1. Chapter V
Financial Aspect
FRAMEWORK
This aspect quantifies the results of the marketing, technical, management, taxation and legal phases of the project study, and expresses
in peso terms the possible outcome of operating the project.
This chapter presents the overall financial picture in terms of operating cash requirements, profitability and cash flows.
MAJOR ASSUMPTION
In the formulation of financial projection, assumptions play a vital role because they serve as the foundation for estimating the future
expenditures, expenses, and revenues of the project as accurately as possible. These assumptions that the proponent made are based on the
workable facts and research.
1. The business operations will start on January 2010 and will operate continuously.
2. The total capital contribution is fifteen million pesos (15,000,000) where in the capital partners will contribute twenty five percent (25%)
equivalent to one million two hundred fifty thousand pesos (1,250,000), and limited partners will contribute fifteen percent (15%)
equivalent to seven hundred fifty thousand (750,000).
3. The pre-operating expenses is estimated to be at P 25,520.00
4. Total fixed assets are estimated to be at P 5,769.65.00
5. Depreciation is computed using the straight – line method. The company assumes a salvage value estimated to be ten percent (10%)of
the cost fixed assets.
6. The company shall maintain a policy of ten percent (10%) increase of selling price and number of units sold annually.
7. Sales discount is estimated at ten percent (10%) of sales and sales returns and allowances are estimated at one percent (1%)
8. Purchase of the first year are estimated at P 2,292,382.50 for year one with an annual increase of ten percent (10%)
9. Overhead shall consist of the following accounts with a ten percent (10%).
a) Light – P244,800.00
b) Water –P 22,965.00

2. c) Telephone – P 11,289.00
d) Repairs and maintenance – P3,044.89.00
10. Raw materials are estimated for one month available for use.
11. Operating expenses are estimated as follows:
a) Rent expense – P 40,000.00
b) Retainer’s – P 40,000.00
c) Advertising - P 30,000.00
12. Monthly SSS, withholding tax, philhealth and EC are based on the 2009 contribution as provided by Social Security System (SSS), bureau
of internal revenue (BIR), and Philhealth Insurance Corporation. See the said contribution tables on the appendix section.
13. Monthly PAG-IBIG contribution is considered one – hundred pesos (P100)
14. Salaries and wages are based on the prescribed wage order by the department of labor and employment (DOLE) with an ten percent
(10%) increase annually.

3. COFFEE TALK
Projected Sales
Hot Coffee Price Qnty Total Grand Total
Espresso 120.00 2920 350,400.00 350,400.00
Caffe Doppio 110.00 2920 321,200.00 321,200.00
Caffe Hag 110.00 2920 321,200.00 321,200.00
Cappuccino 105 1825 383,400.00 383,400.00
Iced Cappuccino 105 1825 191,625.00 191,625.00
Milky way Cappuccino 120 1825 219,000.00 219,000.00
Almond Cappuccino 120 1825 219,000.00 219,000.00
Frapped capuccino 120 1825 219,000.00 219,000.00
Caffe Latte 115 1825 209,875.00 209,875.00
Caffe Mocha 115 1825 209,875.00 209,875.00
Coffee with a twist
Café Breve 120 3650 438,000.00 438,000.00
Caffe Freddo 120 3650 438,000.00 438,000.00
Café Macchiato 120 3650 401,500.00 401,500.00
Latte macchiato 120 3650 401,500.00 401,500.00
Flavored Coffee
Vanill 90 4380 394,200.00 394,200.00
Irish Crème 90 5475 492,750.00 492,750.00

4. Caramel 90 4380 394,200.00 394,200.00
Hazelnut 90 5475 492,750.00 492,750.00
Fruit flavors such as orange and raspberry 90 5475 492,750.00 492,750.00

