5. financial feasibility

ALL PROJECTS ARE CONSIDERED VIABLE ONLY WHEN THEY ARE EXPECTED TO:◦ BE PROFITABLE TO MEET SHORT- TERM

OBLIGATIONS

◦ BE LIQUID & TO REMAIN LIQUID DURING ADVERSITIES

◦ GROW IN THEIR ABILITY FINANCE THEIR OPERATIONS MOSTLY FROM NET-WORTH SOURCES RATHER THAN CREDIT APPLICATIONS

◦ BE ABLE TO SERVICE THEIR FINANCING CHARGES.

MAJOR ASSUMPTIONS

TOTAL PROJECT COSTS

INITIAL WORKING CAPITAL REQUIREMENTS

ALTERNATIVE SOURCE OF FINANCING CONSIDERED, IF ANY

SOURCES OF FINANCING THE PROJECT

BEGINNING & PRO-FORMA FINANCIAL STATEMENTS

FINANCIAL ANALYSES

IN THE FORMULATION OF FINANCIAL PROJECTIONS, ASSUMPTIONS PLAY A MAJOR ROLE BECAUSE THEY SERVE AS THE FOUNDATION FOR ESTIMATING THE FUTURE EXPENDITURES, EXPENSES, & REVENUES OF THE PROJECT AS ACCURATE AS POSSIBLE.

THESE ASSUMPTIONS, THEREFORE, MUST BE BASED ON WELL-CONSIDERED, REALISTIC & WORKABLE FACTS.

1. EXISTING BUSINESS PRACTICES IN THE INDUSTRY WHERE THE PROJECT BELONGS MAY PROVIDE SOME VALUABLE INFORMATION & INSIGHTS ON:◦ CREDIT TERM◦ CREDIT EXTENSION◦ BAD-DEBT ALLOCATIONS◦ BAD-DEBT WRITE-OFF◦ QUALITY-CONTROL COSTS◦ DIVIDENT POLICIES◦ SALES RETURNS, ALLOWANCES, & DISCOUNTS◦ LABOR & MANAGEMENT COMPENSATION◦ OVERHEAD ACCOUNTS◦ INVENTORY COSTING◦ OPERATING ACCOUNTS◦ FIXED- ASSET REQUIREMENTS◦ METHOD OF DEPRECIATION & AMORTIZATION◦ INTANGIBLE ASSET PRE-REQUISITE

2. PREVIOUSLY MADE FEASIBILITY STUDIES DIRECTLY RELATED TO THE PROJECT MAY CONTRIBUTE ADDITIONAL FACTORS TO BE CONSIDERED, WHICH EITHER CONFIRM OR CONTRADICT FINDINGS IN INDUSTRY STANDARDS, SPECIFICALLY THOSE ITEMS INVOLVED IN THE COMPUTATIONS OF:

◦ SELLING PRICE

◦ SALES FORECASTS

◦ UNFORSEEN COSTS

◦ PRODUCTION VOLUME

◦ PRODUCT MIX

GOVERNMENTAL REGULATIONS & INCENTIVES DIRECTLY OR INDIRECTLY AFFECT THE PROJECT, SUCH AS:

◦ IMPORT POLICIES

◦ EXPORT POLICIES

◦ TAX RATES

◦ TAX EXEMPTIONS

◦ PRICE CEILINGS

◦ RELEVANT PRESIDENTIAL DECREES OR LOI

OTHER PERTINENT DATA WHICH CAN JUSTIFY THE ASSUMPTIONS OF THE STUDY, SUCH AS◦ INDUSTRY POLICIES

◦ PRE-FEASIBILITY STUDIES

◦ SYMPOSIUM & CONFERENCES, &

◦ MATERIAL OUTPUTS OF INDUSTRY ASSOCIATIONS.

ESTIMATES OF THE PROJECT’S INITIAL COST/ASSET REQUIREMENT WHICH MUST BE BASED ON THE MATERIALS, SUPPLIES, EQUIPMENT, PHYSICAL PLANT, & MANPOWER NEEDS OF THE PROJECT SPECIFIED IN THE TECHNICAL PORTION.

