Chapter V

Financial Aspect

5.1 Total Project Cost

START-UP ASSET SCHEDULE

SHORTERM ASSETS
*Start-up Cash Requirement ₱ 243,181.38
₱
SUBTOTAL 243,181.38
CAPITAL ASSETS
Tools, Machineries and Equipment 44,860.00
Furniture and Fixtures 7,000.00
Other Assets 10,000.00
Turmeric Rhizome 60,000.00
Building 545,625.00
Land 1,905,000.00
Service Vehicle 250,000.00

SUBTOTAL 2,822,485.00
₱
TOTAL PROJECT COST 3,065,666.38

Note:

Start-up cash requirement includes: Organizational Cost, Initial Salaries and

Wages Payments, other necessary expenses at the start of the business and other
start-up costs.

5.2 Source of Initial Investment

The Niñas Turmeric Farm would be a Sole Proprietorship form of business.

The source of initial investment of the proposed business will come from the

owner’s investment.
5.3 Business Assumption

1. The total project cost amounts to ₱3,065,666.38

2. The owner’s initial investment amounts to ₱3,500,000.00

3. It is assumed that Turmeric Crops is suitable to the land.

4. Land, building, machineries and equipment, service vehicle, and furniture

and fixtures will be acquired on a cash basis at the first year of operation.

5. Sales annually are equal to the actual supply of VI Ninas Turmeric Farm.

6. Sales are made in cash basis. No sales return and discounts will be allowed.

7. The harvesting of fresh turmeric is after 10 to 12 months after planting. It is

projected that the harvest will only take place when there is a contract buyer.

8. The planting of turmeric crops will be every after harvest.

9. Purchases will increase by 3% per annum.

10. Overhead cost will increase by 25% per annum.

11. Utilities expense will increase by 2% per annum.

12. It is assumed that salaries will increase 3% each year. Salaries are in net

pay.

13. The salvage value of property, plant and equipment is estimated at 3%.

14. The cost of office supplies will increase by 3% annually.

15. On the first year of operation only farm manager, agriculturist, field workers

and bookkeeper will work.\

16. Withdrawal is ₱100,000 per annum.\

17. The income tax rate is 8% and it is payable at the end of the year.
5.4 Forecasted Financial Statements

5.4.1 Income Statement

NIÑAS TURMERIC FARM

Statement of Financial Performance
As of end of December 31, 2022

NOTES YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

₱ ₱ ₱ ₱ ₱
Sales Revenue (1) 1,500,000.00 2,362,500.00 2,480,625.00 2,604,656.25 2,734,889.06
Less:
₱ ₱ ₱ ₱ ₱
Permits and Licenses (2) 15,677.50 15,834.28 15,992.62 16,152.54 16,314.07

Advertising Expense (3) 3,600.00 3,672.00 3,745.44 3,820.35 3,896.76

Office Supplies
Expense (4) 2,070.00 2,111.40 2,153.63 2,196.70 2,240.63
Utilities Supplies
Expense (5) 1,445.00 1,473.90 1,503.38 1,533.45 1,564.11

Salaries and Wages (6) 470,780.00 480,195.60 489,799.51 499,595.50 509,587.41

Contributions (7) 47,400.12 47,400.12 47,400.12 47,400.12 47,400.12

 Utilities Expense (8) 206,388.00 210,515.76 214,726.08 219,020.60 223,401.01

Depreciation (9) 48,724.00 48,724.00 48,724.00 48,724.00 48,724.00

EBIT 796,084.62 809,927.06 824,044.77 838,443.26 853,128.12

Less:

Tax due 100,000.00 169,000.00 178,450.00 188,372.50 198,791.13

₱ ₱ ₱ ₱ ₱
NET FARM INCOME 603,915.38 1,383,572.95 1,478,130.23 1,577,840.49 1,682,969.82

*This Financial Statement requires to be read with the accompanying notes

5.4.2 Statement of Financial position

NIÑAS TURMERIC FARM

Statement of Financial Position
As of end of December 31, 2022

ASSETS
NOTES YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
CURRENT ASSETS
Cash & Cash ₱ ₱ ₱ ₱ ₱
(10)
Equivalents 512,688.45 907,127.04 1,260,927.09 1,635,141.68 2,030,878.27
TOTAL CURRENT
ASSETS 512,688.45 907,127.04 1,260,927.09 1,635,141.68 2,030,878.27

NON CURRENT ASSETS

Property Plant and
(11)
Equipment (net) 2,773,761.00 2,725,037.00 2,676,313.00 2,627,589.00 2,578,865.00
TOTAL NON CURRENT
ASSETS 2,773,761.00 2,725,037.00 2,676,313.00 2,627,589.00 2,578,865.00
₱ ₱ ₱ ₱ ₱
TOTAL ASSETS 3,286,449.45 3,632,164.04 3,937,240.09 4,262,730.68 4,609,743.27

