Mark20013 Feasibilitystudyrev

INSTRUCTIONAL MATERIAL FOR
FEASIBILITY STUDY
COURSE CODE MARK 20013
COMPILED BY:
DR. ALIPIO M. GARCIA

DR. BLESSING G. GLOVA
PUP A. Mabini Campus, Anonas Street, Sta. Mesa,

Manila 1016 Direct Line: 335-1752|Trunk Line: 335-1787
or 335-1777 local 236 or 302 Website: www.pup.edu.ph|
Email: [email protected]
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Overview
“Feasibility” is defined in the Cambridge Dictionary as the possibility that it can be

done, achieved, or made. Thus, a feasibility study is undertaken to determine if a project
or a proposed business venture is “doable, and worth pursuing in terms of time, effort,
and resources based on the given findings presented in the study. At the end of the
study, the project/business proponents decide if it is a Go, No Go, or Go with certain
adjustments based on certain key components such as marketing aspect, technical
aspect, financial aspect, organization and management aspect, and the socio-economic
aspect.
This instructional material (IM) aims to help students navigate the challenging task
of undertaking a feasibility study. This IM puts together key definitions and concepts lifted
from the classic guide in doing feasibility studies by the Development Academy of the
Philippines,tips from www.projectmanager.com and www.balancecareers.com, examples
drawn from the feasibility study undertaken by a group of Marketing Management
students of the PUP College of Business headed by John Carlo E. Tablac, entitled : “Isko
Aralan: A Feasibility Study on the Establishment of a Study Hub at Teresa St., Sta. Mesa,
Manila for the students of PUP, and for the financial study, notes from Prof. Laarni Grace
C. Lagman, CPA, MBA.
Course Outcomes
At the end of the course, the students are expected to:
• Understand the notion of “feasibility study”

• Describe the different aspects/elements that affect the possibility of success of a
project or business
• Undertake a feasibility study on a business idea they are interested to pursue
• Come with the feasibility study findings
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TABLE OF CONTENTS
Overview………………………………………………………………………………….…. 2
Course Outcomes……………………………………………………………………………2
TOPIC 1: Introduction to Feasibility Studies………………………………………………………1

TOPIC 2: Project Summary………………………………………………………………………….3
TOPIC 3: Market Study………………………………………………………………………………5
TOPIC 4: Technical Study……………………………………………………………………………14
TOPIC 5: Management Study………………………………………………………………………..19
TOPIC 6: Financial Study……………………………………………………………………………..25
TOPIC 7: Socio-Economic Study…………………………………………………………………….42
Example Feasibility Study.……………………………………………………………………………44
Bibliography…………………………………………………………………………………………….135
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TOPIC 1: Introduction to Feasibility Studies
Course Materials
Introduction to Feasibility Studies
Course Description
To be doing a project feasibility study is a tough job. It requires researching. Data
to be gathered must be comprehensive to arrive at valid, reliable and accurate results.
These results must be able to prove the viability of a proposed business project.
Topic 1, Introduction will enable you to assess the importance and benefits of
conducting a project feasibility study prior to its implementation. Here discussed the key
elements and aspects which need substantial consideration in the whole project
feasibility preparation.
Course Objectives
At the end of the discussion, the students must have got familiarized and
acquainted with the rigors of project feasibility study preparation.
Course Materials and Resources
1. Brief introduction by the teacher on what the subject is all about;
2. Initial collaboration by the students on the groupings to be formed;
3. Assistance by the teacher on what business to pursue for which a project
feasibility study is needed;
4. Various entrepreneurship courses recorded on YouTube, Google Drive,
television shows, and other related applications
Introduction the Need for Feasibility Studies
Aduana (2015) came out with a working definition of the team project feasibility
study. He said it is a systematic inquiry into a proposed business activity to determine
its viability in all areas directed towards the measurement of profitability level.
The above working definition summarizes a project feasibility study in the
following ways;
• Serves as the conceptual framework on how a business project may be
performed;
• Highlights the significance of the thinking process;
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• Provides advice to new business projects and existing businesses in
terms of plant expansion, additional product lines, or new business
opportunities;
• Is contributory as a success factor to would-be and ongoing businesses;
• Embrace key areas of other disciplines like economics, marketing,
management, accounting, taxation, engineering, quantitative analysis,
mathematics, logic and reasoning, and business report writing;
• Is undertaken for profit-oriented organizations; and
• Involves cost-benefit analysis.
To benefit from the results of a project feasibility study, it has to be able to test
the viability of a business project in all areas. Likewise, it must enhance its sustainability
as measured by its future success, it must be able to invite infusion of additional
working capital, and identify its recovery period and corresponding return on the
investment. A good feasibility may reduce business difficulty to meet and satisfy the
requirements of investors. Henceforth, a good feasibility study must be comprehensive,
objective, simple, and reliable.
Certain factors affect the preparation of a feasibility study. These factors are type
of industry, size of the project, purpose of the study, party preparing the study, and
requirements of prospective investors.
Those in the manufacturing industry require lengthier preparation as compared to
businesses render the service industry. For proposed project with minimal funding
requirement can easily prepare its feasibility study as compared to projects with multi-
million fund requirement. Additionally, determining the viability of a new project entails
more preparation, analysis, time, and funding than a study for an existing business
endeavor.
The conduct of a project feasibility study is done by a group of experts including
an economist, industrial engineer, mechanical engineer, marketing consultant,
accountant, lawyer, and human resource officer. As a final note, the template or format
to be used in preparing a feasibility study depends the funding agency or prospective
investor.
Course Assessment/Assignment
Finalize your groupings. Each group must be able to conceptualize at least three
proposals on the business it intends to pursue.
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Topic 2 Project Summary
Course Description
When the business to be pursued is finalized by the group, certain critical
decisions have to be addressed, these are the proposed name of the business,
description of the industry, description of the project, location of the project, highlights of
major assumptions. These are the preliminary concerns of the proponent which are
briefly described in Topic 2.
Course Objective
At the end of the discussion, the students must have introduced themselves to
the overall picture of a project feasibility study; must have familiarized themselves with
the preliminary requirements in conducting a project feasibility study.
1. Brief introduction by the teacher on the Project Summary of a Feasibility
Study;
2. Continued collaboration by the students on the groupings formed;
3. Assignments done by the students on the three business proposals;
television shows and other related applications
The project summary presents the highlights of the study, lists its major
assumptions, and summarizes the major findings and conclusions. The other terms for
project summary are abstract. Synopsis, overview, or executive summary. This is done
after all the major parts of the feasibility study will have been designed.
The following sections must be contained in the project summary.
• Proposed name of the business
• Description of the industry
• Description of the project
• Location of the project
• Highlights of major assumptions
• Summary of findings and conclusion
The business name should be reflective of the business entity including its
philosophical values and culture; and must be appealing to the customers. The choice
of a business name (usually three choices) must be accomplished by one to two
paragraphs explaining its nature and purpose. Several government agencies; DTI, SEC,
BSP have to be consulted for this purpose.
The description of the industry where the project belongs is cited to include
recent trends in the global market pertinent to the proposal business. The current
programs and thrusts of the national government must likewise be indicated.
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The description of the project includes its nature as well as its product or service.
Mention should be made of regional studies which are related to the proposed project
including certain government programs and incentives provided.
The strategic location of the project must be able to attain maximum efficiency to
the proponents enabling them to enjoy a competitive advantage. To have competitive
advantage means having an edge over its competitors for the purpose of profitability at
lower cost.
A good feasibility study is one which states its major assumptions. It facilitates
the conduct of the study with all the mathematical and quantitative analyses. Letting of
assumptions is based on the following;
• Past experiences of other similar businesses
• Trend in the local and global markets
• Programs of the regional and national governments
• Regulations and issuances of monitoring agencies
• Economic, financial and monetary indicators
The Summary of Findings and Conclusions is the last section of the project
summary, conclusions must have been reached along the market study, technical
study, management study, and financial study; specifying the feasibility situation in
these various aspects.
When everything is clear, the prospective investors to the proposed project may
or may not commit the necessary funds for the implementation of the proposal. After
this with the go signal of the investors, the proponents prepare a business plan.
After finalizing the business proposals per group, you are now required to decide
on the following;
1. Proposed name of the business;
2. Description of the industry;
3. Description of the project;
4. Location of the project.
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Topic 3: Market Study
Course Description
It must be the right beginning to start with. A careful and systematic projection of
the demand, supply including the demand-supply curve is very important for a clear
estimate of the future success of the proposed business. From here, the market share
the proponent may enjoy will be identified inclusive of the pricing and marketing
program to be used.
Course Objectives
At the end of the discussion, the students must have developed the analytical
skill of forecasting the marketability of a proposed business project.
1. Assignments done by the students on their proposed business name,
description of the industry, description of the project and its location;
2. Collaboration between the teacher and the students as to the sources of data
relative to demand, supply, and competitors and their prices;
3. Various entrepreneurship courses recorded on YouTube, Google Drive, and
other related applications.
The market study focuses on the study of demand, supply, gap between demand
and supply, the prior, and the marketing program. If demand is non-existent, the project
can never sustain as a going concern. An existing demand is primordial, such demand
is not presently served, and cannot be served by existing supplies.
The term market study in a feasibility study refers to the study of demand, supply
and price. It answers the question pertinent to the potential demand for the product or
service.
The primary objective of the market study may be found below;
• Determine the size and growth of total annual demand
• Evaluate the annual supply situation
• Identify the possible entry of competitors
• Determine the possible market share of the product or service
• Establish a pricing policy
• Define the appropriate marketing program
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Demand Study
The demand study must be anchored on the industry description. The demand;
either past or future, is usually expressed in an annual basis. Demand referring to past
consumption is known as past demand. Demand which is the projected usage or
consumption is known as future demand.
Past demand in the total of local production, total consumption, total number of
importations. Total local production may be the same thing as total consumption, if the
consumers are in the same place or area as the producers. Care must be exercised in
this instance.
Future demand simply refers to the projected demand for a product for local
consumption or projected production and projected number of units to be imported.
Estimating project future demand may follow the trend in the market of the
proposed product or service including the professional judgement of the proponent.
Nevertheless, certain forecasting tools are recommended for the purpose. Therese are
simple moving average, weighted moving average, arithmetic straight line, arithmetic
geometric curve, high-low point method, or least square method. Use of these
forecasting tools reveal varying data pertinent to the project future demand. However,
the simple moving average is the most pessimistic. It is advisable to begin with a low
forecast of demand, but may give your business a certain level of success.
The following is a discussion of the use and process of three of the commonly
used forecasting tools. Read and learn carefully to benefit from the following
discussions.
The following assumed historical data shall be used to illustrate the different
forecasting tools discussed in this section, unless otherwise expressly indicated that a
separate assumed past data are provided:
Year Local Production Importation Total

2010 3,900 2,700 6,600
2011 4,700 2,300 7,000
2012 5,200 3,300 8,500
2013 5,800 3,600 9,400
2014 6,300 3,800 10,100
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Simple Moving Average
In simple moving average, the historical data of past years used to forecast are
added, and the result is divided by the total number of years. The immediate results
serves as the first projected data. On the second year of projection, the most recent
data is removed, and replaced by the first projected data. This process is repeated to
determine the projected demand for the next five or ten years.
Using the historical data for the past five years, the projected demand from 2015
to 2019 in simple average is computed as follows:
Projected Demand
2015 (6,600 + 7,000 + 8,500 + 9,400 + 8,320
10,100) /5 -
2016 (7,000 + 8,500 + 9,400 + 10,100 + 8,664
8,320) /5 -
2017 (8,500 +9,400 + 10,100 + 8,320 + 8,997
8,664) /5 -
2018 (9,400 + 10,100 + 8,320 + 8,664 + 9,096
8,997) /5 -
2019 (10,100 + 8,320 + 8,664 + 8,997 + 9,035
9,096) /5 -
Weighted Moving Average

