Professional Documents
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- SSS
- PAG-IBIG
- PhilHealth
- Utilities Expense
- Rent Expense
- Interest Expense
6. Repairs and Maintenance will be P300.00 on the first year operation and will
increase by 5% in the second year. On the third year, it will increase by P1, 000.00
7. Insurance Expense will be P2, 000 annually and will stay constant in the succeeding
years.
8. The owner of the business, who is a resident citizen with no dependent, has no other
sources of income.
conditional, and cash flows. These statements are necessary for the company to
determine its ability to generate cash and to know its capability to pay back its debt.
Also, it is important to track the financial standing on a trend line to recognize any
profitability issues.
Financial statement analysis deals with the analyzation of the balance sheet and
the income statement of a business using ratios for financial representations, business
evaluation, and financial forecasting. Moreover, it helps investors decide whether or not
to invest their funds in a particular company. This analysis is a quantifying method for
Current Ratio
Current Ratio is a liquidity ratio that measures a companys ability to pay short-
term and long-term obligations. It considers the total amount of current assets of a
The table above indicates that within the five- year projection, the proposed
business has current ratios above 1:1 the ideal current ratio which means that it is
financially liquid since the current assets are more than enough to cover the currently
maturing liabilities.
assets to cover its immediate liabilities. It is more robust than the current ratio since it
The table above tells us that the proposed business is financially liquid on the
last three years because it is above the ideal acid test ratio of 1:1. On the first two years
of operation, the acid test ratio is below the ideal ratio because of payment of currently
maturing obligations. The current asset of the business in the first two years is mostly
composed of inventory which is the main reason of the low acid-test ratio. The usage of
acid test ratio is more reliable as compared with the current ratio because it helps in
assessing the liquidity of the business without the consideration of inventory and
prepaid assets since quick assets are highly convertible into cash.
Return on Equity
It is the most common profitability ratio that measures the overall efficiency of the
business in managing its total investment in asset and generating a profit to the owner.
The table above indicates that the returns of investments from the first year to the
fifth year are increasing because of the increasing trend of net income. The returns on
equity for the first three years are negative because of the net losses the business
incurred. However, the return increases due to increase in the projected sales that
minimal increase which helps in the continuous progress in the operations. A Du Pont
Analysis is shown on the next page to further understand the components of return on
the length of time required for the project to recover the initial cost of an investment
using the present value of future cash flows. The shorter the period is, the better.
The table above indicates that the proposed project will not be able to recoup the
investment within five years. The approximate time cannot be determined because the
proponents estimated the financials of the proposed project for five years only.
Nonetheless, it is in a period more than five years. The information warns the
prospective implementer of the risks he has to bear in undertaking the proposed project.
proponents computed the average increase of net cash flow from operations and used
this trend or percentage to calculate for the following years net cash flow.
Contribution Margin
cost compared to the company sales in pesos. It represents the total earnings available
to pay for the fixed expenses and generate a profit. The formula is:
The table above shows that the proposed projects contribution margin is
increasing because of the increased selling price as stated in the financial assumptions
and the increase in production which decreases variable cost per unit. Therefore, the
business is more capable of coping up with its fixed cost and that there is an increasing
This analysis determines the minimum amount of peso sales or number of items
to sell to cover up the expenses during the period. An amount over the break-even point
would result in a profit while the opposite would result in a loss. An amount equal to the
break-even point would result in neither profit nor loss but break even.
The table shows how much sales in peso and in units is needed to break even.
Furthermore, the year 2021 had the highest break-even point that resulted from its
lesser contribution margin. On the first three years of operations, the business
continuously increases its contribution margin per unit due to the increases productivity
of the production process. The break-even point increases on the fourth year because
of the additional cost of labor which is necessary to increase the production capacity
and to maximize the possible sales the company could take. It decreases again on the
5th year which could signify that the increase is temporary and is solely because of the
SENSITIVITY ANALYSIS
instance it is very sensitive or in what independent variable change does the business is
materially affected. It determines the impact it gives to the entity when particular
variable differs from what was previously assumed. The proponents can determine how
changes in one variable will affect the target variable and the business through
sensitivity analysis.
The entity should consider its actions when the project is shown to be sensitive to
the value of a variable that is uncertain. It can include project level conduct like long-
term supply contracts, sector level actions like price changes or national level actions
like a change in tax. The project may have to be redesigned or implemented first on the
Listed on the next page are the scenarios assumed that may happen during a
business endeavor.
Analysis
increase in expenses in the production process and operations. Due to the increase in
sales volume, the business is still expected to progress in the succeeding years. The
proposed venture has also shown that the productivity increases and, therefore,
decreases the cost per unit of the produced goods. Based on these analyses, the
business will be at the optimal situation if it declines its cost of production and operating
expenses.
