Chapter 6

Financial Study
Investment /Capital Requirement
DSNT Company shall operate with the nature of a partnership agreement between Yvet
B. Gonido and Anica Iarra V. Miranda. An initial capital of one million five hundred thousand
pesos (P1, 500,000.00) is required to establish the business. Each partner will contribute seven
hundred fifty thousand pesos (P 750,000,000.00) to raise the said capital for the business. Each is
also expected to contribute an equal amount of property and service throughout the course of the
business unless they are to agree otherwise in a new contract of partnership. The researchers will
seek help financial assistance from their parents because as newly graduates they are still
financially unequipped.

Assumptions for Financial Statements

DSNT Company will have an initial capital of One Million Five Hundred Thousand
pesos (P1, 500,000.00). The researchers formulated major assumptions to guide them in
projecting their financial statements.

In preparing the financial statements, the following assumptions were used:

1. Depreciation was computed using the straight line method.
2. The SSS, PhilHealth and Pag-Ibig are based on the contribution schedule mandated
by the government.
3. Utilities expense includes electricity, water and telephone bill are based on the
commercial rates of the utility providers of Balanga, Bataan.
4. The cost of raw materials will increase in accordance with that of the inflation rate.
5.
(Padagdag na lang. more on kasi kung pano ginawa yung FS dto eh. Ynug basis)

Projected Financial Statements

Table 6.1 DSNT Company

Income Statement
For the Years Ended 2015-2017
2015

2016

2017

5,696,640.00

6,511,136.00

7,129,800.00

4,466,649.20
1,229,990.80

5,129,227.80
1,381,908.20

5,601,165.40
1,528,634.60

134,770.00

84,000.00
180,000.00
148,608.00
54,000.00
17,508.00
72,000.00

144,000.00
180,000.00
21,500.00
195,334.08
62,000.00
20,100.00
82,800.00

168,000.00
180,000.00
25,000.00
213,894.00
67,500.00
25,000.00
90,000.00

48,000.00
1,500.00
61,500.00

55,200.00
1,725,00
61,500.00

60,000.00
1,875.00
61,500.00

Total Operating Expense

801,886.00

822,434.08

892,769.00

NET INCOME/ (LOSS)

428,104.80

559,474.12

635,865.60

Sales
Cost of Goods Sold
(Annex 1)
GROSS PROFIT
OPERATING EXPENSES
Pre Operating Expense
Salaries & Allowances (Yvet &
Anica)
Rent Expense
Business Permit
Percentage Tax (3%)
Light and Water
Communication
Gas and Oil
Shop Repairs & Maintenance
(Fumigation Expense)
Office Supplies
Depreciation Expense

Table 6.2 DSNT Company

Balance Sheet
For the Years Ended 2015-2017
2015

2016

2017

Current Assets
Cash
Accounts Receivable
Raw Materials Inventory
Goods in Process, end
Finished Goods Invty,end

1,240,294.80
356,000.00
1,900.00
2,750.00
3,800.00

1,842,158.92
406,000.00
3,500.00
5,500.00
4,500.00

2,554,264.52
450,000.00
4,200.00
6,500.00
5,000.00

TOTAL CURRENT ASSETS

1,604,744.80

2,261,658.92

3,019,964.52

Non-Current Assets
Furniture and Fixtures
Transportation Equipment
Machineries and Equipment
Non-Current Assets
Less- Accum. Depreciation
Property and Equipment-net
TOTAL ASSETS

55,000.00
250,000.00
225,800.00
530,800.00
(112,440.00)
418,360.00
2,023,104.80

55,000.00
250,000.00
225,800.00
530,800.00
(224,880.00)
305,920.00
2,567,578.92

55,000.00
250,000.00
225,800.00
530,800.00
(337,320.00)
193,480.00
3,213,444.52

LIABILITIES
Current Liabilities
Accounts Payable
TOTAL LIABILITIES

95,000.00
95,000.00

80,000.00
80,000.00

90,000.00
90,000.00

EQUITY
YVET B. GONIDO, beg.
Balance
Add: Net Income/Loss
Total

750,000.00
214,052.40
964,052.40

964,052.40
279,737.06
1,243,789.46

1,243,789.46
317,932.80
1,561,722.26

ANICA IARRA V.
MIRANDA, beg. Balance

750,000.00

964,052.40

1,243,789.46

214,052.40
964,052.40

279,737.06
1,243,789.46

317,932.80
1,561,722.26

2,023,104.80

2,567,578.92

3,213,444.52

ASSETS

LIABILITIES AND
EQUITY

Add: Net Income/Loss

Total
TOTAL LIABILITIES
AND PARTNER'S
EQUITY

Table 6.3 DSNT Company

Cash Flow Statement
For the Years Ended 2015-2017

2015

2016

2017

428,104.80

559,474.12

635,865.60

112,440.00

112,440.00

112,440.00

(8,450.00)

