Less: Finished Goods
Inventory, ending
COST OF GOODS
SOLD

APRIL

MAY

JUNE

708,614

629,879

551,144

472,409

1,495,962

1,495,962

1,495,962

1,495,962

1,574,697

1,495,962

2,204,575

2,125,841

2,047,106

2,047,106

708,614

629,879

551,144

472,409

472,409

787,348

1,574,697

1,574,697

1,574,697

1,574,697

SEPTEMBER

OCTOBER

NOVEMBER

DECEMBER

AUGUST

3.4

472,409

393,674

314,939

236,205

157,470

157,470

18

1,495,962

1,495,962

1,495,962

1,495,962

1,574,697

1,495,962

1,968,371

1,889,636

1,810,901

1,732,166

1,732,166

1,653,432

393,674

314,939

236,205

157,470

157,470

78,735

1,574,697

1,574,697

1,574,697

1,574,697

1,574,697

1,574,697

3.4

NOTES
Finished Goods
Inventory, beginning
Add: Cost of Goods
Manufactured
Goods Available for Sale
Less: Finished Goods
Inventory, ending
COST OF GOODS
SOLD

170 | P a g e

JULY

NOTES
Finished Goods
Inventory, beginning
Add: Cost of Goods
Manufactured

MARCH

3.4
18

3.4

2016

2017

2018

2019

78,735

236,209

563,804

247,319

16,613,050

19,054,157

20,457,817

21,928,669

23,637,924

16,613,050

19,132,892

20,694,025

22,492,473

23,885,242

78,735

236,209

563,804

247,319

253,282

16,534,315

18,896,683

20,130,221

22,245,155

23,631,961

2020

4.7 Financial Analyses


4.7.1 Horizontal Analysis
Davao Polyethylene Terephthalate (PET) Flakes Processing Plant
Comparative Statement of Financial Position
2016

2017

NOTES
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets
Non Current
Property Plant and Equipment
Deferred Tax Asset
Total Non Current Assets
TOTAL ASSETS

1
2
3
4

5
6

Liabilities and Stockholders' Equity


Liabilities
Current Liabilities
7
TOTAL LIABILITIES
Parners' Equity
Partner's Equity, beginning
Add: Net Income
Total:
Less: Withdrawal
Partner's Equity, ending

TOTAL LIABILITIES AND


PARTNERSHIP EQUITY

171 | P a g e

17

2018

Increase/
Decrease (%)

4,270,277
949,207
1,131,890
6,351,375

2019

Increase/
Decrease (%)

2020

Increase/
Decrease (%)

Increase/
Decrease (%)

2,392,375
984,708
1,321,969
4,699,052

-44.0%
3.7%
16.8%
0.0%
-26.0%

310,190
1,532,304
1,691,127
3,533,620

-87.0%
55.6%
27.9%
0.0%
-24.8%

864,370
1,589,612
1,475,735
3,929,718

178.7%
3.7%
-12.7%
0.0%
11.2%

1,337,619
1,649,063
1,531,053
4,517,735

54.8%
3.7%
3.7%
0.0%
15.0%

14,605,138 13,827,570
751,015
1,072,076
15,356,153 14,899,647
21,707,528 19,598,699

-5.3%
42.8%
-3.0%
-9.7%

13,050,003
1,245,173
14,295,177
17,828,796

-5.6%
16.1%
-4.1%
-9.0%

12,272,436
494,158
12,766,594
16,696,312

-6.0%
-60.3%
-10.7%
-6.4%

11,494,868
173,097
11,667,965
16,185,700

-6.3%
-65.0%
-8.6%
-3.1%

899,897
899,897

980,211
980,211

8.9%
8.9%

1,054,201
1,054,201

7.5%
7.5%

1,127,915
1,127,915

7.0%
7.0%

1,254,113
1,254,113

11.2%
11.2%

24,000,000
(1,752,369)
22,247,631
1,440,000
20,807,631

20,807,631
(749,143)
20,058,489
1,440,000
18,618,489

-13.3%
57.2%
-9.8%
0.0%
-10.5%

18,618,489
(403,893)
18,214,595
1,440,000
16,774,595

-10.5%
46.1%
-9.2%
0.0%
-9.9%

16,774,595
233,802
17,008,397
1,440,000
15,568,397

-9.9%
157.9%
-6.6%
0.0%
-7.2%

15,568,397
803,190
16,371,587
1,440,000
14,931,587

-7.2%
243.5%
-3.7%
0.0%
-4.1%

21,707,528 19,598,699

-9.7%

17,828,796

-9.0%

16,696,312

-6.4%

16,185,700

-3.1%

As what can be seen in the horizontal analysis presented in the previous page, the account
that most influence the trend is the cash account. Cash account percentage increased drastically
during the year 2019, this is because of the collection of Accounts Receivable in 2018. This can
be related to the percentage decrease of Accounts Receivable from 2018-2019. This decrease,
further, can be explained by looking at the increase in the number of shipments in December
2018 (see note 8.1.1 Shipments), which means more percentage of Accounts Receivable by the
end of 2018. This increase of shipment is also the explanation why there is a lesser percentage
change in the inventories account in year 2019, because of the increase in shipment in December
2018 (from 20 sacks in 2017 to 30 sacks in 2018) and a constant shipment in December 2019 (30
sacks each for 2018 and 2019).

On the non-current assets portion, there are no additional investment throughout the five
years, therefore, the property, plant and equipment percentage decreases per year. The deferred
tax asset decreased in year 2019 and 2020 due to the expiration of the tax benefit during the net
operating loss carry-over in 2016 and 2017.

To sum up, generally in the four succeeding years, from 2017-2020, the balances of total
assets and total liabilities and equity increases, because of the increase in cash especially in the
year 2019, which influences the Asset section, and because of the net income in the equity
section which drags up the total balance of equity.

172 | P a g e

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Comparative Income Statement

2016

2017
Increase/
Decrease (%)

NOTES
Sales
Less: Cost of Goods Sold
Gross Income
Add: Other Income
Total Gross Income

Increase/
Decrease (%)

2020

Increase/
Decrease (%)

Increase/
Decrease (%)

26,059,585
20,130,221
5,929,364
1,176,809
7,106,173

8.1%
6.5%
13.6%
8.9%
12.8%

29,196,950
22,245,155
6,951,796
1,281,863
8,233,659

12.0%
10.5%
17.2%
8.9%
15.9%

31,410,728
23,631,961
7,778,767
1,396,295
9,175,062

7.6%
6.2%
11.9%
8.9%
11.4%

2,168,066
3,967,734
1,082,597

2,410,259 11.2%
4,120,882 3.9%
838,033 -22.6%

2,498,432
4,289,318
895,414

3.7%
4.1%
6.8%

2,594,033
4,473,608
932,216

3.8%
4.3%
4.1%

2,697,755
4,680,534
993,584

4.0%
4.6%
6.6%

TOTAL EXPENSES

7,218,398

7,369,175

7,683,163

4.3%

7,999,857

4.1%

8,371,872

4.7%

Net Income Before Tax

(2,503,384) (1,070,204) 57.2%


751,015 321,061

(576,990) 46.1%
173,097

(1,752,369) (749,143) 57.2%

(403,893) 46.1%

Provision For Net Income


Less: Tax Benefit
Net Income After Tax

173 | P a g e

8.2

14
15
16

20,340,157 24,115,290
16,534,315 18,896,683
3,805,841 5,218,606
909,173 1,080,365
4,715,014 6,298,971

2019

18.6%
14.3%
37.1%
18.8%
33.6%

Less: Expenses
Selling Expenses
Administrative Expenses
Other Expenses

8.1

2018

2.1%

233,802 140.5%
(70,141)
70,141
233,802 157.9%

803,190 243.5%
(240,957)
240,957
803,190 243.5%

It can be noted from the horizontal analysis that the trend of percentage change per year
of cost of goods sold and sales are directly proportional. This is because of the variable cost in
cost of goods sold, which is, primarily, the purchase of raw materials. Also, in the other income
percentage change, it is in the second year, or 2017 that it has the most increase in percentage.
This is because there was no production in January 2016. Moving on, in the selling expenses, the
percentage change is greater in 2017, also because of no production in January 2016. In the other
expenses, the percentage change is greater in 2017, due to the start up expenses in 2016. To sum
up, the percentage changes in 2018-2020 are relatively the same, except for the net income
which drastically increased in 2019

174 | P a g e

4.7.2 Vertical Analysis


Davao Polyethylene Terephthalate (PET) Flakes Processing Plant
Common-Size Statement of Financial Position

2016
NOTES
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Total Current Assets
Non Current
Property Plant and Equipment
Deferred Tax Asset
Total Non Current Assets
TOTAL ASSETS

TOTAL LIABILITIES AND


PARTNERSHIP EQUITY

175 | P a g e

2018
CommonSize %

2019
CommonSize %

2020
CommonSize %

CommonSize %

1
2
3
4

4,270,277
949,207
1,131,890
6,351,375

19.7%
4.4%
5.2%
0.0%
29.3%

2,392,375
984,708
1,321,969
4,699,052

12.2%
5.0%
6.7%
0.0%
24.0%

310,190
1,532,304
1,691,127
3,533,620

1.7%
8.6%
9.5%
0.0%
19.8%

864,370
1,589,612
1,475,735
3,929,718

5.2%
9.5%
8.8%
0.0%
23.5%

1,337,619
1,649,063
1,531,053
4,517,735

8.3%
10.2%
9.5%
0.0%
27.9%

5
6

14,605,138

67.3%

13,827,570

70.6%

13,050,003

73.2%

12,272,436

73.5%

11,494,868

71.0%

15,356,153
21,707,528

70.7%
100.0%

14,899,647
19,598,699

76.0%
100.0%

14,295,177
17,828,796

80.2%
100.0%

12,766,594
16,696,312

76.5%
100.0%

11,667,965
16,185,700

72.1%
100.0%

Liabilities and Stockholders' Equity


Liabilities
Current Liabilities
7
TOTAL LIABILITIES
Parners' Equity
Partner's Equity, beginning
Add: Net Income
Total:
Less: Withdrawal
Partner's Equity, ending

