JMJ Marist Brothers

Notre Dame of Marbel University

Integrated Basic Education Department
Senior High School

BUSINESS PLAN

DURABAM COMPANY

SPORTS COMPLEX, ALUNAN AVENUE, KORONADAL CITY

SOUTH COTABATO, PHILIPPINES
WWW.DURABAMCOMP.COM.PH

In Partial Fullfillment of the Entrepreneurial Management

Presented by:

BAIRA, ALLIAH MARI P.

BINAS, DORESH JEAN G.
CASTOR, E.J.MITCH C.
NONO, ROSEMARIE G.
SALIBONGCOGON, ADA GRACE Q

March 2018
 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Acknowledgement

To the people who never leave and helped we reach these accomplishments,
a great thanks to all of you.
We entrepreneurs would love to extend our gratitude to our loving families for
believing in us, for being understanding and for being supportive physically,
emotionally and financially.
To Mr Kenneth Clint Bajade for being a good teacher who helped us finish
and experience how to make a business plan that could be a good help in our
future.
To our classmates, ABM 1 for answering all our questions when sometimes
we are not up to date and for reminding us the task we need to pass and also for
cheering us when there are times that we are so down.
To our Almighty God for guiding and giving us unlimited hopes whenever we
are tired of works, for enlightening us when we sometimes experience giving up
and for always be there by our side.
Thank you and God bless always.
 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

TABLE OF CONTENTS

Preliminaries Page
Title Page ……………………………………………………......... i
Acknowledgement ……………………………………………………... ii
Executive summary……………………………………………………... iii
Table of Contents ……………………………………………………... ix
List of Tables ……………………………………………………... x
List of Figures ………………………………………………………….. xi
List of Appendices ……………………………………………………... xii
Chapter I-Marketing Plan
Description of the product ……………………………………………… 1
Market……………………..……………………………………………… 2
Market Area……………….…………………………………………….... 2
Total Demand ………. ...……………………………………………… 3
Demand Analysis ………………………………………………………. 4
Supply Analysis ………………………………………………………….. 4
Market Share ……………………………………………………………. 5
Selling Price ……………………………………………………………. 5
Promotional Measures …………………………………………………. 6
Promotional Budget …………………………………………………… 6
Competition ……………………………………………………………. 6
Sales Forecast ………………………………………………………… 7
Chapter II-Production Plan
Production Process ……………………….……………………………. 8
Fixed Capital …………..……………………………………………… 8
Planned Capacity ….……………………………………………… 9
 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Future Capacity ………………………………………………………... 10

Location and Layout …………………………………………………… 11
Raw materials and supplies ………………………………………….. 12
Labor …………………………………………………………………….. 12
Factory/Overhead expenses …………………………………………. 13
Production Cost ……………………………………………………….. 14
Chapter III-Organization and Management Plan
Form of Business Ownership ………………………………………… 15
Liability of the Owners ………………………………………………… 15
Organization Structure ………………………………………………… 15
Key Officers and Personnel .......................................................... 16
Pre-operating activities ……………………………………………….. 16
Pre- operating expenses ……………………………………………… 17
Chapter IV-Financial Plan
Total Project Cost …………………………………………………… 18
Sources of Financing ……………………………………………... 18
Financial Statements ………………………………………………….. 19
Financial Analysis ………...…………………………………………… 24
Appendices ……………………………………………………………. 25
Biography ……………………………………………………………… 30

List of Tables
 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

No. Title Page

1 List of Target Market 2
2 Selling Price of the Products 5
3 Promotional Budget 6
4 Sales Forecast for One Year 7
5 Cost of Labor 12
6 Total Factory Overhead Expenses 13
7 Total Unit Cost of Bambler 14
8 Total Unit Cost of Bambholder 14
9 Key Officers and Personnel 16
10 Total Projected Cost 18
11 Owners’ Equity 19
12.1 Projected Cash Flow 20
12.2 Projected Income Statement 21
12.3 Projected Balance Sheet 22
12.4 Statement of Projected Owners’ Equity 23
13 Return On Investment 24
14.1 Break-even Point Computation 24
14.2 Break-even Point for Bambler 25
14.3 Break-even Point for Bambholder 25
15.1 Projected Payback Period 26
15.2 Net Present Value 26