LIABILITIES & EQUITY

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
CURRENT LIABILITIES
 ₱ ₱ ₱ ₱ ₱
Tax Payable 100,000.00 169,000.00 178,450.00 188,372.50 198,791.13
TOTAL CURRENT
LIABILITIES 100,000.00 169,000.00 178,450.00 188,372.50 198,791.13
₱ ₱ ₱ ₱ ₱
TOTAL LIABILITIES 100,000.00 169,000.00 178,450.00 188,372.50 198,791.13

OWNERS' EQUITY (12)

₱ ₱ ₱ ₱ ₱
OWNER'S CAPITAL 3,186,449.45 3,463,164.04 3,758,790.09 4,074,358.18 4,410,952.15
TOTAL PARTNERS'
EQUITY 3,186,449.45 3,463,164.04 3,758,790.09 4,074,358.18 4,410,952.15
TOTAL LIABILITIES & ₱ ₱ ₱ ₱ ₱
EQUITY 3,286,449.45 3,632,164.04 3,937,240.09 4,262,730.68 4,609,743.27

- - - - -

*This Financial Statement requires to be read with the accompanying notes

5.4.3 Cash Flow

NIÑAS TURMERIC FARM

Statement of Cash Flows
As of end of December 31, 2022

YEAR
ACTIVITIES/PARTICULARS
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
CASH FLOW FROM ACTIVITIES
Net Income ₱ 603,915.38 ₱ 1,383,572.95 ₱ 1,478,130.23 ₱ 1,577,840.49 ₱ 1,682,969.82
Adjustments/Reconciling Items
Depreciation Expense 48,724.00 48,724.00 48,724.00 48,724.00 48,724.00
Increase/(Decrease) in Tax
Payable 100,000.00 69,000.00 9,450.00 9,922.50 10,418.63
NET CASH FLOW FROM OPERATING
ACTIVITIES
752,639.38 1,501,296.95 1,536,304.23 1,636,486.99 1,742,112.45

CASH FLOW FROM INVESTING

ACTIVITIES
Purchase of PPE AND OTHER
ASSETS (2,822,485.00) - - - -
NET CASH FLOW FROM INVESTING
ACTIVITIES
(2,822,485.00) - - - -

CASH FLOW FROM FINANCING

ACTIVITIES

Capital Investment of Owner 3,065,666.38 - - - -

 Capital Withdrawal of Owner (483,132.30) (1,106,858.36) (1,182,504.18) (1,262,272.39) (1,346,375.86)
NET CASH FLOW FROM FINANCING
ACTIVITIES 2,582,534.07 - 1,106,858.36 - 1,182,504.18 - 1,262,272.39 - 1,346,375.86

NET CASH FLOW ₱ 512,688.45 ₱ 394,438.59 ₱ 353,800.05 ₱ 374,214.60 ₱ 395,736.59

Add: Cash balance, Beginning 512,688.45 907,127.04 1,260,927.09 1,635,141.68
Cash balance, Ending ₱ 512,688.45 ₱ 907,127.04 ₱ 1,260,927.09 ₱ 1,635,141.68 ₱ 2,030,878.27

5.4.4 Statement of Changes in Equity

NIÑAS TURMERIC FARM

Statement of Changes in Partners' Equity
As of end of December 31, 2022

PARTICULARS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

 ₱ ₱ ₱ ₱ ₱
Owner's Capital, Beg 3,065,666.38 3,186,449.45 3,463,164.04 3,758,790.09 4,074,358.18
Add:
Net Income for
the Year 603,915.38 1,383,572.95 1,478,130.23 1,577,840.49 1,682,969.82
Less:
Owner's
Withdrawals (483,132.30) (1,106,858.36) (1,182,504.18) (1,262,272.39) (1,346,375.86)
₱ ₱ ₱ ₱ ₱
OWNER'S CAPITAL, END 3,186,449.45 3,463,164.04 3,758,790.09 4,074,358.18 4,410,952.15
5.5 Financial Statement Analysis

NO FINANCIAL
. RATIOS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 AVERAGE

1 Working Capital 412,688.45 738,127.04 1,082,477.09 1,446,769.18 1,832,087.15 1,102,429.78

2 Current Ratio 5.13 5.37 7.07 8.68 10.22 7.29

3 Acid Test Ratio 5.13 5.37 7.07 8.68 10.22 7.29

4 Net Profit Margin 40% 59% 60% 61% 62% 56%
Return on
5 Investment 18% 40% 40% 40% 39% 35%
5.5.1 Working Capital

5.5.2 Net Profit Margin

5.5.3 Return of Investment

5.5.4 Payback Period