5. COFFEE TALK
Computation of depreciation ( Straight Line Method )
Office Machineries and equip. Cost Quantity Total Cost Life Depreciation 2008 2009 2010 2011 2012
Computer ( Intel Pentium 4) 12,500.00 1 12,500.00 5 2,250.00 2,250.00 2,250.00 2,250.00 2,250.00 2,250.00
Printer ( Hewlett Packard) 2,000.00 1 2,000.00 5 360.00 360.00 360.00 360.00 360.00 360.00
Stereo ( JVC) 28,000.00 1 28,000.00 5 5,040.00 5,040.00 5,040.00 5,040.00 5,040.00 5,040.00
TOTAL 42,500.00 42,500.00 7,650.00 7,650.00 7,650.00 7,650.00 7,650.00 7,650.00
Coffee shop’s Machineries
and Equipment
Aroma Grande Coffee Maker 17,100.00 1 17,100.00 5 3,078.00 3,078.00 3,078.00 3,078.00 3,078.00 3,078.00
Espresso Machine 5,159.00 1 5,159.00 5 928.62 928.62 928.62 928.62 928.62 928.62
Coffee Press 1,700.00 1 1,700.00 5 306.00 306.00 306.00 306.00 306.00 306.00
Thermal Coffee Press 7,000.00 1 7,000.00 5 1,260.00 1,260.00 1,260.00 1,260.00 1,260.00 1,260.00
Grinder 1,000.00 1 1,000.00 5 180.00 180.00 180.00 180.00 180.00 180.00
Blender 2,500.00 1 2,500.00 5 450.00 450.00 450.00 450.00 450.00 450.00
Refrigerator 8,000.00 1 8,000.00 5 2,880.00 2,880.00 2,880.00 2,880.00 2,880.00 2,880.00
Oven-Gas Range 15,000.00 1 15,000.00 5 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00
Microwave Oven 7,500.00 1 7,500.00 5 1,350.00 1,350.00 1,350.00 1,350.00 1,350.00 1,350.00
Television 22,000.00 1 22,000.00 5 3,960.00 3,960.00 3,960.00 3,960.00 3,960.00 3,960.00

6. Aircondition 25,000.00 2 25,000.00 5 4,500.00 4,500.00 4,500.00 4,500.00 4,500.00 4,500.00
Electric Fan 4,000.00 1 4,000.00 5 720.00 720.00 720.00 720.00 720.00 720.00
Water Purifier 4,500.00 1 4,500.00 5 810.00 810.00 810.00 810.00 810.00 810.00
Generator 70,000.00 1 70,000,00 5 12,600.00 12,600.00 12,600.00 12,600.00 12,600.00 12,600.0
Fire Extinguisher 1,500.00 3 4,500.00 5 810.00 810.00 810.00 810.00 810.00 810.00
TOTAL 191,959.00 202,959.00 36,532.62 36,532.62 36,532.62 36,532.62 36,532.62 36,532.62
Furniture and Fixtures
Set of table and chair 7,500.00 2 15,000.00 5 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00 2,700.00
Table (steel) 4,500.00 1 4,500.00 5 810.00 810.00 810.00 810.00 810.00 810.00
Office chairs 850.00 4 3,400.00 5 612.00 612.00 612.00 612.00 612.00 612.00
Couch 5,500.00 6 33,000.00 5 5,940.00 5,940.00 5,940.00 5,940.00 5,940.00 5,940.00
TOTAL 18,350.00 55,900.00 10,062.00 10,062.00 10,062.00 10,062.00 10,062.00 10,062.00
TOTAL FIXED ASSETS 252,809.00 301,359.00 54.244.62 54.244.62 54.244.62 54.244.62 54.244.62 54.244.62
Depreciation
Leasehold improvement 60,000.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00

7. COFFEE TALK
Capital Requirements
Coffee Shop Rental ( six months advance deposit ) 240,000.00
Leasehold Improvements 60,000.00
Office Equipment 42,500.00
Coffee Shop Machineries and Equipments 202,959.00
Furniture and Fixtures 55,900.00
Advertising Expense 30,000.00
Pre-operating Expense
Mayors Permit 5,000.00
Taxes and License 4,500.00
Engineering Permit
Sanitary Inspection Fee 1,500.00
Garbage Fee 700.00
SEC 3,500.00
Attotney’s Fee (notary) 350.00
BIR Registration 500.00
Barangay permit 850.00
Health permit 4,000.00
Miscellaneous Fee 2,320.00 25,520.00
Reserve Money 4,343,121.00