List of Figures
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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

No. Title Page

1 Estimated Population of Koronadal City 3
2 Estimated Potential Buyers from the Total Population 3
3 Market Share of the Products 5
4 Process Flow Chart 8
5 Map of the Business Location 11
6 Organization Structure 15

List of Appendices
 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

No. Title Page

1 Receipts 25
2 Production 26
3 Product List 27
4 Product Exhibit 28
5 Awards and Recognition 29
 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Chapter I

MARKETING PLAN

This chapter presents the marketing plan. It includes description of the

product, market, market area, total demand, supply, demand/supply analysis,
market share, selling price, promotional measures, promotional budget,
competition and sales forecast.
Description of the product
The DURABAM Company produces two kinds
of products which were all made of bamboo. The
company’s first product was called Bambler, a
unique tumbler with an outer cover of bamboo
tube. The bamboo tumbler will keep the water
inside. The inner part of the tumbler is a container
where the water poured and stored. There were
some intricate designs on the bamboo cover for
the tumbler to become more attractive. Also, the
design can be personalized depending on the
customers wants.
BAMBLER
The other product is Bambholder, a phone
holder made from bamboo which was used to
secure the phone from any risk of damage. It will
be used as a holder of the phone while charging. It
was also used to prevent the phone from falling
down which may cause breakage to its screen and
system. This product is quite popular nowadays,
however bambholder is unique since it is very
Filipino in nature and also an environment-friendly. BAMBHOLDER
Market

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Product Target Market

Bambler  Students
 Office Workers
 Sports Enthusiasts
 Travelers
Bambholder  All people who has a
phone
Table 1. List of Target Market
The target market for the bambler is the students, office workers, sports
enthusiasts and travelers. Since the students and office workers are usually
using tumbler as a water container, the owners thought that they are the capable
buyers of the bambler. Sports enthusiasts and travelers are also potential
customers of bambler because they engage in physical activities in which it is
necessary for them to bring water to avoid dehydration.
For the bambholder, people who own a cellular phone are the ideal target
market because usually some phone charger has short wire connector and they
find it difficult where to place their phone while charging.
Market Area
The market area of the business will be within the City of Koronadal. Since, it
was the center and the only city that was located at the Province of South
Cotabato. The company viewed it as one of the most visited area of the
company’s target market. Therefore, Koronadal City was a perfect area to create
and start for opportunity.

Total Demand

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Senior High School

10%

Students
20% 40%
Employees

Active Persons

Stay at Home

30%

Figure 1. Estimated Population of Koronadal City

From the entire population of Koronadal City which is the target market of the
company. Approximately, 40% are students, 30% are employees, 20% are active
person and 10% are staying at home.
2%

15% Students

15%
Employees

Active Persons

Stay at Home

20%

Figure 2. Estimated Potential Buyers from the Total Population

From this population, the company estimated that 15% of the students, 20%
of employees, 15% of the active person and 2% of staying at home are the
potential buyers of the DURABAM products. On the other hand, the company is
confident to supply the products according to the demand of the consumers.

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Demand Analysis
The target market of the DURABAM Company for the Bambler are the
students, office workers, sports enthusiasts and travelers who desires to have a
tumbler that can be bring wherever place they want to go. Also, they want to
have a tumbler that can be called as unique and nature-friendly.
The DURABAM Company provides Bambholder for all people that own a
phone; it serves as a holder that can be attached on the wall near the socket.
Phone holders are considered as a demand for the consumers because many
people are struggling to find appropriate place where they can put their phone
while charging, especially those who has short connector or phone chargers.
Supply Analysis
The supply of bamboo was from the Cordero Furniture Shop and Tuazon
Furniture Shop at Purok Upper Maligaya, Barangay Poblacion, Tantangan, South
Cotabato. The other materials that will be needed in the production like the wood
glue, paint and varnish were from the Department Store like KCC and Hardwares
like Golden Hardware.
Based on the demand of the consumers, the DURABAM Company will
sustain their demands like the phone holders and tumblers that can satisfy their
needs and wants to ease their daily problems.

