FINANCIAL ASPECT

Introduction

The financial aspect of this study involves processes

of evaluating financial information relevant for decision-

making. This is a phase of the study wherein the marketing,

technical, and other aspects are being quantified. The

possible outcomes of operation are also presented herein. In

addition, projected profitability, estimated operating

costs, sources of funds etc. are forecasted in this aspect.

The financial performance and financial condition of a

company is best communicated to users through the company’s

financial statements. They show the operating effectiveness

of a company and the results of the management’s stewardship

of the resources entrusted to it. The basic financial

statements are the Statement of Financial Position,

Statement of Comprehensive Income, Statement of Changes in

Partners’ Equity, Statement of Cash Flow, and Notes to

Financial Statements.

Financial Requirements

A. Source of Funds

The primary sources of capital will be a contribution

by each partner. Each partner will contribute an amount

 Financial Aspect 68

of Php 100,000 to come up with a total capital of Php

500,000.

Table 27:

Partners
Profit or
contribution and
Amount Loss
Profit or Loss
Distribution
DistributionXPar

tner's Equity
Albero 100,000 1/5
Aliguyon 100,000 1/5
Balagot 100,000 1/5
De Leon 100,000 1/5
Mendoza 100,000 1/5
TOTAL 500,000  

Major Assumptions

For the purpose of preparing the project financial

statements, Kaw-itan will use the following assumptions. All

assumptions are in accordance with the company’s policies.

 Kaw-itan will operate on a calendar year basis which

will start on January and end on December with 26-days

monthly operation.

 Inflation rate each year will be assumed to be at 3%

based on the official website of the National

Statistics Coordination Board (www.nscb.gov.ph).

 Financial Aspect 69

 The revenue considered are all inflows that shall be

received in providing the service. This shall be

collected in the form of cash from customers who

availed the Hammock Glamping.

 The cash collected will earn additional income in the

form of interests from deposits to bank.

 Income tax expense is based on thirty percent (30%) of

the partnership net income.

 Income taxes will be paid every April 15, August 15,

and November 15 of the current taxable year and April

15 of the next calendar year when final adjusted income

tax return is due for filing as prescribed by the

Bureau of Internal Revenue.

 Social Security System, Phil Health, and HDMF

contributions will be deducted from the employees’

monthly salary.

 Remittance of contributions and withholding taxes if

any are assumed to be made at the end of the month.

 Fixed assets shall be recorded at cost with no residual

value. The depreciation expense will be computed using

the straight line method.

 Advertising expense will be considered each year in

order for the business to increase its customers and

 Financial Aspect 70

maintain competitive marketing. But the cost may change

due to the change in the prices of advertisements.

 Rent expense shall include the cost of water,

electricity, and communication necessary to conduct the

business.

 Business permits for City Government of Baguio will be

computed as gross receipts times 50% of 1%.

 Miscellaneous expense increases annually by 3% due to

inflation.

 Cash shall compose of cash in bank. All collections

during the day will be immediately deposited on the

next day.

 Cash will be deposited to BDO with an interest of 0.25%

annually.

 Subsequent costs after the acquisition of the assets

will be capitalized.

 Withholding tax payable, Social Security System

payable, HDMF Payable, and PhilHealth payable shall be

remitted monthly.

 Income tax payable is equal to thirty percent (30%) of

the partnership net income. Three fourths of the annual

income tax will be paid in cash and the remainder will

be payable next year.

EXHIBIT 1: Projected Statement of Financial Position

71
 Kaw-itan
Projected Statement of Financial Position
As of Pre-operating to December 31, 2023

Note Pre-operating 2019 2020 2021 2022 2023

ASSETS
CURRENT ASSETS
Cash and Cash Equivalents SCF 41,579.00 154,016.50 899,346.44 1,526,192.71 2,185,371.94 2,843,560.00
Unused Office Supplies Sch 12 3,005.00 5,660.00 8,225.00 10,790.00 13,355.00 15,920.00
Total Current Assets 44,584.00 159,676.50 907,571.44 1,536,982.71 2,198,726.94 2,859,480.00
NON-CURRENT ASSETS
Machines and Equipment Sch 6 352,217.00 352,217.00 352,217.00 352,217.00 352,217.00 352,217.00
Less: Accumulated Depreciation-Machines and Equipment Sch 6 - (17,702.52) (88,512.58) (159,322.65) (229,903.55) (299,796.95)
Furnitures and Fixtures Sch 6 26,894.00 26,894.00 26,894.00 26,894.00 26,894.00 26,894.00
Less: Accumulated Depreciation-Furniture and Fixtures Sch 6 - (1,842.04) (8,132.21) (14,122.88) (18,481.88) (20,519.50)
Total Non- Current Assets 379,111.00 359,566.44 282,466.21 205,665.48 130,725.58 58,794.55

