FOLDING BAG FEASIBILITY STUDY

CHAPTER I

SUMMARY OF THE PROJECT

Name of Firm

THE FOLDING BAG CO. its name came after the product itself, a folding

bag. A bag that can be folded to be in form of another bag, shoulder bag to

be a back pack, shoulder bag to purse, travelling bag to tote bag.

Location

The location of the firm would be in the heart of the University belt. It

will secure a working and selling place near Ever Mall in Morayta Sampaloc

Manila.

Head Office

The head office would still be in the same place, near the Ever Mall in

Morayta Sampaloc Manila, a 30 square meter building that would be divided

to the shop and the office.

Plant Size

PRODUCTION SITE

Place to put the sample bags and the office where wholesalers can order.

DOOR

DOOR

DIPLAY

Brief Description of the Project

Folding Bag Co. concept is a fast and simple folding mechanism which

allows the bag to be quickly folded around its base and secured. So it can be

reduced to a slim, pocket sized package in just a few seconds. And because

the base is rigid, the package always stays neat and flat.

Folding Bag Co. product bags differ from other reusable bags because

they:

Have no awkward storage pouch

Fold-away flat for easy storage

Have a proper gusset and semi-rigid base

Do not crumple or lose shape

Project Summary

Market Feasibility

The over all marketing aspect of the business is suitable of the supply

and demand but more or less capture the markets situation.

The future operation will not be a problem in view of the supply and

demand but more or less capture the market situation.

We will acquire an implement current strategies in the bag product to

make sure that the business will remain competitive.

Technical Feasibility

Technical capabilities in the product service vary widely across the

developing world. The level of technology applied being highly dependent on

the over all status of technology development within a particular country.

The partners will be applying modern technology in the establishment

of our business. They will be using modern tools and equipment and

providing new facilities to the demands of the customer.

Management Feasibility

The project would be managed by newly graduates or newbies that

would try on conquering the world of bags using materials that are earth

friendly. To distribute econo-bags that are in style and can be folded if not

use. Space free, affordable and attractive designs would be introduce in the

market.

Financial Feasibility

The total investment of the project will amount to Php. 8,000,000

partner’s capital. The initial investment will be used in purchasing the

materials, machines and equipment, supplies, building renovation and other

requirement in the operation of the business.

Most of the money would be used mainly for production cost as stated

above. The financial status is said to be stable since the income is

continuously increasing as the business progresses.

Socio-Economic Impact

The project is calculated to have a big contribution in the economy. It

will be a source of employment to brought young people and old in the

community, creating substantial income for individual and families aside

from providing income. It also makes the employees productive and a better

person in the society.

It will also provide a formal job training and experience to college

students who requires for their course before they graduate.

Lastly, the project will help the government because of taxes that will

be paying that lead to the development of communities and other

government service, and the main course of all, this bag would help the

country to avoid plastic use in department stores and small stores

nationwide. An earth-friendly bag would be introduce by Folding Bag Co.

CHAPTER 2

BACKGROUND OF THE STUDY

Brief Background of the study

Global awareness of environmental issues such as climate change and

resource depletion has grown dramatically in recent years. As a result, there

has been a surge of interest in developing alternative building techniques

and materials which are capable of meeting our structural needs with lower

energy and material consumption. These technologies are particularly

attractive for housing. Much of the global demand for housing is currently

being driven by economic growth in developing countries. Additionally,

natural disasters such as the 2004 Indian Ocean tsunami have destroyed

houses in many countries where limited economic wealth makes

reconstruction a challenge. This has resulted in shortages of permanent

housing in these areas. This thesis explores the structural behaviour of

earthbag housing under vertical compressive loading, in an attempt to

broaden our quantitative understanding of this alternative building

technique.

In recent years, environmental degradation has emerged as one of the

most significant challenges facing global civilization. There are several

drivers of this degradation, including greenhouse gas emissions due to fossil

fuel consumption for energy and transportation (IPCC, 2007), and depletion

of natural resources (Gordon et al., 2006). The construction industry

accounts for a large portion of total global consumption (Roodman &

Lenssen, 1994). This consumption has been estimated to be 50% of global

material use, and 40% of global energy use (Price Waterhouse Cooper,

2008). Growth in this consumption is tied directly to global economic

growth. Additionally, the current state of the world economy is such that

growth in developing nations, especially in Asia, is driving global growth for

the first time in modern history (Callen, 2007).