Market Share

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Bambler Bambholder
24% 23%
Market Size Market Size

Market Share Market Share

76% 77%

Figure 3. Market Share of the Products

From the amount of Sale of the bambler P60,720.00 in a month divided by

the total market size of P250,000.00, the market share of the company will be
24%. For the bambholder which has an amount of sale of P58,680.00 in a month
divided by the total market size of P260,000.00, the market share for the
bambholder is 23%. Data was based on the monthly sales of UNITOP and
NOVO for the tumblers and CD-r King and OCTAGON for the phone holders.
Selling price

Product Unit Cost Markup Selling Price

Bambler P264.00 15% P303.60
Bambholder P122.25 20% P146.70
Table 2. Selling Price of the Products

From the total unit cost of P264.00 in producing one bambler, it has a mark-
up of 15% which will cost P303.60 for its selling price. For the bambholder it has
a total unit cost of P122.25 plus the 20% markup resulting to P146.70 selling
price. Unit cost includes all the materials needed such as bamboo, tumbler,
stekwil, paints, varnish, adhesive hook, paint brush and also the employee’s
salary.

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Promotional Measures
The newly-produced product will be promoted using tarpaulins, facebook
account and instagram page. The tarpaulins were placed to the most visited area
of Koronadal City such as Round ball, Rizal park, Sports complex, Public market
and Gensan Drive. Facebook and Instagram page were created for promoting
the products through online.
Promotional Budget

Promotional Measures Amount

Tarpaulins (5) P400.00
Facebook Account P 00.00
Instagram Page P 00.00
Total P400.00
Table 3. Promotional Budget
Since the company only uses five tarpaulins, a facebook account and an
instagram page for promotions. The five tarpaulins size 2*4 worth P80.00 each
multiplied by five pieces is worth P400.00. The facebook and instagram page
does not need payment anymore since it is open for public. Also, word of mouth
does not need any amount to pay also. Therefore, only the tarpaulins will be
using money for the promotion.
Competition
DURABAM will be providing a high quality product with unique designs.
Compared with other businesses, DURABAM produces environment-friendly
products which are made from bamboo. Since it is bamboo, the company is
confident to produce a product that is durable and not easy to break. Unlike with
the plastic product that other company produced the bamboo is thick which could
help protect what is inside of it. These characteristic of bamboo can make the
company unique compared to other company. Also, the company assures the
market that they will produce a product that will worth to its price.

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Sales Forecast

Sales forecast Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec
Number Unit of Sold
Bambler 200 205 210 216 222 228 234 240 246 252 258 264
Bambholder 400 410 420 431 442 453 464 476 488 500 513 526
Unit Price
Bambler 303.6 303.6 303.6 303.6 303.6 303.6 303.6 303.6 303.6 303.6 303.6 303.6
Bambholder 146.7 146.7 146.7 146.7 146.7 146.7 146.7 146.7 146.7 146.7 146.7 146.7
SALES
Bambler 60720 62238 63756 65577 67399 69221 71042 72864 74686 76507 78329 80150
Bambholder 58680 60147 61614 63227 64841 66455 68069 69829 71590 73350 75257 77164
Total Sales 119400 122385 125370 128804 132240 135676 139111 142693 146276 149857 153586 157314
Unit Cost
Bambler 264 264 264 264 264 264 264 264 264 264 264 264
Bambholder 122.25 122.25 122.25 122.25 122.25 122.25 122.25 122.25 122.25 122.25 122.25 122.25
Total Cost
Bambler 52800 54120 55440 57024 58608 60192 60776 63360 64944 66528 68112 69696
Bambholder 48900 50123 51345 52672 54035 55379 56724 58191 59658 61125 62714 64304
Profit
Bambler 7920 8163 8316 8553 8791 9029 9266 9504 9742 9979 10217 10454
Bambholder 9780 10024 10269 10537 10806 10076 11345 11638 11932 12225 12543 12860
Total Profit 17700 18187 18585 19090 19597 19105 20611 21142 21674 22204 22760 23314

Table 4. Sales Forecast for One Year

Based on the data above, it has a total sale of P 1,652,712.00 in a year and it
is expected to increase 15% the following years. For the total unit cost amounting
to P1,408,743.00 less the total sales, meaning, the company will gain a total
profit of P 243,969.00 every year. The estimated increase of the company’s sale
every month is 2.5%.