8. Total 5,000.000.00 656,879.00
Partner A Partner B Partner C Partner D Total
Capital balance, beginning 1,250,000.00 1,250,000.00 1,250,000.00 1,250,000.00 5,000,000.00
Add: share in Net-Income- YEAR 1 209,941.61 209,941.61 209,941.61 209,941.61 839,766.44
Total 1,459,941.61 1,459,941.61 1,459,941.61 1,459,941.61 5,839,766.44
Less: Share in withdrawal- Year 1 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
Capital balance, Ending 1,359,941.61 1,359,941.61 1,359,941.61 1,359,941.61 5,439,766.44
Capital Balance, Beginning- YEAR 2 1,359,941.61 1,359,941.61 1,359,941.61 1,359,941.61 5,439,766.44
Add: Share in Net income 266,762.92 266,762.92 266,762.92 266,762.92 1,067,051.70
Total 1,626,704.54 1,626,704.54 1,626,704.54 1,626,704.54 6,506,818.14
Less: Share in Withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
Capital Balance, Ending 1,526,704,54 1,526,704,54 1,526,704,54 1,526,704,54 6,106,818.14
Capital Balance, Beginning- YEAR 3 1,526,704,54 1,526,704,54 1,526,704,54 1,526,704,54 6,106,818.14
Add: Share in Net Income 301,254.01 301,254.01 301,254.01 301,254.01 1,205,016.04
Less: Share in withdrawal 1,827,958.55 1,827,958.55 1,827,958.55 1,827,958.55 7,311,834.18
Capital Balance, Ending 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00

9. Capital Balance, Beginning- YEAR 4 1,727,958.55 1,727,958.55 1,727,958.55 1,727,958.55 6,911,834.18
Add: Share in Net income 345,096.38 345,096.38 345,096.38 345,096.38 1,380.385.51
Total 2,073,054.92 2,073,054.92 2,073,054.92 2,073,054.92 8,292.219.69
Less: share in withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
Capital Balance, Ending 1,973,054.92 1,973,054.92 1,973,054.92 1,973,054.92 7,982,219.69
Capital Balance, Beginning- YEAR 5 1,973,054.92 1,973,054.92 1,973,054.92 1,973,054.92 7,982,219.69
Add: Share in Net income 392,823.09 392,823.09 392,823.09 392,823.09 1,571,292.37
Total 2,365,878.02 2,365,878.02 2,365,878.02 2,365,878.02 9,463,512.06
Less: Share in withdrawal 100,000.00 100,000.00 100,000.00 100,000.00 400,000.00
Capital Balance, Ending 2,265,878.02 2,265,878.02 2,265,878.02 2,265,878.02 9,063,512

10. COFFEE TALK
Income Statement
For the years ended December 31
2008 2009 2010 2011 2012
Sales 7,641,257.00 8,405,402.50 9,245,942.75 10,170,537.03 11,187,509.73
Less: Sales Discounts 382,063.75 7,985,132.38 8,783,645.61 9,662,010.17 10,628,211.19
Net Sales 7,289,211.25 7,985,132.38 8,783,645.61 9,662,010.17 10,628,211.19
Less: Cost of Sales 483391898 528455318 583881079 642305417 706118949
Gross Profit 2,425,292.27 2,700,579.20 2,944,834.82 3,238,956.00 3,567,021,70
Less: Operating Expenses
SSS Contribution 184,500.00 191,731.32 203,522.40 209,455.20 211,152.00
Philhealth Contribution 37,332.00 37,500.00 41,100.00 44,250.00 49,650.00
Employee Compensation 3,720.00 3,720.00 3,720.00 3,720.00 3,720.00
Pag-ibig Contribution 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00
Bonus- 13th Month Pay 233,000.00 253,900.00 281,770.00 310,307.00 341,320.00
Rent Expense 480.000.00 480.000.00 480.000.00 480.000.00 480.000.00
Retainer’s Fee 40,000.00 44,000.00 48,400.00 53,240.00 58,554.00
Office Supplies Expense 6,416.67 7,593.06 8,396.92 9,240.33 10,164.67