Objectives of the study

The following are the main objectives of the study to be understand

and analyze:

Size – the proponents expects that the establishment will increase in

size, due to the people that increases and also for the smooth flow of the

service.

Capacity – for the next 5 years, the capacity also increases due to

insisted public demands. It’s the time that we expand and produce more

maximized space.

Volume – the proponents expect that the volume on sales will increase,

for new product, activities and marketing strategies, for the convenience of

more people.

Worth – for the next 5 years, the establishment’s worth will be proven

because the place on where it stands will contribute to the business

economy.

Role in the Industry of the Economy – the establishment’s role in the

industry will be witnessed by the people that surround us. It can contribute

for the business industry. About the economy it will help for promoting the

country for its beautiful achievements for the economy.

Operational Definition of Terms

Performance – the act of performing or the state of being performed

Profitability – is a technical analysis term used to compare

performances of different trading system of investment

w/ one system

Quality – folding bag co. reputation for quality is internationally known.

It is

unique because the highest quality standard are maintained are

reasonable prices.

Facility – convenient advantages maybe in the form of instrument or

method.

Productivity – it is an environment conductive to employees.

Services – is best when you think like a customer. A caring and

respectful attitude and sincere smile builds are value in our customer

and value of folded bags

History. It’s all about the beginning of the entire Industry.

Customer Care. It is how you handled a customer satisfaction.

Internal customer. A person that is part of the team.

External Customer. It’s a person who will be the guest.

Customer. Is the lifeblood of business. Without them they have no

reason to open a business. It also refers to the buyer or user of goods

and service.

Management. Is the process by which people in the business makes

use of both human and material resources to achieve the desired or

set goals.

Strategy. A customer care blueprint based on the discovery

information.

Quality. It is the prices based on the product offered.

Cleanliness. The sanitation and ambiance of surroundings.

Value. The traits and attitude of people.

Survey. In statistics, a method of collecting data in which people were

asked to answer a number of question (usually in the form of

questionnaires).

Scope and Limitation of the Study

The study is limited to the information gathered in putting up a

company that would make and distribute folding bag or bag that can be

folded in different forms. From the history of bags the benefits of this kind of

business and how it profitable for the proponents upon putting up this kind of

business.

CHAPTER 3

MARKET STUDY

Objectives of the study

- To gather appropriate information need for the technical operation of the

business.

- To research for the supply of raw materials

- To know the needs of unhampered flow of operation will be the rate

prominent consideration in the plant layout

- To know what kind of product will be offered by the business

Methodology

The research is a combination of a descriptive-quantitative design.

The descriptive method is designed for the investigator to secure responses

to questions that are factual and practices of which the respondents are

presumed to have knowledge.

The research is geared towards the fulfillment of a common goal that

included the study habits of the respondents in relation to their academic

performance. This descriptive design was used as the method of research

since it describes the nature of a prevailing conditions and practices, and

seeks accurate description of activities, objects, persons and processes. This

method is believed to be the most appropriate in securing evidences about

the present condition of a group of persons, class or events and may involve

conduction, analysis and measurement. The researcher decided to utilize

the descriptive method because the study tried to find out the present facts,

concerning the present status of Folding Bag Co.

Demand

As electricity and other related products have been an essential in

every Filipinos craved for memories, it is consider as a prime commodity. It if

therefore safe to assumed that the demand for the function room is always

at the right time. Especially now that there are so many people who are busy

with their professions and needs a right hand for their occasions.

The rising cost of electricity bill proved that the demand continue to

rise or grow.

Projected demand for five(5) years

==============================

YEAR COST/SALES

==============================

1st year2010 895,280.00

2nd year2011 940,044.00

3rd year2012 987,046.20

4th year2013 1,036,398.51

5th year2014 1,088,218.44

==============================

The demand is believed to increase 10% in each year because having

an increase in electricity bill.