In weighted moving average, a weight is given to every data where the most
recent data is given a higher weight. The weight to be given which is discretionary in
character should have equal difference. For example, if the first data is given a weight of
one, the next data should have a weight of two, and the third data should have a weight
of three.
Likewise, if the first data has a weight of two, the next data would have a weight
of four, and the third data would have a weight of six.
A Weight of One is Assigned to the First Historical Demand. The projected
demand for the next five years where the first data has been given a weight of one is
computed as follows:
Projected Demand
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2015 [6,600 + 2(7,000) + 3(8,500) + 4(9,400) 8,947
+ 5(10,100) ÷ 15 -
2016 [7,000 + 2(8,500) + 3(9,400) + 9,156
4(10,100) + 5(8,947) ÷ 15 -
2017 [8,500 + 2(9,400) + 3(10,100) + 9,278
4(8,947) + 5(9,156) ÷ 15 -
2018 [9,400 + 2(10,100) + 3(8,947) + 9,297
4(9,156) + 5(9,278) ÷ 15 -
2019 [10,100 + 2(8,947) + 3(9,156) + 9,271
4(9,278) + 5(9,297) ÷ 15 -
The divisor 15 is the sum of all of all the weights assigned to the historical
demand.
A Weight of Two is Assigned to the First Historical Demand. In weighted moving
average, assignment of weight to historical demand is discretionary provided there an
even increase of weight is provided. In case the first historical demand data is given a
weight of two, the projected demand for the next five years is computed as follows:
Projected Demand
2015 2[6,600 + 4(7,000) + 6(8,500) + 8,947
8(9,400) + 10(10,100) ÷ 30 -
2016 2[7,000 + 4(8,500) + 6(9,400) + 9,156
8(10,100) + 10(8,947) ÷ 30 -
2017 2[8,500 + 4(9,400) + 6(10,100) + 9,278
8(8,947) + 10(9,156) ÷ 30 -
2018 2[9,400 + 4(10,100) + 6(8,947) + 9,297
8(9,156) + 10(9,278) ÷ 30 -
2019 2[10,100 + 4(8,947) + 6(9,156) + 9,271
8(9,278) + 10(9,297) ÷ 30 -
It can be observed that the results are the same whether the first historical data
is assigned a weight of one or two, provided that there is an even assignment of weights
to all other data.
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Arithmetic Straight Line
The following steps may be observed in arithmetic straight line:
1. Deduct the earliest historical data used in projection from the most recent
data.
2. Subtract 1 from the total number of years of the historical data.
3. Divide the difference computed in Step 1 by the number of years in Step 2.
4. Add the result computed from Step 3 to the most recent data as projected
figure.
Using the historical demand data, the projected demand for the next five years
using the arithmetic straight line is computed as follows:
Step 1 – Difference of the most recent and earliest data:
2014 demand 10,100
2010 demand 6,600
Difference 3,500
Step 2 – Total number of years minus 1
Number of years in
historical demand 5
Less: 1
Difference 4
Step 3 – Divide Step 1 and Step 2
Difference in Step 1 3,500
Divided by 4
Figure to be added
To the last demand 875
Step 4 – Projected Demand
2015(10,100 + 875) 10,975
2016(10,975 + 875) 11,850
2017(11,850 + 875) 12,725
2018(12,725+ 875) 13,600
2019(13,600 + 875) 14,475
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The arithmetic straight line is highly suggested if the historical demand had been
constantly increasing.
However, this forecasting tool cannot be used in case the most recent historical
demand data is lower than the earliest demand data. In this case, the proponent may
use the arithmetic geometric curve.
The arithmetic geometric curve is almost similar to the arithmetic straight line, but
the shape of the line if historical demand data is plotted in a two-dimensional graphing
paper appears curving.
The procedural steps involved are:

1. Compute the percentage of change yearly.
2. Add the computed percentage of change in procedure number 1.
3. Subtract 1 from the total number of years in historical demand.
4. Divide the total computed percentage of change in procedure 2 by the result
in procedure 3.
5. Multiply the result in procedure 4 with the most recent data. This is the first
projected demand.
6. The next projected data is computed by multiplying the result in procedure 4
with the first projected data.
For us to benefit from the study of demand, there is a need to identify the
consumers as to their need for the product or service; (consumer type, income
classification, location, age); there must be data on total past demands and their
demand patterns for proper future demand projections; the favorable indicates that the
project may be feasible.
Demand data may be gathered from the following;
• Manufacturers, retailers, consumers, schools, local government units,
national government offices;
• BSP, DOF, DTI, NEDA, PSA, BOC;
And these demand data may be obtained through survey, interview,
questionnaire, observation, testing. The appropriate sample size to be included in the
survey must be determined together with the validity of the questionnaire.
In the study of demand, important analyses of the government programs
influencing demand and its trends in the world market must be explained. In addition,
the fiscal and monetary policy of the national government has to be integrated in
relation to the proposed project. A word of caution must be remembered; all data
gathered pertinent to demand projection must be presented in tabular form; each cell in
the table must have brief, but concise entry for the appreciation of prospective investors.
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Supply Study
If the demand study focuses on the prospective buyers of the product or service;
the supply study focuses on the existing suppliers or providers of that product or
service. In the supply study, and investigation of the direct and indirect competitors is
conducted. This will give information on the historical supply and its growth patterns as
well as forecast and evaluate future supply.
For the most benefits out of the study of the competitors, the following
information about them must be obtained;
• Size, domestic/foreign, coverage area;
• Amount of capitalization and resources held;
• Marketing program/strategies adopted;
• Pricing and pricing strategies;
These are essential for the preparation of a Competitor Analysis.
Since the supply data is not available data, the proponent must check the supply
pattern as increasing or decreasing; percentage increase or decrease; existence of
government projects affecting the supply pattern or those from the private sector; new
uses of the product, if any.
Demand-Supply Analysis
In this section of the Market Study, the projected demand is compared with the
projected supply. If the projected demand is higher than the projected supply, there is
an unsatisfied demand. This unsatisfied demand provides opportunity to the proponent
to proceed with his planned enterprise. If this is the situation, it is a go signal for the
project study.
A hypothetical illustration is presented below. Study it carefully for your
appreciation.
Year Projected Demand Projected Supply Unsatisfied Demand/Excess
Supply
2015 125,000 121,800 3,200
2016 156,250 146,160 10,090
2017 198,875 179,778 19,097
2018 252,000 221,127 30,873
2019 325,080 279,986 45,094
Total 1,057,205 948,851 108,354
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As can be seen from the table above, the projected demand is increasing for the
next five years, likewise, the projected supply is increasing, but it is not sufficient to
satisfy the projected demand. The difference between supply and demand is the
immediate market share the proponent may take advantage of.
This immediate market share is computed by dividing 105,354 (unsatisfied
demand) by 1,057,205 (projected demand); which is equivalent to 10.25 percent. This is
only true given the assumption that the existing suppliers/ competitors will not increase
their plant capacity and production output.
Pricing and Marketing Program
As to how much to sell the product or service; and how to market effectively this
product or service, is the concern of the last section of the market study.
To be able to set the selling price of the product or service, the following
important points have to be considered;
• Determine total cost incurred (direct materials, direct labor, overhead
expenses);
• Decide on proposed mark up;
• Compare proposed selling price with prices of similar products or
substitutes;
• Make necessary adjustments; if needed;
• Analyze history of said prices;
• Determine expected operating expenses;
• Finalize your selling price.
Lastly, a brief marketing program should form an important part of the Market
Study. This marketing program must identify and briefly explain the following;
• Target market;
• Terms of sale;
• Channels of distribution;
• Transportation arrangement;
• Estimated selling price;
• Promotion and advertising activities;
• Distribution network;
• Packaging;
• Marketing staff; and
• Estimated cost of marketing.
Finally, the Market Study must be concluded by providing brief, but straight
forward answers to the following major questions;
• Is there a demand?
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• Are there available or enough supply?
• Is there a gap between demand and supply?
• How much is the expected selling price of the product?
• What marketing strategies should be adopted?
For the business proposal being pursued per group, you are required to submit a
Demand-Supply Forecast including the Gap Analysis, Make, Too, an Analysis of the
Competitors including their prices and marketing program.
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Topic 4: Technical Study
Course Description
Another primordial concern of the proponent in his project feasibility study is its
technical aspect. It is this part which describes the product or service, the manufacturing
process to be undertaken, its plant capacity with the production schedule, the plant
location and layout, the need for fixed assets like machinery, equipment, tools, building
structures and facilities. Likewise, the waste disposal system, the requirements for raw
materials, direct labor, as well as utilities and overhead are described lengthily.
The description of the waste disposal system also forms part of the calculations
made on the total Cost of Investment.
Course Objectives
At the end of the discussion, the students must have developed the research skill
of gathering data pertinent to the important components of the Technical Study for
determining the total cost of investment required.
1. Assignments done by the students pertaining to the Market Study to become
necessary inputs to the Technical Study;
2. Collaboration between the teacher and the students as to the source of data
relative to the important components of the Technical Study;
television shows, and other related applications.
The technical study provides the details as to how the product will be produced
on how the services will be delivered. It explains the whole manufacturing processes,
and serves as the technical plan as to how the business will produce, store and deliver
the product to end users.
The specific items considered in a technical study are; product or service;
manufacturing process; plant capacity; production schedule; plant location and layout;
machinery, equipment and tools; building structures and other facilities; waste disposal
system; raw materials requirement; direct labor requirement, utilities and other overhead
requirements; and total cost of investment.
Product or service – be able to describe the product vividly to include both its
tangible and intangible attributes. By tangible attributes, it means its physical and
mechanical parts, chemical contents, raw materials assembled with all quantitative
measurements. Intangible attributes; on the other hand, include the features of the
product like size, color, texture, scent, flavor, other variants, brand, label, package, and
the like. Emphasis must be given on the value and benefits of the product to the
consumers.
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Manufacturing process – it illustrates the sequential steps followed in
manufacturing a proposed product which are diagramed in a flowchart with explanation
below it. Take note that the type of product, characteristics of the raw materials,
expected quality influence the type of manufacturing process to be used.
Plant capacity – refers to the maximum level of production that a machine may
actually produce during a particular period. The size and capacity of the plant are
influenced largely by the size of demand and the expected market share of the
proposed product.
The plant capacity section of the technical Study presents in schematic diagram
the processing plant, description of the machinery which has the required capacity,
suppliers of the machinery, auxiliary equipment needed, and the estimated cost.
Production schedule – this is a manufacturing planning tool aimed at maximizing
production capacity of the plant or its accompanying efficiency by minimizing its
operation costs. Several production scheduling tools are available; such as, batch
production scheduling, cycle-time analysis, use of Gantt Chart, algorithmic methods.
The use of any of the production scheduling tools necessitates showing the
schedule of raw materials purchases, schedule for direct labor (number of laborers and
labor cost per hour), schedule for other manufacturing costs, schedule for finished
goods and delivery time, and schedule for inventory level. The scheduling tool to be
used depends upon the quantity to be produced and the time of production.
Plant Location and Layout – these are important considerations in the selection
and determination processes; as to where the plant shall be located and how it must be
laid out.
For the plant location to be ideal, economical and operational; it must have
proximity to the following;
• Market
• Sources of raw materials
• Available utilities
• Supply of skilled work force
• Transportation and infrastructure facilities
• Existence of waste disposal system
• Local taxation and legislation
• Peace and order situation
• Physical conditions and terrain of the land
• Prevalent weather condition in the area
• Attitude, customs and practices of the community
• Type of product to be manufactured and zoning restrictions in the area
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On the other hand, plant layout refers to the physical arrangement of machines,
furniture, equipment, and tools in producing goods. This aims to maximize production
operation at the lowest cost without sacrificing the quality of the product. To get the
most out of the plant layout;
• It must be economically and technically feasible;
• Available floor space must be efficiently utilized;
• It must provide smooth, easy and uninterrupted transport and flow of
materials, goods in process, finished goods, and industrial waste;
• Full utilization of production capacity;
• It must provide for the safety at work and conducive work conditions to all
employees;
• It must provide room for easy supervision and maintenance of machinery and
equipment.
Plant layout may be product or line layout, process or functional layout, fixed
position or location layout, fixed position or location layout, or combined or group layout.
Product or line layout is used when the material moves sequentially from one
machine to another. Here, products are standardized and produced in great quantities.
Under the process or functional layout, machines having similar functions and
operations are arranged together in one place. Here, products are not standardized and
produced in small quantities.
Fixed position or location layout may be adopted when the product remains fixed
or stationary. Machines and manpower go to the product for the conduct of production.
Combined layout or group layout is used when the product requires both the
process and product layout. This is the case when continuous production is not in place,
but manufacturing operations need to produce several products in repeated quantities.
Machinery, Equipment and Tools
For this portion of the technical study; machineries, equipment and tools which
are needed to produce the product, are presented in table form to include specifications,
supplies, acquisition and maintenance costs.
In selecting the necessary machinery and equipment, focus must be given to
maximizing the expected output within the time schedule at the lowest possible sort.
Therefore, plant capacity with its plant location and layout have to be considered. If
possible, accompanying pictures with brief descriptions must be presented followed by
a recommendation of which one to pursue given several alternatives.
Building Structures and Other Facilities
The size, type, number of floors, and the estimated costs of building structures
and facilities must well be defined in this section.
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Buildings and related structures to be constructed include an administrative
building, manufacturing plant, workhouse, road network and pathways, drainage and
disposal system, and a packaging space. The size of the factory building depends on
the machinery and equipment including the plant capacity with its specifications and
storage requirements.
What is important in this section is the architectural design or building
perspective including the ground layout of different permanent structures for the
purpose of efficiency.
More importantly, the estimated cost, the estimated useful life, estimated annual
depreciation have to be calculated to be presented in matrix form.
Waste Disposal System
This section of the technical study presents an engineering design with a
supporting schedule of the estimated cost. The design should reflect the recommended
waste disposal system which may be a transfer station system, a landfill station
provision system, or a combination facilities system. It must compare with the existing
community practice on waste disposal. It must likewise identify the expected volume of
waste to be produced monthly and separate the business recyclables.
On top of it, the proponent must see to it that his manufacturing process is
geared towards waste reduction as it has bearing on his financial operation.
Raw Materials Requirement
This is a listing of the different types of raw materials or ingredients needed in
manufacturing the product. A schedule for this must be prepared specifying the types of
raw materials required, the prospective suppliers, world market trends of the raw
materials, and the estimated cost of each.
Proper labelling and brief descriptions of each raw material must be included. In
case alternatives are available, the best must be selected and recommended with
accompanying justification.
Direct Labor Requirements
In table form, the direct labor requirements by the proposed operation must be
shown indicating the necessary number of skilled workers per department, number of
hours of work needed from each, daily direct labor rate of each, and total direct labor
cost.
Caution must be exercised so that the direct labor cost may be within what is
existing in the community and region. Likewise, the choice of skilled workers is
dependent on the type of product proposed as well as the recommended manufacturing
process. These skilled workers, as much as possible, have to be available within the
plant or business location or from easily accessible locations.
17
Utilities and Overhead Requirements
Under this particular section of the technical study, the proponent identifies the
available utility providers in the area (light and water). The expected consumption for
utilities must be calculated along with proposals for cost reduction. Additionally, other
types of overhead costs must be calculated as they affect the manufacturing process.
In similar regard, the estimated utility consumption depends on the particular
machinery to be used in manufacturing along with the number of units to be used.
Mechanical and electrical engineers can help the proponent come up with the expected
utility consumption.
Total Cost of Investment
After careful deliberation of everything which needed be included in the Technical
Study, the total requirements for capital expenditure may already be determined. The
amount of capital expenditure plus the working capital requirements represent the total
project cost. In tabular presentation, the total cost is computed as follows:
Capital Expenditures Estimated Amount