LAND & LAND IMPROVEMENTS◦ COST OF LAND, NOTARY FEES, REGISTRATION DUTIES, &

OTHER RELATED COSTS

BUILDINGS, INCLUDING ELECTRIC & WATER UTILITIES, FURNITURE & FIXTURES◦ BUILDING COST, WELLS, WATER PIPES, ELECTRICAL

CONNECTIONS, GAS SUPPLY, TELEPHONE SYSTEM, RESERVOIR & TANKS, WASTE WATER DISPOSAL, FENCING, ROADS & PATHS, EMPLOYEES HOUSING, & FIRE PROTECTION

EQUIPMENT, PLUS INSTALLATION COSTS PURCHASE & INSTALLATION OF MACHINERY◦ PURCHASE TAXES, FREIGHT & INSURANCE EXPENSES,

CUSTOMS DUTIES

TRIAL-RUN ASSOCIATED WITH ELECTRIC UTILITIES, EQUIPMENT & MACHINERY◦ ELECTRICITY & TELEPHONE LINES, ELECTRICAL EQUIPMENT,

INTERNAL TRANSPORT EQUIPMENT, VEHICLES, OFFICE EQUIPMENT & SUPPLIES, FURNITURE & FIXTURES, MAINTENANCE & CLEANING EQUIPMENT, & SPARE PARTS

INVENTORY INVESTMENTS◦ PURCHASES OF MATERIALS & SUPPLIES◦ FREIGHT EXPENSES

INVENTORY-RELATED COSTS◦ INDIRECT & DIRECT LABOR W/ CORRESPONDING FRINGE BENEFITS◦ HEAT, LIGHT, & POWER◦ MAINTENANCE◦ WAREHOUSING EXPENSES RELATED TO RAW MATERIALS◦ MATERIALS IN PROCESS◦ FINISHED GOODS

CASH CREDITS◦ PRE-PAID EXPENSES (COST OF INITIAL INVESTIGATIONS, PRE-FEASIBILITY STUDIES,

RESEARCH & TECHNICAL STUDIES, ECONOMIC & MARKETING STUDIES, FINANCIAL & PROFITABILITY STUDIES, DESIGN STUDIES, & CONSULTING- ENGINEERING FEES).

◦ INTANGIBLE ASSETS (PATENTS, LICENSES, GOODWILL, REPRODUCTION RIGHTS)◦ OPERATING SALARIES◦ WAGES & FRINGE BENEFITS◦ ENGINEERING COSTS◦ OPERATING TAXES◦ OFFICE SUPPLIES◦ COMMUNICATION FACILITIES◦ OFFICE UTILITIES◦ BILLING COSTS◦ TRANSPORTATION COSTS◦ EXPENSES FOR ADVERTISING◦ BORROWING COSTS◦ PROVISIONS FOR UNFORSEEN COSTS

STEPS IN DECIDING ON THE FINANCING SCHEME TO SUPPORT THE PROJECT:◦ LIST THE ALTERNATIVE SOURCES OF FINANCING◦ DETERMINE SOURCES SELECTED OR PROPOSED AS A

FUNCTION OF MAXIMUM PROFITABILITY◦ FINALIZE THE AMOUNT & TERMS FOR EACH SOURCE

SELECTED◦ STATE THE STATUS OF FINANCING FROM EACH

SOURCE◦ SPECIFY THE FINANCING OF CONTINGENCIES &

FLUCTUATIONS IN WORKING CAPITAL◦ PINPOINT ALTERNATIVE SOURCES OF FINANCING IN

ORDER OF PRIORITY

PRESENT IN AN ORDERLY & UNDERSTANDABLE FORM THE CASH BUDGET, THE OPERATING PERFORMANCE, & THE FINANCIAL CONDITION OF A BUSINESS ENTERPRISE

IT DEPICT THE PROGRESS OF A FIRM IN FINANCIAL TERMS

1. THE INCOME STATEMENT- IS THE COMPUTATION OF THE PROJECT’S TOTAL REVENUES & TOTAL COST FOR ONE PERIOD OR FISCAL YEAR,THEREBY ARRIVING AT THE CONCERN’S NET INCOME OR DEFICIT WITHIN THE PERIOD, TOGETHER WITH ITS PERFORMANCE IN TERMS OF PROFITABILITY & COST CONTROL

2. THE CASH-FLOW STATEMENT or THE CASH BUDGET- IS A SYSTEMATIC PRESENTATION OF CASH RECEIPTS & DISBURSEMENTS FOR A GIVEN OPERATING PERIOD OR FISCAL YEAR, TAKING FOR GRANTED THE “ACCRUAL CONCEPT” IN ACCOUNTING.

3. THE BALANCE SHEET- SHOWS THE ASSETS DERIVED BY THE PROJECT FROM CORRESPONDING LIABILITIES & EQUITIES (NET WORTH). IT IS AN OVERALL PICTURE OF A FIRM’S FINANCIAL CONDITION AS OF A CETAIN TIME.

THIS PORTION GAUGES THE PROJECT’S PROFITABILITY, LIQUIDITY, CASH SOLVENCY & GROWTH OVER TIME.