3.4 Supply

3.4.1 Supply for the past years

The projected supply for five year is believed to be the following;

======================================

YEAR SALES % of DEMAND

======================================

2010 895,280.00 10%

2011 940,044.00 10%

2012 987,046.20 10%

2013 1,036,398.51 10%

2014 1,088,218.44 10%

======================================

Accordingly, the demand is also the supply analysis and that there are

increase of 10% in every supply in each year.

3.5 Demand and supply analysis, demand/supply gap

Accordingly, this table tells the true history for this kind of business.

This business would definitely boom for the fact that there are more students

and parents who would be more willing to own this kind of bag that is low-

cost, space-less and is handy, and thus school’s who will require this kind of

bag would like to recommend our bag because it is an eco-friendly bag.

And thus Folding Bag Co. would meet their needs for demand and

supply for the years to come.

Marketing Strategies

Product

The product is the name itself FOLDING BAG. There are different types

of bag that would be made to sell these are the following

PURE RANGE

BRIGHT RANGE

BENRI RANGE

Product Category

The following are the product category.

Bag size 410 x 330 x 110 mm 410 x 330 x 110 mm 370 x 300 x 95 mm

Approx size when folded 110 x 85 x 25 mm 110 x 85 x 20 mm 105 x 75 x 15 mm

Bag weight 90g 80g 50g

Volume ~15 litres ~15 litres ~10.5 litres

Fabric Organic cotton Nylon / polyester mix Ripstop nylon

Waterproof? No Shower proof Shower proof

Washing Instructions Not recommended. Due to the organic properties of our cotton bags the fabric can shrink when washed, even at a low temperature

Machine wash on low temperature

Machine wash on low temperature

Handle Info Short and long handled versions available

Short and long handled versions available

Short handles only

Fastening method Free fastening cotton strap

Velcro strap Elastic loop

Biodegradable? Yes, natural fabrics biodegrade easily

Not really Not really

Disposal Instructions Remove the plastic base sections and dispose for recycling with your other household plastics. You can dispose of the bag as you wish or return it to

Please return your bag to us. We will recycle the plastic base sections and promise to reuse or recycle the fabric

Please return your bag to us. We will recycle the plastic base sections and promise to reuse or recycle the fabric

us. We will ensure that the fabric is reused or recycled

Branch

The Folding Bag Co. would not have a branch until after 3 years of

operation to be able to give out the financiers capital and to have more

investments for future branches.

Packaging

Folding Bag Co. prepare eco-bag and boxes. It will have a logo of

Folding Bag Co.

Pricing

RETAILERS

SIZES (backpack to shoulder bag) PRICE

SMALL 150.00

MEDIUM 200.00

LARGE 250.00

SIZES (shoulder bag to hand bag) PRICE

SMALL 80.00

MEDIUM 120.00

LARGE 150.00

WHOLESALERS (100pcs up)

SIZES (backpack to shoulder bag) PRICE

SMALL 100.00

MEDIUM 150.00

LARGE 200.00

SIZES (shoulder bag to hand bag) PRICE

SMALL 50.00

MEDIUM 90.00

LARGE 120.00

Place of Distribution

The place of distribution would be in the University Belt. Wholesalers

are welcome, the product could be distributed to any part of the country

because of the wholesalers.

Promotions and Advertising

Promotion is one of the major components of the company total marketing

mixture. The proposed business establishment will be promoted not only personally and

verbally, but it will also be promoted through flyers or brochures its advantage to us to

promote our company because the nearby mall also located in our vicinity.

The establishment will concentrate on producing high quality bags and providing

excellent services to make sure that the customers will get a delightful from the products

that they would by and from the word of mouth of patrons, there would be new

customers that would like to try our products.

Chapter IV –Technical Study

4.1 Objectives of the study

- To know Sizing and structuring of the shop

- To know the product and services of the business

- To know about the market competition

- To be knowledgeable about major advertisement that would help the business

4.2 Product / service

Folding Bag Inc. has a variety of services to offer and from which to choose.

During the first two years, the product line will include:

4.2.1 Uses of Products

The bags can use for shopping bag,gift bag,carrier bag,packaging bag,

promotional bag,advertising bag,etc

4.3 Manufacturing Process

Pre –Operations

This is the first stage of manufacturing process, these are several factors to be

considered to achieve the minimum time effort, materials and workers, the preparation

may require the following activities.