Land xxxx
Factory Building xxxx
Administrative Building xxxx
Machinery xxxx
Equipment xxxx
Tools xxxx
Road network and pathways xxxx
Drainage system xxxx
Parking space xxxx
Waste disposal facilities xxxx
Working capital requirements xxxx
Total xxxx
18
Be able to prepare a matrix showing the Total Cost of Investment required for
your proposed business. You need to itemize everything needed with corresponding
peso value for the final estimation of the Total Cost of Investment. Include all alternative
sources, and make a choice; justify your choice.
19
Topic 5: Management Study
Course Description
The Management Study determines the human resource requirements of the
project. It begins identifying the form of business organization to adapt followed by the
design of an appropriate organizational structure. Staffing requirements are likewise
indicated with mention of salaries, compensation and fringe benefits.
The Management Study ends by showing the Project Schedule from the pre-
operating phase to the different activities to be carried out until final implementation. A
GANTT CHART is prepared for this.
Course Objectives
At the end of the discussion, the students must have acquired the necessary
skills towards strategic planning; particularly the design of a GANTT CHART for a
proposed business.
1. Assignments done by the students pertaining to the Market Study and
Technical Study as inputs to the Management Study;
2. Collaboration between the teacher and the students as to the strategy by
which data so far gathered may be put in a creative blend for an overall view
of the entire project;
3. Various entrepreneurship course recorded on YouTube, Google Drive,
The management study determines the human resource requirements of the

project. The people to be considered must be technically qualified and competent to
handle and accomplish the desired objectives.
Basically, the management study aims to determine the most appropriate type of
business organization, in terms of formation structure, that will effectively accomplish
the objectives of the business. A human resource specialist may will help the proponent
in designing the management of the project.
Business organization helps the proponent decide to pursue a sole
proprietorship, partnership or corporation; his choice must have logical basis. A sole
proprietorship may be established with a small capital requirement and simple
operation.
A sole proprietorship is easy to from and with a lighter tax burden and less
impositions from the national government. Many sale proprietorships are merchandising
and service entities which carry routine activities all throughout the year.
20
Secondly, the internal organizational structure serves as the framework that
outlines the communication process between employees and departments, and defines
the responsibilities and functions of each employee in the organization. The size of the
business, the type of product sell do affect the design of the internal organizational
structure.
A flat structure is highly advisable for sole proprietorships and partnerships. It is a
simple structure which hastens decision making by empowering the few employees to
formulate decisions.
A department-focused structure and a product-focused structure are applicable
to corporate entities where the work to be accomplished is broken down to department
functions and/or product classifications. The internal structure becomes so complex
giving way to persons who will be heads of different product lines or different
departments and functions.
The end result of these decisions is the design of an organizational chart which
shows positions, ranks, and relationships of the employees in the organization.
In the management study section, the designed organizational chart requires a
brief description of the relationships of functions and positions in the organization and
how those could best meet the pre-determined objectives. The internal structure of sale
proprietorships, being flat and simple, is self-explanatory along this line.
Staffing requirements may best be shown through a listing of positions with
corresponding qualifications and functions. An example is shown below.
No. of Position Qualification Job Description

