Pricing Strategy – The study used a cost-mark-up
pricing strategy. A cost-based pricing strategy ignores
the impact of pricing levels on demand patterns, as
well as market conditions and competitors' pricing
tactics. As a result, regardless of the pricing of
competitors, management will set its own price.
Selling Price = Cost + Mark-up To compute the price
of the product.
HORIZONTAL ANALYSIS
BALANCE SHEET
CY-PY Amount change/base year
Assets YEAR 1 YEAR 2 Amount Change Percentage Change
Cash 711,156.82 1,402,705.73 691,548.92 49.30%
Building 135,000.00 120,000.00 (15,000.00) -12.50%
Store Equipment 39,110.61 33,571.22 (5,539.39) -16.50%
Water System 45,000.00 40,000.00 (5,000.00) -12.50%
Delivery Vehicle 90,000.00 80,000.00 (10,000.00) -12.50%
Furniture and Fixture 8,548.00 7,776.00 (772.00) -9.93%
Total Assets 1,028,815.43 1,684,052.95 655,237.53 38.91%
Liabilities and Owner's Equity
Long-term debt payable 115,487.40 115,487.40 - 0.00%
Issuance of Bonds
Total Liabilities 115,487.40 115,487.40 - 0.00%
Partners Equity
Initial Investment 913,328.03 1,568,565.55 655,237.53
Total Liability & Owner's Equity 1,028,815.43 1,684,052.95 655,237.53 38.91%
INCOME STATEMENT CY-PY Amount change/base year
YEAR 1 YEAR 2 Amount Change Percentage Change
Sales Revenue 1,410,400.00 1,551,440.00 141,040.00 9.09%
Less: Cost of Sale 350,100.00 353,565.00 3,465.00 0.98%
Gross: Profit 1,060,300.00 1,197,875.00 137,575.00 11.48%
Less: Operating Expenses 469,831.39 426,803.39 (43,028.00) -10.08%
Income Before Tax 590,468.61 771,071.61 180,603.00 23.42%
Less: Income Tax Expense(30%) 177,140.58 231,321.48 54,180.90 23.42%
Net Income 413,328.03 539,750.13 126,422.10 23.42%
VERTICAL ANALYSIS
BALANCE SHEET
Assets YEAR 1 year 1 common size YEAR 2 year 2 common size
Cash 711,156.82 69.12% 1,402,705.73 83.29%
Building 135,000.00 13.12% 120,000.00 7.13%
Store Equipment 39,110.61 3.80% 33,571.22 1.99%
Water System 45,000.00 4.37% 40,000.00 2.38%
Delivery Vehicle 90,000.00 8.75% 80,000.00 4.75%
Furniture and Fixture 8,548.00 0.83% 7,776.00 0%
Total Assets 1,028,815.43 100.00% 1,684,052.95 100%
Liabilities and Owner's Equity
Long-term debt payable 115,487.40 11% 115,487.40 6.86%
Issuance of Bonds
Total Liabilities 115,487.40 11% 115,487.40 6.86%
Partners Equity
Initial Investment 913,328.03 89% 1,568,565.55 93.14%
Total Liability & Owner's Equity 1,028,815.43 100% 1,684,052.95 100%
INCOME STATEMENT
YEAR 1 year 1 common size AS 1` PESO YEAR 2 year 1 common size AS 1 PESO
Sales Revenue 1,410,400.00 100.00% 1 1,551,440.00 100% 1.00
Less: Cost of Sale 350,100.00 24.82% 0.25 353,565.00 23% 0.23
Gross: Profit 1,060,300.00 75.18% 0.75 1,197,875.00 77% 0.77
Less: Operating Expenses 469,831.39 33.31% 0.33 426,803.39 28% 0.28
Income Before Tax 590,468.61 41.87% 0.42 771,071.61 50% 0.50
Less: Income Tax Expense(30%) 177,140.58 13% 0.13 231,321.48 15% 0.15