“Organization”

- Setting up the working area

- Preparing tools and equipment

- Checking up, warming up large equipments

- Checking proper equipment temperature

Assembling all raw materials or ingredients needed for production.

Pattern/Frames of the

Product & Cutting of

Leather

Skiving

Folding of edges

Sticking of different

Parts

Stitching

Fixing of locks &

Accessories

Finishing quality check

& Packing

4.3.2 Alternative Process Considered

The location of the firm would be in the heart of the University belt. It

will secure a working and selling place near Ever Mall in Morayta Sampaloc

Manila.

Head Office

The head office would still be in the same place, near the Ever Mall in

Morayta Sampaloc Manila, a 30 square meter building that would be divided

to the shop and the office.

Plant Size

PRODUCTION SITE

Place to put the sample bags and the office where wholesalers can order.

DOOR

DOOR

DIPLAY

4.7 Plant Size and layout

The Folding Bag Inc. would have 1 storey building with total lot area of 700 sqm.

The proposed establishment would be well equipped and will have complete facilities for

the convenience of both customers and personnel. The establishment would have

spacious display area, which can accommodate many person as possible. The building

and the facilities of the proposed establishment are designed for the convenience of the

customers and employees. Air conditioning unit are installed to provide outmost cool

effect on the entire establishment.

4.8 raw Materials and supplies

4.9 utilities

4.10 waste disposal

4.11 direct labor requirements

Chapter V – Management Study

5.1 Objectives of the study

1. Getting Maximum Results with Minimum Efforts - The main objective of

management is to secure maximum outputs with minimum efforts & resources.

Management is basically concerned with thinking & utilizing human, material &

financial resources in such a manner that would result in best combination. This

combination results in reduction of various costs.

2. Increasing the Efficiency of factors of Production - Through proper utilization

of various factors of production, their efficiency can be increased to a great

extent which can be obtained by reducing spoilage, wastages and breakage of all

kinds, this in turn leads to saving of time, effort and money which is essential for

the growth & prosperity of the enterprise.

3. Maximum Prosperity for Employer & Employees - Management ensures

smooth and coordinated functioning of the enterprise. This in turn helps in

providing maximum benefits to the employee in the shape of good working

condition, suitable wage system, incentive plans on the one hand and higher

profits to the employer on the other hand.

4. Human betterment & Social Justice - Management serves as a tool for the

upliftment as well as betterment of the society. Through increased productivity &

employment, management ensures better standards of living for the society. It

provides justice through its uniform policies

5.2 Form of business ownership

The proponents chose to form Limited Partnership because all the

individuals involved in the project are willing to share or provide not only the

capital requirements but also their ability and skills to perform the obligation

assigned for the effective and efficient operation of the business. The

proponents have a General partner and the rest are a limited partner. The

General manager will contribute 25% of the capital and the other partners will

contribute 18.75% each with a total of 100%

The staff of this business has equal duties and responsibilities in operating the

business to provide coordination. The profit loss will also be divided according to the

capital contribution of each of the proponents.

As for the company’s liability the general partner will be liable for debts which

may extend beyond his capital contribution while the limited partners liability is only up

to the extend of their capital contribution.

5.3 Capitalization

The capital of Cliques Resto-bar would be 5 Million Pesos which will be

contributed by 5 partners.

5.4 Organizational structure

General Manager

Telephone operators Production control supervisor Wover

Machine operators

Raw materials handler

Production Head

Quality Control

Assistant Quality Control

Janitor

Packer

Counter

Repairer

Security Guard

5.5 Manpower requirements

General Manager

responsible for directing and controlling the work and personnel of a business or a

particular department with in the business.

Monitor and check the performance of all outlets against target, take note of

variances.

Attends to staff concerns and problems, build morale and teamwork in his/her

department.

Responsible for maintaining good public and client image.