Positions Description Requirements
3 Mechanical • Licensed • To confer with
Engineers mechanical other
engineers mechanical
• Varied engineers on
experiences on the
automotive implementation
engine design of operation
• Exposure to systems
quality assurance • To conduct
and inspection specification
trainings review of
engine
components
21
• To provide
technical
guidance
based on
computer
reports about
the system
• To determine
and evaluate
product
conformance
based on
design and
application
requirements
• To oversee the
overall
installation of
maintenance,
repair of
equipment
For salaries, compensation and fringe benefits, a salary schedule similar to the
one presented below has to be designed.
Position Salary Basic Monthly Total 13th Total
Description grade Monthly Allowance Annual Month
Pay Pay &
Other
Benefits
Financial 30 P35,000 P2,000 P444,000 P35,000 479,000
analyst
Bookkeeper xx xxxx xxxx xxxx xxxx xxxx
Receivable xx xxxx xxxx xxxx xxxx xxxx
clerk
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In making decisions on salaries, compensation and fringe benefits. The following
must be consulted by the proponent;
• Provision of Labor Code;
• Stationary minimum wage in the region;
• Prevailing industry practice;
• Demands of the position;
• Technical requirements of the work.
Grouping of salary schedules may be done by functional units, by rank, by
tenure.
The last part of the management study is a Project Schedule. It defines the time
frame of the pre-operating phase of the proposed project and the different
activities carried out within that time frame.
The Project Schedule defines further the following;
• Activities or tasks for project implementation;
• Resources needed like materials, technology and personnel;
• Work to be done within a time frame;
• Time start and time finish of each task to be done.
This may be shown in a GANTT CHART like the one below,
23
Be able to design the GANTT CHART showing the various activities to be
accomplished by your proposed business prior to its actual implementation.
Be ready, too, with your proposed ORGANIZATIONAL CHART with all your
Staffing requirements. This must be accompanied by a Salary Schedule with all the
justification needed.
24
Topic 6: Financial Study
Course Description
The financial study section of the project feasibility study deals with the cost of
the project, its expected revenue, the estimated operating expenses, and the project
profitability.
To make these financial data easily discernible, an Income Statement, a Balance
Sheet and a Cash Flow Statement have to be illustrated properly and accurately. The
various sources of financing must likewise be explained. Finally, a financial statement
analysis must show to the prospective investors that this business proposal is worth
their investment.
Course Objectives
At the end of the discussion, the students must have thoroughly understood the
importance and process of careful and analytical financial planning.
1. Assignments done by the students pertaining to the Market Study, Technical
Study, Management Study as inputs to the Financial Study;
2. Collaboration between the teacher and the students as to the strategy by
which data so far gathered may be put in a creative blend for an overall view
of the entire project;
The financial study section of the project feasibility deals with the cost of the
project, its expected revenue, the estimated operating expenses, and the projected
profitability. All these are projected financial data based on the various assumptions
used in this study.
Financial study is primarily concerned with the financial health of the business
and the proponent is advised to work closely with and accountant or a financial output in
proposing it.
To be able to identify the financial feasibility of the project, it must look into its
profitability, liquidity, and solvency. The financing sources must be readily available, and
its rate of return on investment has to be higher than the cost of capital. It is likewise
important to determine its ability to generate each from operating activities.
Following are the procedural steps in conducting a financial study; they are also
the different sections therein;
• Set clearly the assumptions and its basis;
• Determine the total cost of the proposal project;
25
• Identify the soreness of financing;
• Propose the projected financial statements;
• Perform financial statement analysis.
Major Assumptions are listed one after the other with solid grounds and bases
from reliable facts. Ordinarily, assumptions are made on the following items;
• Market share;
• Selling price;
• Plant capacity;
• Manufacturing costs;
• Availability of raw materials;
• Plant location;
• Tax rates;
• Price changes;
• Operating expenses;
• Utility consumption.
These major assumptions must maintain intertwined relationships. The
assumption market share is the basis of determining the total number of units to be
produced. This must not exceed the assumed plant capacity. Also, the assumptions
on the selling price and the expected changes in prices must be higher than the
assumed manufacturing cost. Further, the assumption on utility consumption should
be based on the plant capacity and the expected machine hours. Which become the
basis of the assumption on operating expenses and overhead cost.
On top of everything, the plant location must be so accessible to assure
continuity in the supply of raw materials. Certain tax incentives may be enjoyed by
the proponent; if the proposed project is aligned with government mandates for
better marketability of its products.
Total Project Cost refers to the estimated initial funding requirements of the
proposed project. There is still a need to calculate the future operating cost. Should
there be available alternatives in terms of the total costs based on the various items
comprising it, a presentation like the one shown below has to be made.
Description Alternative Alternative Alternative Alternative
#1 #2 #3 #4
Land xxxx xxxx xxxx xxxx
Administrative building xxxx xxxx xxxx xxxx
Factory plant xxxx xxxx xxxx xxxx
Machinery xxxx xxxx xxxx xxxx
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Equipment xxxx xxxx xxxx xxxx
Tools xxxx xxxx xxxx xxxx
Parking lot xxxx xxxx xxxx xxxx
Drainage system xxxx xxxx xxxx xxxx
Waste disposal facilities xxxx xxxx xxxx xxxx
Storage facilities xxxx xxxx xxxx xxxx
Transportation equipment xxxx xxxx xxxx xxxx
Pollution control system xxxx xxxx xxxx xxxx
Working capital xxxx xxxx xxxx xxxx
Estimated Total Project xxxx xxxx xxxx xxxx
Cost
All the amounts presented in the table above are taken from the technical study,
except for the working capital requirements. The amount of working capital requirement
must likewise be identified. This will enable the proponent to know, if he can produce
and sell the goods needed by the consumers as well as pay its maturing financial
obligations.
To help the proponent determine his level of working capital requirement, he has
to consider the following factors;
• Providing practice in the industry;
• Length of the manufacturing process;
• Nature of the industry;
• Pattern in sales and purchases.
If the working capital is assured, the following may be done by the proponent;
• Immediately take profitable opportunities;
• Settle currently maturing obligations;
• Provide credit facilities to customers;
• Properly manage inventories.
The recommended level of working capital has to be justified based on the
benefits cited above. The estimated total project cost will be used to prepare projected
financial statements, computation of rate of return on investment, and in securing the
attractiveness of the investment proposal.
27
Sources of Financing must explicitly define the possible sources of funds to
finance the initial funding requirements of the proposed project. Alternative ways of
financing the project should be presented to the prospective investors.
The financing of a new venture usually comes from the owner’s infusion of fresh
capital; he is the primary source of capital. Sole proprietorships and partnerships usually
suffer from this problem. Only corporations enjoy the privilege of financing through
creditors. The debt-to-equity ratio of corporate owners in highly dependent on the
attractiveness of the investment proposal. The basic rule states that an investment with
a rate of return that is higher than the cost of capital in favorable (cost of capital is an
interest expense item).
The proponent has to present in table form the various sources of financing
available to him including the costs to be incurred. This has to be compared with the
rate of return on investment, and make a decision if it is favorable or not.
Consider the following illustration for your clearer understanding
The total project cost has been estimated at P25 million. The funding source for
this capital requirement has been determined as follows:
8% bank loan with MBTC P5,000,000
10% preference shares 7,500,000
Ordinary shares 12,500,000
Total capital P25,000,000
The following information has been determined as a result of evaluation of the
economic trend in the market:
A. The expected market prices of the shares are:
Ordinary shares P50
Preference shares 25
B. Dividends per share
Ordinary shares P4
Preference shares 2
C. Expected dividend growth rate of ordinary shares, 2%
D. Corporate income tax rate, 30%
The individual cost of capital according to sources is computed as follows:
A. Ordinary shares
𝑃4
𝐶𝑂𝐶 = 𝑃50 + 2%
= 10%
B. Preference shares
28
𝑃2
𝐶𝑂𝐶 = 𝑃25
= 8.0%
C. Bank loan or bonds
8%(1 − .30)
𝐶𝑂𝐶 =
= 5.6%
The weighted cost of capital is computed by determining first the capital ratio
structure as follows:
8% bank loan with MBTC P5,000,000 20.0%
10% Preference shares 7,500,000 30.0%
Ordinary shares 12,500,000 50.0%
Total capital P25,000,000 100.0%
The weighted cost of capital is computed by adding the sum of each cost of
capital as follows:
Proportion Cost Weighted
8% bank loan with MBTC 20.0% 5.6% 1.1%
10% Preference shares 30.0% 8.0% 2.4%
Ordinary shares 50.0% 10% 5.0%
Total capital 100.0% 8.5%
Hence, the weighted cost of capital is 8.5%. this is the benchmark or it serves as
the minimum rate of return for any capital investment requirement to be favorable.
Return on investment is a measure that determines the amount of return for
every peso of investment. For example, if the rate of return is 12%, that implies that 12
centavos are returned for every one peso invested.
The rate of return on investment (ROI) is computed as follows
𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
ROI =
𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
The return of investment is compared against the minimum rate of return, or the
cost of capital. The decision rule is that if ROI is higher than COC, the investment
29
appears to be favorable. However, if ROI is less that COC, the proposed project may
not be favorable.
For example, in the P25 million total cost of the project, the net income realized
amounted to P2.6 million, then the return on investment is 10.4%, computed as follows:
𝑃2,600,000
ROI = + 2%
𝑃25,000,000
= 10.4%
Comparing the return on investment of 10.4% against the minimum required rate
of return of 8.5%, it appears that the project is financially favorable.
This simple mathematical formula does not consider the risk involved in the
investment.
The Projected Financial Statements can disclose information on (1) profitability of
operating activities, (2) liquidity condition, (3) solvency status, (4) management
efficiency in handling resource, and (5) adaptability performance.
The common financial statements included in the study are;
(1) Statement of comprehensive income;
(2) Statement of financial position;
(3) Statement of cash flows.
The following are the supporting schedules which are required of the proponent
to accomplish;
(1) Quantity of raw materials to be purchased;
(2) Required number of units to be produced;
(3) Manufacturing cost per unit (materials, direct labor, overhead cost);
(4) Estimated cash collection and payment;
(5) Depreciation/lapsing schedule;
(6) Compensation cost;
(7) Amortization schedule.
The statement of comprehensive income on Income Statement presents the
amount of income realized during the period measured in accordance with the accrual
method of accounting; it shows the profitability of the business.
The statement of financial position or the Balance Sheet presents the financial
condition of the business in terms of liquidity and solvency status. The total resources
and equity, both of the creditors and owners, are shown in this statement.
30
The statement of cash flows shows the amount of cash generated and disbursed
during a certain period. The sources of cash inflows and cash outflows should be
properly identified in the statement.
You may use this as GUIDE the following Financial Statements Template
including the Supporting Schedules.
Statement of Comprehensive Income
Net sales (Supporting schedule) xxxxx
Less:Cost of goods sold (Supporting schedule) xxxxx
Gross income xxxxx
Other income xxxxx
Total income xxxxx
Expenses:
Distribution expenses (Supporting schedule) xxxxx
Administrative expenses (Supporting schedule) xxxxx
Finance costs (Supporting schedule) xxxxx xxxxx
Income before tax xxxxx
Income tax xxxxx
Net income xxxxx
Supporting schedule of net sales

Sales xxxxx
Sales returns and allowances
(xxxxx)
Sales discounts
(xxxxx)
Net sales revenue xxxxx
Supporting schedule of cost of goods sold for merchandising
Merchandise inventory, January 1 xxxxx
Purchases xxxxx
Freight-in xxxxx
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Total xxxxx
Purchase returns and allowances (xxxx)
Purchase discounts (xxxx) xxxxx
Goods available for sale xxxxx
Less: Merchandise inventory, December 31 xxxxx
Cost of goods sold xxxxx
Supporting schedule of cost of goods sold for manufacturing
Direct materials
Materials inventory, beginning xxxxx
Add: Net purchases xxxxx
Total materials available for use xxxxx
Less: Materials inventory, ending xxxxx
Indirect materials used xxxxx xxxxx
Direct materials used xxxxx
Direct labor xxxxx
Factory overhead
Indirect materials xxxxx
Indirect labor xxxxx
Other factory overhead xxxx xxxxx
Total manufacturing cost xxxxx

Add: Work in progress, beginning xxxxx
Total goods put in process xxxxx
Less: Work in process, ending xxxxx
Cost of goods manufactured xxxxx
Add: Finished goods, beginning xxxxx
Total goods available for sale xxxxx
Less: Finished goods, ending xxxxx
32
Cost of goods sold xxxxx
Supporting schedule for distribution expenses
Materials inventory, beginning xxxxx
Sales salaries xxxxx
SSS contribution xxxxx
PAG-IBIG contribution xxxxx
Salesmen’s commission xxxxx
Depreciation expenses – delivery vehicle xxxxx
Advertising expenses xxxxx
Store supplies xxxxx
Total xxxxx
Supporting schedule for administrative expenses
Officer and staff salaries xxxxx
Depreciation – office furniture xxxxx
SSS contribution xxxxx
PAG-IBIG contribution xxxxx
Doubtful accounts xxxxx
Office supplies xxxxx
Total xxxxx
Statement of Financial Position

Assets
Current Assets
Cash and cash equivalents (schedule) xxxxx
Trading securities xxxxx
Trade and other receivables (schedule) xxxxx
Inventories (schedule) xxxxx
33
Prepaid expenses (schedule) xxxxx
Total current assets xxxxx
Noncurrent assets
Property, plant and equipment (schedule) xxxxx
Long-term investment (schedule) xxxxx
Intangible assets (schedule) xxxxx
Other noncurrent assets (schedule) xxxxx
Total noncurrent assets xxxxx
Total Assets xxxxx
Liabilities and Stockholders’ Equity
Current liabilities
Trade and other payables (schedule) xxxxx
Short-term bank loan xxxxx
Warranty payable xxxxx
Total current liabilities xxxxx
Non-current liabilities
Bonds payable xxxxx
Deferred tax liability xxxxx
Total non-current liabilities xxxxx
Total liabilities xxxxx
Shareholders’ equity
Share capital (schedule) xxxxx
Reserves (schedule) xxxxx
Retained earnings xxxxx
Total shareholders’ equity xxxxx
Total Liabilities and Stockholders’ Equity xxxxx
34
Statement of Cash Flow
Cash flow from operating activities
Cash receipts from customer xxxxx
Cash payment to supplier xxxxx
Cash payment for salaries xxxxx
Cash payment for other expenses xxxxx
Cash payment for rent xxxxx
Cash generated from operations xxxxx
Interest paid (xxxx)
Income tax paid (xxxx)
Cash flow provided (used) by operating activities
xxxxx
Cash flow from investing activities
Sale of investment xxxxx
Acquisition of machinery (xxxx)
Sale of machinery xxxxx
Cash flow provided (used) by financing activities
xxxxx
Cash flow from financing activities
Payment of dividends (xxxx)
Sale of treasury share xxxxx
Bank loan xxxxx
Issuance of bonds xxxxx
Cash flow provided (used) by financing activities
xxxxx
Increase in cash and cash equivalent
xxxxx
Add: Cash and cash equivalents – January 1
xxxxx
35
Cash and cash equivalents – December 31
xxxxx\
Lastly, the Financial Statement Analysis is a reflection of the value of the