Net Income 413,328.03 29% 0.29 539,750.13 35% 0.35
Statement of Cost of Goods Sold
Year 1 Year 2 Year 3 Year 4 Year 5
Beginning Inventory - - - - -
Add:
Purchase of Raw Materials 69,300.00 72,765.00 76,403.25 80,223.41 84,234.58
Direct Labor 280,800.00 280,800.00 280,800.00 280,800.00 280,800.00
Cost of Goods Sold 350,100.00 353,565.00 357,203.25 361,023.41 365,034.58
Yearly Production Cost
Total Cost
Item Unit Quantity Price
Monthly Yearly
Seeds pack 50 100 5,000.00 60,000.00
Organic Fertilizer sack 7 100 700.00 8,400.00
Organic Insecticide liter 3 25 75.00 900.00
Total 5,775.00 69,300.00
Income Statement
For Five Year Projection
Year 1 Year 2 Year 3 Year 4 Year 5
Sales Revenue 1,410,400.00 1,551,440.00 1,706,584.00 1,877,242.40 2,064,966.64
Less: Cost of Goods Sold 350,100.00 353,565.00 357,203.25 361,023.41 365,034.58
Gross Profit 1,060,300.00 1,197,875.00 1,349,380.75 1,516,218.99 1,699,932.06
Less: Operating Expenses
Land Rental 60,000.00 60,000.00 60,000.00 60,000.00 60,000.00
Salaries and Wages 226,080.00 226,080.00 226,080.00 226,080.00 226,080.00
Promotional Expense 48,000.00
Supplies Expense 4,279.00 4,492.95 4,717.60 4,953.48 5,201.15
Utilities Expense 36,000.00 37,800.00 39,690.00 41,674.50 43,758.23
Repairs and Maintainance 24,000.00 25,200.00 26,460.00 27,783.00 29,172.15
SSS,PHIC,HDMF Contribuion 25,296.00 26,560.80 27,888.84 29,283.28 30,747.45
Permits and Licenses 9,865.00 10,358.25 10,876.16 11,419.97 11,990.97
Depreciation Expense 36,311.39 36,311.39 36,311.39 36,311.39 36,311.39
Total Operating Expenses 469,831.39 426,803.39 432,023.99 437,505.62 443,261.33
Income Before Tax 590,468.61 771,071.61 917,356.76 1,078,713.37 1,256,670.73
Less: Income Tax Expense(30%) 177,140.58 231,321.48 275,207.03 323,614.01 377,001.22
Net Income 413,328.03 539,750.13 642,149.73 755,099.36 879,669.51
Projected Balance Sheet
For Five Year Projection
Assets Pre-Operating Year 1 Year 2 Year 3 Year 4 Year 5
Current Assets:
Cash 146,030.00 711,156.82 1,402,705.73 2,196,654.25 3,103,552.40 4,135,020.70
Total Current Assets 146,030.00 711,156.82 1,402,705.73 2,196,654.25 3,103,552.40 4,135,020.70
Non-Current Assets
Building 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00
Accumulated Depreciation (Building) (15,000.00) (30,000.00) (45,000.00) (60,000.00) (75,000.00)
Store Equipment 44,650.00 44,650.00 44,650.00 44,650.00 44,650.00 44,650.00
Accumulated Depreciation (Equipment) (5,539.39) (11,078.78) (16,618.17) (22,157.56) (27,696.95)
Water System 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00
Accumulated Depreciation (Water System) (5,000.00) (10,000.00) (15,000.00) (20,000.00) (25,000.00)
Delivery Vehicle 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00
Accumulated Depreciation (Delivery Vehicle) (10,000.00) (20,000.00) (30,000.00) (40,000.00) (50,000.00)
Furniture and Fixture 9,320.00 9,320.00 9,320.00 9,320.00 9,320.00 9,320.00