Production Control Supervisor

Checking all the materials

Checking of quality control products

Checking of packed products

Training new hired employees

Production Head

Responsible in checking all the raw materials

Checking of the machine operations

Quality Control

Checking all the materials

Checking of quality control products

Checking of packed products

Assistant Quality Control

Re-check all the materials

Re-checking of quality control products

Re-checking of packed products

Packer

Responsible in packing finished products

Machine Operators

Responsible in operating the machines that makes the bag1

Counter

After all the checking of quality control, the counter is responsible in counting

bags as it is packed by the packer.

Wover

Responsible in woving the bags before and after it was seen by the quality

control

Make sure that all bags are properly woven.

Telephone Operator

Answers all call from orders

Write down orders in a order form

Write purchase orders in receipts

Raw Materials Handler

Responsible in handling raw materials to the machine operators

Counter of the raw materials stock.

Repairer

Repairer of the bags that was rejected by the quality control

Janitor

To secure the place in its feature

Make the work place clean

Security Guard

responsible for the safety of the establishment.

Assigned to secure the smooth flow of the working areas.

Responsible for handling any violence inside the store.

Makes a daily report for what incident during their work.

Qualifications

General Manager

Male/Female

College graduate, preferably with a business management degree

Between 27 – 35 years of age

Should have started a career in a service – oriented industry

Must be hardworking and self – motivated

With 3 years experience

Articulate in English and Filipino

Must be good in handling subordinates

Production Control Supervisor

Male / Female between 24 – 34 years of age

With at least 2 years work experience

Knowledgeable in foldingbags

Graduate of any course

Willing to train everything related in their work

Production Head

preferred management graduate but not required

Male/Female between 25 – 35 years old of age

Familiar with Folding bag

With at least 2 years in experience

Dependent and can work well with minimum supervision

Assistant Quality Control

Female, 20 years of age

Graduate of any course

Can work on flexible hours

Packer

Male, between 25 – 30 years of age

Graduate in any course

Must be good in handling co – workers

Machine Operators

Male, between 22 – 27 years of age

Must be a college graduate with any course

With 1 year experience in servicing machine operations

Woover

Female, between 20 – 25 years of age

2 years vocational course

Telephone operator

female, 22 – 27 years of age

graduate of any related course

Should have knowledge to communicate with the customer

Can work in flexible hours

Raw Materials Handler

Male, 21 – 27 years of age

Graduate in ant 2 years vocational course

Can work in flexible hours

Knowledge in a service industry

Repairer

Male, 21 – 27 years old

Any 2 years course graduate

Can work in flexible hours

Must be hard working

Janitor

Male, Female 21 – 27 years of age

At least 2 years college degree

Can work in flexible hours

Must be hardworking

Security Guard

Male, 25 – 35 years old

Well trained in security agency

Physically fit

At least vocational graduate

Preferably with similar work experience

Hardworking and courteous

No criminal records

5.6 Compensation

PERSONNEL NO.

REQUIRED

Project Engineer 1

Payroll Manager 1

General Foreman 1

Head Carpenter 1

Carpenter 4

With in 120 Days 8

Welder 2

Assistant Welder 2

Mixer 2

Steal Man 3

Lead Mason 1

Mason 4

Laborer 10

With In 90 Days 24

Master Plumber 1

Assistant Plumber 2

Master Electrician 1

Electrician Helper 2

Painter 5

With in 60 days 11

Operational Period

PERSONNEL NO.

REQUIRED

SALARY/

DAY

SALARY/

MONTH

SALARY

ANNUALLY

General Manager 1 600 15,600 187,200

Production Control

Supervisor

1 400 10,400 124,800

Production Head 1 550 14,300 171,600

Quality Control 1 350 9,000 109,200

Assistant Quality Control 2 400 18,200 218,400

Packer 3 840 21,840 262,080

Machine Operators 2 560 14,560 174,720

Counter 3 840 21,840 262,000

Woover 10 2,800 72,800 873,600

Telephone Operator 1 280 7,280 873,600

Raw Materials Handler 2 560 14,560 174,720

Repairer 2 560 14,560 174,720

Janitor 2 560 14,560 174,720

Security Guard 2 600 15,600 187,200

Total Salary 33 9,900 192,400 2,308,800

5.7 Organization Policies

Benefits of the Employees

All hired employees of the business are entitled to the ff. benefits:

1. 13th month pay for every employee is entitled for the 13 th month pay, which has

equivalent to ½ of the basic salary of an employee within a month.