THESE MEASURES ARE USED TO DETERMINE A FIRM’S ABILITY TO MEET SHORT-TERM OBLIGATIONS, & TO REMAIN SOLVENT IN THE EVENT OF ADVERSITIES.

◦ 1. CURRENT RATIO = CURRENT ASSETS

CURRENT LIABILITIES

◦ 2. QUICK or ACID-TEST RATIO = CURRENT ASSETS- INVENTORIES

CURRENT LIABILITIES

◦ 3. LIQUIDITY OF INVENTORIES = COST OF SALES

AVERAGE INVENTORY

◦ 4. DEFENSIVE POSITION = CASH + MARKETABLE SECURITIES + RECEIVABLES

PROJECTED OPERATING EXPENDITURE/NUMBER OF DAYS

THESE TESTS ARE EMPLOYED TO PRESENT THE PROJECT’S ABILITY TO MEET LONG-TERM OBLIGATIONS.

◦ 1. DEBT-TO-NETWORTH RATIO = TOTAL LIABILITIES

TOTAL EQUITIES

◦ 2. TOTAL CAPITALIZATION RATIO = LONG-TERM LIABILITIES

LONG-TERM LIABILITIES & EQUITIES

THESE SHOWS THE OPERATIONAL PERFORMANCE & EFFICIENCY OF THE PROJECT.◦ 1. NET PROFIT MARGIN = NET INCOME AFTER TAX

SALES

◦ 2. OPERATING PROFIT MARGIN = PROFIT BEFORE INTEREST & TAXES

SALES

◦ 3. GROSS PROFIT MARGIN = GROSS PROFIT

SALES

◦ 4. RETURN ON FINANCIER’S INVESTMENT = NET INCOME + INTEREST

STOCK EQUITY & LONG-TERM LIABILITY

◦ 5. RETURN ON OWNER’S INVESTMENT = NET INCOME

STOCK EQUITY

◦ 6. RETURN ON COMMON STOCK EQUITY = NET INCOME – PREFERRED STOCK DIVIDENDS

NET-WORTH – PAR VALUE OF PREFERRED STOCK

◦ 7. RETURN ON NET OPERATING PROFIT = PROFIT BEFORE INTEREST & TAXES

TOTAL TANGIBLE ASSETS

◦ 8. ASSET TURNOVER = SALES


◦ 9. RETURN ON ASSETS, OR EARNING POWER = NET INCOME


TEST OF TOTAL DEBT COVERAGE = PROFIT BEFORE INTEREST & TAXES

(INTEREST + PRINCIPAL PAYMENT)

(1/1 – INCOME TAX RATE)

THIS TECHNIQUE IS EMPLOYED TO DETERMINE THE MAJOR USES & SOURCES OF FUNDS WITHIN ONE YEAR IN A PROJECT’S LIFE.◦ 1. CASH-FLOW ANALYSIS

a. SOURCES OF FUNDS: NET DECREASE IN ANY ASSET OTHER THAN CASH NET INCREASE IN ANY LIABILITY PROCEEDS FROM THE SALE OF STOCKS FUNDS PROVIDED BY OPERATIONS

b. USES OF FUNDS: NET INCREASE IN ANY ASSET OTHER THAN CASH & FIXED ASSETS GROSS INCREASE IN FIXED ASSETS NET DECREASE IN ANY LIABILITY A RETIREMENT OF STOCK CASH DIVIDENDS

◦ 2. WORKING CAPITAL-FLOW ANALYSIS

a. SOURCES OF FUNDS:

NET DECREASE IN ANY ASSET OTHER THAN CURRENT ASSETS

NET INCREASE IN LONG-TERM LIABILITIES

PROCEEDS FROM THE SALE OF STOCKS

FUNDS PROVIDED BY OPERATIONS

b. USES OF FUNDS:

NET INCREASE IN OTHER ASSETS

GROSS INCREASE IN FIXED ASSETS

NET DECREASE IN LONG-TERM LIABILITIES

RETIREMENT OF STOCK

CASH DIVIDENDS

THESE FUNCTIONS INDICATE HOW THE PROJECT EMPLOYS ASSETS FOR WHICH IT PAYS A FIXED COST. BEFORE THESE TESTS ARE APPLIED, A CLARIFICATION SHOULD BE MADE ON WHAT “VARIABLE” & “FIXED” COSTS ARE.