TOTAL ASSETS 423,695.00 519,242.94 1,190,037.65 1,742,648.18 2,329,452.52 2,918,274.55

-
LIABILITIES AND PARTNER'S CAPITAL -
LIABILITIES 5,990.67
SSS Payable Sch 11 - 5,650.00 5,650.00 5,650.00 5,650.00 5,650.00
PhilHealth Payable Sch 11 - 1,328.25 1,328.25 1,328.25 1,328.25 1,328.25
HDMF Payable Sch 11 - 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00
Income Tax Payable Sch 10 - 26,270.91 62,667.38 62,722.98 62,857.48 63,065.76
VAT Payable Sch 14 - 49,502.73 16,643.16 16,643.16 16,643.16
Total Current Liabilities - 34,249.16 120,148.36 87,344.39 87,478.89 87,687.17
TOTAL LIABILITIES - 34,249.16 120,148.36 87,344.39 87,478.89 87,687.17

PARTNER'S CAPITAL
Albero,Capital SPC 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
Aliguyon,Capital SPC 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
Balagot,Capital SPC 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
De Leon,Capital SPC 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
Mendoza,Capital SPC 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
Total Partner's Capital 423,695.00 484,993.78 1,069,889.29 1,655,303.79 2,241,973.63 2,830,587.38

TOTAL LIABILITIES AND PARTNER'S CAPITAL 423,695.00 519,242.94 1,190,037.65 1,742,648.18 2,329,452.52 2,918,274.55

72
EXHIBIT 2: Projected Statement of Comprehensive Income

Kaw-itan
Projected Income Statement
For the Years Ended Pre-Operating to December 31, 2023

Revenues Note Pre-operating 2019 2020 2021 2022 2023

Service Revenue Sch 1 - 334,285.71 2,005,714.29 2,005,714.29 2,005,714.29 2,005,714.29
Interest Revenue Sch 2 - 103.95 385.04 2,248.37 3,815.48 5,463.43
Total Revenue - 334,389.66 2,006,099.33 2,007,962.65 2,009,529.77 2,011,177.72
LESS: Operating Expenses
Salaries Expense Sch 11 - 92,861.75 594,180.00 594,180.00 594,180.00 594,180.00
SSS, Philhealth, and HDMF Expense Sch 11 - 15,956.50 58,729.50 58,729.50 58,729.50 58,729.50
13th Month pay Sch 13 - 45,215.88 45,215.88 45,215.88 45,215.88 45,215.88
Taxes and Licenses Sch 3 26,555.00 3,427.00 12,787.00 12,787.00 12,787.00 12,787.00
Rent Expense Sch 4 40,000.00 40,000.00 240,000.00 240,000.00 240,000.00 240,000.00
Office and Other Supplies Sch 11 250.00 600.00 7,200.00 7,200.00 7,200.00 7,200.00
Advertising Expense Sch 5 1,500.00 3,000.00 18,000.00 18,000.00 18,000.00 18,000.00
Depreciation Expense Sch 6 - 19,544.56 77,100.23 76,800.73 74,939.90 71,931.03
Donation to PBTS (Expense) Sch 7 - 16,714.29 100,285.71 100,285.71 100,285.71 100,285.71
Maintenance Expense Sch 8 - 1,260.00 7,560.00 7,560.00 7,560.00 7,560.00
Miscellaneous Expense Sch 9 8,000.00 8,240.00 9,476.00 10,897.40 12,532.01 14,411.81
Total Expenses 76,305.00 246,819.97 1,170,534.32 1,171,656.22 1,171,430.00 1,170,300.93

Operating Income (76,305.00) 87,569.69 835,565.00 836,306.43 838,099.77 840,876.79

Net Operating Income Before Tax - 87,569.69 835,565.00 836,306.43 838,099.77 840,876.79
Less: Income Tax Expense (30%) - 26,270.91 250,669.50 250,891.93 251,429.93 252,263.04
Net Operating Income after Tax (76,305.00) 61,298.78 584,895.50 585,414.50 586,669.84 588,613.75

73
EXHIBIT 3: Projected Statement of Changes in Partner’s Equity

Kaw-itan
Projected Statement of Changes in Partner's Equity
For the Years Ended Pre-operating to December 31, 2023