CHAPTER VIII
SOCIO-ECONOMIC DESIRABILITY
profit, and the undertaking of its social responsibility. The sectors that will be the
beneficiaries of the business upon its operation, with their respective benefits, are
Government
to the growth of the economy, taking care of the environment, and providing a healthy
and safe nation for its citizens. However, the government cannot do these without
taxes.
In line with this, entrepreneurial activity such as the realization of the proposal will
lead to the generation of more revenues for the government through their payment of
Community
not reached college level will be given opportunities. On top of that, the employees will
earn additional income to provide for their needs and eventually improve their lives.
There will be a decrease in the unemployment rate in the country, and it will also
directly improve the standard of living for those in the community where the business is
located.
Ultimate Users
The quality of the product Pandan Massage Oil is considered better as compared
to chemically-based ones. It can be used to relieve stomach cramps and spasms. Its
natural components are commonly conventional in mitigating pain like arthritis, chest
pains, earaches, and headaches. Also, healing rheumatisms and nerve weaknesses.
Spas
Customer satisfaction is also one of the objectives of businesses other than the
maximization of profit. The spas will be able to provide their patrons with an organic,
innovative, high quality and affordable product. The clients are given another option to
choose from or an alternative from the usual massage oil used to make a variety of their
selection.
Competitors
compete to attract almost the same market with their homogeneous products, as such
On the other hand, the existence of competitors in the industry promotes the
will help them identify their comparative advantage and edge as to the other
competitors. Their strengths and weaknesses are identified as a basis for them to
leverage its strength and overcome its vulnerability. Lastly, the competitors will be
propelled and influenced to innovate new products or improve their existing products for
market competence.
Related Industries
The realization of the proposed project will help in promoting other related
industries. These include the suppliers of raw materials such as pandan leaves, mineral
oil and eucalyptus oil, as well as the manufacturers of the tools, equipment, and
machinery. They will be benefitted by the generation of additional income from being the
CHAPTER IX
and dissecting its strengths, weaknesses, opportunities, and threats. It helps the
implementer know the inside and outside variables that will impact the achievement or
failure of the business. SWOT analyses are frequently utilized during strategic planning.
They can serve as an antecedent to any organization activity, for example, exploring
zones for change, or refining and diverting endeavors in the middle of planning.
action or activity. Knowing these favorable and negative aspects can help organizations
adequately impart what parts of the plan should be perceived. With the use of SWOT
out how to change over its weaknesses and threats to strengths and opportunities
individually. Also, this guarantees the abilities and strengths of the business to be
STRENGTHS
Use of natural components
leaves extract, mineral oil, and eucalyptus essential oil. It provides assurance to the
user that the product is not harmful and does not contain the harmful chemical
substance. The massage oil produced using Pandan leaves has a similar relieving
impact with the other massage oils, however the main contrast is that it has its kind of
used by the spas. Pandan massage oil is composed of a base oil and essential oil. The
massage spas do not need to incur additional cost for other essential oil to provide a
delightful smell.
The production of the proposed massage oil is easy; the unskilled workers can
WEAKNESSES
Established Competitors
Many varieties of massage oils have already been on the market. They come in
different forms, sizes and packaging. Competing products are supplied from both
foreign and local sources. Furthermore, the spas may refuse to shift to another kind of
product due to their patronage to the massage oils that they have been accustomed
using.
marketing schemes to penetrate the market and provide awareness to the people that
OPPORTUNITIES
Nowadays, the factors that can trigger stress to people are increasing work
pressure which pushes them to resort to having a body massage. This tension,
pressure and strain factor which is becoming a trend in our present work environment
would increase the customers in a massage spa, which consequently would increase
The nations natural tourist spots are one of the reasons why many foreigners
visit the country and learn some bits of its culture. One of the cultures which are highly
patronized is the traditional body massage, which is more expensive in their countries.
The affordability encourages the tourist massage services in the country and is an
THREATS
At present, there are several types of massage oil products existing in the
market, customers will be provided with more options to try other products and would
technology and as people came to know its existence they prefer to have some
relaxation using the massage equipment as commonly promoted in the malls. This
technology development may prevent the customers to visit the massage spas and
instead have their massage at home with the use of massage machines.