2. SSS benefits a social security contribution will be providing for the employees.

3. Phil. Health will be provided for the hospitalization of employees.

4. Incentives/bonuses – all employees with one year of service are entitled to any

yearly bonuses.

5. Annual vacation leave – regular employees are entitled to annual service leave

of 5 days with pay for every one year of service.

6. Sick Leave – any employees had a right to leave for the medicine.

7. Paternity/Maternity leave – issue for the employees needs an emergency leave.

Managerial Benefits

The managers are also entitled to benefits and privileges environmental to

employees plus the following:

1. Salary increase depending on the state of the business every year.

2. They will provide 10% discount on all food item.

3. They will be given a vacation, sick or emergency leave.

4. Paternity/maternity leave will also provided.

5. 13th month pay, SSS benefits, Phil. Health, Pag – ibig benefits will be given.

5.8 Legal requirements

In starting the operation of the business, the owners should complete the

necessary documents and requirements needed for the legalization; this stage of

business is organized in a formal manner, which requires registration in various

regulating government agencies.

Before a partnership can operate legally, it must first to comply with certain level

registration that are summarized as follows:

Place of Registration

1. Security and Exchange Commission (SEC)

2. Department of Trade and Industry (DTI)

3. City of Municipal Hall Permit (Mayor’s Permit)

4. Bureau of Internal Revenue

5. Social Security System

6. Other Agencies as may be required

In building business there are certain requirements to make specific business

legal. If the following cannot be obtained the operation will not function well.

BIR 1902 DTI application

Business Permit For employees: SSS,PhilHealth,Pag- ibig

Barangay Clearance Declaration of real property tax

Fire Inspection Certificate SEC

Building Permit

Chapter VI – Financial Study

6.1 Objectives of the study

The financial study is important because it is tasked to find out whether the business

ventured will be profitable even in the place of competition and unfavorable conditions.

The study will also show in detail the upward movement of the ventures finances a

period. The financial study after undertaken, is best presented by showing the

statements and schedules of the profits that are presented by showing the statements

and schedules of the profits that are intended to be realized. It must also show the

sources and kind of financing and the ways in which to repay what it owed. The study

will also reflect other financial information and data, which are needed in order for the

business venture to succeed. The financial study has several parts, initially; there is the

portion which status assumptions. These are very important for these assumptions

become the bases for the estimates.

To come up with a good assumptions, one must look into business practices that

are currently followed in the same industry as the proposed business. Also previous

feasibility studies, made in similar ventures as the one proposed might prove helpful.

Another important source of information for assumptions are government

regulations and policies, industry profiles, conferences, business plan, and articles from

business associations may help.

The next portion of the financial study is which discusses the total cost of the

project. A company will need assets. The next part of the study list down the sources

from where money can be borrowed on acquire. The list includes sources from where

long and short term loans can be acquired.

6.2 Total project cost – all items considered consumption made

PRODUCTION COST

FIXED CAPITAL

Machinery and equipment 1,795,658.00

Utilities 585,769.00

Total 2,381,428.00

WORKING CAPITAL

Stocks 78,636.00

Labor cost 21,600.00

Electricity & water 10,000.00

Miscellaneous 60,000.00

Computer advertisement 4,000.00

Taxes & licenses 14,400.00

Repairs & maintenance 586,000.00

Others 58,000.00 832,636.00

TOTAL 3,214,064.00

6.3 Initial capital requirements – all items considered

The proposed business, Folding Bag Inc.is a General Partnership which means

that there are three or more owners of this business. And that the investment cost of

the business are sub divided into the owners capital, which total of:

5,000,000.00

6.4 Sources of financing

6.4.1 Sources selected or proposed for both long-term

and short-term financing

6.4.2 Alternative sources

6.4.3 Amount and terms of financing

The proponents of the project will not seek help from financing or bank loan, but

from their own savings and with the help of their parents. From this the company wont

need to rush up their sales just to pay for their financial loan.