2017
CommonSize %

17

899,897
899,897

4.1%
4.1%

980,211
980,211

5.0%
5.0%

1,054,201
1,054,201

5.9%
5.9%

1,127,915
1,127,915

6.8%
6.8%

1,254,113
1,254,113

7.7%
7.7%

24,000,000
(1,752,369)
22,247,631
1,440,000
20,807,631

110.6%
-8.1%
102.5%
6.6%
95.9%

20,807,631
(749,143)
20,058,489
1,440,000
18,618,489

106.2%
-3.8%
102.3%
7.3%
95.0%

18,618,489
(403,893)
18,214,595
1,440,000
16,774,595

104.4%
-2.3%
102.2%
8.1%
94.1%

16,774,595
233,802
17,008,397
1,440,000
15,568,397

100.5%
1.4%
101.9%
8.6%
93.2%

15,568,397
803,190
16,371,587
1,440,000
14,931,587

96.2%
5.0%
101.1%
8.9%
92.3%

21,707,528

100.0%

19,598,699

100.0%

17,828,796

100.0%

16,696,312

100.0%

16,185,700

100.0%

It can be observed from the vertical analysis that the percentage of cash over the total
assets decreased, from year 2016 to 2018, but it started to increase in year 2019. This is due to
the negative net cash provided by operating activities (see Statement of Cash Flows). The
percentage of accounts receivable over total assets increases over time because of the increase of
sales every year. Generally, the percentage of current assets over total assets decreases, but it
started to increase in 2019. This can be explained by the similar trend in the net income. It started
to increase in 2019 because of the positive income in 2019 which can also be related to the
positive net cash provided by operating activities in 2019. On the other hand, the percentage of
current liabilities over total liabilities and equities is increasing per year, due to the increase of
purchases per year. Also, it can be seen that the percentage of net income over total liabilities
and equity increase every year, which signifies good business condition.

176 | P a g e

Davao Polyethylene Terephthalate (PET) Flakes Processing Plant


Common-Size Income Statement

2016
CommonSize %

NOTES

Sales
Less: Cost of Goods Sold
Gross Income
Add: Other Income
Total Gross Income

2018
CommonSize %

100.0%
81.3%
18.7%
4.5%
23.2%

2,168,066
3,967,734
1,082,597

10.7% 2,410,259
19.5% 4,120,882
5.3% 838,033

10.0% 2,498,432
17.1% 4,289,318
3.5% 895,414

TOTAL EXPENSES

7,218,398

35.5% 7,369,175

Net Income Before Tax

(2,503,384)
751,015
(1,752,369)

Provision for Income Tax


Less: Tax Benefit
Net Income After Tax

8.2

14
15
16

24,115,290
18,896,683
5,218,606
1,080,365
6,298,971

100.0%
78.4%
21.6%
4.5%
26.1%

2019
CommonSize %

20,340,157
16,534,315
3,805,841
909,173
4,715,014

Less: Expenses
Selling Expenses
Administrative Expenses
Other Expenses

8.1

2017

26,059,585
20,130,221
5,929,364
1,176,809
7,106,173

CommonSize %
29,196,950
22,245,155
6,951,796
1,281,863
8,233,659

100.0%
75.2%
24.8%
4.4%
29.2%

9.6% 2,594,033
16.5% 4,473,608
3.4% 932,216

8.9% 2,697,755
15.3% 4,680,534
3.2% 993,584

8.6%
14.9%
3.2%

30.6% 7,683,163

29.5% 7,999,857

27.4% 8,371,872

26.7%

-12.3% (1,070,204)
3.7% 321,061

-4.4%
1.3%

-2.2%
0.7%

0.8%
0.2%

2.6%
0.8%

8.6% (749,143)

3.1% (403,893)

233,802
(70,141)
70,141
1.5% 233,802

100.0%
76.2%
23.8%
4.4%
28.2%

CommonSize %
31,410,728
23,631,961
7,778,767
1,396,295
9,175,062

(576,990)
173,097

100.0%
77.2%
22.8%
4.5%
27.3%

2020

803,190
(240,957)
240,957
0.8% 803,190

2.6%

In the table, it can be seen that over time, the percentage of cost of goods sold over sales
decreases. This is due to the increase of production and finished goods shipped, which means
that the fixed cost is allocated to more units produced which is also why the percentage of gross
income increases per year. Further, the percentage of expenses over sales also decreases because
the fixed expenses are distributed over the increasing number of goods sold (see Note 8 Sales).
Generally, the percentage of net income over sales increases over time due to the increase

177 | P a g e

production which increases the utilization rate of the machineries used in production, thereby
increasing sales and decreasing cost and expenses.

4.7.3 Financial ratios

According to Ballada (2010), Ratio analyses are used to understand the health of a
company. Ratios lend insight into many critical aspects such as present and future profit
potential, expense control, and solvency.
The industry ratios presented are gathered from the website www.Biztats.com, a
free online source for small business statistics, owned and operated by BizMiner of Camp
Hill, PA, a leader in online data analysis since 199823. Since the ratios provided are only
for one year, the proponents assumed that it will be constant for 2016 to 2020.

4.7.3.1 LIQUIDITY RATIOS


Creditors and potential creditors are interested in continuously monitoring a
companys ability to pay interest as it comes due and to repay the principal of the debt at
maturity. An analysis of a firms liquid position provides indicators of its short-term debt
paying ability. Measures of liquid position are also used to evaluate managements
current operating efficiency; thus, both investors and creditors are interested in these
statistics (Ballada, 2010).

23

http://www.bizstats.com/about.php

178 | P a g e

Working Capital

6,000,000
5,000,000
4,000,000
DPET

3,000,000
2,000,000
1,000,000
2016

2017

2018

2019

2020

Working capital is a measurement of the companys ability to repay its current liabilities
using only its current assets. It will be computed using the formula below:

The table below shows the working capital of DPET for 2016 to 2020.

Current Assets
Current Liabilities
Net Working Capital

2016
6,351,374.81
899,896.82
5,451,477.99

2017
4,699,052.21
980,210.51
3,718,841.70

2018
3,533,619.91
1,054,201.26
2,479,418.65

2019
3,929,717.64
1,127,914.61
2,801,803.02

2020
4,517,734.89
1,254,113.42
3,263,621.47

Based from the data, the company has a strong working capital which has both positive
and negative significance. For the positive side, the companys working capital is advantageous
in terms of obtaining short-term credit at favorable interest rates, because a strong working
capital means that the company is able to pay its short-term obligations in a timely manner.
However, in the negative side, too much working capital, as in the case of the company,
179 | P a g e

indicates that there is ineffective management of current assets because they can utilize its
excess current assets by investing in long term assets, which yield higher rates of return. The
fluctuation of working capital is because of continues losses which impacts the cash balance and
increase ofliabilities in first year up to third year. But on the fourth year, it rises because it starts
earn profit. Despite of the fluctuation, the company will still be able to pay its current liabilities
when they become due because current assets still exceed current liabilities in each year.

Current Ratio

8.00
7.00
6.00
5.00

DPET

4.00

Industry

3.00
2.00
1.00
0.00
2016

2017

2018

2019

2020

The current ratio also describes the ability of the company to meet current debt
obligations with assets that are readily available. The current ratio is used to evaluate a
companys liquidity and short-term debt paying capacity. This statistics is often assigned great
importance by lenders in making credit-granting decisions since current assets and current
liabilities represent the core of the companys daily operations. Its difference from the working
capital is that it emphasize the relationship of each peso amount of current asset to each peso
amount of liabilities. It will be computed using the formula below:

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The industry has a current ratio of 1.30. . The table below shows the current ratio of
DPET for 2016 to 2020.

Current Assets
Current Liabilities
Current Ratio

2016
6,351,374.81
899,896.82
7.06

2017
4,699,052.21
980,210.51
4.79

2018
3,533,619.91
1,054,201.26
3.35

2019
3,929,717.64
1,127,914.61
3.48

2020
4,517,734.89
1,254,113.42
3.60

DPET has higher current ratio than the industry. It is because of the initial high initial
investment of the partners that even there are withdrawals in every year, there are more than
enough assets to cover the short term obligations. Notwithstanding the consecutive decreases
during the first three years, it still has a current ration above the industry.

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Quick Ratio

6.00
5.00
4.00
DPET

3.00

Industy
2.00
1.00
0.00
2016

2017

2018

2019

2020

Quick (acid-test) ratio is a measurement of companys short-term paying ability without


relying on inventory and prepaid expenses. It is a more rigorous test for it test only the more
liquid assets to cover the current liabilities. It will be computed using the formula below:

The industry has a quick ratio of 0.65. The table below shows the quick ratio of DPET for
2016 to 2020.

2016
Current Assets
Inventory
Current Liabilities

Quick Ratio

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2017

2018

2019

2020

6,351,374.81
1,131,890.10
899,896.82

4,699,052.21
1,321,969.17
980,210.51

3,533,619.91
1,691,126.73
1,054,201.26

3,929,717.64
1,475,735.49
1,127,914.61

4,517,734.89
1,531,053.13
1,254,113.42

5.80

3.45

1.75

2.18

2.38

As compared to the industry ratio, DPET also has a higher quick ratio which rises its
liquidity, thus giving a security of being paid its short-term creditors especially the suppliers
who take the biggest part of the current liabilities.