◦ 1. BREAK-EVEN VOLUME ANALYSISBEV = FIXED COSTS

SELLING PRICE – VARIABLE COST/UNIT

◦ 2. BREAK-EVEN CASH ANALYSISBEC = CASH FIXED COSTS

SELLING PRICE – CASH VARIABLE COST/UNIT

◦ 3. BREAK-EVEN SELLING PRICE ANALYSISBESP = VARIABLE COSTS + FIXED COSTS

UNIT VOLUME

= TOTAL COST X SELLING PRICE

SALES

◦ 4. BREAK-EVEN SALES ANALYSISBES = BESP X UNIT VOLUME

= FIXED COST

1 – (VARIABLE COST/NET SALES)

THESE TECHNIQUES PRESENT HOW A PROJECT EMPLOYS FUNDS WHICH PAY A FIXED RETURN.

◦ EARNINGS PER SHARE = NET INCOME

SHARES

◦ DIVIDENDS PER SHARE = NET INCOME – PREFERRED STOCK DIVIDENDS – RETAINED EARNINGS

COMMON SHARE

THESE FINANCIAL TOOLS EVALUATE THE JUSTIFICATION FOR INVESTING IN THE PROJECT.

◦ AVERAGE RATE OF RETURN = AVERAGE NET INCOME

AVERAGE NET INVESTMENT

◦ PAYBACK PERIOD IN YEARS = INITIAL-YEAR CASH OUTFLOW

SUCCEEDING ANNUAL NET CASH FLOW

◦ CAPITAL RECOVERY OR CASH PAY-OFF PERIOD IN YEARS = STOCKS

ANNUAL CASH DIVIDENDS

Expected SalesLess: Raw materials

Labor costUtilitiesMarketing expensesDepreciation costsOthers

Equals: Net profits

ROI = Net profit / Total expenses X 100%.

PARTICULAR Y1 Y2 Y3 Y4 Y5

Sales in units

Product X @ P68.00

25, 000.00 43, 000.00 51, 800.00 54, 000.00 57, 100.00

Sales 1, 700, 000.00 2, 924, 000.00 3, 522, 400.00 3, 672, 000.00 3, 882, 800.00

LESS: Cost of Sales

Direct materials & labor

Manufacturing overhead

776, 300.00

73, 200.00

1, 237, 300.00

131, 800.00

1, 534, 700.00

143, 800.00

1, 559, 000.00

157, 000.00

1, 636, 800.00

171, 400.00

Total 849, 500.00 1, 369, 100.00 1, 678, 500.00 1, 716, 000.00 1, 808, 200.00

Raw materials inventory, beginning 0.00 54, 500.00 54, 500.00 104, 500.00 104, 500.00

Raw materials inventory, ending (54, 500.00) (54, 500.00) (104, 500.00) (104, 500.00) (194, 500.00)

Cost of Sales 795, 000.00 1, 369, 100.00 1, 628, 500.00 1, 716, 000.00 1, 718, 200.00

Gross Profit on Sales 905, 000.00 1, 554, 900.00 1, 893, 900.00 1, 956, 000.00 2, 164, 600.00

LESS: Operating expenses

Salaries and Wages 107, 800.00 221, 700.00 266, 200.00 319, 400.00 383, 200.00

Employee’s benefits 21, 500.00 31, 000.00 37, 000.00 44, 700.00 53, 700.00

Representation 6, 000.00 6, 000.00 6, 000.00 6, 000.00 6, 000.00

Retainer’s fee 6, 300.00 10, 800.00 10,800.00 11, 800.00 13, 000.00

Taxes and licenses 9, 200.00 9, 200.00 9, 200.00 10, 100.00 11, 100.00

Rental 2, 500.00 6, 000.00 6, 000.00 6, 100.00 6, 500.00

Office supplies 1, 500.00 2, 600.00 2, 900.00 3, 200.00 3, 500.00

Light and power 1, 100.00 1, 900.00 2, 100.00 2, 400.00 2, 600.00

Miscellaneous 7, 800.00 14, 500.00 17, 000.00 20, 200.00 24, 000.00

Allowance for depreciation 1, 500.00 2, 500.00 2, 500.00 2, 500.00 2, 500.00

Provisions for bad debts 15, 000.00 10, 000.00 5, 000.00 2, 000.00 2, 100.00

Amortization of operating expenses 2, 000.00 2, 000.00 2, 000.00 2, 000.00 2, 000.00

Total operating expenses 182, 200.00 318, 200.00 366, 700.00 430, 400.00 509, 600.00

Income operating expenses 722, 800.00 1, 236, 700.00 1, 527, 200.00 1, 525, 600.00 1, 655, 000.00

LESS: Financial charges 18, 000.00 .00 .00 .00 .00

Income before income tax 704, 800.00 1, 236, 700.00 1, 527, 200.00 1, 525, 600.00 1, 655, 000.00