Partner’s Capital- Beginning Reference Pre-operating 2019 2020 2021 2022 2023
Albero 100,000.00 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73
Aliguyon 100,000.00 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73
Balagot 100,000.00 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73
De Leon 100,000.00 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73
Mendoza 100,000.00 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73
Subtotal 500,000.00 423,695.00 484,993.78 1,069,889.29 1,655,303.79 2,241,973.63

Income Summary (shared equally)

Albero (15,261.00) 12,259.76 116,979.10 117,082.90 117,333.97 117,722.75
Aliguyon (15,261.00) 12,259.76 116,979.10 117,082.90 117,333.97 117,722.75
Balagot (15,261.00) 12,259.76 116,979.10 117,082.90 117,333.97 117,722.75
De Leon (15,261.00) 12,259.76 116,979.10 117,082.90 117,333.97 117,722.75
Mendoza (15,261.00) 12,259.76 116,979.10 117,082.90 117,333.97 117,722.75
Income after Partner's Salary (76,305.00) 61,298.78 584,895.50 585,414.50 586,669.84 588,613.75

Partners's Capital-Ending
Albero 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
Aliguyon 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
Balagot 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
De Leon 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
Mendoza 84,739.00 96,998.76 213,977.86 331,060.76 448,394.73 566,117.48
Total Partners’ Capital, End 423,695.00 484,993.78 1,069,889.29 1,655,303.79 2,241,973.63 2,830,587.38

74
EXHIBIT 4: Projected Statement of Cash Flows

Kaw-itan
Projected Statement of Cash Flows
For the Year ended Pre-operating to December 31,2023
Schedule Pre-Operating 2019 2020 2021 2022 2023
Operating Activities
Cash Receipts
Service Revenue Sch 1 - 334,285.71 2,203,725.21 2,205,432.21 2,205,432.21 2,205,432.21
Interest Revenue Sch 2 - 103.95 385.04 2,248.37 3,815.48 5,463.43
Subtotal - 334,389.66 2,204,110.26 2,207,680.58 2,209,247.70 2,210,895.64

77,100.23 76,800.73 74,939.90 71,931.03

Cash Disbursements
Taxes and Licenses Sch 3 26,555.00 3,427.00 12,787.00 12,787.00 12,787.00 12,787.00
Rent Expense Sch 4 40,000.00 40,000.00 240,000.00 240,000.00 240,000.00 240,000.00
Donation to PBTS (Expense) Sch 7 - 16,714.29 100,285.71 100,285.71 100,285.71 100,285.71
Advertising Expense Sch 5 1,500.00 3,000.00 18,000.00 18,000.00 18,000.00 18,000.00
Salaries Expense Sch 11 - 92,861.75 557,170.50 557,170.50 557,170.50 557,170.50
Payment for VAT Sch 14 - 148,508.20 232,577.50 199,717.93 199,717.93
SSS, PhilHealth, And HDMF Expense Sch 10 - 7,978.25 95,739.00 95,739.00 95,739.00 95,739.00
13th Month Pay Sch 13 45,215.88 45,215.88 45,215.88 45,215.88 45,215.88
Maintenance Sch 8 - 1,260.00 7,560.00 7,560.00 7,560.00 7,560.00
Office Supplies Sch 12 3,255.00 3,255.00 9,765.00 9,765.00 9,765.00 9,765.00
Miscellaneous Expense Sch 9 8,000.00 8,240.00 9,476.00 10,897.40 12,532.01 14,411.81
Income Tax Expense SCI - 214,273.03 250,836.32 251,295.43 252,054.76
Subtotal 79,310.00 221,952.16 1,458,780.32 1,580,834.31 1,550,068.46 1,552,707.59

Net Operating Activities (79,310.00) 112,437.50 745,329.94 626,846.27 659,179.24 658,188.05

Investing Activities
Purchase of Property, Plant and Equipment SFP 379,111.00 - - - - -
Net Investing Activities (379,111.00) - - - - -

Financing Activites
Investment by partners 500,000.00 - - - - -
Withdrawal - - - - - -
Net Financing Activities 500,000.00 - - - - -

Net cash Provided from different activities 41,579.00 112,437.50 745,329.94 626,846.27 659,179.24 658,188.05
Add: Cash Balance Beginning 41,579.00 154,016.50 899,346.44 1,526,192.71 2,185,371.94
Cash Balance End 41,579.00 154,016.50 899,346.44 1,526,192.71 2,185,371.94 2,843,560.00