Accounts Receivable Turnover

14.00
12.00
10.00
8.00
DPET
6.00
4.00
2.00
0.00
2016

2017

2018

2019

2020

Accounts receivable turnover is the measurement of times the company


collect its average accounts receivable during the year. It is important to know

can

this for cash is

the most liquid asset of a business, thus the more cash the company will be able to have, the
more assured will be its creditors. It will be computed using the formula below:

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The table below shows the accounts receivable turnover ratio of DPET for 2016
to 2020.
2016
Sales on Account
Average Accounts Recevable

2017

2018

2019

2020

10,170,078.28
832,170.69

12,057,644.81
966,957.48

13,029,792.42
1,258,505.62

14,598,475.19
1,560,957.67

15,705,364.02
1,619,337.48

12.22

12.47

10.35

9.35

9.70

Accounts Receivable Turnover

The fluctuating times of collection times, although it can be observed that each
year is beyond nine times, cannot be interpreted independently from the average

age

of

receivables since there is no data available for the industrys accounts receivable turnover ratio
on which it can be compared.

Average Age of Receivables

40.00
35.00
30.00
25.00
DPET

20.00
15.00
10.00
5.00
0.00
2016

2017

2018

2019

2020

Average age of receivables is the measurement of the average days for


accounts receivable to be collected. It must be known for it will determine if

the

the collection

period is within the credit term or, if beyond, at least near to it. It will be computed using the
formula in the next page:
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The table below shows the average age of receivables ratio of DPET for
2016 to 2020.

Number of Days
Accounts Receivable Turnover
Average Age of Accounts Receivable

2016 2017 2018 2019 2020


365
365
365
365
365
12.22 12.47 10.35
9.35
9.70
29.87 29.27 35.25 39.03 37.63

The average collection period for each year shows to be acceptable since the
credit term according to the companys policy is 30 days after the recognition

of

accounts

receivable from its customers.

Inventory Turnover

16.00
14.00
12.00
10.00

DPET

8.00

Industry

6.00
4.00
2.00
0.00
2016

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2017

2018

2019

2020

Inventory turnover is the measurement of times the companys inventory has


been sold and replaced. It should be identified to know whether to too much
invested in inventories. It will be computed using the formula

cash is being

below:

The industry has an inventory turnover of 0.65. The table below shows the
inventory turnover ratio of DPET for 2016 to 2020.

Cost of Goods Sold


Average Inventory
Inventory Turnover

2016
16,534,315.35
1,414,467.57
11.69

2017
18,896,683.45
1,226,929.64
15.40

2018
20,130,221.15
1,506,547.95
13.36

2019
22,245,154.55
1,583,431.11
14.05

2020
23,631,960.78
1,503,394.31
15.72

The fluctuating times of inventory sale and replacement are consistently


above than the industrys ratio. Nevertheless, it will be more significant if it will
be interpreted together with the average age of inventory.

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Average Age of Inventory

60.00
50.00
40.00
DPET

30.00

Industry
20.00
10.00
0.00
2016

2017

2018

2019

2020

Average age of inventory is the measurement of the average days for the entire
inventory to be sold. It must be known because inventories has the risk of

obsolescence

and deterioration. Thus, maintaining high level of inventory will have its negative effect to the
company. It will be computed using the formula below:

The industry has average age of inventory of 54.48 days. The table below shows
the average age of inventory ratio of DPET for 2016 to 2020.
2019
365
14.05
25.98

2020
365
15.72
23.22

As compared to the industrys sales period, DPET is more efficient and

liquid

Number of Days
Inventory Turnover
Average Age of Inventory

2016
365
11.69
31.22

2017
365
15.40
23.70

2018
365
13.36
27.32

because it has significantly shorter time to moving its inventory, hence, it can
inventories into cash sooner than that of the industry.
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convert

its

4.7.3.2 PROFITABILITY RATIOS


Being a profit-oriented entity, the owners are expected to be concerned if such
venture is earning or not. Furthermore, creditors may also use the profitability of the company
in evaluating whether to continue its transactions
profitability ratios will be computed to

with it or not. With this regard, different

assess such.

Return on Sales

0.0600
0.0400
0.0200
2016

2017

2018

(0.0200)

2019

2020

DPET
Industry

(0.0400)
(0.0600)
(0.0800)
(0.1000)

Return on sales is the measurement of the percentage of net income for


each peso sale. It is the percentage of sales that remained after paying all expenses
of the company. It shows the effective conversion of sales into income. It will be
computed using the formula below:

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The industry has a return on sales of 4.07%. The table below shows

the

return sales of DPET for 2016 to 2020.


2016
-1,752,368.87
20,340,156.56
(0.0862)

Net Income After Tax


Sales
Return on Sales

2017
-749,142.59
24,115,289.62
(0.0311)

2018
-403,893.32
26,059,584.85
(0.0155)

2019
233,801.73
29,196,950.39
0.0080

Comparing the DPETs ratio with that of the industry, it can be


that there is a large difference for each year of operation. It must be

2020
803,189.93
31,410,728.05
0.0256

determined

remembered that on

the fifth year, which has the highest return on sales for the first five years of operation, it has
only attain the 62.83% of the industrys return

on sale.

Return on Total Assets

0.0600
0.0400
0.0200
DPET

2016
(0.0200)
(0.0400)
(0.0600)
(0.0800)

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2017

2018

2019

2020

Industry

Return on total assets is the measurement of the efficiency of the


management of its assets in the production of profit during a certain

period.

companys
It

will

be

computed using the formula below:

The industry has a return on total assets of 4.33%. The table below shows the
return on total assets of DPET for 2016 to 2020.

Profit (Loss)
Interest Expense
Average Total Assets
Return on Total Assets

2016
-1,752,368.87
22,818,826.72
(0.0768)

2017
-749,142.59
20,653,113.50
(0.0328)

2018
-403,893.32
18,713,747.76
(0.0177)

2019
233,801.73
17,262,554.02
0.0102

Comparing the DPETs ratio with that of the industry, it can be


for the first five years of operation, itis lower which is considered to be

2020
803,189.93
16,441,005.92
0.0352

noticed

that

normal for a starting

manufacturing company. However, it is worthy to take note that on its fifth year, DPET is only
0.81% lower than the industrys return on total assets
improving asset management efficiency.

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which

is

an

indicator

of

its

Return on Partners Equiy

0.1200
0.1000
0.0800
0.0600
0.0400

DPET

0.0200

Industry

(0.0200)

2016

2017

2018

2019

2020

(0.0400)
(0.0600)
(0.0800)

Return on partners equity is the measurement of the efficiency of the


companys management of the invested capital in the production of profit during a
certain period. It is important to be determined for it will be a deciding whether an
investor will still be continue investing or not. It will be computed using the
formula below:

The industry has a return on partners equity of 11.67%. The table below shows
the return on partners equity of DPET for 2016 to 2020.

Profit (Loss)
Average Partners' Equity
Return on Partners' Equity

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2016
-1,752,368.87
22,033,175.49
-0.08

2017
-749,142.59
19,713,059.83
-0.04

2018
-403,893.32
17,696,541.88
-0.02

2019
233,801.73
16,171,496.08
0.01

2020
803,189.93
15,249,991.91
0.05

Comparing the DPETs ratio with that of the industry, it can be observed that
there is a significant difference for each year of operation. It must be noted
fifth year, which has the highest return on partners equity for the first
attain the 45.13% of the industrys return on equity

ratio. This

considered in investing such big money for it can probably

that

on

the

five years, it has only


matter

must

be

earn more if used for other

investments.

4.7.3.3 SOLVENCY RATIOS


In a long-term perspective, there must be formula/e to identify whether the
company will be able to conduct operation sustainably in an indefinite period or at
least long enough to achieve its objectives. With this matter, long-term creditors
and investors, the partners in this case, are more interested with different solvency
ratios.

Debt to Total Assets Ratio

0.70
0.60
0.50
0.40

DPET

0.30

Industry

0.20
0.10
0.00
2016

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2017

2018

2019

2020

Debt to total assets ratio is the measurement of the amount of assets that
financed by debt. It will be computed using the

are

formula below:

The industry has debt to total assets ratio of 63%. The table below shows
the debt to total assets ratio of DPET for 2016 to 2020.

Total Liabilities
Total Assets

2016

2017

899,896.82

980,210.51

1,054,201.26

1,127,914.61

1,254,113.42

21,707,527.95

19,598,699.05

17,828,796.47

16,696,311.56

16,185,700.29

0.04

0.05

0.06

0.07

0.08

Debt to Total Assets Ratio

2018

2019

2020

There is a clear big gap between DPETs debt to total assets ratio and the
industrys debt to total assets ratio. Lower debt to total assets ratio represents a
more stable business for it provides a less risk of exhausting all of companys
assets to pay its liabilities.

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Equity to Total Assets Ratio

1.00
0.90
0.80
0.70
0.60

DPET

0.50

Industry

0.40
0.30
0.20
0.10
0.00
2016

2017

2018

2019

2020

Equity to total assets ratio is the measurement of the amount of assets that are
financed by owners' investments. It is the total opposite of the other solvency ratio and
will be computed using the

formula below:

The industry has equity to total assets ratio of 37%. The table below shows the
equity to total assets ratio of DPET for 2016 to 2020.

Total Equity

2016
20,807,631.13

2017
18,618,488.54

2018
16,774,595.21

2019
15,568,396.95

2020
14,931,586.87

Total Assets

21,707,527.95

19,598,699.05

17,828,796.47

16,696,311.56

16,185,700.29

0.96

0.95

0.94

0.93

0.92

Equity to Total Assets Ratio

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There is also anevident large gap between DPETs equity to total assets ratio and
the industrys equity to total assets ratio. Higher equity to total assets ratio represents a
worth investing business appearance for it shows the willingness of the investors to
finance such company.