11. Insurance Expense 3,208.33 3,796.53 4,198.46 4,620.16 5,082.33
Advertising Expense 30,000.00 22,500.00 15,000.00 7,500.00 10,000.00
Depreciation- Office Machinery & Equip. 7,650.00 7,650.00 7,650.00 7,650.00 7,650.00
Depreciation- Office Shop Machinery & equip. 36,532.62 36,532.62 36,532.62 36,532.62 36,532.62
Depreciation Furniture and Fixtures 10,062.00 10,062.00 10,062.00 10,062.00 10,062.00
Depreciation- Leasehold Improvements 12,000.00 12,000.00 12,000.00 12,000.00 12,000.00
Pre-Operating Expenses 25,520.00
Leasehold Improvements 60,000.00
Total Operating Expense 1,190,341.62 1,131,385.52 1,172,752.40 1,208,977.31 1,256,297.62
Net Income Before Tax 1,234.950.65 1,569,193.67 1,772,08.42 2,029,978.69 2,310,724.08
Provision for Income Tax (32%) 39518421 50214198 56706637 64959318 73943170
Net Income After tax 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37

12. COFFEE TALK
Projected Balance Sheet
For the years ended 2008-2010
2008 2009 2010 2011 2012
ASSETS
Current Assets
Cash 4,298,641.00 5,511,784.70 6,856,903.19 8,437,370.50 10,296,958.00
Accounts Receivable 700,450.21 828,866.08 916,616.93 1,008,683.97 1,109,586.15
Inventories 191,03.188 226,054.39 249,986.43 275,095.63 302,614.40
Prepaid expenses
Supplies on hand 583.33 690.33 763.36 840.03 924.06
Insurance Expense 291.67 345.14 381.68 420.01 462.03
Interest on Bank Deposit 283,591.19 198,424.25 246,848.51 303,745.34 370,690.49
Total Current Assets 5,474,589.27 6,766,164.83 8,271,500.10 10,026,155.48 12,081,235.13
Fixed Assets
Office Machineries and Equip. 42,500.00 42,500.00 42,500.00 42,500.00 42,500.00
Coffee Shop Machineries and equip. 202,959.00 202,959.00 202,959.00 202,959.00 202,959.00
Furniture and Fixtures 55,900.00 55,900.00 55,900.00 55,900.00 55,900.00
Total Fixed Assets 301,359.00 301,359.00 301,359.00 301,359.00 301,359.00
Less Accumulated Depreciation 54,244.62 108,489.24 162,733.86 216,978.48 271,223.10

13. Net Book Value 247,114.38 192,869.76 138,625.14 84,380.52 30,135.90
Leasehold Improvement 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00
Less: Accumulated Depreciation 12,000.00 24,000.00 36,000.00 48,000.00 60,000.00
Net Book Value 48,000.00 36,000.00 24,000.00 12,000.00 0.00
Total Assets 5,769,703.55 6,995,034.59 8,434,125.24 10,122,536.00 12,111,371.03
Liabilities and Partner Equity
Accounts Payable 191,031.88 226,054.39 249,966.43 275,095.63 302,614.40
SSS Contributions Payable 22,941.66 25,556.08 27,089.67 27,885.47 28,219.79
Employees Compensation Payable 6,222.00 6,768.50 7,414.04 7,992.84 8,941.07
Pag-ibig Contribution Payable 310.00 335.83 337.99 338.17 338.18
Withholding Taxes Payable 16,795.46 21,274.29 19,865.81 23,989.82 31,093.19
Estimated Income Tax Payable 32,932.02 44,589.50 50,971.32 58,380.38 66,484.34
Value Added Tax Payable 49,031.51 57,967.56 64,095.97 70,532.84 77,588.36
Other Current Liabilities 7,272.68 501,986.97 1,098,822.87 1,762,392.26 2,528,870.55
TOTAL LIABILITIES 329,937.20 888.216/45 1,522,291.05 2,230,316.30 3,047,858.96
Partner’s Equity
Capital Beginning 5,000,000.00 5,439,766.44 6,106,813.14 6,911,834.18
Add: Net Income after tax 83976644 106705170 120501604 138038551 157129237
TOTAL 5,839,766.44 6,506,818.14 7,311,834.18 8,292,219.69 9,463,512.06