proposed business in terms of profitability, liquidity, solvency, and management
efficiency.
In analyzing the projected financial statements, the use of financial ratios is the
effective means with which to entice prospective investors to the investment proposal.
Following are the commonly-used Financial Mix Ratios to interpret the financial
performance of the proposed business. You may go over it for proper guidance in the
preparation of the Financial Study of your planned enterprise.
Liquidity Ratios
Ratios Formulas indicator
Current 𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 Indicates the
ratio 𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 ability to pay
currently maturing
debts
Acid-test 𝑇𝑜𝑡𝑎𝑙 𝑞𝑢𝑖𝑐𝑘 𝑎𝑠𝑠𝑒𝑡𝑠 Indicates the
ratio 𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 ability to pay
current liabilities
by the use of
Quick Assets = cash + trading securities + trade quick assets;
receivables more stringent
measure of
liquidity
Receivable 𝑁𝑒𝑡 𝑐𝑟𝑒𝑑𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 Indicates the
turnover 𝑎𝑣𝑒. 𝑡𝑟𝑎𝑑𝑒 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 efficiency of
collection of
receivables
Collection 360 𝑑𝑎𝑦𝑠 Indicates the
period 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 quickness in
collecting trade
receivable;
measures the
liquidity of
receivables
36
Inventory 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 Indicates the
turnover 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 efficiency of
acquiring and
selling inventory;
the number of
times inventories
are acquired and
sold during the
year
Inventory 360 𝑑𝑎𝑦𝑠 Indicates the
sales 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 number of days to
period sell inventory
Payable 𝑛𝑒𝑡 𝑐𝑟𝑒𝑑𝑖𝑡 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑠 Indicates the
turnover 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑟𝑎𝑑𝑒 𝑝𝑎𝑦𝑎𝑏𝑙𝑒𝑠 efficiency of
meeting trade
payables
Payable 360 𝑑𝑎𝑦𝑠 Indicates the
payment 𝑝𝑎𝑦𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 number of days
days before payment of
trade payables
Operating Collection period + inventory days Indicates the
turnover number of days
cash is invested
until the day of its
recovery
Cash 𝑐𝑎𝑠ℎ 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 Indicates the
turnover 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑎𝑠ℎ 𝑏𝑎𝑙𝑎𝑛𝑐𝑒 ability to pay
operating
expenses given
certain cash
balance
Days to 360 𝑑𝑎𝑦𝑠 Indicates the
pay 𝑐𝑎𝑠ℎ 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 number of days
operating required paying
expenses operating
expenses
37
Working 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 Indicates the
capital 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 adequacy of
turnover working capital
Raw 𝑟𝑎𝑤 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 𝑢𝑠𝑒𝑑 Indicates the
materials 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑤 𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 number of times
turnover raw materials are
used and
replenished
Work-in- 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑚𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑒𝑑 Indicates the
process 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑤𝑜𝑟𝑘 − 𝑖𝑛 − 𝑝𝑟𝑜𝑐𝑒𝑠𝑠 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 number of times
turnover work-in-process
inventories are
converted to
finished products
Finished 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 Indicates the
goods 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑓𝑖𝑛𝑖𝑠ℎ𝑒𝑑 𝑔𝑜𝑜𝑑𝑠 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 number of times
turnover finished goods are
sold
Asset 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 Indicates the
turnover 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 effectiveness of
utilizing
company’s
resources
Current 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 − 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 − 𝑎𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛 Indicates the

assets 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 adequacy of
turnove current
r Alternative formula: resources to
meet𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 𝑎𝑛
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠 + 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 + 𝑖𝑛𝑐𝑜𝑚𝑒 𝑡𝑎𝑥𝑒𝑠 + 𝑜𝑡ℎ𝑒𝑟 𝑒𝑥𝑝𝑒𝑛𝑠𝑒(𝑒𝑥𝑐𝑙𝑢𝑑𝑖𝑛𝑔
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 operating
requirements
Net Current assets minus current liabilities Indicates the
working amount of
capital investment to
operate
normally
38
Solvency or Leverage Ratios
Ratios Formulas Indicator
Debt ratio 𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 Indicates the percentage of
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 all assets being financed with
debt
Debt-to- 𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 Indicates the proportion of
equity ratio 𝑡𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦 debt in relation to resources
provided by owners
Equity ratio 𝑡𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦 Indicates the proportion of
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 assets provided by owner
Times 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥𝑒𝑠 Indicates the number of times
interest 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 interest is covered by
earned operating income
Fixed assets 𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡𝑠 (𝑛𝑒𝑡) Indicates the percentage of
to non- 𝑡𝑜𝑡𝑎𝑙 𝑛𝑜𝑛 − 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 investment in fixed assets
current debts finance from non-current debt
Fixed assets 𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡𝑠(𝑛𝑒𝑡) Indicates the percentage of
to 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦 investment in fixed assets by
shareholders’ shareholders
equity
Fixed assets 𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡𝑠(𝑛𝑒𝑡) Indicates the percentage of
to total equity 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 investment in fixed assets
Profitability ratios
Ratios Formulas Indicator
Gross profit 𝑔𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 Indicates the
rate 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 income after
deducting cost of
sales
Operating 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 Indicates the
profit margin 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 amount of profit
after deducting
operating expenses
from gross profit
39
Net profit 𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 Indicates the
margin 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 amount of profit
after deducting all
expenses
Return on 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑖𝑛𝑐𝑜𝑚𝑒 Indicates the rate of
Investment 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 return of every peso
investment
If there is interest-bearing debt, return on
investment is computed as follows:
𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 + [𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒𝑠(1 − 𝑡𝑎𝑥 𝑟𝑎𝑡𝑒)]
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Return on 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 Indicates the
shareholders’ 𝑎𝑣𝑒 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦 percentage of
equity income for every
peso of
shareholders’ equity
Return on 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 + 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒, 𝑛𝑒𝑡 𝑜𝑓 𝑡𝑎𝑥 Indicates the overall
total assets 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 profitability and the
effective utilization
of assets
Return on 𝑛𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 Indicates the
Current 𝑎𝑣𝑒 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 profitability of
assets current assets
invested
Growth Ratios
Ratios Formulas indicator
Basic 𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑡𝑜 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 Indicates
earning 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 the peso
s per return on
share each
ordinary
shares
Diluted 𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑡𝑜 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 Indicates
earning 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 𝑝𝑙𝑢𝑠 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘 𝑒𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡𝑠 the
s per earnings
share potential
per share
40
by
including
common
stock
equivalent
s
Price- 𝑚𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑠ℎ𝑎𝑟𝑒𝑠 Indicates
earning 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑜𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 the value
s of ordinary
shares in
relation to
the market
price
Dividend- 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 Indicates the percentage

payout 𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 of earnings payment to
ratio shareholders
Dividend- 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 Indicates the relationship
yield ratio 𝑚𝑎𝑟𝑘𝑒𝑡 𝑣𝑎𝑙𝑢𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑜𝑓 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑠ℎ𝑎𝑟𝑒 between dividends and
market value of ordinary
share
Dividend 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 𝑝𝑎𝑖𝑑 Indicates the income
per share 𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 distributed to
shareholders
Book 𝑠ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 ′ 𝑒𝑞𝑢𝑖𝑡𝑦 Indicates the value of
value per 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑠ℎ𝑎𝑟𝑒𝑠 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 share in the event of
share liquidation
Be able to design your Income Statement, Balance Sheet, Cash Flow Statement;
and do your Financial Statement Analysis.
41
Topic 7: Socio-Economic Study
Course Description
The importance of the Socio-Economic Study cannot be underpinned. No
business organization may ever be successful in its operation without giving back to
society a part of its success. Henceforth, its physical contributions, economic
contributions, social contributions, technological contributions, and environmental
contributions may do a lot to enable the proposed project to give back to the community
and government what it received from them.
Course Objectives
At the end of the discussion, the students must have realized the value of a
mutual relationship most essential in business and its various stakeholders.
1. The entire project feasibility study;
2. Final collaboration between the teacher and students;
The last major section of a Project Feasibility Study is the Socio-Economic Study,
it deals with the social and economic impact/benefits of the proposed project to the local
community and the nation in general. In this section, the proponent should make a valid
and supportive description of the contributions are summarized as follows;
P-hysical Contributions include the cleanliness and beautification drives which
may be pushed in the community where the proposed business is to be located;
E-conomic Contributions include provision for employment, additional income to
the people, additional tax collection to the government;
S-ocial Contributions include alleviating the standard of living of the people,
helping government with infrastructures, helping local supplies of materials, increase of
exports and foreign exchange;
T-echnological contributions include adaptation to use of technology in
production and rendering of services to speed up operations;
E-nvironmental contributions include use of programs and advocacies to help
mitigate climate change, proposal to adapt a more vigorous solid and hazardous and
waste management practices, and maintenance of clean and fresh water to drink and
use.
The proponent should give a brief conclusion on the total benefits that the
proposed project may provide to the community and government.
42
Following the P-E-S-T-E plan, design the Socio-Economic Study of your
proposed business.
43
Example from Isko Aralan Feasibility Study
A. PERSONNEL (ADMINISTRATIVE)
Figure 4
Organizational Chart
Isko Aralan will be using a line type organizational structure for highly efficient and
fast decision-making business operations. This is the oldest and simplest type of business
organization. In this way, the authority flows from top to bottom. The chart shows that
there are only three personnel in the business project. Since it is a small business, and it
don’t require too much work load to operate and a manager and two maintenance staff
are enough to handle the business works.
44
Table 2
Administrative Personnel Requirements
Position Job Description Job Requirements
• Plans and directs the day-

to-day operations of the • Have at least 2 years’
study hub managerial experience
in any type of business
• Responsible for recruiting,
training and supervising • Must be 18 years old
staff and above
• Responsible for • Graduate of any

responding to customer Business
1. Store
complaints and comments Administration course
Manager/Cashier
• Responsible for collecting • Must have a good

payment and giving communication skill
appropriate change with
receipt • Works well under
pressure
• Responsible for counting
the contents of cash • Physically and
register drawer at the end mentally fit
of each shift
45
• Must have knowledge
in computer
• Must know how to print
• At least high school
• Responsible for the
graduate
printing and laptop rental
• Must be 18 years old
services
and above
• Fit to work
2. Maintenance • Responsible for assisting
Staff/Cleaner • Ability to manage time
the customers
• Works well under
pressure
• Responsible for cleaning
• Has capacity to take
the whole area of the
direction
study hub
• Must handle cleaning
work
• Able to use cleaning
equipment
Proposed Salary Rate and Benefits
The proposed salary for the Store Manager is php512 per day and his duty will
last 26 days a month. The Store Manager also serves as the cashier.
Computation: P512.00 x 26 days = P13, 312.00
While the Maintenance Staff or the Cleaner’s salary is worth P256.00 per day.
There are two cleaners with an alternate shift of day by day or a total of 13 work days for
each Maintenance Staff/Cleaner.
Computation: P256.00 x 26 days = P6,656.00 x 2 staff = P13, 312.00
46
Table 3
Personnel Weekly Work Schedule
Tim WEDNES THURSDA SATURDA