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4.7.4 Capital budgeting analysis

Payback Period

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

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Investment
24,000,000

Net Cash
Provided by
Operating
Activities
(2,963,669)
(437,902)
(642,186)
1,243,166
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187
1,592,187

Amount to be
recovered
26,963,669
27,401,571
28,043,756
26,800,591
25,208,404
23,616,217
22,024,030
20,431,843
18,839,656
17,247,469
15,655,282
14,063,095
12,470,908
10,878,721
9,286,534
7,694,347
6,102,159
4,509,972
2,917,785
1,325,598
(266,589)
(1,858,776)
(3,450,963)
(5,043,150)
(6,635,337)
(8,227,524)

The number of periods in which the business will be able to recoup its initial investment
is approximately 21 years, or 20.83 years specifically. This computation is based on the
assumption that the company will have the same net cash flows provided by operating activities
in the last year projected (2020). This assumption is used because if the proponents use the
average of five years (2016-2020), the result will be not feasible, and proponents deem it
incorrect due to the projected increasing trend starting 2019. Further, if the proponents use only
the average of the positive net cash from operating activities (2019 to 2020) and use it to project
the increase in the succeeding years, it will not be prudent because of the expected natural
fluctuations of cash flows. Therefore, the most appropriate and prudent estimation is to assume
the same net cash flows in the last year projected (2020) in projecting the succeeding years to be
able to get the payback period.
The payback period of approximately 21 years imply that it is only after 21 years that the
company's investment will be recovered. This implies that the business is not a good investment
because of the relatively long payback period; however, the proponents recommend that the
projection of financial statements be longer than five years in order to more or less provide a
better approximation of the net cash flows provided by the company which is the basis of the
payback period.

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4.8 Accounting and Control Plan

4.8.1 Revenue Cycle Activities


The data flow diagram shown in Figure 4.8.1a represents the logical elements of
sales order processing system. The sales process starts with the customer placing an order
through telephone, email or in person. The sales order officer will send a copy of sales
order to the operations manager to check if the customer is in the customer list. An
approved sales order from the operations manager will be given to sales order officer to
trigger the continuation of the sales process by releasing simultaneously sales information
to warehouse officer, shipping officer and billing officer. The warehouse officer will
send a copy of verified stock release to billing officer and finished products together with
the verified stock release to the shipping officer. Upon receipt of the finished products,
the shipping officer will reconcile the items with verified stock release, shipping notice,
and shipping notice. The finished product together with the packing slip will be sent to
customer. The shipping notice will be sent to billing officer who will reconcile it with the
information in the sales order. After reconciling, the billing officer will send a remittance
advice and sales invoice to the customer showing the amount to be paid for the shipped
goods. Also, the billing officer will send the sales order to bookkeeper- SL, sales journal

voucher to bookkeeper- GL, and reviewed stock release to inventory analyst. The
bookkeeper- SL will update the accounts receivable records and will send the accounts
receivable summary to bookkeeper- GL. The inventory analyst will update the inventory
records and will send journal voucher to bookkeeper- GL. Bookkeeper- GL will then
reconcile the two documents. After reconciliation, bookkeeper- GL will post to general
ledger records and file the approved journal voucher.
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Figure 4.8.1.1 Sales Order Processing System

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The data flow diagram shown in Figure 4.8.1b represents the logical elements of
cash receipts system. The customer will pay by depositing on the companys account in
the bank. The customer will send the deposit slips together with the remittance advice.
The Customer remittance officer will make a remittance list out of the information in the
documents provided by the customer. Customer remittance will then send the remittance
advice and a copy remittance list to bookkeeper- SL, the deposit slips and a copy
remittance list to cash receipts officer and a copy of remittance list to the treasurer. The
bookkeeper- SL will update the accounts receivable records and will send the accounts
receivable summary to bookkeeper- GL. The cash receipts officer will record the cash
receipts and will send the cash receipt journal voucher to bookkeeper- GL. BookkeeperGL will then reconcile the two documents. After reconciliation, bookkeeper- GL will post
to general ledger records and file the approved journal voucher. The treasurer will
reconcile the bank statement, remittance list and journal vouchers.

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Figure 4.8.1.2 Cash Receipts System

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4.8.2 Expenditure Cycle Activities


The data flow diagram shown in Figure 4.8.2a represents the logical elements of
purchase system. The process starts with the purchase requisition made by the inventory
analyst sent to purchasing officer. The purchasing officer will send a purchase order to
the supplier, a copy to the bookkeeper- SL, and a blind copy to the receiving officer.
Upon receipt of the item being ordered, the receiving officer will make a receiving report
which will be sent to the warehouse, a copy to the bookkeeper- SL, and another copy to
inventory analyst. After, reconciling the suppliers invoice with the purchase order and
receiving report, the bookkeeper- SL will set up the accounts payable and will send a
journal voucher to bookkeeper- GL. The inventory analyst will update the inventory
records and will send journal voucher. Bookkeeper- GL will then reconcile the two
documents. After reconciliation, bookkeeper- GL will post to general ledger records and
file the approved journal voucher.

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Figure 4.8.2.1 Purchase System

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The data flow diagram shown in Figure 4.8.2.2 represents the logical elements of
cash disbursements system. Cash disbursement process will start by identifying liabilities
due by the bookkeeper- SL. Bookkeeper- SL will send voucher packet to cash
disbursement officer. Cash disbursement officer will record the payment detail to the
check register, send the check to supplier, send a copy of the check to bookkeeper- SL,
and a journal voucher to bookkeeper- GL. Bookkeeper- SL will update the accounts
payable record and send the accounts payable summary to bookkeeper- GL. BookkeeperGL will then reconcile the journal voucher and accounts payable summary. After
reconciliation, bookkeeper- GL will post to general ledger records and file the approved
journal voucher.

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Figure 4.8.2.2 Cash Disbursements System

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The data flow diagram shown in Figure 4.8.2.3 represents the logical elements of
payroll system. Payroll process will start when the operations manager gives the job
tickets to cost accountant and time cards to payroll accountant. The payroll accountant
will reconcile time cards with the personnel action forms from human resource officer.
After reconciliation, the payroll accountant prepares the payroll register showing gross
pay, deductions, overtime pay, and net pay to be sent to bookkeeper- SL, enters the
information into the employee payroll records, and prepares employee paychecks to be
sent to the cash disbursement officer. Bookkeeper- SL will review the payroll register,
send voucher packet to cash disbursement officer, record the disbursement voucher to
voucher register and send the disbursement voucher to bookkeeper- GL. Cash
disbursement officer will prepare the payroll check, enter the amount to the check
register, send a copy of the payroll check together with the voucher packet to
bookkeeper- SL, send a journal voucher to bookkeeper- GL, deposit the payroll check to
the bank, and distribute the employee paychecks to the employees. Bookkeeper- GL will
then reconcile the disbursement voucher, labor summary, and journal voucher. After
reconciliation, bookkeeper- GL will post to general ledger records and file the approved
journal voucher.

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Figure 4.8.2.3 Payroll System

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4.8.3 Conversion Cycle Activities


The data flow diagram shown in Figure 4.8.3 represents the logical elements of
conversion cycle. The cycle starts with production planning and control which gathers
information from the sales order system, marketing system, bill of materials, and
inventory analyst. The operations manager specifies the materials and operations
requirement and prepares production schedule. The operations manager will send
purchase requisition to the inventory analyst, production schedule, work order, and
materials requisition to the plant workers and a copy of work order to the cost accountant.
The plant workers will send materials requisition and completed work order to the
inventory analyst. The inventory analyst will update the raw materials inventory records
and finished goods inventory record, send the materials requisition to the cost accountant
and send a journal voucher to bookkeeper- GL. The cost accountant will reconcile the
copy work order, the materials requisition, and job time cards. After reconciliation, cost
accountant will perform cost accounting and send a journal voucher to bookkeeper- GL.
Bookkeeper- GL will then reconcile the two journal vouchers. After reconciliation,
bookkeeper- GL will post to general ledger records and file the approved journal
vouchers.

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Figure 4.8.3.1 Conversion Cycle

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Accounting Control
Every business usually ensures that the activities that will be done are in
conformity with the organizations objectives. In consideration of this, it is necessary to
have a valid and accurate financial statements for these are records of businesss financial
activities. Furthermore, attaining reliable financial reporting entails implementation of
internal controls to have a reasonable assurance that the information provided represent
the results of business transactions. Also, such implementation will safeguard its financial
resources particularly its assets from possible fraud or theft.
Firstly, proper authorization will be observed in every transaction. In every sales
transaction, credit check must be performed to ascertain that the entity is transacting with
a valid and creditworthy customer. Personnel action form together with the time cards
will serve as authorization documents as to whom and how much will be given for
payroll accounting. Only suppliers in the master list will be the authorized sources for
purchasing raw materials.
Secondly, segregation of duties will be executed to ensure that incompatible tasks
will not be assigned to one employee. Asset custodian and record keeper must be
different personnel. The time cards and personnel action plan must not be responsibility
of only one person. Cash receipts and disbursing officer must be separated from accounts
receivable and accounts payable accountant. General ledger accountant and subsidiary
ledgers accountant must not be the same.
Thirdly, supervision will be performed in different areas within the entity. The
receiving of raw materials must be closely supervised to confirm the accuracy of quantity
received. The clocking in of the employees must be monitored to validate the time

210 | P a g e

shown in the time cards reflect the hours worked. The distribution of paychecks also be
supervised.
Fourthly, sufficient and updated accounting records will be maintained. These
records will consist of pre-numbered source documents, time cards, job tickets, labor
distribution summary, payroll register, special journals (e.g. cash receipts journal),
subsidiary ledgers, general ledger, and files. These records will provide audit trail in
which each business transaction can be traced as it occurs.
Fifthly, access controls will be applied. Security devices like safe deposit will be
used and security personnel will be hired so that only authorized personnel will be
allowed to access firms assets such as cash and inventories. Access to business records
will also be limited. For this reason, the business will use file cabinet with lock for
documents security.
Lastly, independent verification will be performed to verify the accuracy and
completeness of procedures executed in the each business transaction. Billing personnel
will reconcile shipping notice with sales invoice to ensure that only shipped goods will be
billed to customers. General ledger accountant will reconcile journal vouchers from
billing, inventory control, cash receipts, and accounts receivable. Bank reconciliation will
be done periodically by the treasurer.

