Financial Analysis Essays

5090 Words Sep 12th, 2014 21 Pages
CHAPTER IV

FINANCIAL STUDY

A. Introduction Scenarios that arise in the entirety of the project which were identified during the course of the study will now be verified from a financial point of view to assess its viability. The financial study section informs the reader of the possible outcomes of its operations. The different Financial Statements coupled with analysis help determine the overall financial prospect and desirability of organizing and operating Copycat Photocopy Center.

B. Major Assumptions The project adopted the following assumptions to come up with its financial projections: 1. Contingency Fund
The excess of PhP 21,219.60 from total partners’ initial contribution shall be treated as contingency fund
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g. Salaries Expense
Each worker will be paid PhP 250.00 daily with a corresponding 5% increase per annum. SSS contribution shall be deducted from each worker’s computed monthly salary. h. Supplies Expense
It is expected that purchase of Supplies will increase by 5% every after year i. Taxes and Licenses (Local)
It is presumed that all expenses paid to the government stays constant until changes in laws governing business enterprise will be implemented. j. Utilities Expense
Electricity will increase by 5% annually whereas Communications expense will stay the same.

4. Assets k. Cash
Since Copycat is a Service enterprise, it is expected that all receipts will be in the form of cash. Petty expenses priced below PhP 5,000.00 shall be char4ged to Petty Cash. l. Prepaid Expenses or Supplies
Prepaid Expenses or Supplies will increase by 5% in parallel to the 5% increase in Supplies Expense.

m. Fixed Assets (Machinery and Equipment)
The reconditioned Photocopy Machines shall be depreciated for three (3) years with no residual value.

5. Liabilities n. Taxes Payable
Taxes shall increase based in the income of the enterprise. It is expected to increase at 20% per annum, parallel to the increase in revenues. 6. Partners’ Equity o. Partner’s Drawing Account
Each Partner will be allowed a maximum of the same amount she invested in the business each

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