MONDAY TUESDAY FRIDAY
e DAY Y Y
Store Store Store 1Store Store Store

Manager/ Manager/ Manager/ Manager/ Manager/ Manager/
Cashier Cashier Cashier Cashier Cashier Cashier
8:00
AM-
Maintenanc Maintenan Maintenan Maintenan Maintenan Maintenan
8:00
e ce ce ce ce ce
PM
Staff/Clean Staff/Clean Staff/Clean Staff/Clean Staff/Clean Staff/Clean
er 1 er2 er1 er2 er1 er2
Availability and Source of Administrative Personnel
Isko Aralan operates from Mondays to Saturdays at 8 o’ clock in the morning until
8 o’ clock in the evening. The Store Manager/Cashier and the Administrative
Staff/Cleaner are required to work twelve hours a day from Monday to Saturday, and
Sunday will be their rest day. The employees should come one hour earlier than their
scheduled time and should stay for at least one hour after their shift to prevent
unnecessary occurrence.
The following show the step by step procedure of hiring Store Manager/Cashier
and Maintenance Staff/Cleaner for Isko Aralan:
For the Store Manager/Cashier
⚫ Applicants should pass an application form or resume with 2x2 recent colored picture
to one of the owner of Isko Aralan.
47
⚫ The owner will analyze the contents of the resume and will call the applicant for the
interview.
⚫ After the interview, if passed, will be given the list of requirements to be complied for
a specific amount of time.
⚫ After compliance of all requirements, the applicant may start working to Isko Aralan
as Store Manager/Cashier.
For the Maintenance Staff/Cleaner
⚫ Applicants must pass an application form or resume with 2x2 recent colored picture
to the store manager.
⚫ The store manager will analyze the contents of the resume and will call the applicant
for the interview.
⚫ After the interview, if passed, the applicant will be given the list of requirements to be
complied for a specific amount of time.
⚫ After compliance of all the requirements, the applicant will be schedule for an
orientation.
⚫ After the applicant is oriented, they will be trained for one week regarding the
operations of the business applying the basic principles of the business.
B. MANAGEMENT PROPOSALS
Human has a nature and characteristics of disliking their work so some people
needs to be coerced, controlled, motivated, and to some extent or threaten with
punishment to make them productive and for the business to achieve its organizational
goals.
48
Form of Business Organization
The type of business is a partnership. It is to be registered with the Securities and

Exchange Commission (SEC) for the contract called Articles of Co-partnership. By the
contract of partnership, two or more persons bind themselves to contribute money,
property, and industry with the intention of dividing the profits among themselves.
Isko Aralan as partnership will be registered with the different government

agencies as Securities and Exchange Commission (SEC), Business Permit and Licensing
Office of Manila, Bureau of Internal Revenue (BIR), and Social Security System (SSS).
The project will have its full blast after it has complied with all the necessary
documents and technical requirements needed to operate and engage in this type of
business.
Organizational Policies (Governing Rules and Policies)
1. Accounting Policies
⚫ Cash will be collected everyday by the cashier assigned in the cash register. He
will handle cash received from customers.
⚫ At the end of the day, or a scheduled date, the cashier will give the sale for the
day to general partner.
⚫ Form of payment shall be cash based
2. Personnel Policy
Schedule and Attendance
Attendance and punctuality are important qualities that the company

expects from its employees. They are the factors that determine an employee’s
efficiency and reliability. His presence is necessary for the smooth flow of work at
the start of the business hours.
49
The management will give a logbook where the employees are required to
record their time in and time out. They are given at least 15 minutes grace period
after their schedule time, if they are not be able to report after the given grace
period they will be considered late and will have a deduction in their salary.
Employees who will be late for five (5) consecutive days without prior notice
or valid reason will be terminated.
Absences
Every employee shall ask written permission from the Manager, before
taking the leave of absence. Employees must file an application for absence for at
least one (1) week to the Manager.
Sickness
If employee incurred sickness and cannot report for work, he must call his
manager at least two (2) hours before his duty. If no calls were received on the day
of his absence or his call came in late, this will be considered as AWOL.
Emergency Leave
If employees must go on emergency leave, he must file an absence slip

immediately. Attached to the absence slip must be documents justifying his reason
for going on emergency leave.
An employee who is absent from work without written approval is subject to

penalty. An employee who is absent without submitting official leave for five
consecutive days is considered to abandon his work and therefore subject to
outright dismissal from the business.
Under-time is allowed on a case-to-case basis and only if approved by the

General Manager. Under-time hours shall be automatically deducted from the
salary of the employees concerned.
50
3. Leaving Workplace
Voluntary Resignation
In case an employee intends to resign, he/she must give a one-month prior

notice to the management and must comply with all the clearance requirements;
otherwise the employee shall forfeit whatever remaining compensation due to him.
Termination
In all cases involving a termination of an employee’s service from the

company, appropriate notice of termination shall be furnished to the employee
subject to clearances of all accountabilities. As a matter of policy, terminated
employees are not qualified for reinstatement.
Non-Work/Holidays
Every employee shall be provided with a rest period of twenty-four (24)

hours after every six (6) consecutive normal working days. The following shall be
considered regular holidays:
·New Year’s Day - January 1
·Maundy Thursday - movable date
·Good Friday - movable date
·Araw ng Kagitingan - April 09
·Labor Day - May 1
·Independence Day - June 12
·National Heroes Day - last Sunday of August
·Ramadan - movable date
51
·Bonifacio Day - November 30
·Christmas Day - December 25
·Rizal Day - December 30
The following shall be considered special holidays:
·Eid'lFtr– movable date
·Eid'lAdha– movable date
·All Saints Day - November 1
·Last day of the Year – Dec. 31
4. Conduct and Behavior Policy
In this business, we should always think first the students. The employees must
know how to handle different situations and personalities of the customers that they’ve
encountered. The employees must communicate in good tone because some customers
misunderstood the way of talking to them and may find it rude. Employees who exhibit
rudeness must face the following sanctions:
1st offense - Verbal warning
If a worker committed violation for the first time, the manager should talk to
him personally and warn him about the said violation.
2nd offense - Written Warning
It is the notice calling all the attention to the offense and warning the
offenses against repetition of such violation in the future.
3rd offense - Suspension
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If a worker has committed offense for the third time, he is subject to
suspension. He will be detached from the organization with the designated period
of time without payment. It could be three, six, or nine days.
4th offense - Termination
Termination will be given to employees who have committed a major

offense. The employee will be dishonorably separated from the organization.
5. Uniform Policy:
Both the administrative personnel are required to wear the following uniform to
observe neatness and proper business attire etiquette:
53
Figure 5
Personnel Uniform
6. Workplace Policy
Every business must comply with the policies given by the government and by the
location where the business was established. Our business needs to set standards to
ensure the safety of the customers which includes the following:
⚫ The workplace must have a trash bin to avoid littering materials.
⚫ The staff must observe cleanliness in the study hub.
7. Wage Policy
The management will give their employees a salary according to the law. It will be
given every 15th and 30th of the month.
8. Sales Policy
The management will only accept cash in exchange of our service. Credit cards
and/or debit cards are not acceptable. The management will issue receipt in every
transaction.
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Table 4
Function of each Administrative Department
Administrative Department Function
Store Manager / Cashier They are the one who plan, organize, direct and control.
Managers must plan or narrow goals from their broadest
to most intricate form. They must organize and create a
structure for daily tasks and communication.
Responsible for taking money in the form of cash from

students in exchange for the services that offered in the
study hub. Scans items, provides change, balances
drawer, and receiving money from students.
Maintenance Staff/Cleaner Performs general cleaning and minor maintenance duties

in maintaining library building, adjacent walks and
grounds, and equipment in clean, orderly and functional
condition.
They are the one to assist patrons with daily operational

needs of the Isko-Aralan study hub such as borrowing
laptops and availing some services; performs related
duties as assigned.
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Table 5
Facilities, Equipment and Machines use in Administrative Department
Departmen
Equipment and Facilities Definition Cost
t
Laptops combines the

PC
Manager components, inputs, outputs
including the display screen,
speakers, a keyboard, hard P15,000
disk drive, optical disc drive,
and memory into a single unit.
JOURNAL BOOKS
Accounting journals in which
business transactions are
initially recorded. The
information in these books is
then summarized and posted P240.00
into a general ledger, from
which financial statements are
produced.
BALLPEN Common writing instrument

used to apply ink to a surface,
usually paper, for writing or
drawing. Historically,reed P50.00
pens, quill pens, and dip pens (1box)
were used, with a nib dipped
in ink.
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CALCULATOR Typically a portable electronic
device used to perform
P200.00
calculations, ranging from
basic arithmetic to complex
mathematics.
Equipment
Maintenanc SPIN MOP Implement consisting of a

e sponge or a bundle of thick
P350.00
loose strings attached to a
(1PC)
handle, used for wiping floors
or other surfaces.
PLUNGER
A device consisting of a P500.00

rubber cup on a long handle, (1PC)
used to clear blocked pipes by
means of water pressure.
BRUSH
Used for cleaning or P25.00

scrubbing, applying a liquid or (2PCS)
powder to a surface, or other
purposes.
GARBAGE BIN
A container, typically plastic or P200.00

metal, for household refuse (4PCS)
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BROOM
A long-handled brush of P100.00

bristles or twigs used for (4PCS)
sweeping.
DUSTPAN A flat handheld receptacle into

which dust and waste can be
P50.00
swept from the floor.
(2PCS)
Supplies
HAND SOAP
Use to wash hands for a germ P65.00

free environment. (12PCS)
DETERGENT POWDER A cleansing agent that are

able to emulsify oils, hold dirt
P3.50
in suspension, and act as
(100PCS)
wetting agents.
RAGS A piece of old cloth, especially

one torn from a larger piece,
P90.00
used typically for cleaning
(6PCS)
things.
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MURIATIC ACID
A very strong mineral use for P30.00
cleaning tiles and toilet bowl. (12PCS)
GARBAGE BAG
A bin bag or garbage bag, or P100.00

trash bag is a disposable bag (12PCS)
used to contain rubbish
TOTAL COST P20, 920.00
C. SYSTEM AND FORMS DESIGN
Flow of Administration Operations and Standard Operating Procedure
Administration operations are the processes, activities and tools while operating a
business. These are the support procedures that are necessary for day to day operations.
It also involves the routine equipment checking and some works that are assigned to the
employees.
“ISKO-ARALAN” will be open every Mondays to Saturdays at 8 in the morning

until 8 in the evening. The store manager and the maintenance staff must be at the store
one hour before the opening. The manager which also the cashier of the study hub will
be preparing his area by cleaning and checking the laptops that will be renting of the
students. The maintenance staff will be cleaning the whole area by sweeping and
mopping the floor, arranging the chairs and tables and the cabinets as well, and cleaning
the restroom. After all of this important morning routine, the study hub will be open at
exactly 8 in the morning. The maintenance staff will be staying near to the entrance so
that she will see the students who will be entering the area.
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The manager will be the one who will accommodate and talk to the students, who
will be renting the laptop, and how many hours they will stay in the study hub. The
maintenance will be sweeping and mopping the floor after one hour every day. At exactly
10 in the morning the maintenance staff will be giving a twenty minutes break time after
that, the manager/cashier also has a twenty minutes break time after the break of the
maintenance staff but she will still stay inside the study hub. At 12 in the afternoon, the
manager/cashier will have a one-hour lunch-break. Next to him after an hour is the
maintenance staff to have his or her lunch. They will still stay inside the study hub while
eating.
They will also have an alternate 20 minute break time. After that, they will resume
to their works. At exactly 8 in the evening the study hub will be closed but, the
manager/cashier and the maintenance staff will stay another 1 hour. The manager will be
counting the money they earn during the day checking and making sure that the laptops
are properly used and shut down, changing the passwords of the internet and cleaning
her work area while the maintenance staff will be cleaning the first and second floor of the
study hub, sweeping and mopping the floor, arranging the chairs and tables and cleaning
the restroom as well.
After that important evening routine, the manager and maintenance staff will make
sure that the area is properly clean, the important things inside in the cabinets, air
conditioner and internet are properly shut down and the padlock of the area are secure
and properly lock.
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Table 6
Daily Work Flow Chart
Work hours Store Manager/ Cashier Maintenance staff/Cleaner
Before Cleaning and preparing his/her Sweeping and mopping the floor,
area and checking the laptops arranging cabinets, chairs and
8:00 AM
that will be renting of the tables and cleaning the rest room
students
8:00-9:00 AM Opening ( accommodate the Opening ( staying near to the

students) entrance)
9:00- 11:00 AM Work hour Work hour
11:00-12:00 NN Lunch break Work hour
12:00-1:00 PM Work hour Lunch break
1:00-5:00 PM Work hour Work hour
5:00-5:20 PM Twenty minutes break time Work hour
5:20 PM-5:40 Work hour Twenty minutes break time