211 | P a g e

Chapter 5 Socio-Economic Study


5.1 Social and Economic Development
The establishment of DPET in the Philippines will have contributions on the
countrys social and economic development. The business supports the Philippine
Development Plan 2011-2016, which adopts a framework of inclusive growth that is
sustained, generates mass employment, and reduces poverty.24
The competitiveness of industries is one of the measures of economic
development. Compared with neighboring countries, Philippines economic performance
in terms of investment, exports and competitiveness is unsatisfactory.25 Strategies to help
address this constraint shall therefore be pursued by raising productivity, improving
economic zones and providing goods and services comparable with global brands. DPET
business contributes in achieving this goal through exporting its products, thus will
present its label globally. Moreover, developing human resources by the company helps
boost the employment growth in the community. Human capital as companys asset
needs to harness skills through providing trainings and opportunities to its employees. In
this way, improving abilities is in line in promoting full human development and
livelihood, which is linked to productivity and competitiveness of the firm, as well as in
the industry and community.

24

http://www.neda.gov.ph/?p=1128
Philippine Development Plan 2011-2016. Chapter 3 Competitive Industry and Services Sectors. P.62
Retrieved from: http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-3.pdf
25

212 | P a g e

5.2 Government Revenues


One of the strategic frameworks to achieve the goal of inclusive growth is to
increase tax effort.26 Establishing the business will help the government earn revenues
through payment of its taxes and licenses. In Tables 5.1 and 5.2, the total increases in
revenues of national and local governments are shown. These amounts can be use for the
development of its community.

Table 5.2.1 National Government Revenue


Derived from the Establishment of DPET
Table 5.2.1a National Government Revenue Starting the Business27
Business Registration-Related Fees28
Verification and Reservation of company name with SEC
PHP 40.00
Notarize articles of partnership and treasurer's affidavit at the
notary
500.00
Register the company with the SEC
Filing Fee (1/5 of 1% of partnership's capital)
42,000.00
Legal Research Fee (1% 0f Filing Fee)
420.00
Registration for SEC Bulletin
150.00
Handling Fee
30.00
42,600.00
Apply for Certificate of Registration (COR) and
Taxpayer Identification Number (TIN) at the BIR
Annual Registration Fee - BIR
500.00
Certification Fee
200.00
BIR - Documentary Stamp Tax
15.00
715.00
Total National Government Revenue Start-Up
PHP
43,855.00

26

Philippine Development Plan 2011-2016. Chapter 2 Macroeconomic Policy. P.53


Retrieved from: http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-2.pdf
27
Notes to Financial Statements,
28
Part of the Start-Up Cost

213 | P a g e

Table 5.2.1b National Government Revenue Recurring Expenses29


2016
2017
2018
2019
Income Tax (30%)
137,485
288,643
325,597
Total National Government
137,485
288,643
325,597
Revenue Recurring Cost

Table 5.2.1c Total National Government Revenue


2016
2017
2018
Total NG Revenue Start-up
43,855.00
Total NG Revenue Recurring
137,485
288,643
Expense
Total National Government
Revenue derived from the
43,855.00
137,485
288,643
establishment DPET

2020
508,481
508,481

2019
-

2020
-

325,597

508,481

325,597

508,481

Table 5.2.2 Local Government Revenue


Derived from the Establishment of DPET
Table 5.2.2a Local Government Revenue - Starting the Business
Business Registration-Related Fees30
Community Tax Certificate from City Treasurers Office
10,500.00
Barangay Clearance
100.00
Notarization of encoded business permit
application form at the City Legal Office
50.00
Temporary Authority to Operate and Compliance Form
from BBPLD
Business Tax (1/20 of 1% of Capitalization)
10,500.00
Solid Waste Management
300.00
Garbage Fee
3,000.00
Electrical Fee
1,000.00
Delivery Vehicle Fee
500.00
Health Certification Fee
50.00
Laboratory Fee
100.00
Mayor's Permit Fee
1,000.00
Occupational Permit Fee
15,000.00
Plumbing Fee
100.00
Sanitary Permit Fee
200.00
Sanitary Inspection Fee
600.00
Zoning Fee
300.00
29

Notes to Financial Statements


Part of Start-Up Cost
Amounts retrieved from The World Bank Group, Doing Business in the Philippines, Davao City, 2014
30

214 | P a g e

License Plate
Tax Clearance
Fire Safety Inspection Fee
Property Registration Permits and Fees31
Notarized Deed of Sale (3% of Propertys value)
Copy of tax declaration and certificate of with improvement
from CAO
Tax Clearance Certificate of RPT from CTO
Certificate Authorizing Registration from BIR
Transfer Tax ( 0.8% of Property Price)
Registration at Register of Deeds
Registration Fee
Legal Research Fee (1% of Registration Fee)
Judicial Form Fee
IT Fee
Primary Entry Fee
Registration Fee for Specific Documents
Fixed Entry Fee for Specific Documents
Legal Research Fee for Specific Documents
Annotation Fee
Fee for issuance of new transfer certificate of title
Construction-Related Permits and Fees32
Obtain Lot plan with site map
Notarized the locational clearance application form
Obtain Locational clearance from CPDO ( P1.5 per square
meter + P300)
Fire Safety Evaluation Clearance ( 0.1% of estimated
project cost)
Building Permit
Validation from CPDO Zoning Administrator
Certificate of Occupancy
Fire Safety Inspection Certificate
Application for Water Connection
Total Local Government Revenue from Starting the Business

31

150.00
50.00
300.00

330,000.00
120.00
50.00
115.00
40,000.00
50,646.00
507.00
30.00
2,688.00
330.00
600.00
150.00
50.00
60.00
258.00

55,319.00

500.00
100.00
2,400.00
60,000.00
37,400.00
75.00
5,548.00
555.00
3,000.00
PHP 578,982.00

Part of the Cost of Land


Amounts retrieved from The World Bank Group, Doing Business in the Philippines, Davao City, 2014
32
Part of the Cost of Building
Amounts retrieved from The World Bank Group, Doing Business in the Philippines, Davao City, 2014

215 | P a g e

33,150.00

Table 5.2.2b Local Government Revenue - Recurring Expenses33


2016
2017
2018
2019
2020
Local Business Tax
633,088.00 672,656.00 712,224.00
870,496
1,028,768.00
Real Property Tax
146,000.00 146,000.00 146,000.00 146,000.00
146,000.00
Environmental Tax
10,000.00 10,000.00 10,000.00
10,000.00
10,000.00
Total Local
Government Revenue 789,088.00 828,656.00 868,224.00 1,026,496.00 1,184,768.00
Recurring Expenses

Table 5.2.2c Total Local Government Revenue


2016
2017
2018
2019
Total LG Revenue
Start-up
Total LG Revenue
Recurring Expense
Total Local
Government
Revenue derived
from the
establishment
DPET

2020

578,982.00

789,088.00

828,656.00

868,224.00

1,026,496.00

1,184,768.00

1,368,070.00

828,656.00

868,224.00

1,026,496.00

1,184,768.00

5.3 Supply of Commodities


The impact of producing PET flakes and exporting it for further processing contributes to
the supply of plastics globally. If the companys selling price is over the average price of PET
flakes and it is sold to its market, though its effect is minimal, it has the potential to increase the
price of PET pellets and thereby increasing the price of plastic products. Further, considering the
potential of this company and its vision, when it expands and deliberate on processing not only
PET flakes but also the processing of PET pellets, it will contribute to the plastic manufacturing
companies in the Philippines. This is so because the plastic manufacturing companies in the

33

Notes to Financial Statements

216 | P a g e

Philippines may no longer need to import their raw material, which is PET pellets, in order to
process plastic products.
The establishment of the business, however, will have a negative impact to the previous
buyers or customers of the junk shops where the company plans to purchase its raw materials. If
the company will purchase the PET bottles from these junk shops, this will result to the decrease
in the amount of PET plastics available for the junk shops previous customers.
5.4 Demand for Materials
The materials needed in the companys operations are procured from junkshops in Davao
City. In the survey conducted during the market study, 34% are currently selling PET
plastics/recyclable at 18.00 Php per kilogram, further the average selling price of PET plastics is
17.75 Php. The company then can help the local junkshops by contracting them for a higher
price which is at 20.00 Php per kilogram. In this way, the company, not only maintaining a
competitive price for getting its raw materials, also helps or contributes in the increase of profit
of junkshops.