75
Exhibit 5: Notes to Financial Statements

Schedule 1
Hammock Tents 2019 2020 2021 2022 2023
Total number of days 52 312 312 312 312
Price 600.00 600.00 600.00 600.00 600.00
Number of Hammocks 12 12 12 12 12
Annual Revenue 374,400 2,246,400 2,246,400 2,246,400 2,246,400

2019 2020 2021 2022 2023

Annual Revenue 374,400.00 2,246,400.00 2,246,400.00 2,246,400.00 2,246,400.00
Total revenue (inclusive of VAT) 374,400.00 2,246,400.00 2,246,400.00 2,246,400.00 2,246,400.00
Less: VAT (Revenue/1.12*12%) 40,114.29 240,685.71 240,685.71 240,685.71 240,685.71
Total revenue (Exclusive of VAT) 334,285.71 2,005,714.29 2,005,714.29 2,005,714.29 2,005,714.29

Schedule 2
Interest Revenue
Pre-operating 2019 2020 2021 2022 2023
Cash in Bank - 41,579.00 165,271.50 915,969.37 1,550,724.23 2,217,826.39
Multiplied by: Interest Rate 0.00250 0.00250 0.00250 0.00250 0.00250 0.00250
Interest Revenue - 103.95 413.18 2,289.92 3,876.81 5,544.57
BDO Peso Savings Account: 0.25% per annum

75
Schedule 3
Taxes and Licenses Pre-operating 2019 2020 2021 2022 2023
Particulars
Business Permit (City Hall)* 25,000.00 1,872.00 11,232.00 11,232.00 11,232.00 11,232.00
Business Permit(BIR) 500.00 500.00 500.00 500.00 500.00 500.00
Mayor's Permit 200.00 200.00 200.00 200.00 200.00 200.00
Sanitary Business fee 100.00 100.00 100.00 100.00 100.00 100.00
Tax clearance 150.00 150.00 150.00 150.00 150.00 150.00
Certificates fee 150.00 150.00 150.00 150.00 150.00 150.00
Garbage fee 85.00 85.00 85.00 85.00 85.00 85.00
Sewerage fee 100.00 100.00 100.00 100.00 100.00 100.00
PUSO Inspection fee 100.00 100.00 100.00 100.00 100.00 100.00
Sanitary Inspection fee 125.00 125.00 125.00 125.00 125.00 125.00
Fire inspection fee 45.00 45.00 45.00 45.00 45.00 45.00
TOTAL 26,555.00 3,427.00 12,787.00 12,787.00 12,787.00 12,787.00
*Based from 1% of 50% of Gross Receipts

Schedule 4
Rent expense Pre-operating 2019 2020 2021 2022 2023
Prepaid Rent - - - - - -
Less: Rent Expense 40,000.00 40,000.00 240,000.00 240,000.00 240,000.00 240,000.00
Unexpired Portion of the Prepaid Rent* - - - - - -
*Rent Expense includes (communication, electricity, and water)

Schedule 5
Advertising Expense
Mode of Advertising Pre-operation 2019 2020 2021 2022 2023
Advertising Expense 1,500.00 3,000.00 18,000.00 18,000.00 18,000.00 18,000.00
- - - - - -
Total 1,500.00 3,000.00 18,000.00 18,000.00 18,000.00 18,000.00

76
Schedule 6
Property, plant, and equipment
2019 2020 2021 2022 2023
A. Machine and Equipment 352,217.00 352,217.00 352,217.00 352,217.00 352,217.00
Less: Accumulated Depreciation 17,702.52 88,512.58 159,322.65 229,903.55 299,796.95
Carrying Value 334,514.48 263,704.42 192,894.35 122,313.45 52,420.05

2019 2020 2021 2022 2023

B. Furniture and Fixtures 26,894.00 26,894.00 26,894.00 26,894.00 26,894.00
Less: Accumulated Depreciation 1,842.04 8,132.21 14,122.88 18,481.88 20,519.50
Carrying Value 25,051.96 18,761.79 12,771.13 8,412.13 6,374.50

TOTAl Depreciation
2019 2020 2021 2022 2023
Machinery 17,702.52 70,810.07 70,810.07 70,580.90 69,893.40
Furniture 1,842.04 6,290.17 5,990.67 4,359.00 2,037.63
TOTAl Depreciation 19,544.56 77,100.23 76,800.73 74,939.90 71,931.03

Schedule 7
Donations to PBTS (Expense) 2019 2020 2021 2022 2023
Total Revenue (Exlusive of VAT) 334,285.71 2,005,714.29 2,005,714.29 2,005,714.29 2,005,714.29
Percent 5% 5% 5% 5% 5%
TOTAL 16,714.29 100,285.71 100,285.71 100,285.71 100,285.71
*Kaw-itan will give a portion of its revenue to PBTS in the form of donation which is 5% of total revenue.