Established Competitors
Having competitors with established reputation with massage spas could prove
to be a weakness but as a strength as well. The product may be new to the industry, but
this can provide them an alternative to shifting to a better quality product, which is
organic and likewise much cheaper. Changing to an affordable product allows them to
The product being new to the market and practically having no demand and
supply gap, it needs detailed product development like sampling and direct selling which
is costly. This can encourage customers of the spas to demand the proposed oil
because of its stress-relieving effect with gentle and refreshing aroma or smell.
once they feel that the product does not satisfy their needs and wants. The fast
changing minds of the customers is a threat to every business. This threat can serve as
an avenue for the entity to be more innovative. The implementer of the proposed
product may consider selling Pandan Massage oil with freebies for example or using
other selling strategies like buying one take one or giving discounts for every 10-gallon
Technology and tradition always are on different sides of a coin. The number one
nowadays always put the traditional business at a disadvantage. Entities that use
the market. The implementer can make this as an opportunity to improve its quality. The
implementer must see to it that the relaxing effect of the proposed product is lasting,
that it can more than compete with the relaxation the massage machine can offer which
The workers needed in the production only requires a minimal training which
would certainly be of great help to save time and cost during the operational activities of
the business. Also, the basal component of the product being the Pandan leaves has its
natural aroma; this does not need other essential oil compared to the competing
products. In effect, the proposed product selling price is much lower but can provide the
needed stress relief after its application with its refreshing and soothing aroma. This
feature will enhance the market patronage and increased profitability to the business.
CHAPTER X
SUMMARY
This study was designed to determine the feasibility and viability of The
1. Is the proposed production and distribution of Massage Oil from Pandan Leaves
The study covers the massage spas located within Cebu City. The proponents
used purposive sampling method in finding the sample size employed in the survey,
In gathering the data, the Descriptive Survey Method was used as the data
gathering instrument utilizing the questionnaire made by the proponents. Other sources
such as the periodicals and internet were also applied to get the information needed for
FINDINGS
Based on the data gathered and presented in the previous chapters, the
Technical Aspect
The proposed product is massage oil that contains oil extracted from Pandan
leaves and mix with mineral and eucalyptus oil for additional benefit. Pandan leaves
contain laxative properties that serve as the pain reliever. It is also used to treat
arthritis, chest pains, earaches, headaches, and reducing stomach cramps. The
business will rent a space in Osmena Boulevard, Cebu City for the office and production
site. The production capacity for the first year are 312 gallons, and an estimate that
there will be 10% increase each year and in the fourth year an additional worker is hired
Marketing Aspect
There is no demand-supply gap for the proposed product for the reason that
massage oils are prevalent in the market. In spite of the abundance in the market, the
proposed product can still compete because it is organic and cheaper. The results of the
survey showed that there are two (2) leading brands in the market which composed
70% of the supply. Consequently, the proponents determined that the potential market
share of the proposed product is zero, but with an extensive marketing strategy, it can
penetrate 10% of the annual demand. This market share increases by 5% yearly.
Management Aspect
The proponents concluded that the organization structure of the proposed study
be sole proprietorship considering that the amount of initial capital requirement is only
P196, 464.00 which could be raised or financed by a single person. Furthermore, the
proposed project only needs a simple organizational structure composed of a few
individuals.
Permit, Fire and Safety Clearance, BIR Registration and Clearance, SSS Membership
and Clearance, Philhealth Registration, Pag- ibig Registration, and LTO Registration.
The business will be subjected to taxes such as Income Tax, Percentage Tax,
Financial Aspect
The proposed venture is not found to be profitable based on the projected loss
for the first three years of operation, (P86, 813.25) for the first year, (P45, 339.59) for
the second year, and (P5, 858.03) for the third year. However, during the fourth year
and fifth year of operation, it resulted in net income of P21, 128.47 and P104, 964.68
respectively because of the increase in sales and minimal increase in production cost.
The return on equity from first year to fifth year is -57%, -34%, -4%, 13% and 61%
respectively. The payback period of the business is more than five years. Therefore, the
proposed business does not have sufficient profit to recoup the implementers
investment. It should also be pointed out that despite the great losses of the business, it
Socio-Economic Desirability
benefited such as the government, community, ultimate users, spas, competitors, and
related industries. The project will give job opportunities to those unemployed ones and
improve their quality life. The community will also be introduced to a new product of
SWOT Analysis
The strengths of the proposed product are the use of natural components; it
requires minimal training of workers and that similar massage oils are pricey. One of the
new to the market, requires extensive promotion. Workers today are more stressed due
traditional massage are its opportunities. The threats are the fast changing preference
CONCLUSIONS
Based on the preceding, the proponents conclude that The Proposed Production
of Massage Oil from Pandan Leaves (Pandanus Amaryllifolius) and its Distribution to
Spas in Cebu City is technically feasible, socially and economically desirable but not
RECOMMENDATIONS
The proponents recommend that The Proposed Production of Massage Oil from
Pandan Leaves (Pandanus Amaryllifolius) and its Distribution to Spas in Cebu City be
2. To improve the financial performance, the business could widen its market by
position shows a large amount of ending inventory which signifies that there is
room for more customers from cities other than of the target market.
the product could be repacked into smaller volumes. The smaller packaging of
the product could be consigned to the supermarket around the target market.
4. The implementer may choose to bear all the risks and still continue the operation
of the proposed business for more than five years because his loss can still be