6.4.4 Projected balance sheet

Folding Bag Inc.BALANCE SHEET

For year ended 2011

CURRENT ASSETS

Cash3,000,000.

00

FIXED ASSETS

Gross Fixed AssetAccumulated depreciation

2,195,632.00

Net Fixed asstes 49,869.38

TOTAL ASSETS2145762.6

2

LIABILITIES 854237.38

notes payable

income tax payable117,149.0

0

TOTAL LIABILITIES854237.3

8

PARTNERS CAPITAL

Capital1,000,000.

00

Capital1,000,000.

00

Capital1,000,000.

00

Capital1,000,000.

00

Capital1,000,000.

005000000

Add:Net Income

retained earnings 895,820.00less:drawings 345,695.00Total partners equity 1241515

TOTAL LIABILITIES & CAPITAL

3645762.6

6.5 Financial statements

6.5.1 Assumptions

1. Miscellaneous expenses increase 3% annually.

2. Permit and license increases 5% annually.

3. Advertising expense increase 2% annually.

4. Purchases increase 5% annually.

5. Salaries and wages increase 3% annually.

6. Office supplies increase 3% annually.

7. Utility expenses increase 3% annually.

8. Repair and maintenance increase 5% annually.

9. Depreciation expense computed on a straight line method.

10. Sales increase 5% 6% 7% 8% and 9% on succeeding years.

11. 13th month pay increase 3% annually.

12. Value added taxes 12%.

13. Income tax payable 35% on the Net Income before tax.

6.5.2 Projected income

Folding Bag Inc.Income statement

For December 31, 2011

SALES895,280.0

0LESS COST OF SALESSTOCKS 78,636.00LABOR COST 80,000.00TOTAL COST OF SALES 158,636.00

GROSS PROFIT1,053,916.0

0

less :operating expenseelectricity & water 10,000.00rent expense 60,000.00taxes & licenses 14,400.00selling expense 8,000.00repairs & maintenance

586,000.00

miscellaneous 60,000.00comp. advertisement 10,000.00contingencies 85,080.00depreciation 45,233.00TOTAL OPERATING EXPENSE 878,713.00income from operation 174,203.00

LESS: interest expense 23,086.00TOTAL 151,117.00

NET INCOME 151,117.00

6.5.3 Capital cash flow statements

2011 2012 2013 2014 2015

CASH INFLOW

Beginning

Balance

248296 335152 492791 734825

Partners capital 62000

Proceeds from loan

135801

Sales 39380 422688 553488 714138 908934

Others 600 600 800 1000 1000

Total cash inflow 527681 671584 889440 1207929 1644759

Less : cash outflow

Stocks 78636 93372 118456 145956 180525

Labor cost 21600 22680 23812 25008 26256

100236 119052 142268 170964 2006781

Add : operating expense

Electricity & water

4000 - - - -

Miscellaneous 60000 69000 79350 91253 104941

Taxes and licenses

14400 14832 15276 15732 16200

Others 1000 1100 1210 1331 1464

Computer advertisement

10000 10500 11025 11576 12155

Selling expense 1000 1100 1210 1331 1464

Repairs & maintenance

1000 1100 1210 1331 1464

Contingencies 1080 1134 1191 1250 1313

Total operating expense

92480 98766 110472 123804 139001

Interest expense 23086 18595 13341 7193 -

Payments of loan 26418 30909 36163 42311 -

Withdrawals 31000 33000 35000 37000 39000

Payment of taxes 36110 59405 91832 131822

Acquisition of machinery & equipment &

utilities

6165 - - - -

CASH ON HAND 248296 335152 492791 734825 1128155

6.5.4 Projected balance sheet

Folding Bag Inc.BALANCE SHEET

For year ended 2011

CURRENT ASSETS

Cash3,000,000.

00

FIXED ASSETS

Gross Fixed AssetAccumulated depreciation

2,195,632.00

Net Fixed asstes 49,869.38

TOTAL ASSETS2145762.6

2

LIABILITIES 854237.38

notes payable

income tax payable117,149.0

0

TOTAL LIABILITIES854237.3

8

PARTNERS CAPITAL

Capital1,000,000.

00

Capital1,000,000.

00

Capital1,000,000.