217 | P a g e

Chapter 6 Organization and Management Study


6.1 Basic consideration in forming the organization
Davao Polyethylene Terephthalate (PET) Flakes Processing Plant is a
manufacturing organization engaged in the processing of PET plastic bottles and other
PET recyclable materials into PET flakes. The plant will be located at Malagamot,
Panacan, Davao City. There are risk factors that needed to be considered upon the
establishment of the business. First, the capital that will be raised must be a primary
consideration for it will serve in materializing this project. As a consequence, the
adequacy of the personal investments must be attained. Second, enticing the customers to
prefer the Davao PET Flakes is another consideration. With this regard, the marketing
plans and strategies will be put into action. Third, the companys success does not solely
depend on the greater market share, but also on employees performance which will be
highly influenced by the way they will be dealt. As regards to this, good employeremployee relationship will be achieved by giving them reasonable pay, proper
supervision and proper treatment in order for them to be motivated to work effectively
and efficiently. Fourth, operation disruption is a possibility that must be given attention
on the duration of the business. It will be prevented by conducting proper machine
maintenance, thus, the entity will be contracting maintenance personnel to ensure the
machines efficacy. Last, possibility of theft, misappropriation or fraud of cash, supplies,
equipments or any assets of the company is a thing that must not be overlooked. This will
be addressed through application of internal controls such as segregation of duties and
execution of appropriate legal action in case of any occurrence of the particular act.

218 | P a g e

6.2 Form of ownership


There are three forms of ownership namely, sole proprietorship, partnership and
corporation. Sole proprietorship is a form of business wherein a person conducts his
business alone and entirely for his own profit, being solely responsible for all its activities
and liabilities. On the other hand, a partnership is an ownership whereby two or more
persons bind themselves to contribute money, property or industry to a common fund,
with the intention of dividing the profits among themselves. Lastly, a corporation is an
artificial being created by operation of law, having the right of succession and the
powers, attributes, and properties expressly authorized by law or incident to its existence.
Davao PET Flakes Processing Plant will be a partnership form of business
organization. The advantages of a partnership is that, compared to sole proprietorship, it
brings greater financial capability to the business due to personal credit of the partners,
combines special skills, expertise and experience of the partners and makes possible a
closer supervision of all its activities through the participation in the business by more
than one person. Moreover, it is easier and less expensive to organize as it is formed by a
simple contract between two or more persons than a corporation, and it has no limitation
as to its duration.
The partners will contribute money as an investment which will be used in the
conduct of business. The capital will be utilized in the obtainment of land, construction of
the processing plant, utilities expenses, salaries for employees and other expenses related
to operation of business.

219 | P a g e

6.3 Organizational Chart


Figure 6.3.1 Organizational Chart

6.4 Officers and Key Personnel


The organizational structure is composed of the following:

Partners They are the parties to an arrangement who contribute resources to a common
fund and divide the profits among themselves. They provide the necessary capital for the
business to operate.

Internal Auditor An employee of a company charged with providing independent and


objective evaluations of the company's financial and operational business activities,
including its corporate governance. Internal auditors also provide evaluations of

220 | P a g e

operational efficiency and will usually report to the highest levels of management on how
to improve the overall structure and practices of the company.34

Managing Partner The managing partner is one of the partners who contribute his skills
to the partnership. He is assigned to handle the companys overall activities and
responsible for the companys overall well-being.

Treasurer The treasurer performs custodial responsibilities of the financial assets of the
business especially cash. He is tasked to perform liquidity risk management and proper
cash management. He also signs the checks for disbursement.
Cash Disbursement Officer This person prepares the cash disbursement check to
be given to the suppliers and inputs payment detail in the check register.

Human Resource Officer Assigned to hire competent and highly qualified employees,
he also updates personnel information and status.

Accounting:
Payroll / Cash Receipts Officer He will prepare the payroll schedule of the
company and he will also record the companys receipt of cash from suppliers in
the cash receipts journal.
Cost Accountant He is assigned to update work in process account, prepares
product cost schedule and allocates cost. Investigates variances and resolve issues
related to production.
34http://www.investopedia.com/terms/i/internalauditor.asp

221 | P a g e

Bookkeeper He records the day-to-day financial transactions of the


business. A bookkeeper is usually responsible for writing the "daybooks". The
daybooks consist of purchases, sales, receipts, and payments. The bookkeeper is
responsible for ensuring all transactions are recorded in the correct day book,
suppliers ledger, customer ledger and general ledger.35 The business will hire two
(2) bookkeepers, one for the subsidiary ledgers and one for the general ledger.
The person assigned in the general ledger is the General Accountant.
Customer Remittance / Billing Officer Assigned to make remittance list and
records sales in the sales journal.

Marketing Analyst He is tasked to handle the website of the business and ensure that
supplier and customer relationships are properly taken care of because most of the
communication and contacting are done online. He will also handle all the marketing and
promotional activities of the business.

Operations Manager The operations manager handles the day to day operations in the
plant. He is assigned to manage and supervise the following:
Plant Workers This is composed of ten (10) workers and two (2) maintenance
personnel. They perform the day to day activities of the business.
Sales Order/Purchase Order Prepares sales orders from customers and purchase
orders to suppliers.

35http://en.wikipedia.org/wiki/Bookkeeping

222 | P a g e

Receiving / Shipping Officer Assigned to check the the quantity and quality of
raw materials during the procurement procedure. He is also assigned to supervise
and ensure the quantity and quality of the finished products to be shipped to
customers.

Inventory/Supply Analyst He will ensure that there is enough supply of raw materials
and other supplies needed for production and operation. Performs inventory check and
purchase requisition.

Quality Assurance Personnel This employee is assigned to perform procedures to


ensure the quality of the finished products. His task focuses on quality assessment.

223 | P a g e

6.5 Project Schedule


Table 6.5.1 Planned Schedule
PLANNED ACTIVITY
Identify the business venture
Study the Demand and Supply of
the Business

DATE OF EXECUTION
July 22-27, 2014
July 28, 2014 August 10, 2014

TIME DURATION
One week
Two weeks

Choose an appropriate location

August 11-17, 2014

One week

August 11, 2014 September 7,


2014

Four Weeks

Identify the source of financing

August 11-17, 2014

One week

Choose business name

August 4-9, 2014

One week

Presentation of the Project


Proposal

September 15-30, 2014

Two weeks

Finalization of the project


proposal

October 1-31, 2014

One month

Signing of contract with the


building contractor

November 4-8, 2014

One week

Filing of documents necessary


for the business registration,
land purchase and building
construction

November 8, 2014 December


8, 2014

One month

Land Clearing

December 8-13, 2014

One week

Make an estimate for the


following:
Land
Building
Equipments
Building Construction
Equipment Installation
Furniture and Fixtures Needed
Business Licenses and
Registration Fees
Labor Cost
Utilities Cost
Product Costing

224 | P a g e

Construction of Building

December 15, 2014 June 15,


2015

Six months

June 15 August 15, 2015

Two months

Installation of equipments,
furniture and fixtures

August 17-22, 2015

One week

Testing of machines and


equipments

August 24 2015 September 6,


2015

Two Weeks

Website designing and creation

August 24, 2015 September 12,


2015

Three weeks

Hiring of employees

September 14 September 30,


2015
October 1-13, 2015

Two weeks

Promotion of Business and its


product

October 13 December 15, 2015

Two month

Contact Suppliers for Raw


Materials

Decemberr 15 31, 2015

Two weeks

Purchasing of Raw Materials for


Stock

January 4 29, 2016

One month

Start of Operations

February 1, 2016

Acquiring equipments, furniture


and fixtures and necessary
supplies

Employee Training and Seminar

225 | P a g e

Two weeks

Figure 6.5.1 Project Schedule

226 | P a g e

Chapter 7 Recommendation
Based on the discussions between the proponents and the panel lists during the project
presentation, the recommendation below is worthy to mention.

Since the utilization rate of the machine used for producing the end products only has an
average of 43%, it will be an indication of an inefficiency of the companys production.
In order to remedy this problem, the partnership will consider initiating programs and
activities for schools, malls, hospitals, and other institutions within Davao City that will
enable the company to get PET Bottles from them in addition to the inventories provided
by the current suppliers. Example of these activities include:
Giving of freebies in exchange of PET Bottles
Coordinate with environmental organizations or clubs of universities, like
ECOTENISTA, Nature Watch, and YES-O.

Research further for the supply and demand part due to probability that the reason why
there is an excess demand for PET flakes is because there is a lack of raw materials (PET
bottles).

To provide a better projection of financial statements, the partnership should extend their
data gathering regarding the suppliers of raw materials. As a result of the increase of
supply, the company can then respond to the demand of PET flakes. Also, will be a
further increase of utilization rate of the machine thereby increasing the financial status
of the business and earlier recovery of the 24,000,000 Php initial investment

227 | P a g e

Appendices
Appendix A: List of Suppliers

Company
Name

Business Type

Location
Main
Products:
Size (based
on):
Annual
Revenue (in
US dollars)
Annual
Revenue (in
Philippine
pesos)
Number of
Employees
Main Markets

Product
Quality
Selling Price:
Min Order
unit price (US
$/ton)
unit price
(Php/ton)
supply ability
(tons/year)
Reference

228 | P a g e

1
Beijing Ou
Yuan Sheng Fa
Plastic
Products Co.,
Ltd.
Manufacturing,
Trading
Company
Beijing, China
-

CHINA
2
3
Shijiazhuang
Shijiazhuang
Aojie Trading
Refining and
Co., Ltd.
Plastic Trading
Co., Ltd.