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Chapter II

PRODUCTION PLAN

This chapter covers the production process, fixed capital, planned capacity,
future capacity, location and layout, raw materials and supplies, labor,
factory/overhead expenses and production cost.
Production Process

Cleaning the
Cutting of bamboos bamboos Forming of products

Product packaging
Distribution and labeling Designing the product
F

Figure 4. Process Flow Chart

Fixed Capital
a.) Life of Fixed Capital
The fixed capital of the company is the physical store of the business
which was cost P120,000.00 for the rent yearly, bamboos amounted
P22,500.00 and tools and equipment that cost P28,800.00 per year. The
physical store, tools and equipment can be used for more than 20 years.
Bamboo on the other hand, has a maximum life span of 2 years.

b.) Sources of Fixed Capital

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

The physical store of the business was rented from the government and
was paid monthly. Bamboos are purchased by the business from the
suppliers. Machines and tools are bought from the market specifically in
Hardware and Department Store. The money used to settle the expenses
of these fixed capital are all from the owner’s capital. Partners contributed
using their personal savings.
c.) Maintenance and Repairs
The machines and tools are maintained and checked by the
company’s workers once a month to assure that it could last until its
estimated life. Also, it is used to secure that it will not bring harm to the
employees who are using it and to make sure that it will work well. The
bamboos are also monitored by the workers regularly for at least once a
month. This is to ensure that the bamboos are in good condition that can
be used to produce durable products. The physical store is checked by the
owner everyday. This is to make sure that the store is clean and safe to
the business and to the customers.
Planned capacity
The DURABAM Company was providing enough number of tools and
equipment for the production of the products. The tools and equipment used are
high quality to avoid inconvenience and problems through the process. Through
these materials the business will meet the demand of the products as well as the
needs of the consumers. Also, using this tools and equipment the company will
have a high possibility of completing the products within a period of time and
avoid delays of distribution.

Skilled workers and effective leaders that can handle problems of a business

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

will be hired. The company will search for workers who are committed and
discipline. They have the guts to lead others, to obey the rules and to learn the
whole process of the business. From the given characteristic the company will
hire 2 craftsmen who will expect to provide 24 different products everyday - 8
pieces for bambler and 16 pieces for bambholder. In a given quota each day, the
company is expected to produce 600 different products within a month and 7,200
when it comes to a year.
Future capacity
The DURABAM Company has large number of workers which have the
ability to finish and work properly with the products. The company will also have
high quality machines and advance technology for the production of the product
from the cutting of the bamboo until finishing the product. Inside the company will
be the production of the product which will be using machineries and the skills
and ability of the workers to provide good quality products as well as their term or
way of solving the problem regarding the production such as defectives, errors
and other bad circumstances. The company also appoints skilled managers to
lead and maintain the government regulation, productivity, suppliers, as well as
the major issues regarding the production of the products. To the management of
resources and its capacity as well as meeting the demand of the products will
also the main focus of the company.
To be effective distributors of the products the company will provide enough
number of transportation for the shipping of the products to the respective areas
of branches and stores of the company. Also, the company contributes not only
to the property but also to other crowded places such as malls, bazaars and
boutiques. The company will also meet the schedule of shipping to avoid shifting
of schedule that might affect the delivering of the products.