77
Schedule 8
Maintenance Expenses
2019 2020 2021 2022 2023
Maintenance* 1,260.00 7,560.00 7,560.00 7,560.00 7,560.00

Schedule 9 Pre-operating 2019 2020 2021 2022 2023

Miscellaneous Expense* 8,000.00 8,240.00 9,476.00 10,897.40 12,532.01 14,411.81
*Miscellaneous expense increases at 3% annually

Schedule 10
Income Tax Payable 2019 2020 2021 2022 2023
Income Tax Payable 29,647.41 63,513.61 63,570.22 63,706.21 63,915.97
TOTAL 29,647.41 63,513.61 63,570.22 63,706.21 63,915.97

Schedule 11 Salaries Expense Employee Employer

Daily Monthly Yearly SSS Philhealth HDMF Taxable Monthly Net Pay SSS PhilHealth HDMF TOTAL
Operations Supervisor 461.54 12,000.00 144,000.00 5,760.00 1,980.00 1,200.00 135,060.00 11,255.00 135,060.00 11,520.00 1,980.00 1,200.00 14,700.00
Bookkeeper 461.54 12,000.00 144,000.00 5,760.00 1,980.00 1,200.00 135,060.00 11,255.00 135,060.00 11,520.00 1,980.00 1,200.00 14,700.00
Camp Staff 1 311.54 8,100.00 97,200.00 3,840.00 1,336.50 1,200.00 90,823.50 7,568.63 90,823.50 7,680.00 1,336.50 1,200.00 10,216.50
Camp Staff 2 311.54 8,100.00 97,200.00 3,840.00 1,336.50 1,200.00 90,823.50 7,568.63 90,823.50 7,680.00 1,336.50 1,200.00 10,216.50
Camp Staff 3 311.54 8,100.00 97,200.00 3,840.00 1,336.50 1,200.00 90,823.50 7,568.63 90,823.50 6,360.00 1,336.50 1,200.00 8,896.50
Night Shift Differential-1 Camp Staff 311.54 1,215.00 14,580.00 - - - 14,580.00 1,215.00 14,580.00 - - - -
TOTAL 49,515.00 594,180.00 23,040.00 7,969.50 6,000.00 557,170.50 46,430.88 557,170.50 44,760.00 7,969.50 6,000.00 58,729.50

78
Schedule 12
Office and other Supplies Expense Pre-Operating 2019 2020 2021 2022 2023
Supplies 3,255.00 6,260.00 15,425.00 17,990.00 20,555.00 23,120.00
Less: Office Supplies Expense 250.00 600.00 7,200.00 7,200.00 7,200.00 7,200.00
Unused Office Supplies 3,005.00 5,660.00 8,225.00 10,790.00 13,355.00 15,920.00

Schedule 13
13th Month Pay 2019 2020 2021 2022 2023
Operations Supervisor 11,255.00 11,255.00 11,255.00 11,255.00 11,255.00
Bookkeeper 11,255.00 11,255.00 11,255.00 11,255.00 11,255.00
Camp Staff 1 7,568.63 7,568.63 7,568.63 7,568.63 7,568.63
Camp Staff 2 7,568.63 7,568.63 7,568.63 7,568.63 7,568.63
Camp Staff 3 7,568.63 7,568.63 7,568.63 7,568.63 7,568.63
TOTAL 45,215.88 45,215.88 45,215.88 45,215.88 45,215.88

Schedule 14
VAT Payable
2019 2020 2021 2022 2023
Output Tax 40,114.29 240,685.71 240,685.71 240,685.71 240,685.71
Input Tax 40,967.79 41,821.29 40,967.79 40,967.79 40,967.79
VAT Payable (853.50) 198,010.93 199,717.93 199,717.93 199,717.93
Input Tax comprises the tax of machines and equipment; furniture and fixture; and supplies

79
 80

Financial Ratio Analyis

The financial statements of Kaw-itan will be used to

illustrate the use of financial ratios in analyzing the

company’s liquidity, activity or efficiency in managing

resources, leverage and profitability. Since the company is

a small enterprise, applicable ratios will only be used.