14. Less: Partner’s Drawing 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00
Total Partner’s Equity 5,439,766.44 6,106,818.14 6,911,834.18 7,892,219.69 9,063,512.06
TOTAL LIABILITIES & PARTNER EQUITY 5,769,703.65 6,995,034.59 8,434,125.23 10,122,536.00 12,111,371.03

15. COFFEE TALK
Projected Cash Flow
For the Years Ended 2008-2009
2008 2009 2010 2011 2012
Excess of Sales Over Expenses 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37
Depreciation 54,244.62 54,244.62 54,244.62 54,244.62 54,244.62
Increase/Decrease in Current Assets/Liablities
Withholding Tax Payable 201,245.47 238,496.06 217,115.42 268,011.98 349,128.50
SSS Premium Payable 184,500.00 191,731.32 203,522.40 209,455.20 211,152.00
Pag-ibig Premium Payable 20,400.00 20,400.00 20,400.00 20,400.00 20,400.00
Employees Compensation Payable 3,720.00 3,720.00 3,720.00 3,720.00 3,720.00
Phil Health Payable 37,332.00 37,500.00 41,100.00 44,250.00 49,650.00
Income Tax Payable 395,184.21 502,141.98 567,066.37 649,593.18 739,431.70
VAT Payable 588,378.18 646,579.22 711,184.08 782,298.06 860,527.50
Net Cash Provided by Operating Activities 2,325,070.92 2,761,864.90 3,023,368.94 3,412,358.56 3,859,546.70

16. Cash Flows from investing activities
Purchase of Equipments
Office Equipment 42,500.00
Coffee Shop Machineries and equip. 202,959.00
Furniture and Fixtures 55,900.00
Net Cash Provided by Investing Activities 301,359.00
Cash Flows From Financing Activities
Contributed Capital 5,000,000.00
Drawing 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00
Net Cash Provided by Financing Activities 4,600,000.00 1,213,143.70 1,345,118.49 1,581,467.31 1,859,587.00
Increase (Decrease in Cash ) 4,298,641.00 1,213,143.70 1,345,118.49 1,581,467.31 1,859,587.00
Cash Beginning of Year -- 4,298,641.00 5,511,784.70 6,856,903.19 8.437.370.50
Cash End of Year 4,298,641,00 5,511,784.70 6,856,903.19 8.437.370.50 10,296,958.00
Cash on Hand 429,864.10 551,178.47 685,690.32 843,737.05 1,029,695.80
Cash on Bank 3,868,776.90 4,960,606.23 6,171,212.82 7,593,633.45 9,267,262.20
Interest on Bank Deposit 154,751.08 198,424.25 246,848.51 303,745.34 370,690.49

17. 2008 2009 2010 2011 2012
FINANCIAL STATEMENT ANALYSIS
Net Income 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37
Contributed Capital 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00
(Earnings rate on resource provided by owners) 17% 21% 24% 28% 31%
RATE ON RETURN SALES
Net Income 839,766.44 1,067,051.70 1,205,016.04 1,380,385.51 1,571,292.37
Sales 7,641,275.00 8,405,402.50 9,245,942.75 10,170,537.03 11,187,590.73
(indicated Net Profitability of each peso Sales) 11% 13% 13% 14% 14%
PAYBACK PERIOD
Net Investment 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00
Annual Cash Return 4,298,641.00 5,511,784.19 6,856,903.19 8,437,370.50 10,296,958.00
(Indicates the year investments made may had return 1.16 0.91 0.73 0.59 0.49
to the company inflow of cash)