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

From the 7,200 products that will produce by the company in the first
year, the company assume that it will increase 15% the following year. Thus,
7,200 multiplied by 15% have a total production of 1,080. Therefore, next year an
additional 1,080 different products will provide by the company. The same
increase is expected to the following years.
Location and Layout

DURABAM Company

Figure 5. Map of the Business Location

The business was located at the Sports Complex, Alunan Avenue, City of
Koronadal. The location is near the South Cotabato Cultural Gymnasium and the
South Cotabato Division Office. The specific location is the area where the target
market can easily locate the business, for the target market were the students,
office workers and sports enthusiasts.

Raw Materials and Supplies

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a. Sources
Bamboo is the only raw material used in making the products. The bamboo
will be provided by the Cordero Furniture Shop and Tuazon Furniture Shop, they
will be the source of all the bamboo tubes that will be used. Other materials like
stekwil glue, tumbler, adhesive hook and paints will be taken from the
Department Store and Hardware.
b. Availability
The company secures the availability of all the materials needed during and
after the production. In terms of the raw materials the two furniture shop can
easily provide the bamboo since everyday they have the stock of bamboos as
well as other materials from the hardware and department store.
Labor

a. Cost of labor

Employee Units to produce Units to produce Salary

(Bambler) (Bambholder)
Craftsmen (2) 8 16 P300.00 per day
Table 5. Cost of Labor
The company had a target number of products to be produced each day. The
company assumes that 2 craftsmen can produce 8 Bambler and 16 Bambholder
a day. If labors can achieve the quota, each employee will receive P300.00 per
day. Provided all the materials from the raw material bamboo and other materials
such as tumbler, stekwil glue, hook, furniture tools and paints, including the
salary cost of the entire employee, the company will gain P708.00 every day.

b. Labor availability
The availability of the labor is assured by the business since they will hire

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

craftsmen who are highly skilled and had a great experience in handling bamboo
products. The main target of the business in searching for their labors are those
who work in furniture shops more specifically in Tuazon and Cordero Furniture
Shop.
c. Labor productivity
The company will hire 2 craftsmen which will be divided into two –cutting and
cleaning raw materials and designing the product. One person will assign to the
cutting and cleaning while one person also for the designs. Based on the cost of
labor, in a day the company must provide 8bambler and 16bambholder.
Therefore, within a day with 8 hours of working the labors must produce 24
different products. Thus, as the business got high labors become more
productive.
Factory/Overhead expenses
Bambler
Variable Manufacturing Cost
Indirect Material (2,900x1.5) 3,600
Light and water (2,900x0.88) 2,552
Total Variable Manufacturing Cost 6,152
Salary 90,000
Insurance 22,500
Total Estimated Factory Overhead Cost 118,652
Bambholder
Variable Manufacturing Cost
Indirect Material (4,800x1.5) 7,200
Light and water (4,800x0.88) 4,224
Total Variable Manufacturing Cost 11,424
Salary 90,000
Insurance 22,500
Total Estimated Factory Overhead Cost 123,924
Total Company’s Factory Overhead Cost P 242,576
Table 6. Total Factory Overhead Expenses
The factory or overhead expense includes the indirect material, light and

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

water, salesperson salary, and insurance. These expenses could really help in
the flow of the business and it was the most expensive among all the expenses.
The company’s estimated overhead expenses is worth P242,576.00.
Production Cost
Bambler
Materials Quantity Cost
Bamboo 1 tube P 8.00
Tumbler 1 piece P150.00
Stekwil Glue 6.25 grams P 6.00
Brown Paint 30 milliliter P 7.50
Black Paint 15 milliliter P 10.75
Paintbrush 1 piece P 37.00
Varnish 15 milliliter P 7.25
Employees salary 1 product P 37.50
Total P264.00
Table 7. Total Unit Cost of Bambler

Bambholder
Materials Quantity Cost
Bamboo ½ tube P 4.00
Adhesive hook 1 piece P 18.25
Brown Paint 30 milliliter P 7.50
Black Paint 15 milliliter P 10.75
Paintbrush 1 piece P 37.00
Varnish 15 milliliter P 7.25
Employees salary 1 product P 37.50
Total P122.25
Table 8. Total Unit Cost of Bambholder
The total unit cost for the bambler is P264.00 and for the bambholder is
P122.25. The markup for the bambler is 15% and for the bambholder is 20%.
The profit for every bambler is P39.60 and P24.45 for the bambhoder.