Liquidity Ratios

a. Current Ratio

Current Assets
Current Ratio =
Current Liabilities
Current Ratio
2019 2020 2021 2022 2023
Current Assets 159,676.50 907,571.44 1,536,982.71 2,198,726.94 2,859,480.00
Current Liabilities 34,249.16 120,148.36 87,344.39 87,478.89 87,687.17
Current Ratio 4.66 7.55 17.60 25.13 32.61

Analysis: Since it is more that P 1.00, it is a desirable

situation wherein the current assets are enough to pay down

the short term obligations of the company. Although it is a

good indication that the company is healthy in terms of

short term debts, the company may not be using its current

assets efficiently. This may also lead to working capital

management. In order to avoid this, the organization should

plan either to increase its short term loans, spend more

cash optimally etc.

b. Return on Investment
 81

Net Operating Income

ROI =
Average operating Asset
ROI
2019 2020 2021 2022 2023
Net Operating Income 61,298.78 584,895.50 585,414.50 586,669.84 588,613.75
Average Operating Asset 259,621.47 595,018.82 871,324.09 1,164,726.26 1,459,137.27
Return on Investment 0.24 0.98 0.67 0.50 0.40

Analysis: This means the company gains favourably to its

costs. It should continue to improve its operations to

increase more its ROI. This could also be an indication to

attract more investors. Because for investors, choosing a

company with a good ROI is important because a high ROI

means the firm is successful at using the investment to

generate high returns.

Leverage/ Solvency Ratio

a. Debt Ratio

Total Liabilities
Debt Ratio =
Total Assets
Debt Ratio
2019 2020 2021 2022 2023
Total Liabilities 34,249.16 120,148.36 87,344.39 87,478.89 87,687.17
Total Assets 519,242.94 1,190,037.65 1,742,648.18 2,329,452.52 2,918,274.55
Debt Ratio 0.07 0.10 0.05 0.04 0.03

Analysis: Since it is not more than 1, then it shows that

the company is not mostly funded by debts. In other words,

the lower the percentage the less risk the company is

considered to have taken on.

 82

b. Equity Ratio

Total Equity
Equity Ratio =
Total Assets

Equity Ratio
2019 2020 2021 2022 2023
Total Equity 484,993.78 1,069,889.29 1,655,303.79 2,241,973.63 2,830,587.38
Total Assets 519,242.94 1,190,037.65 1,742,648.18 2,329,452.52 2,918,274.55
Equity Ratio 0.93 0.90 0.95 0.96 0.97

Analysis: Kaw-itan finances a greater portion of its assets

with equity and a lower portion with debt. This means that

since its equity ratio is high it generally indicates less

risk and greater financial strength than a lower ratio.

Profitability Ratio

a. Return on Assets (ROA)

Net Income
Return on Assets =
Average Total Assets
Return on Assets
2019 2020 2021 2022 2023
Net Income 61,298.78 584,895.50 585,414.50 586,669.84 588,613.75
Average Total Assets 259,621.47 595,018.82 871,324.09 1,164,726.26 1,459,137.27
Return on Assets 0.24 0.98 0.67 0.50 0.40

Analysis: It shows that the Company is efficiently using its

assets to generate earnings. This means that the company is

asset-intensive. Additionally, a more asset-intensive

company needs more money to continue generate revenue. This

ratio should be given attention to make it more attractive

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to investors since it is used for them to assess the

financial strength and efficiency to use resources.

b. Return on Equity (ROE)

Net Income
Return on Equity =
Average Partner's Equity
Return on Equity
2019 2020 2021 2022 2023
Net Income 61,298.78 584,895.50 585,414.50 586,669.84 588,613.75
Average Partner's Equity 242,496.89 534,944.64 827,651.89 1,120,986.81 1,415,293.69
Return on Equity 0.25 1.09 0.71 0.52 0.42

Analysis: Kaw-itan is profitable in relation to equity. It

uses investments to generate earnings growth. The company

should continue to improve its operations in order also to

improve more its ROE since it attracts more investors if the

ratio is high.

Capital Budgeting

a. Payback Period

Net Cost of Initial Investment

Payback Period =
Annual Net Cash Inflows
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Payback Period
Initial Investment 500,000.00
Annual Net Cash Inflows
2019 112,437.50
2020 745,329.94
2021 626,846.27
2022 659,179.24
2023 658,188.05
Payback Period 1.43

Analysis: It shows that in less than two years, the partners

could already recover their investments. A project with a

shorter payback period has less risk than with the project

with longer payback period but it ignores the time value of

money.