Income tax 246, 600.00 432, 800.00 534, 500.00 533, 900.00 547, 700.00

NET INCOME 458, 200.00 803, 900.00 992, 700.00 991, 700.00 1, 107, 300.00

SAMPLE PROJECTED INCOME STATEMENT

Projected Income Statement

For the years ended December 31,2011-2015

2011 2012 2013 2014 2015

Net Sales (Schedule 1) 192,469,820.22 224,547,396.48 261,151,729.98 302,873,254.90 350,380,415.90

Less: Cost of Goods Sold (Schedule 2) 68,980,408.74 76,640,389.80 84,354,256.81 92,497,006.62 100,847,746.28

Gross Profit 123,489,411.48 147,907,006.68 176,797,473.17 210,376,248.28 249,532,669.62

Less: Administrative Expenses

Organizational Cost 9,551,729.00

Amortization of Software 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00

Office Supplies Expense (Schedule 4) 130,968.00 154,542.24 162,125.29 167,431.06 172,520.30

Insurance Expense (Schedule 5) 215,223.53 221,680.24 228,330.66 235,180.57 242,236.00

Depreciation Expense (Schedule 6) 1,712,027.33 1,712,027.33 1,712,027.33 1,712,027.33 1,712,027.33

Salaries Expense (Schedule 7) 6,435,000.00 6,435,000.00 6,435,000.00 6,435,000.00 6,435,000.00

SSS Contribution (Schedule 7) 273,679.20 273,679.20 273,679.20 273,679.20 273,679.20

Pag-Ibig Contribution (Schedule 7) 43,200.00 43,200.00 43,200.00 43,200.00 43,200.00

Philhealth Contribution (Schedule 7) 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00

Utilities Expense (Schedule 8) 1,485,160.00 1,529,714.80 1,575,606.24 1,622,874.43 1,671,560.66

Property Tax (Schedule 11) 108,578.26 111,835.61 115,190.68 118,646.40 122,205.80

Repairs and Maintanance (Schedule

12) 72,000.00 74,160.00 76,384.80 78,676.34 81,036.63

Advertising Expense (Schedule 13) 257,500.00 265,225.00 273,181.75 281,377.20 289,818.52

Training Expenses (Schedule 15 ) 1,757,500.00 1,757,500.00 1,757,500.00 1,757,500.00 1,757,500.00

Miscellaneous Expense (Schedule 16) 19,456.28 19,456.28 19,456.28 19,456.28 19,456.28

Total Administrative Expenses 22,152,021.60 12,688,020.70 12,761,682.22 12,835,048.82 12,910,240.72

Total 101,337,389.88 135,218,985.98 164,035,790.95 197,541,199.46 236,622,428.90

Add: Interest Income on Bonds (Schedule 16) 2,100,000.00 4,900,000.00 10,500,000.00 24,500,000.00

Income before Interest and Taxes 101,337,389.88 137,318,985.98 168,935,790.95 208,041,199.46 261,122,428.90

Less: Interest Expense (Schedule 10) 24,000,000.00 15,600,000.00 7,800,000.00 0.00 0.00

Income before Taxes 77,337,389.88 121,718,985.98 161,135,790.95 208,041,199.46 261,122,428.90

Less: Income Tax 35% (Schedule 14) 27,068,086.46 42,601,645.09 56,397,526.83 72,814,419.81 91,392,850.12

Net Income 50,269,303.42 79,117,340.89 104,738,264.12 135,226,779.65 169,729,578.79

Item Period 1 Period 2 Period 3

SalesExpenses

____________________________________

Add: beg balance

Ending cash balance

Cash Flow from Operating Activities

(Inc.) Dec. in Prepaid Insurance (2,396,457.43)

Net Cash Provided by (used in) Operating Activities (2,396,457.43)

Cash Flow from Investing Activities

Purchased of Fixed Assets (420,587,622.00)

Payments for Organization/Pre-Operating Cost (9,551,729.00)

Net Cash Flow Provided by (used in) Investing Activities (430,139,351.00)

Cash Flow from Financing Activities

Proceeds from Issuance of Stocks 300,000,000.00

Proceeds from Bank Loan 150,000,000.00

Net Cash Provided by (used in) Financing Activities 450,000,000.00

Net Increase (Decrease) in Cash 17,464,191.57

Cash Balance, Beg. 0.00

Cash Balance, End. 17,464,191.57


CASH FLOWS:

Operational Inflows:

Sales

1, 700, 000.00 2, 924, 000.00 3, 522, 400.00 3, 672, 000.00 3, 882, 800.00

Adjustment for receivables:

Beginning

Ending

0.00

(300, 000.00)

300, 000.00

(497, 000.00)

497, 000.00

(598, 800.00)

598, 800.00

(624, 200.00)

624, 200.00

(660, 000.00)