-5,050.00

-2,200.00

(356,000.00)

-50,000.00

-44,000.00

Other Payables

95,000.00

-15,000.00

10,000.00

Net cash provided by operation

271,094.80

601,864.12

712,105.60

NET INCREASE (DECREASE) IN CASH

271,094.80

601,864.12

712,105.60

CASH , BEGINNING

969,200.00

CASH FLOW FROM OPERATING

ACTIVITES
Net Income
Adjustment to reconcile net income to net cash
provided by (used in)
operating activites:
Depreciation
Decrease (increase) in assets:
Inventories
Accounts Receivable
(Decrease)increase in liabilities:

INCOME & DEFECIENCY TAX PAID

CASH FROM INVESTMENT ACTIVITIES
Capital
Withdrawal
Acquisition of property, plant & equipment
TOTAL:

CASH , END

1,240,294.80 1,842,158.92

1,240,294.80 1,842,158.92 2,554,264.52

Table 6.4 Horizontal Analysis of DSNT Companys Income Statement

2015-2016
2016-2017
Amount
Percent
Amount
Percent
SALES

814,496.00

14.30%

618,664.00

9.51%

COST OF GOODS SOLD

662,578.60

14.83%

471,937.60

9.20%

GROSS PROFIT

151,917.40

12.35%

146,726.40

10.62%

(134,770.00)

-100%

60,000.00
21,500.00
46,726.08
8,000.00
2,592.00
10,800.00

71.43%
0
31.44%
14.81%
14.80%
15%

24,000.00
3,500.00
18,559.92
5,500.00
4,900.00
7,200.00

16.67%
0
16.28%
9.50%
8.87%
24.38%
8.70%

7,200.00
225.00
-

15%
15%
0

4,800.00
150.00
-

8.70%
8.70%
0

Total Operating Expense

20,548.08

2.56%

70,334.92

8.55%

NET INCOME/ (LOSS)

131,369.32

30.68%

76,391.48

13.65%

OPERATING
EXPENSES
Pre Operating Expense
Salaries & Allowances
(Yvet & Anica)
Rent Expense
Business Permit
Percentage Tax (3%)
Light and Water
Communication
Gas and Oil
Shop Repairs &
Maintenance (Fumigation
Expense)
Office Supplies
Depreciation Expense

Pa lagyan na lng explanation

Table 6.5 Horizontal Analysis of DSNT Companys Balance Sheet

2015-2016
2016-2017
Amount
Percent
Amount
Percent
ASSETS
Current Assets
Cash
Accounts Receivable
Raw Materials Inventory
Goods in Process, end
Finished Goods Invty,end

601,864.12
50,000.00
1,600.00
2,750.00
700.00

48.52%
14.04%
84.21%
100.00%
18.42%

712,105.60
44,000.00
700.00
1,000.00
500.00

38.66%
10.84%
20%
18.18%
11.11%

TOTAL CURRENT ASSETS

656,914.12

40.94%

758,305.60

33.53%

Non-Current Assets
Furniture and Fixtures
Transportation Equipment
Machineries and Equipment
Non-Current Assets
Less- Accum. Depreciation
Property and Equipment-net
TOTAL ASSETS

(337,320.00)
(112,440.00)
544,474.12

0
0
0
0
100.00%
-26.88%
26.91%

(562,200.00)
(112,440.00)
645,865.60

0
0
0
0
50%
-36.74%
25.15%

LIABILITIES
Current Liabilities
Accounts Payable
TOTAL LIABILITIES

(15,000.00)
(15,000.00)