PM
8:00 PM Closing Closing
After 8:00 PM Inventory Inventory
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Topic 3: Market Study
The market study is the lifeblood of virtually every project feasibility study. While
profitability is generally the focal point of a project study, the question of demand is the
most basic issue. There can be no discussion of profitabiity or of the other aspects of the
feasibility study if there is no demand. The market study seeks to determine the following:
1. The size, nature, and growth of total demand for the product
2. The description and price of the product to be sold
3. The supply situation and the nature of competition
4. The different factors affecting the market of the product
5. The appropriate marketing program for the product
GENERAL MARKET DESCRIPTION
A target market is a group of customers within a business’s serviceable available

market that the business has decided to aim its marketing effort towards. Target market
consists of consumers who exhibit similar characteristics and are considered most likely
to buy or avail a business’s product or service.
The target market of Isko Aralan are mainly the students of Polytechnic University of
the Philippines, Sta. Mesa, Manila. The present population of the university is 24,950
students and is considered as the target population of the business. They are students
studying at the University Main Building including the Senior High School and the
Laboratory High School. To break down, there are 18,859 college students; 5,586 Senior
High School Students and 505 Laboratory High School Students. Excluded from the
population are the students from the College of Engineering and Architecture, College of
Communication and College of Tourism, Hospitality and Transportation Management
since they are quite far from the proposed project location, but they can still be considered
as the secondary market.
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The proponents of this study conducted a survey using a questionnaire to 150
respondents to test the feasibility of this project. The 150 respondents represent the total
population of the target market. As per the outcome of the survey, females show more
interest in going and studying to the said study hub. The result of the survey also shows
that students aging 17-19 years old are more studious and interested in going to a study
hub. Second to them are students aging 16 and below. Also, majority of the respondents
are fourth year college students and are considered the target market of the business.
Next to them are the first year college students.
There is no existing study hub in the project location. It only has indirect competitors
which are the Milk tea Shops, Computer and printing Shops and the Condo Unit in Maui
Oasis that is for rent for academic purposes. This only shows that out of the big and in-
need market for a comfortable and accessible study hub, there is no existing business
that satisfies the need of the students. This will make the Isko-Aralan to easier dominate
the market. Therefore, Isko Aralan will be the first ever study hub to operate near the
university vicinity specially designed for the students of the Polytechnic University of the
Philippines students.
A. DEMAND
Market demand for a product or service is the total volume that would be bought
by a defined customer group, in a defined geographical area, in a defined period, in a
defined marketing environment, under a defined marketing program.
Past Demand for the Industry
There is no existing statistical data recorded by the Department of Trade and
Industry, or even in the internet, regarding the demand for a study hub. In this case, past
demand for the study hub in Polytechnic University of the Philippines is obtained by
getting the total population of the university for the past 5 years up to the present then
multiplied by the market acceptability, which is obtained by getting the percentage of
respondents who said that PUP students need to have a study hub which is 137 out of
150 respondents or 91.33% then multiplied to frequency of agreement or the average
number of hours of stay of a customer in the study hub. Majority of the students said that
they will stay for 2 hrs. Thus, the annual demand is obtained. The past demand is then
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obtained by multiplying the population to the market acceptability then multiplied to the
frequency of agreement.
Table 7
Past Demand for Isko Aralan
Market Acceptability Frequency of Total Demand for

Year Population
for Isko Aralan Agreement Isko Aralan
2014 25,363 91.33% 2 46,328
2015 29,003 91.33% 2 52956
2016 27,566 91.33% 2 50,352
2017 22,805 91.33% 2 41,654
2018 24,950 91.33% 2 45,572
Table 8
Projected Demand
Year Target Market Frequency of Projected Annual

Population Acceptability Agreement Demand
2019 25306 91.33% 2 42,936
2020 25817 91.33% 2 47,157
2021 26339 91.33% 2 48,110
2022 26871 91.33% 2 49,087
2023 27414 91.33% 2 50,074
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Exponential Population Projection Formula is used to project and compute the
population of Polytechnic University of the Philippines Manila for the next 5 years. The
projected population for the next 5 years is computed exactly and near the actual number
of students for the past 5 years.
Students aging 17-19 years and are female are likely the ones who will avail the
service of Isko Aralan. They are the majority who are willing and able to be the customers
of the study hub. This can be explained because ,psychologically speaking, female are
more studious than male and, at age 17-19 are more grade conscious which made them
be the target market of the study hub.
The projected demand is computed by multiplying the target population every year
to the market acceptability rate and then multiplied to the frequency of agreement or the
number of hours a student will avail the service per day.
B. SUPPLY
The computation for past annual supply is based on the past annual multiplied by the
percentage of demand served. The same method was applied on projected annual
supply, projected annual demand multiplied by percentage of market acceptability.
Table 9
Past Annual Supply
Year Past Annual Percentage of Past Annual Supply

Demand Demand Served
2014 46,328 91.33% 42,311
2015 52,956 91.33% 52,601
2016 50,352 91.33% 50,015
2017 41,654 91.33% 38,043
2018 45,572 91.33% 41,621
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The formula used for Past Annual Supply is:
Past Annual Supply = Past Annual Demand x Percentage of Demand Served
Table 10
Projected Annual Supply
Year Projected Annual Percentage of Projected Annual

Demand Demand Served Supply
2019 42,936 91.33% 39,213
2020 47,157 91.33% 43,069
2021 48,110 91.33% 43,939
2022 49,087 91.33% 44,831
2023 50,074 91.33% 45,733
The formula used for Projected Annual Supply is:
Projected Annual Supply = Projected Annual Demand x Percentage of Demand

Served
C. DEMAND-SUPPLY ANALYSIS
In this part, Demand-Supply gap analysis was determined in order to identify the
unsatisfied market from the market share of the proposed business. Unsatisfied market
implies that the supply is too insufficient to meet the demand.
Table 11
Demand-Supply Gap Analysis
Year Projected Projected Demand- Unsatisfied

Annual Annual Supply Supply Gap Demand
Demand
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2019 42,936 39,213 3,723 8.67%
2020 47,157 43,069 4,088 8.67%
2021 48,110 43,939 4,171 8.67%
2022 49,087 44,831 4,256 8.67%
2023 50,074 45,733 4,341 8.67%
The formula used for Demand-Supply Gap Analysis is:
Demand-Supply Gap Analysis = Projected Annual Demand – Projected Annual

Supply
D. MARKET SHARE
In this part, the market share is based on the unsatisfied market industry. 8.67%
of the demand we’re concluded unsatisfied that will be the target market customer and
the other 91.33% is the potential market of the proposed business.
Table 12
Market Share Analysis
Year Demand-Supply Unsatisfied Market Projected Market

Gap Share
2019 3,723 8.67% 3,228
2020 4,088 8.67% 3,544
2021 4,171 8.67% 3,616
2022 4,256 8.67% 3,690
2023 4,341 8.67% 3,774
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The formula used for Market Share Analysis is MSA= Demand-Supply Gap x Unsatisfied
Market.
Sales
12%
26%
52%
5%
1%
4%
Isko Aralan Daily Grace Mr. Abraham Kean And Mateo I love Milktea Printing Shop
Figure 6
Market Share
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E. GENERAL MARKETING PROCESS (COMPETITORS ANALYSIS)
Indirect Competitors
1. Mr. Abraham Camba Jr’s Study Room and Meeting Place
Figure 7
Mr. Abraham Camba Jr’s Study Room and Meeting Place
Mr. Abraham Camba Jr. owns a unit at Maui Oasis located at Sta. Mesa, Manila
near Polytechnic University of the Philippines. The unit he bought of the said
establishment open a business opportunity for him to make a profit, so he decided to rent
his unit and make it as a Study Room and Meeting Place. The target market of his
business are the students of PUP.
Marketing Strategies
Incentives and Benefits
Mr. Camba Jr. bought the unit so he doesn’t need to pay any monthly rent expense
for his business and also he doesn’t have any employees, thus the only expense of the
business is the Electricity and Water bills. It is a big advantage for him because 100% of
the sales will go to him.
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Budget Allocations
Mr. Camba Jr. bought a unit at Maui Oasis. He allocated the budget to buy a unit
for about P1-3 Million. The water, electricity, and other utilities are separated thus these
are also included as his budget allocation.
Market Research and Development
Market R&D is a series of investigative activities to improve existing products and

procedures to the development of the existing or new products. The target market of Mr.
Camba’s business are the students of Polytechnic University of the Philippines Mabini
Campus with a total population of 24,950, this consist of College students together with
Senior High School & Laboratory High School.
Sales Force
Sales force is the division of a business that’s responsible for selling products or
services. Mr. Camba Jr. is the owner and only employee of his business, thus he’s the one
who sells his business. The type of sales force used is Business to customer (B2C Sales).
Quality Standards
A quality standard is a detail of the requirements, specification, guidelines and