Net inflow from sales 1, 400, 000.00 2, 727, 000.00 3, 420, 600.00 3, 646, 600.00 3, 847, 000.00

Non-operational inflows:

Loan Proceeds

Paid-up capital

200, 000.00

100, 000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Total non- operational inflows 300, 000.00 0.00 0.00 0.00 0.00

Total Cash Inflows 1, 700, 000.00 2, 727, 000.00 3, 420, 600.00 3, 646, 600.00 3, 847, 000.00

Cash Outflows:

Cash Operating Expenses 1, 197, 500.00 2, 093, 100.00 2, 508, 200.00 2, 661, 300.00 2, 846, 400.00

Adjustment for accounts payable:

Beginning

Ending

0.00

(105, 700.00)

105, 700.00

(108, 200)

0.00

108, 200.00

0.00

133, 600.00

0.00

133, 400.00

Build-up of inventories 54, 500.00 0.00 (133, 600.00) (133, 400.00) (136, 900.00)

Total Operating Outflow 1, 146, 300.00 2, 090, 600.00 50, 000.00 0.00 0.00

Non-operating outflow 2, 532, 800.00 2, 661, 500.00 2, 842, 900.00

Debt servicing:

Principal

Interest

200, 000.00

18, 000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Fixed Asset acquisitions:

Land & land improvements

Building

Machinery & equipment

Delivery of equity

Office equipment

85, 000.00

90, 000.00

40, 000.00

15, 000.00

5, 000.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Pre-operating expenses

Sales tax

Dividends

10, 000.00

85, 000.00

0.00

0.00

146, 200.00

250, 000.00

0.00

176, 100.00

634, 700.00

0.00

183, 600.00

800, 000.00

0.00

194, 100.00

700, 000.00

Total non-operating outflow 548, 000.00 396, 200.00 810, 800.00 983, 600.00 894, 100.00

Total cash outflow 1, 694, 300.00 2, 486, 800.00 3, 343, 600.00 3, 645, 100.00 3, 737, 000.00

Net cash inflow/ (outflow)

ADD: Beginning cash balance

5, 700.00

0.00

240, 200.00

5, 700.00

77, 000.00

245, 900.00

1, 500.00

322, 900.00

110, 000.00

324, 400.00

CASH BALANCE, ENDING 5, 700.00 245, 900.00 322, 900.00 324, 400.00 434, 400.00

Projected Cash Flow Statement

For the years ended December 31,2008-2012

2011 2012 2013 2014 2015

Cash Flow from Operating Activities

Net Income 50,269,303.42 79,117,340.89 104,738,264.12 135,226,779.65 169,729,578.79

Adjustments to Reconcille Net Income

Organization Cost 9,551,729.00

Amortization of Software 30,000.00 30000 30000 30000 30000

Depreciation Expense 19,245,640.67 19,245,640.67 19,245,640.67 19,245,640.67 19,245,640.67

(Inc.) Dec. Accounts Receivable (2,004,897.46) (334,145.84) (381,293.93) (434,592.51) (494,871.93)

(Inc.) Dec. Inventory (1,190,113.46) (192,540.91) (171,642.97) (193,190.47) (201,069.07)

(Inc.) Dec. in Factory Overhead Supplies (49,224.00) (1,476.00) (1,464.00) (1,464.00) (1,524.00)

(Inc.) Dec. Unused Office Supplies (23,112.00) (4,160.16) (1,338.18) (936.31) (898.10)

(Inc.) Dec. in Prepaid Insurance (71,893.74) (74,050.55) (76,272.06) (78,560.00) (80,917.01)

Inc. (Dec.) Accounts Payable 386,123.00 7,777.00 11,756.00 11,756.00 11,761.00

Inc. (Dec.) SSS Contribution Payable 82,776.32

Inc. (Dec.) Pag-Ibig Contribution Payable 17,000.00

Inc. (Dec.) Philhelth Contribution Payable 23,025.00

Inc. (Dec.) Witholding Tax Contribution Payable 126,757.82

Inc. (Dec.)Utilities Payable 1,760,390.00 52,818.57 54,396.26 56,029.39 57,709.02

Inc. (Dec.) Vat Payable 577,409.46 96,232.73 109,813.00 125,164.58 142,521.48

Inc. (Dec.) Interest Payable 12,000,000.00 (4,200,000.00) (3,900,000.00) (3,900,000.00)

Inc. (Dec.) Income Tax Payable 6,920,802.86 3,883,389.66 3,448,970.43 4,104,223.25 4,644,607.58

Net Cash Provided by (used in) Operating Activities 97,651,716.89 97,626,826.05 123,106,829.33 154,190,850.25 193,082,538.42