00

Capital1,000,000.

00Capital 500,000.00

4500000Add:Net Incomeretained earnings 895,820.00less:drawings 345,695.00

Total partners equity 1241515

TOTAL LIABILITIES & CAPITAL

3645762.6

6.5.5 Financial analysis

6.5.5.1 Ratios

I. Test of Profitability

A. Net Profit Margin = Net Income After Tax

Sales

=8,156,381

20,250,000 = .40

B. Gross Profit = Profit before tax

Income

=12,548,277

8,156,381 = 1.54

C. Return on owner’s equity investment = Net Income

Stock Equity

=8,156,381

22,709,467 = .36

D. Turnover Rate of Gross Capital = Gross Sales

Gross Capital

=20,250,000

17,000,000 = 1.19

Test of Liquidity

E. Current Ratio = Current Asset

Current Liabilities

=151,984.03

4,349,896.90 = .35

F. Quick on Acid Test = Asset - Inventories

Current Liabilities

=1,519,845.03 – 192000

4,349,896.90 = .31

G. Liquidity of Inventories = Cost of Sales

Average Inventory

=20,250,000

192,000 = 105.19

H. Deb – To – Net Wale Ratio = Total Liabilities

Total Equities

= 4,349,896.90

22,709,467 = .19

6.5.5.2 Break-even point analysis

Break-even calculations assume a 25% to 30% gross margin. This is a

conservative estimate, and it will be improved as strategic relationships develop and the

benefits of Folding Bag Inc. offerings are realized by customers.

Break-even Analysis

Break-even Analysis:

Monthly Units Break-even 95,000.00

Monthly Revenue Break-even P95,000.00

Assumptions:

Average Per-Unit Revenue P200.00

Average Per-Unit Variable Cost P200.00

Estimated Monthly Fixed Cost P6,000.00

6.5.5.3 Capital recovery, and earnings

Showing the cash payoff period,

The project met the income requirements of 27% (cost of capital) since the total

computer NPV is greater than the total project cost. The total project cost is

344,636.00 and the computer NPV is

Year Annual cash flow 27% net present value PHP

2006 77,968 0.70740 55,154

2007 127,470 0.62000 79,031

2008 196,375 0.48819 95,868

2009 281355 0.38440 108,152

2010 384,018 0.30268 116,234

NPV = 454,439 - 197,801

=256,638

Payback period

The investment will be recovered within 1 year and nine month. This means that

the project is feasible because the capital will be recovered in less than 2 years.

Year Net cash flow

2011 77,968

2012 127,470

2013 196,375

2014 281355

2015 384,018

total project cost 197,801

recovered

first year -77,968

to be recovered 119,833

365

first year -127,470.00

to be recovered 349

119,833

349 =708 days

payback period = 1 year 11 months and 7 days

Rate of return

The computation shows an average of 35.6% which means that the business is

maximizing its assets throughout the operation.

ROI – Net Income/ Total Assets

YEAR NET INCOME ASSETS ROI

2011 76,735 253,228 30.30%

2012 126,237 338,851 37.25%

2013 195,142 495,257 39.40%

2014 280,122 736,058 38.86%

2015 382,785 1,128,155 33.93%

35.79%

Chapter VII – Socio-Economic

7.1 Contribution to the Philippine economy

As we start the business, there will be a benefit to the government

or Municipal and national government. And as of this days more

business owners/establishment gives more taxes, showing to increase the

revenues of the government. So that revenues can be used in the

development of the community. All these taxes are enforced by the

government to every business owners/establishment. The project will help

us increase the business and to outgrow it.

7.2 Employment generation

This can provide jobs so skilled and unskilled person and this is a great

benefit in the society. As for the country suffered a crisis of

unemployment and the business can help the government in decreasing

the unemployment rate in the country.

7.3 Social desirability

Folding Bag Inc. business also plays a big role in the society, because

this business provide good quality of services and recycled bags that the

customers need, sell this is a reasonable price and supply needs of the

people.

7.4 Others – The proponents

The project would be beneficial to the proponents for it gained profit

that would raise the quality of their families. The income generated by the

partners will surely improve the standard of living of themselves and their

families.