Chapter III

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Organization and Management Plan

This chapter includes form of business ownership, organization structure, key
officers and personnel, pre-operating activities and pre-operating expenses.
Form of Business Ownership
The Durabam Company will be in the form of partnership. It will be owned by
five partners who will serve as the primary source of the funds of the company for
a greater financial support from the partners. The owners of the company are
expected to be highly involved in the management and decision making of the
business. Since it is in the form of partnership, the owners will have equal rights
in the business. The plans and steps must also be agreed by every partner.
Liability of the Owners
The firm will be an unlimited liability company in which the creditors could
run after to the property of the owners in case if the firm fails to do its obligation
and responsibility to pay its debts. The partners of the firm will be responsible for
the whole business obligations and transactions. It means that a partner can be
held liable to any obligations and transactions of the other partner/s.
Organization Structure

OWNERS

Craft men (2) Sales Person (1)

Figure 6. Organization Strcture

Key Officers and Personnel

Positions Job Description Job Specification Proposed Salary

Owners The owners of the  Communicating There will be no
company are the skills salaries for the

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Notre Dame of Marbel University
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Senior High School

person who controls  Technical skills owners because

the operations. The  Problem solving they will divide the
people who will skills money left from
supervise the  Knows how to all the productions
managers and in handle finances and expenses.
charge in decision
making.
Craft men The two craft men  Fast hands P 300 / day
are in charge in the  Creativity
process of cutting  Patient
the bamboo, and  Have the potential
designing the to make quality
products. products
Sales Person Sales Person is in  Knowledge in P300 / day
charge to entertain business
customers and give
information about the 
Had an
products to them. experience of
being a book
or record
keeper
Table 9. Key Officers and Personnel
Pre-operating Activities
The business operating activities includes purchasing of bamboos, cutting of
bamboos which used tools and equipment, designing the product by means of
artistic painting and distributing the products by any means of communication.

Pre-operating Expenses
According to the activities listed above the pre-operating expenses includes
purchasing of raw material or bamboo, delivery expense, wages, purchasing of
tools and equipment. Pre-operating expenses are viewed by the company in not

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Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

less than P100, 000.00. If it exceed an additional fund will be needed and the
company will used their retained earnings.

Chapter IV
Financial Plan
This chapter presents the total project cost, sources of financing, financial
statements and financial analysis.
Total Project Cost

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Notre Dame of Marbel University
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The business just rent a commercial building to cut financial cost. It

requires purchasing needed office equipment, furniture and fixtures and office
supply. The total project cost estimate is two hundred sixty-eight thousand five
hundred forty-five pesos (P268,545.00) which are the following:
Start-up fixed assets
Office equipment P51,300.00
Furniture and fixtures 16,145.00
Total P 67,445.00
Start-up expenses
Office supplies P 3,000.00
Rental 120,000.00
Utilities Expense 8,500.00
Business registration 18,000.00
Advertising 1,600.00
Total P151,100.00
Start-up Cash P 50,000.00
Total Projected Cost P268,545.00
Table 10. Total Projected Cost
Sources of Financing
The initial capital for the business will be financed by the owners.
Financial Assumptions
1. The business is projected to increase in sale by 15% every year.
2. Expenses are expected to increase after 3 years.
3. Member's contribution remains the same in the five years of operation.

a.) Equity
Owners Contribution
Alliah Mari Baira P60,000.00
Doresh Jean Binas P60,000.00
E.J. Mitch Castor P60,000.00
Rosemarie Nono P60,000.00
Ada Grace Salibongcogon P60,000.00

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Notre Dame of Marbel University
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Senior High School

Table 10.1 Owners Equity

The owners have the equity which is the beginning capital of the company
worth Php 300,000. The business has a five owner and the said amount was
from their contribution. Each of them had contributed Php 60,000 which served
as their starting capital for the business.
Financial Statements
This Chapter contains the Financial Position and Statement of financial
performance of the company for 5 years and the cash flow.