Cash Flow from Investing Activities

Purchased of Fixed Assets

Investment in Bonds (15,000,000.00) (20,000,000.00) (40,000,000.00) (100,000,000.00) (135,000,000.00)

Additional Investment on tank (540,000.00) (556,200.00) (572,886.00) (590,072.58) (607,774.76)

Net Cash Flow Provided by (used in) Investing Activities (15,540,000.00) (20,556,200.00) (40,572,886.00) (100,590,072.58) (135,607,774.76)

Cash Flow from Financing Activities

Proceeds from Issuance of Stocks

Proceeds from Bank Loan

Payments Of Dividends 0.00 (12,500,000.00) (17,500,000.00) (45,000,000.00) (57,500,000.00)

Payment of Bank Loan (70,000,000.00) (65,000,000.00) (65,000,000.00) 0.00 0.00

Net Cash Provided by (used in) Financing Activities (70,000,000.00) (77,500,000.00) (82,500,000.00) (45,000,000.00) (57,500,000.00)

Net Increase (Decrease) in Cash 12,111,716.89 (429,373.95) 33,943.33 8,600,777.67 (25,236.34)

Cash Balance, Beg. 17,464,191.57 29,575,908.46 29,146,534.51 29,180,477.85 37,781,255.51

Cash Balance, End. 29,575,908.46 29,146,534.51 29,180,477.85 37,781,255.51 37,756,019.18

Item

AssetsCashAccount receivablesInventoryMachinery equipmentFurniture and fixtureBuilding

LiabilitiesAccounts payableBank loansBusiness Capital

Total Assets = Total Liabilities + Capital

Assets:

Current Assets

Cash 20,464,191.57

Prepaid Insurance 2,396,457.43

Total Current Assets 22,860,649.00

Non-Current Assets

Property Plant and Equipment 420,587,622.00

Organization Cost 6,551,729.00

Total Non-Current Assets 427,139,351.00

Total Assets 450,000,000.00

Liabilities and Stockholders Equity:

Non-Current Liability

Bank Loan 200,000,000.00

Stockholders' Equity

Common Stock, 100par, 5,000,000 shares authorized 250,000,000.00

Total Liabilities and Stockholders' Equity 450,000,000.00


ASSETS

Current Assets:

Cash on Hand

Accounts receivables

LESS: Allowances for bad debts

Inventories:

Raw materials

Finished goods

Goods in process

5, 700.00

300, 000.00

(15, 000.00)

54, 000.00

0.00

0.00

245, 900.00

497, 000.00

(25, 000.00)

54, 000.00

0.00

0.00

322, 900.00

598, 800.00

(30, 000.00)

104, 500.00

0.00

0.00

324, 400.00

624, 200.00

(32, 000.00)

104, 500.00

0.00

0.00

434, 400

660, 000.00

(34, 000.00)

104, 500.00

0.00

0.00

TOTAL CURRENT ASSETS 344, 700.00 771, 900.00 996, 200.00 1, 021, 100.00 1, 164, 800.00

Fixed Assets:

Land & land improvements

Buildings

Machinery & equipment

Delivery equity

Office equipment

85, 000.00

90, 000.00

40, 000.00

15, 000.00

5, 000.00

85, 000.00

90, 000.00

40, 000.00

15, 000.00

5, 000.00

85, 000.00

90, 000.00

40, 000.00

15, 000.00

5, 000.00

85, 000.00

90, 000.00

40, 000.00

15, 000.00

5, 000.00

85, 000.00

90, 000.00

40, 000.00

15, 000.00

5, 000.00

Total fixed assets 235, 000.00 235, 000.00 235, 000.00 235, 000.00 235, 000.00

LESS: Accumulated depreciation (8, 800.00) (23, 800.00) (38, 000.00) (53, 800.00) (68, 800.00)

Net book value 226, 200.00 211, 100.00 196, 200.00 181, 200.00 166, 200.00

Deferred charges

Organization & pre-operating expenses 8, 000.00 6, 000.00 4, 000.00 2, 000.0 0.00

TOTAL ASSETS 578, 900.00 989, 100.00 1, 196, 400.00 1, 204, 300.00 1, 331, 000.00

SAMPLE. PROJECTED BALANCE SHEET

LIABILITIES & OWNER’S EQUITY

Current Liabilities:

Accounts payable

Income tax payable

0.00

105, 700.00

0.00

108, 200.00

0.00

133, 600.00

0.00

133, 400.00

0.00

136, 900.00

Total current liabilities 105, 700.00 108, 200.00 133, 600.00 133, 400.00 136, 900.00