4
Lanzhou
Qianmiaonuo
Trading Co.,
Ltd.

Manufacturing,
Trading
Company
Heibei, China
-

Manufacturer

Trading

Hebei, China

Gansu, China

10-50 Million

50-100 Million

441-2,207
Million

2,207-4,415
Million

51-200

5-50

North America,
South America,
Eastern
Europe,
Southeast Asia,
Africa,
Oceania, Mid
East, Eastern
Asia, Western
Europe
fibre-grade

Europe, Africa,
the Middle
East, Southeast
Asia and
Russia

global

fibre-grade

fibre-grade

1 ton

1 ton

20 tons

1,500

850

960

1,117.00

66,626

37,754

42,380

49,312.20

http://sjzaojie.en.m
ade-inchina.com/product/
lSfxWXhThYkC/C
hina-Hot-SellingCheap-Clean-andTransparent-PetFlakes.html

http://lianhuasuliao
.en.made-inchina.com/product/
HqDmhLnEIsRY/
China-The-FlakesPet.html

http://qianmiaonuo.
en.made-inchina.com/product/
gvrQKnDYuuVm/
China-Pet-ChipsPet-Flakes-forBottle-Sheet-FilmFiber-Textile.html

5-50
-

fibre-grade

5 tons ;
20 tons
1,150;
1,125
51,080;
49,970

http://ouyuansheng
fa.en.made-in
china.com/product/
gSJQiutxmphV/Ch
ina-Pet-ScrapFlakes.html

Europe,
Africa, Middle
East,
Southeast Asia

Company
Name
Business Type

Location
Main
Products:

Size (based
on):
Annual
Revenue (in
US dollars)
Annual
Revenue (in
Philippine
pesos)
Number of
Employees
Main Markets

Product
Quality
Selling Price:
Min Order
unit price (US
$/ton)
unit price
(Php/ton)
supply ability
(tons/year)
Reference

229 | P a g e

5
Sharath
Corporation
LTD.
Manufacturer,
Trading
Company,
Agent
Bangladesh

BANGLADESH
6
7
Interlink PLC
Moonlight PET
Flakes
Industris
Manufacturer,
Manufacturer
Trading
Company

8
Bangladesh
Recycling Ind.
Ltd.
Trading
Company,
Distributor/Wh
olesaler
Bangladesh

Dhaka,
Bangladesh
Textile
Waste,PET Fla
kes,Nylon
Waste

Bangladesh
waste pet bottle
flakes clear
green and
brown

PET FLAKES,
PET BOTTLE,
POTATO

1-2.5 Million

1-2.5 Million

1-2.5 Million

100 Million
Above

44-111 Million

44-111 Million

44-111 Million

4,415 Million
Above

101 - 200

51 - 100

101 - 200

11-50

Southern
Europe,
Northern
Europe,
Central
America,
Western
Europe,
Eastern Asia
fibre-grade

Eastern Asia,
Southeast Asia

Eastern Asia,
Southeast Asia

Eastern Asia,
Southeast Asia

fibre-grade

fibre-grade

fibre-grade

11 tons
850

25 tons
925

44 tons
800

42 tons
950

881.25

37,754

40,836

35,318

41,940

38,904.54

Leather,Leathe
r
Product,Rubber
& Rubber
Product,Pet
Flakes,Apparel
s

1200

1200

4800

2520

http://www.alibaba
.com/productdetail/Pet-FlakesClearColour_131091308
.html

http://www.alibaba
.com/productdetail/PET-FlakesClear-Color-HotWashed_14900087
6.html

http://bd11580215
8.fm.alibaba.com/c
ompany_profile.ht
ml#top-nav-bar

Eastern Asia,
Southeast Asia

Company
Name
Business
Type
Location
Main
Products:

Size (based
on):
Annual
Revenue (in
US dollars)
Annual
Revenue (in
Philippine
pesos)
Number of
Employees
Main
Markets

Product
Quality
Selling
Price:
Min Order
unit price
(US $/ton)
unit price
(Php/ton)
supply
ability
(tons/year)
Reference

230 | P a g e

9
Noman
International
Manufacturer

Pakistan
Pet Flakes,Pet
Flakes Clear /
White,Pet
Flakes
Green,Pet
Flakes Light
Blue

PAKISTAN
10
11
MUSAAB MOOSA
KHURSHEED
ENTERPRISES
International
Manufacturer, Trading Manufacturer
Company,
Distributor/Wholesaler
Pakistan
Pakistan
PET FLAKES,PET
White Clear Pet
FLAKES CLEAR
flakes
COLOUR,PC CD /
DVD SCRAP,PET
SETRIPE CHOPPED
GREEN
COLOUR,PET
FLAKES GREEN

12
A.R.IMPEX
Manufacturer,
Buying Office,
Agent
Pakistan
WHITE PET
FLAKES,GRE
EN PET
FLAKES,WHI
TE POP
CORN,BLACK
POP CORN

1-2.5 Million

5-10 Million

44-111 Million

222-444 Million

51 - 100

51 - 100

Eastern Asia,
Mid East

North America,South
America,Eastern
Europe,Southeast
Asia,Africa,Mid
East,Eastern
Asia,Western
Europe,Central
America,Northern
Europe,
Southern Europe
fibre-grade

fibre-grade

11-50
Eastern
Asia,
Middle
East

fibre-grade

fibre-grade

50 tons
815

20 tons
925

20 tons
775

25 tons
740

813.75

35,980

40,836

34,214

32,669

35,925

2400

6000

9600

6000

http://nomanintl.tr
ustpass.alibaba.co
m/company_profil
e.html#top-nav-bar

http://www.alibaba.com/prod
uct-detail/Pakistan-MMECold-Washed-PETFlakes_125169646.html

http://www.alibaba.c
om/productdetail/PetFlakes_169221735.h
tml

http://pk102304495
6.trustpass.alibaba.c
om/company_profil
e.html#top-nav-bar

INDIA
13
14
Dee Tee Industries Ltd.
APTEXIM

Bhuvani Exports

Location

Manufacturer / Exporters
/ Wholesale Suppliers
India

India

Manufacturer / Exporters
/ Wholesale Suppliers
India

Main Products:

metals, tools, pet


-

350 - 400

Main Markets

Worldwide

worldwide

Product Quality

fibre-grade

fibre-grade

fibre-grade

Selling Price:
Min Order

5 tons

50 tons

unit price (US $/ton)

940

860

unit price (Php/ton)

41,498.18

37,966.42

2400

12000

Company Name
Business Type

Size (based on):


Annual Revenue (in US
dollars)
Annual Revenue (in
Philippine pesos)
Number of Employees

supply ability (tons/year)


Reference

231 | P a g e

http://www.exportersindia.com
/deetee__industries/products.ht
m

Company
Name

16
Bluemax
Tradelink Inc.

Business Type

Manufacturer,
Distributor/Wh
olesaler, Other

Location

MAKATI ,
Philippines

Main
Products:

Reclamation
Sand,Construct
ion
Sand,Magnetite
Iron
Sand,Mangane
se Ore,Coconut
Shell Charcoal

Size (based
on):
Annual
Revenue (in
US dollars)
Annual
Revenue (in
Philippine
pesos)
Number of
Employees
Main Markets

Product
Quality
Selling Price:
Min Order
unit price (US
$/ton)
unit price
(Php/ton)
supply ability
(tons/year)
Reference

232 | P a g e

PHILIPPINES
17
18
JJ&P
JJ&P
Commodities
Commodities
Corporation
Corporation
Manufacturer,
Agent

S Bautista,
Valenzuela
City,
Philippines
Pet Flakes,PET
Recycled
Plastics,PE
Flakes,Mixed
PP & PE
plastic

19
Evolution
Resources Inc,
Manufacturer

Manila,
Philippines

20
C&N Metals
and Minerals
Trading Co.
Trading
Company,
Buying Office,
Agent
Quezon City,
Philippines

Iron Ore, Iron


Concentrate,
Iron Sand,
Minerals

Wire
Rods,Steel
Plate,Reinforce
ment Bar,Ferro
Alloys,CRCHRC

1 Million

5-10 Million

44 Million

222-444
Million

101 - 200

11-50

5-10

Southeast Asia

Southeast Asia

fibre-grade

fibre-grade

fibre-grade

fibre-grade

Mid East,
Southern
Europe,
Southeast Asia,
Eastern Asia,
Sou
fibre-grade

18 tons
1200

24 tons
-

25 tons
-

75 tons
-

50 tons
790

52,976

34,876

1200

4800

2400

19200

http://ph10429772
7.trustpass.alibaba.
com/company_prof
ile.html#top-navbar

http://www.alibaba
.com/productdetail/PetRecycledFlakes_101360777.
html

http://www.alibaba
.com/productdetail/RecycledGreen-PET-plasticscrap_164396533.h
tml

http://www.alibaba
.com/productdetail/PET-BottleFlakes_120636795.
html

http://ae100517304
.fm.alibaba.com/

PHILIPPINES
21

22

23

24

Company Name

Ameripil Industry

Demsol Plastic
Manufacturing

Brenwin enterprises
corporation

Innovo Plastics

Business Type

Manufacturer,
Trading Company

Manufacturer

Trading Company

Manufacturer, other

Location

Calamba,
Philippines

marikina,
Philippines

Manila, Philippines

Main Products:

PP

PET plastic bottle


waste,PET
crushed,Straw,Twin
es

PET FLAKES

Pet flakes, PE & PP


flakes, Pet rubber,
Scrap rubber, Scrap
tires,

Annual Revenue (in


US dollars)

Annual Revenue (in


Philippine pesos)

Number of
Employees

51-100

Main Markets
Product Quality

fibre-grade

fibre-grade

fibre-grade

fibre-grade

Size (based on):

Selling Price:
Min Order

15 tons

20 tons

100 tons

unit price (US


$/ton)

unit price (Php/ton)

supply ability
(tons/year)

480

1200

http://ph1020709014.fm.
alibaba.com/

http://www.alibaba.com/
product-detail/PETplastic-Bottle-wastePETcrushed_126789914.htm
l

http://www.alibaba.com/
product-detail/PETFLAKES_116191898.ht
ml

Reference

233 | P a g e

1400

http://www.alibaba.com/
product-detail/scrapplastics-and-scraprubber_101557352.html