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 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Financial Analysis

This topic contains the analysis of the financial statement as the proof of the

profitability of the business. This includes the Return on Investment (ROI), Break-

even Point and Payback Period.

a.) Return on Investment

Year 1 Year 2 Year 3 Year 4 Year 5

Net 790,570.20 955,788.96 1,129,726.23 1,348,228.04 1,599,505.12
Income
Total 1,429,386 1,615,412.80 1,813,894.62 2,076,040.06 2,385,007.32
Assets
Return on 55.31% 62.78% 65.89% 69.32% 71,71%
Investment
Table 13. Return on Investment
The ratio of Return on Investment is 55.31 percent which shows the
profitability of every peso invested by the owners. This indicates that there is 55
cents return on every P1.00 invested on the assets of DURABAM Company. This
is favorable for the company as its starting condition; to have a high return on
investment reflects the effective performance on the operations within the
business. The business used the formula: Net income/ Average total assets.

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 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

b.) Break-even point

Bambler Bambholder
300 300
303.60-6.125 = 1.0085 units 146.70 – 1.90= 2.07 units

Profit BEP
300+6.125 300+1.90
24 = 12.76 per unit 24 = 12.58 per unit

260 260
303.60-6.125 = 0.87 units 146.70-6.125 = 1.85 units

Cash BEP
260+147 260+45.50
24 = 16.96 per unit 24 = 12.73 per unit

360 100+260
297.475= 1.21 units 146.70 – 6.125=2.56 units
Debt-Service BEP
300+147+100 300+ 45.50+100
24 = 22.79 per unit 24 =18.56 per unit
Table 14.1. Break-even Point Computation
To have a clearer picture of the project’s break-even performance, the
following data are presented:
BAMBLER

Sales Volume Selling Price

Profit Break-Even Points 1 unit Php. 12.76/unit
Cash Break-Even Points 1 unit Php. 16.96/unit
Debt-Service Break Even Points 1 unit Php. 22.79/unit
Table 14.2 Break-even Point for Bambler

BAMBHOLDER

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 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

Sales Volume Selling Price

Profit Break-Even Points 2 units Php. 12.58/unit
Cash Break-Even Points 2 units Php. 12.73/unit
Debt-Service Break Even Points 3 units Php. 18.56/unit
Table 14.3 Break-even Point for Bambholder
It could be seen that the project’s BEP sales volume are lower compare to the
proposed project’s rated capacity. It is also visible that every product has a high
selling price. It is because the expenses, both the direct and indirect cost a huge
amount of money which results a low sales volume and a high selling price.
c.) Payback Period
The DURABAM Company has a need of P300,000.00 to start the
business.
Year Cash Flow Payback Period
0 -P300,000.00
1 P1,358,941
2 P1,546,112.80
3 P1,736,899.62
4 P1,999,045.06
5 P2,308,012.32
Payback Period P300,000.00/ P1,358,941 22 or 2 months and 2 days
Table 15.1 Projected Payback Period
The proposed business payback period is two (2) months and two (2)
days. It indicates that the business is profitable and feasible.
Net Present Value
The net present value (NPV) method discounts all cash flows at the
project’s cost of capital and then sums of these cash flows. The project is
accepted if the NPV is positive.
Year Free Cash Flow Present Value of CF
0 -P300,000.00 -P300,000.00
1 P1,358,941 P1,129,386
2 P1,546,112.80 P1,136,448.96
3 P1,736,899.62 P1,252,731.23

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 JMJ Marist Brothers
Notre Dame of Marbel University
Integrated Basic Education Department
Senior High School

4 P1,999,045.06 P1,421,233.04
5 P2,308,012.32 P1,622,510.12
Present Value of Cash
P6,562,309.35
Inflow
Table 11.4 Net Present Value
Net Present Value=Present Value of Cash Inflow-Cost of Capital
Net Present Value=P6,562,309.35-300,000= P6,262,309.35
The investment yield present value of cash flows net of investment
cost that a greater than one (1) for the first five year period. This
indicates that the project is feasible.

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