Long-term liability

Total Liabilities 105, 700.00 108, 200.00 133, 600.00 133, 400.00 136, 900.00

OWNER’S EQUITY

Contributed Capital 100, 000.00 100, 000.00 100, 000.00 100, 000.00 100, 000.00

Retained Earnings:

Balance, beginning 0.00 373, 200.00 780, 900.00 962, 800.00 970, 900.00

Net Income before the year 458, 200.00 803, 900.00 992, 700.00 991, 700.00 1, 017, 300.00

Dividends paid 0.00 (250, 000.) (634, 700.00) (800, 000.00) (7000,00.00)

Sales tax (85, 000.00) (146, 200.00) (176, 100.00) (183, 600.00) (194, 100.00)

Total Owner’s Equity 473, 200.00 800, 900.00 1, 062, 800.00 1, 070, 900.00 1, 194, 100.00

TOTAL LIABILITIES & OWNER’S EQUITY 578, 900.00 989, 100.00 1, 196, 400.00 1, 204, 300.00 1, 331, 000.00

Projected Balance Sheet

As of December 31,2008-2012

Assets 2011 2012 2013 2014 2015

Current Assets

Cash 29,575,908.46 29,146,534.51 29,180,477.85 37,781,255.51 37,756,019.18

Accounts Receivable (Schedule 1) 2,004,897.46 2,339,043.30 2,720,337.23 3,154,929.74 3,649,801.67

Inventory (Schedule 2) 1,190,113.46 1,382,654.37 1,554,297.34 1,747,487.81 1,948,556.88

Factory Overhead Supplies (Schedule 3) 49,224.00 50,700.00 52,164.00 53,628.00 55,152.00

Unused Office Supplies (Schedule 4) 23,112.00 27,272.16 28,610.34 29,546.66 30,444.76

Prepaid Insurance (Schedule 5) 2,468,351.17 2,542,401.72 2,618,673.78 2,697,233.78 2,778,150.79

Total Current Assets 35,311,606.55 35,488,606.06 36,154,560.54 45,464,081.50 46,218,125.28

Non-Current Assets

Property Plant and Equipment (Schedule 6) 401,851,981.33 383,132,540.66 364,429,782.99 345,744,214.90 327,076,348.99

Investment in Bonds 15,000,000.00 35,000,000.00 75,000,000.00 175,000,000.00 310,000,000.00

Total Non-Current Assets 416,851,981.33 418,132,540.66 439,429,782.99 520,744,214.90 637,076,348.99

Total Assets 452,163,587.88 453,621,146.72 475,584,346.53 566,208,299.39 683,294,477.26

Liabilities and Stockholders Equity

Current Liabilities

Accounts Payable (Schedule 3) 386,123.00 393,900.00 405,656.00 417,412.00 429,173.00

SSS Contribution Payable (Schedule 7) 82,776.32 82,776.32 82,776.32 82,776.32 82,776.32

Pag-Ibig Contribution Payable (Schedule 7) 17,000.00 17,000.00 17,000.00 17,000.00 17,000.00

Philhealth Contribution Payable (Schedule 7) 23,025.00 23,025.00 23,025.00 23,025.00 23,025.00

Witholding Tax Contribution Payable (Schedule 7) 126,757.82 126,757.82 126,757.82 126,757.82 126,757.82

Utilities Payable (Schedule 8) 1,760,390.00 1,813,208.57 1,867,604.82 1,923,634.22 1,981,343.24

VAT Payable (Schedule 9) 577,409.46 673,642.19 783,455.19 908,619.77 1,051,141.25

Interest Payable (Schedule 10) 12,000,000.00 7,800,000.00 3,900,000.00 0.00 0.00

Income Tax Payable (Schedule 14) 6,920,802.86 10,804,192.52 14,253,162.96 18,357,386.20 23,001,993.78

Total Current Liabilities 21,894,284.46 21,734,502.41 21,459,438.11 21,856,611.32 26,713,210.40

Non-Current Liability

Bank Loan (Schedule 10) 130,000,000.00 65,000,000.00 0.00 0.00 0.00

Total Liabilities 151,894,284.46 86,734,502.41 21,459,438.11 21,856,611.32 26,713,210.40

Stockholders' Equity

Common Stock, 100par, 5,000,000 shares authorized 250,000,000.00 250,000,000.00 250,000,000.00 250,000,000.00 250,000,000.00

Retained Earnings 50,269,303.42 116,886,644.31 204,124,908.42 294,351,688.07 406,581,266.86

Total Stockholders' Equity 300,269,303.42 366,886,644.31 454,124,908.42 544,351,688.07 656,581,266.86

Total Liabilities and Stockholders' Equity 452,163,587.88 453,621,146.72 475,584,346.53 566,208,299.39 683,294,477.26