Appendix B: List of Buyers


1
Fujian
Minrui
Chemical
Fibre
Co.,Ltd

2
Zhejiang
Jiali
Renewable
Resources
Co., Ltd

Business
Type
Location

Manufacturing

Manufacturing

Fujian,
China

CNF,
Shanghai

Main
Products:
Size (based
on):
Annual
Turnover
Number of
Employees
Main
Markets
Product
Quality
Selling
Price:
Min Order
(tons)
Annual
Purchase
Volume
Unit Price
Reference

PET Fibre

Company
Name

234 | P a g e

CHINA
3
D.K.INTER
NATIONAL
COMPANY

4
Shanghai
clean
technology
co., LTD.

5
W.W
Textile

6
PET Flakes
Genius
Group

Manufacturing

Manufacturer

Manufacturer

Manufacturer

Shanghai
port, China

Shanghai,
China

Shanhai,
China

Mazhen
Industrial
Zone
Wuxi,
Anhui,
21000
China

PET Fibre

PET Fibre

30,000 Tons

18,000 Tons

$800/MT

$750/MT

http://www.petflakespsf.com/?gclid=
CMvKpYryrcA
CFZcDvAoda3
kANg

http://www.2wt
extile.com/Imp
ort.htm

Fibre

Clear
Colored

Clear
colored

24,000 Tons

15,600 Tons

6,00012,000 Tons

http://importer.
ec21.com/buy_l
ead/Buy_PET_
Flake-23639026.html

http://www.rec
yclechina.com/l
eads/details803
84.htm

http://importer.
ec21.com/buy_l
ead/Buy_PET_
Flakes-23490861.html

96,000 Tons

http://www.fuzi
ng.com/vli/001
458c42250/PET
-Flakes

KOREA

RUSSIA

7
Steve Hong

8
Optuniversal
Llc

Business
Type
Location

Manufacturin
g
Busan, Korea

Main
Products:
Size (based
on):
Annual
Turnover
Number of
Employees
Main Markets

PET Fibre

Product
Quality
Selling Price:
Min Order
(tons)
Annual
Purchase
Volume
Unit Price

Fibre

Reference

http://importer.ec
21.com/buy_lead/
Buy_PET_Flakes
--23656299.html

Company
Name

235 | P a g e

HONGKONG

USA

INDIA

10

N/A

N/A

11
Rushabh
International

12
Zen Fasteners

Manufacturer

Manufacturer

Manufacturer

Russia

Hongkong

Manufactur
er
Flowery
Branch
Georgia,
USA

Trading
Company
Delhi, India

India

5-50

3,600 Tons

6,000 Tons

http://europe.bloo
mbiz.com/default
.cgi/action/viewc
ompanies/compa
nyid/992656/

Clear, White
PET

Clear,
White PET

Clear, White
PET

2,400 Tons

432 Tons

600 Tons

US $991 / MT

US $1212 /
Metric Ton

http://www.recycle.
net/cgibin/exview.cgi?item
=LW1100258&w=0
1

http://www.rec
ycle.net/cgibin/exview.cgi
?item=LW110
1102&w=01

$600-700/
Ton

http://globalbuyer
sonline.com/trade
leads/details.asp?
xpyr=702341&ob
j=SGDFGDFUJJ
453BJHJ34JVBJ
BJ234BJ5H

http://www.recycl
einme.com/rimzenfast19/buyoffe
r-23819.aspx

Appendix C: Survey Form

Appendix D: Survey Results

Name

Location

Selling Price /
Kilograms

MAA Junkshop
BCA-A
Junkshop

Ma-a
Ma-a

18.00

230

Dom's Junkshop

Ma-a
Cabaguio, Agdao
Proper
Brgy. Gov.
Vicente Duterte,
R.Castillo High
way Agdao

17.00

150

20.00

167.5

Rosita Junkshop

Mookey Metal
Supply
Kobe Junkshop
Marky Junkshop
Esben Junkshop

Nieves Junkshop
BCY Junkshop

236 | P a g e

13.00

Kilograms of
PET bottles
sold per week
31.25

125 kilograms/ month


450-470 kilograms/ 2
weeks
300 kilograms/ 2
weeks
335 kilograms/ 2
weeks

Willing to
Sell for a
higher
price?
yes
yes
yes
yes

1,800-2,200
kilograms/ 2 weeks
18.00

1,000

Agdao
Erlinda St.
Landmark

18.00

3,250

22.00

166.67

Km. 13 Panacan
Km. 13 North
Diversion Road
Panacan

17.00

400

Km. 13 Panacan

Collection/ selling
period

18.00
19.00

1,000
1,250

yes
1,300 kilograms/ 2-3
times a week
2,000 kilograms/ 3
months
1,600 kilograms/
month
2,000 kilograms/ 2
weeks
1,200-1,300
kilograms/ week

yes
yes
yes

yes
yes

Distance of Samples from Malagamot Road

Distance of Population From Malagamot Road

237 | P a g e

Appendix E: Philhealth Contribution Table

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Appendix F: SSS Contribution Table

239 | P a g e

Appendix G: Withholding Tax Table

Appendix H: Payroll Schedule

240 | P a g e

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Appendix I: Data Gathered from Bureau of Customs

242 | P a g e

243 | P a g e

244 | P a g e

245 | P a g e

246 | P a g e

Appendix J: Data Gathered from Business Bureau

247 | P a g e

248 | P a g e

249 | P a g e

250 | P a g e

Appendix K: Pro-forma Articles of Partnership


Articles of Partnership
Of
_________________________________
KNOW ALL MEN BY THESE PRESENTS:
That, we the undersigned, all of legal age and residents of the Republic of the Philippines
have agreed to amend a general partnership under the terms and conditions herein after set forth
and subject to the provisions of existing laws of the Republic of the Philippines.
AND WE HEREBY CERTIFY:

ARTICLE I. That the name of the partnership shall be


________________________________________

ARTICLE II. That the principal office of the


located__________________________________________________.

Partnership

shall

be

ARTICLE III . That the names, citizenship and residence of the partners of the said
partnership are as follows.
Name

Citizenship

Residence

_______________

___________

__________________________

_______________

___________

__________________________

_______________

___________

__________________________

ARTICLE IV. That the term for which said partnership is to exist is _______
(___) years from the original recording of the said partnership by the Securities and Exchange
Commission.

251 | P a g e

ARTICLE V. That the purposes for which said partnership is formed are as follows:

ARTICLE VI. That the capital of this partnership shall be One Hundred Thousand
Pesos, Philippine Currency contributed in cash by the partners as follws:
Name

Amount Contributed

__________________________
__________________________
__________________________
TOTAL

__________________
__________________
__________________

That no transfer which will reduce the ownership of Filipino citizens to less than the
recquired percentage of capital shall be recorded in the proper books of the partnership;
ARTICLE VII. That the profits and losses shall be divided pro-rata among the partners;
ARTICLE VII. That the firm shall be under the management of
_____________________________________as General Manager and as such he/she shall have
charge of the management of the affairs of the partnership.
ARTICLE IX. That the partners undertake to change the name of the partnership
immediately upon receipt of notice or directive from the Securities and Exchange Commission
that another partnership, corporation or person has acquired a prior right to the use of that name
or that the name has been declared misleading, deceptive, confusingly similar to a registered
name, or contrary to public morals, good customs or public policy .
IN WITNESS WHEREOF, we have hereunto set our hands this ________ day of
_______ 2014 at ______________, Philippines.

_________________________
TIN

_______________________
TIN

Singed in the presence of:


_____________________

________________________

ACKNOWLEDGEMENT

Republic of the Philippines}


S.S.
}
BEFORE ME, a Notary Public for and in ______________________
Philippines, this _____________ of _________, personally came and appeared the following
persons with their Community Tax Certificates as follows:
Name

CTC. #

Date/Place Issued

Known to me and to me known to be the same persons who executed the Foregoing
Articles of Partnership, and they acknowledged to me that the same is their voluntary act and
deed.
WITNESS MY HAND AND SEAL on the date first above written.

253 | P a g e

Appendix L: Registration Permits and Fees36


Property Registration Permits and Fees
Notarized Deed of Sale (3% of Property Value)

330,000.00

120.00
50.00
115.00

Copy of tax declaration and certificate of with improvement from CAO


Tax Clearance Certificate of RPT from CTO
Certificate Authorizing Registration from BIR
Transfer Tax ( 0.8% of Property's value)

40,000.00
48,000.00

Land
Building

88,000.00

Registration at Register of Deeds


Registration Fee
Legal Research Fee (1% of Registration Fee)
Judicial Form Fee
IT Fee
Primary Entry Fee
Registration Fee for Specific Documents
Fixed Entry Fee for Specific Documents
Legal Research Fee for Specific Documents
Annotation Fee
Fee for issuance of new transfer certificate of title

50,646.00
507.00
30.00
2,688.00
330.00
600.00
150.00
50.00
60.00
258.00

Total Registration Fees

55,319.00
473,604.00

(Land and Building Assets are subject to this amount, which are already included in their costs.)
Construction-Related Permits and Fees
Obtain Lot plan with site map
Notarized the locational clearance application form
Obtain Locational clearance from CPDO ( P1.5 per square meter + P300)
Fire Safety Evaluation Clearance ( 0.1% of estimated project cost)
Building Permit
Validation from CPDO Zoning Administrator
Certificate of Occupancy
Fire Safety Inspection Certificate
Application for Water Connection
Total Construction-Related Fees

(This amount is part of the Building Cost)

36

The World Bank Group, Doing Business in the Philippines, Davao City, 2014

254 | P a g e

500.00
100.00
2,400.00
63,500.00
37,400.00
75.00
5,548.00
555.00
3,000.00
113,078.00

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