-15.79%
-15.79%

10,000.00
10,000.00

12.50%
12.50%

EQUITY
YVET B. GONIDO, beg.
Balance
Add: Net Income/Loss
Total

214,052.40
65,684.66
279,737.06

28.54%
30.69%
29.02%

279,737.06
38,195.74
317,932.80

29.02%
13.65%
25.56%

214,052.40
65,684.66
279,737.06

28.54%
30.68%
29.02%

279,737.06
38,195.74
317,932.80

29.02%
13.65%
25.56%

544,474.12

26.91%

645,865.60

25.15%

LIABILITIES AND
EQUITY

ANICA IARRA V.
MIRANDA, beg. Balance
Add: Net Income/Loss
Total
TOTAL LIABILITIES AND
PARTNER'S EQUITY

Table 6.6 Vertical Analysis of DSNT Companys Income Statement

2015
2016
2017
100%

100%

100%

COST OF GOODS SOLD

78.41%

78.78%

78.56%

GROSS PROFIT

21.59%

21.22%

21.44%

2.37%

1.47%

2.21%

2.36%

3.16%
0
2.61%
0.95%
0.31%
1.26%

2.76%
0.33%
3%
0.95%
0.31%
1.27%

2.52%
0.35%
3%
0.95%
0.35%
1.26%

0.84%

0.85%

0.84%

0.03%
1.08%

0.85%
0.94%

0.03%
0.86%

Total Operating Expense

14.08%

12.63%

12.52%

NET INCOME/ (LOSS)

7.52%

8.59%

8.92%

SALES

OPERATING EXPENSES
Pre Operating Expense
Salaries & Allowances (Yvet
& Anica)
Rent Expense
Business Permit
Percentage Tax (3%)
Light and Water
Communication
Gas and Oil
Shop Repairs & Maintenance
(Fumigation Expense)
Office Supplies
Depreciation Expense

Pa lagyan na lng explanation

Table 6.7 Vertical Analysis of DSNT Companys Balance Sheet

2015
2016
2017
ASSETS
Current Assets
Cash
Accounts Receivable
Raw Materials Inventory
Goods in Process, end
Finished Goods Invty,end

61.31%
17.60%
0.09%
0.14%
0.19%

71.75%
15.81%
0.14%
0.21%
0.18%

79.49%
14%
0.13%
0.20%
0.16%

TOTAL CURRENT ASSETS

79.32%

88.09%

93.98%

Non-Current Assets
Furniture and Fixtures
Transportation Equipment
Machineries and Equipment
Non-Current Assets
Less- Accum. Depreciation
Property and Equipment-net
TOTAL ASSETS

2.72%
12.36%
11.16%
26.24%
-5.56%
20.68%
100%

2.14%
9.74%
8.79%
20.67%
-8.76%
11.91%
100%

1.71%
7.78%
7.03%
16.52%
-10.50%
6.02%
100%

4.70%
4.70%

3.12%
3.12%

2.80%
2.80%

37.07%

37.55%

38.71%

10.58%
47.65%

10.89%
48.44%

9.89%
48.60%

37.07%

37.55%

38.71%

10.58%
47.65%

10.89%
48.44%

9.89%
48.60%

100%

100%

100%

LIABILITIES AND EQUITY

LIABILITIES
Current Liabilities
Accounts Payable
TOTAL LIABILITIES
EQUITY
YVET B. GONIDO, beg.
Balance
Add: Net Income/Loss
Total
ANICA IARRA V. MIRANDA,
beg. Balance
Add: Net Income/Loss
Total
TOTAL LIABILITIES AND
PARTNER'S EQUITY

Ratio

Current Ratio

Quick Ratio

Return on Assets
Net Profit
Margin
Fixed Assets
Turnover
Total Assets
Turnover

Table 6.8 DSNT Company Financial Ratio Analysis

Formula
2015
2016
LIQUIDITY RATIOS
Current Assets
Current Liabilities
16.89
28.27
Current AssetsInventory Current
Liabilities
16.85
28.21
PROFITABILITY RATIOS
Net Income
Total Assets
Net Income
Sales
ACTIVITY RATIOS
Sales
Fixed Assets
Sales
Total Assets

2017

33.55

33.5

Liquidity Ratio
Liquidity Ratios determine if the company determine if the company is able to pay its
debts on time, knows how to turn its assets into cash and has an efficient working environment.
As for DSNT Company, it may not be using its current assets or its short-term financing
facilities efficiently since its liquidity ratio is too high (Higher than 2)
Profitability Ratio

Activity Ratio

(Padagdag na lang)

Table 6.10 DSNT Company

Return on Investment
(Year ended 2015)

Net Income

2015

2016

2017

P 428,104.80

P 559,474.12

P 635, 865.60

Total
Investment
Return on
Investment