Accumulated Depreciation (F&F) (772.00) (1,544.00) (2,316.00) (3,088.00) (3,860.00)
Total Non-Current Assets 353,970.00 317,658.61 281,347.22 245,035.83 208,724.44 172,413.05
Total Assets 500,000.00 1,028,815.43 1,684,052.95 2,441,690.08 3,312,276.84 4,307,433.75
Liabilities and Owner's Equity
Liabilities
Issuance of Bonds 500,000.00
Long-term debt payable 115,487.40 115,487.40 115,487.40 115,487.40 115,487.40
Total Liabilities
Partners Equity
Initial Investment - 500,000.00 1,028,815.43 1,684,052.95 2,441,690.08 3,312,276.84
Add: Net Income 413,328.03 539,750.13 642,149.73 755,099.36 879,669.51
Total Liability & Owner's Equity 500,000.00 1,028,815.43 1,684,052.95 2,441,690.08 3,312,276.84 4,307,433.75
Amortization Schedule and Loan Summary
Annual Interest Rate: 5%
Loan Term: 5
Payment per Year: 115,487.40
Loan Amount: 500,000.00
Annual Principal Remaining
YEAR Beg Amount Installment Interest Payment Balance
1 500,000.00 115,487.40 25,000.00 90,487.40 409,512.60
2 409,512.60 115,487.40 20,475.63 95,011.77 314,500.83
3 314,500.83 115,487.40 15,725.04 99,762.36 214,738.47
4 214,738.47 115,487.40 10,736.92 104,750.48 109,988.00
5 109,988.00 115,487.40 5,499.40 109,988.00 -
STATEMENT OF CASH FLOW
FIVE YEAR PROJECTION
OPERATING ACTIVITIES Pre Operating Year 1 Year 2 Year 3 Year 4 Year 5
Net Income: 413,328.03 539,750.13 642,149.73 755,099.36 879,669.51
Add: Depreciation 36,311.39 36,311.39 36,311.39 36,311.39 36,311.39
Cash Flow from Operating 449,639.42 576,061.52 678,461.12 791,410.75 915,980.90
INVESTING ACTIVITIES
Building 150,000.00 - - - - -
Store Equipment 44,650.00 - - - - -
Water System 50,000.00
Delivery Vehicle 100,000.00
Furniture and Fixture 9,320.00 - - - - -
Cash Flow from Investing 353,970.00 - - - - -
FINANCING ACTIVITIES
Long-term debt payable 115,487.40 115,487.40 115,487.40 115,487.40 115,487.40
ISSUANCE OF BONDS 500,000.00 - - - - -
INITIAL INVESTMENT - - - - -
Cash Flow from Financing 500,000.00 115,487.40 115,487.40 115,487.40 115,487.40 115,487.40
Net Cash Flow 146,030.00 565,126.82 691,548.92 793,948.52 906,898.15 1,031,468.30
Cash Balance Beginning 146,030.00 711,156.82 1,402,705.73 2,196,654.25 3,103,552.40
Cash Balance Ending 146,030.00 711,156.82 1,402,705.73 2,196,654.25 3,103,552.40 4,135,020.70
Capital Budgeting Decision
Payback Period
Cash flow Year 1 Year 2 Year 3 Year 4 Year 5
Net Income 413,328.03 539,750.13 642,149.73 755,099.36 879,669.51
Add: Depreciation exp. 36,311.39 36,311.39 36,311.39 36,311.39 36,311.39
449,639.42 576,061.52 678,461.12 791,410.75 915,980.90
Year Annual Cash Inflow Unrecoverd Cost Solution
0 (500,000.00) 50,360.58
1 +
1 449,639.42 (50,360.58) 576,061.52
2 576,061.52 525,700.93
3 678,461.12 1,204,162.06 1 + 0.087422231
4 791,410.75 1,995,572.80
5 915,980.90 2,911,553.70
Payback Period 1.09 or 1 year and
2 months the investment will be recovered