FINANCIAL/ECONOMIC 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

MAJOR PORTIONS OF FINANCIAL STUDY

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. MAJOR ASSUMPTIONS

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

GUIDELINES IN FORMULATING ASSUMPTIONS

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

GUIDELINES..

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

GUIDELINES..

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.

GUIDELINES..

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.

2. TOTAL PROJECT COST

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

FIXED-ASSETS

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

CURRENT ASSETS

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

3. SOURCES OF FINANCING THE PROJECT

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

4. PREPARATION OF FINANCIAL STATEMENTS

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

TYPES OF FINANCIAL STATEMENTS NEEDED

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.

TYPES..

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.

TYPES..

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

5. FINANCIAL ANALYSIS

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

A. TEST OF LIQUIDITY

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

B. TEST OF DEBT-SERVICE

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

C. TEST OF PROFITABILITY

TEST OF TOTAL DEBT COVERAGE = PROFIT BEFORE INTEREST & TAXES (INTEREST + PRINCIPAL PAYMENT) (1/1 – INCOME TAX RATE)

D. TEST OF TOTAL DEBT COVERAGE

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

E. FUNDS-FLOW ANALYSIS

◦ 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

E. FUNDS-FLOW ANALYSIS

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 ANALYSIS BEV = FIXED COSTS SELLING PRICE – VARIABLE COST/UNIT

◦ 2. BREAK-EVEN CASH ANALYSIS BEC = CASH FIXED COSTS SELLING PRICE – CASH VARIABLE COST/UNIT

◦ 3. BREAK-EVEN SELLING PRICE ANALYSIS BESP = VARIABLE COSTS + FIXED COSTS UNIT VOLUME

= TOTAL COST X SELLING PRICE SALES

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

= FIXED COST 1 – (VARIABLE COST/NET SALES)

F. TEST OF OPERATING LEVERAGE

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

G. TEST OF FINANCIAL LEVERAGE

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

H. TEST OF CAPITAL INVESTMENT

Expected SalesLess: Raw materials

Labor costUtilitiesMarketing expensesDepreciation costsOthers

Equals: Net profits

ROI = Net profit / Total expenses X 100%.

Sample Income Statement

PARTICULAR Y1 Y2 Y3 Y4 Y5Sales 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, 800.00LESS: Cost of Sales Direct materials & labor Manufacturing overhead

776, 300.0073, 200.00

1, 237, 300.00131, 800.00

1, 534, 700.00143, 800.00

1, 559, 000.00157, 000.00

1, 636, 800.00171, 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, 200.00Gross Profit on Sales 905, 000.00 1, 554, 900.00 1, 893, 900.00 1, 956, 000.00 2, 164, 600.00LESS: 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, 000.00Total operating expenses 182, 200.00 318, 200.00 366, 700.00 430, 400.00 509, 600.00Income 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 .00Income before income tax 704, 800.00 1, 236, 700.00 1, 527, 200.00 1, 525, 600.00 1, 655, 000.00Income tax 246, 600.00 432, 800.00 534, 500.00 533, 900.00 547, 700.00NET INCOME 458, 200.00 803, 900.00 992, 700.00 991, 700.00 1, 107, 300.00

SAMPLE PROJECTED INCOME STATEMENT

Projected Income StatementFor the years ended December 31,2011-2015

2011 2012 2013 2014 2015Net 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 ExpensesOrganizational Cost 9,551,729.00Amortization of Software 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00Office 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

Sample Cash Flow

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

PARTICULAR Y1 Y2 Y3 Y4 Y5CASH 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, 000.00Non-operational inflows: Loan Proceeds Paid-up capital

200, 000.00100, 000.00

0.000.00

0.000.00

0.000.00

0.000.00

Total non- operational inflows 300, 000.00 0.00 0.00 0.00 0.00Total 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, 400.00Adjustment for accounts payable: Beginning Ending

0.00(105, 700.00)

105, 700.00(108, 200)

0.00108, 200.00

0.00133, 600.00

0.00133, 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 0.00Non-operating outflow 2, 532, 800.00 2, 661, 500.00 2, 842, 900.00Debt servicing: Principal Interest

200, 000.0018, 000.00

0.000.00

0.000.00

0.000.00

0.000.00

Fixed Asset acquisitions: Land & land improvements Building Machinery & equipment Delivery of equity Office equipment

85, 000.0090, 000.0040, 000.0015, 000.00

5, 000.00

0.000.000.000.000.00

0.000.000.000.000.00

0.000.000.000.000.00

0.000.000.000.000.00

Pre-operating expenses Sales tax Dividends

10, 000.0085, 000.00

0.00

0.00146, 200.00250, 000.00

0.00176, 100.00634, 700.00

0.00183, 600.00800, 000.00

0.00194, 100.00700, 000.00

Total non-operating outflow 548, 000.00 396, 200.00 810, 800.00 983, 600.00 894, 100.00Total cash outflow 1, 694, 300.00 2, 486, 800.00 3, 343, 600.00 3, 645, 100.00 3, 737, 000.00Net cash inflow/ (outflow)ADD: Beginning cash balance

5, 700.000.00

240, 200.005, 700.00

77, 000.00245, 900.00

1, 500.00322, 900.00

110, 000.00324, 400.00

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

Projected Cash Flow StatementFor the years ended December 31,2008-2012

2011 2012 2013 2014 2015Cash 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

Sample Balance Sheet

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

PARTICULAR Y1 Y2 Y3 Y4 Y5

ASSETS

Current Assets: Cash on Hand Accounts receivablesLESS: Allowances for bad debtsInventories: Raw materials Finished goods Goods in process

5, 700.00300, 000.00(15, 000.00)

54, 000.000.000.00

245, 900.00497, 000.00(25, 000.00)

54, 000.000.000.00

322, 900.00598, 800.00(30, 000.00)104, 500.00

0.000.00

324, 400.00624, 200.00(32, 000.00)104, 500.00

0.000.00

434, 400660, 000.00(34, 000.00)104, 500.00

0.000.00

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, 000.0090, 000.0040, 000.0015, 000.00

5, 000.00

85, 000.0090, 000.0040, 000.0015, 000.00

5, 000.00

85, 000.0090, 000.0040, 000.0015, 000.00

5, 000.00

85, 000.0090, 000.0040, 000.0015, 000.00

5, 000.00

85, 000.0090, 000.0040, 000.0015, 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

0.00105, 700.00

0.00108, 200.00

0.00133, 600.00

0.00133, 400.00

0.00136, 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 SheetAs of December 31,2008-2012

Assets 2011 2012 2013 2014 2015Current 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 EquityCurrent 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

THANKS FOR LISTENING

GOOD DAY