characteristics to be able to meet its quality by the product in order to meet the purpose
of the product and services. Maui Oasis is a low rise hotel resort type residential
condominium of Filinvest located at Sta. Mesa, Manila.
Market Timing and Scheduling
The business is open anytime. You just need to contact Mr. Camba Jr. for the
booking and scheduling of the place. Here are the contact numbers of Mr. Camba Jr.
09399085684/09175452955.
Pricing Policies
The rate of the service is P1,000 good for 8 persons good for 10 hours. Every extra
1 hour or person just add P100 pesos each.
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Terms and Condition of Sales
You can bring 8 people. The room is well ventilated because it is air conditioned,
Unlimited Wi-Fi connection, with television and refrigerator and an also use the stove for
cooking foods. Spaciously clean for only 1000 pesos for 10 hours. All the damages will be
paid.
Transportation Strategies
The Study Room and Meeting place is located at Sta. Mesa, Manila near
Polytechnic University of the Philippines. It is a walking distance if you are in PUP. You
may ride a tricycle if you’re in LRT station.
Figure 8
Mr. Abraham Camba Jr’s Study Room and Meeting Place Transportation Map
Advertising and Promotions Strategies
Mr. Camba Jr. posted advertisements of his business at the PUP Buy & Sell on
Facebook. PUP Buy & Sell is a platform where you can post if you need something or
71
you want to sell or anything related to business. There’s a 5% discount granted if you
book on the day said in the post or advertisement.
Figure 9
Mr. Abraham Camba Jr’s Study Room and Meeting Place Advertising and
Promotion Strategy
2. I love Milk Tea
I love milk tea is a milk tea service business located at Teresa St. Sta. Mesa,
Manila near Polytechnic University of the Philippines after. The target market of the
business are the students of the PUP.
Figure 10
I Love Milktea
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The owner of I love Milktea hired 3 employees to handle the business.
Budget Allocations
The budget of I love Milktea is about P100,000.00. This includes the salary of the
employees, Rent expense, Electricity and Water expense, P39,936, P20,000, P5,000,
and P1,000 respectively.
I love Milktea is a place where you can hang with your friends and classmates.
Just buy any products and you can enjoy the fresh ambiance of the place whenever you
want. You can also play board games.
Branding and Packaging Strategies
I love Milktea focus on how the customers will like their product. Also, the
differentiation of the taste from their competitors. The uniqueness of the place will surely
catch the attention of the customers.
Advertisements and Promotions Strategies
I love Milktea uses social media so the customers will see the promotion. Also the
business posted their products on a tarpaulin in front of the store so that the customers
will know the products available inside the store.
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Figure 11
I love Milktea Advertisements and Promotions Strategies
3. Daily Grace S&R Fresh Juice & Tea Café
Daily Grace S&R Fresh Juice & Tea Café is a milk tea service business located at
Teresa St. Sta. Mesa, Manila near Polytechnic University of the Philippines after. The
target market of the business is the students of the PUP.
Figure 12
Daily Grace S&R Fresh Juice & Tea Café
The owner of Daily Grace Tea Café hired 2 employees to handle the business.
The 2 employees are stay in and provided a free food.
Budget Allocations
The budget of Daily Grace Tea Café is about P60,000-P80,000. This includes the
benefits and salary of the employees, Rent expense, Electricity and Water expense,
P6,000, P25,000, P10,000, and P1,000 respectively.
Daily Grace Tea Café is a place where you can hang with your friends and
classmates. Just buy any products and you can enjoy the place whenever you want.
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Excessive noise will not be tolerated inside the store so other customers will not be
disturbed.
Branding and Packaging Strategies
Just like other Milk-Tea shops, Daily Grace Tea Café thinks about your health. You
can choose the right amount of sugar you want for your Milk-Tea.
Daily Grace Tea Café uses Flyers since it’s a new business around Teresa St.
Using of flyers will gain the attention of the customers that there is a newly open Milk-Tea
shop in town. Also the business posted their products on a tarpaulin in front of the store
so that the customers will know the products available inside the store.
Figure 13
Daily Grace S&R Fresh Juice & Tea Café Advertisements and Promotions
Strategies
4. Alicia’s Internet Café
Alicia’s Internet Café is a PC rental service business located at 263 Teresa St. Sta.
Mesa, Manila near Polytechnic University of the Philippines. The target market of the
75
Figure 14
Alicia’s Internet Café
Budget Allocations
A budget allocation is the amount of funding designated to each expenditure line.

The budget of Alicia’s Internet Café is about P50,000-100,000. This includes the salary,
incentives of the employee, Electricity bill, Rent expense and the Internet, P6,000,
P1,000, P7,000, P25,000 and P5,000 respectively.
Sales Force
The owner of the business live outside the country he decided to hire just one
employee since the business is small and can easily handle. The type of sales force used
is Business to customer (B2C Sales).
Quality Standards
Alicia’s Internet Café has 13 PC’s. They make sure that all the PC’s are working
fine and the room is air conditioned to prevent the PC’s to overheat due to continuous
operation.
Alicia’s Internet Café opens Monday until Saturday starting from 8 in the morning
until 8 in the evening.
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Pricing Policies
The rate of the service is P15 good for 1 hour of renting the PC. The minimum rate
is P10.
For only 15 pesos per hour, you can now enjoy surfing, streaming and download
with a high speed internet and no lag issues.
Advertising the business is important so the customers knows what are the
services rendered. Alicia’s Internet Café posted tarpaulin in front of their place for the
students will know the rate.
Promotion is meaningful since there are lots of PC rental along the streets of
Teresa. Students may avail Alicia’s Internet Café P25 for 2 hours promo.
Figure 15
Alicia’s Internet Café Advertisements and Promotions Strategies
5. Keane & Mateo Internet Shop
77
Keane & Mateo is an internet and printing service business located at 263 Teresa
St. Sta. Mesa, Manila near Polytechnic University of the Philippines. The target market of
the business are the students of the PUP.
Figure 16
Keane and Mateo
Budget Allocations
A budget allocation is the amount of funding designated to each expenditure line.

The budget of Keane and Mateo is about P50,000-100,000. This includes the Computers,
Electricity bill, Rent expense, Printer and the Internet, P24,000, P3,000, P17,000, P4,500
and P2,700 respectively.
Sales Force
The owner doesn’t have any employee. The type of sales force used is Business
to customer (B2C Sales).
Quality Standards
Keane and Mateo has 3 PC’s so it easy to handle the business. The owner make
sure that all the PC’s are working fine and there’s a monthly repair to prevent the PC’s
from any viruses.
78
Keane and Mateo opens Monday until Saturday starting from 8 in the morning until
8 in the evening.
Pricing Policies
The rate of the service is P15 good for 1 hour of renting the PC. The minimum rate
is P10.
For only 15 pesos per hour, you can now enjoy surfing, streaming and download
with a high speed internet and no lag issues.
services rendered. Keane and Mateo posted tarpaulin in front of their place for the
Promotion is meaningful since there are lots of PC rental along the streets of
Teresa. Students may avail Alicia’s Internet Café P25 for 2 hours promo and P36 for 3
hours.
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Figure 17
Keane and Mateo Advertisements and Promotions Strategies
The above stated computer shops are not the only indirect competitor present in
the proposed location of Isko-Aralan. The three computer shops are the representation
of the other computer shops existing in the project site. In this part, we decided not to
present the other computer shops because almost all of them have the same Marketing
Mixes used.
6. Printing Shops These are the printing service business located at Teresa St. Sta.
Mesa, Manila near Polytechnic University of the Philippines. The target market of the
Figure 18
Printing Shops
Sales Force
Every printing shops have one to two personnel in order to run the business. The
type of sales force used is Business to customer (B2C Sales).
80
Quality Standards
The printing shops make sure that all the equipment are in good condition and
maintaining the cleanliness and orderliness.
Printing shops opens Monday until Saturday starting from 8 in the morning until 8
in the evening but some opens 24 hours.
Pricing Policies
The rate of the service is P1 for black and P3 up depending on the colored content.
Print first then pay.
services rendered. The printing shops posted posters in front of their place for the
Promotion is meaningful since there are lots of printing shops along the streets of
Teresa.
F. PROPOSED MARKETING PROGRAM
Marketing Concept
Isko Aralan is a business that focuses on the customer's needs and satisfying it for
a profit. We aim to build a good relationship with the customer to establish customer
loyalty which will help the company and the customers as well in the long run.
By doing a survey, we understood the needs of the customers and we aim to satisfy
it better than others in a profitable and competitive price.
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Marketing plays a vital role in the success or failure of a business. It adds spice to
the proposed business through pricing, promoting, advertising and for the products and
services that the business will provide. Isko Aralan also aims to withstand its indirect
competitors by dominating the market. It will use different promotions and strategies that
will attract and catch the attention of its target market.
Product Strategies
Polytechnic University of the Philippines is said to be the largest university in the

Philippines in terms of population and yet you will can’t even see a study hub or other
commercial study spaces near the university. Library and other learning facilities of PUP
can't seem to accommodate all the students who needs to study or do some activities
because of the high population.
This serves as the competitive advantage of our study hub business "Isko Aralan".
Isko Aralan is a study hub business that emphasizes on the low cost but clean and
comfortable facility perfect for stimulating customer's learning mood. We want to have
PUPians a good place to study and especially budget friendly to catch their attentions.
Place Strategies
Isko Aralan will be located on Teresa Sta. Mesa Manila and it is considered to be
the most strategic location because our primary target market is the PUP students and
almost all of these students passes to Teresa Street to go to the University.
Pricing Strategies
We used Economy Pricing because the business "Isko Aralan" aims to cater the
financial budget and capabilities of the students of PUP. The price per head in the study
hub will be P20.00 per hour. There is a promotional pricing which includes; Group of 3
persons for P45.00 per hour, Group of 5 for P90.00 per hour and the VIP room which
costs P180.00 per hour, good for 10 persons.
Promotion Strategies
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Since most of our market passes in front of our business facility, we use posters
and flyers for us to be able to reach our target market.
These sales promotions aim to establish awareness among the target market and
to stimulate desirable response from the Isko Aralan's marketing strategies.
Flyers
A flyer is a form of paper advertisement intended for wide distribution and typically
posted or distributed in a public place, handed out to individuals or sent through the mail.
Flyers are an informative tool in making people aware of your product or service and your
company. This will include Isko Aralan’s services offered and its service rates. There will
be a calendar of which markets we will attend. The flyers will be distributed in front of the
school, malls, grocery stores etc.
Figure 19
Isko Aralan Flyer
Poster
Posters will be placed in our store. The design of the poster can be able to catch
the attention of the customers as well as give them information about the business. Two
(2) posters will be produced which are good for Two (2) months.
83
Tarpaulins
Tarpaulins come in various sizes and price. It’s cheaper compared to TV

advertising and LED billboard so it’s great for small-scale business venture. Isko Aralan
will use tarpaulin because it is cost-effective and durable, can reach wider audience, easy
to recognize and flexible. Tarpaulin is as effective as other promotional and advertising
media. It’s straight forward and low maintenance. This can help our proposed business
raise awareness about our brand faster and for a cheaper cost.
Facebook Page
Isko Aralan, a proposed business that focuses on the place to study wherein the
quality of service is in an affordable price will be creating a Facebook page wherein it will
feature all the services offered and its rates. This Facebook page will also include the
contact number of the business, the location of the business and all activities of the
business. This aims to reach a greater volume of the population and make them aware
of the business since social media has become a necessity in the daily lives of people.
Figure 20
Isko Aralan Facebook Page
84
Table 13
Timeline of Marketing Strategies
TIMELINE
Jan Feb Mar Apr May Jun Jul Aug Se Oct Nov Dec
p
FLYERS
POSTER
TARPAUL
IN
FACEBOOK PAGE
Table 14
Budget Matrix
CAMPAIGN PER UNIT TOTAL IN UNIT TOTAL

FLYERS P4/piece 800 pieces P3,200
POSTER P300/piece 2 pieces P600
TARPAULIN • 4ft. by 2ft 2 pieces P240
120/piece
• 9ft. by 1 piece P270
3ft.270/piece
Total cost:P4,310
85
H. PROJECTED SALES
Table 15
Projected Daily Sales for the Study Hub
Service Rate Frequency Daily Sales

Study Hub
Walk in:
Individual 20 150 3,000
Group 45 10 450
of 10
Group 90 5 450
of 5
Group 180 4 720
of 3
Total 4,620
Laptop Rental
Laptops 20 6 960
(8)
Daily Income 5,580
Table 16
Projected Monthly and Annual Sales for the Study Hub
Monthly Projection
Daily Income 5,580.00
x 26 days 26.00
Monthly Income P145,080.00
86
Annual Projection
Monthly Income 145,080.00
x 12 months x12.00
Annual Income P1,740,960.00
Table 17
Projected Daily Sales for Printing
Daily Unit Price Sale Cost/Ream Income

Short (1 Ream)
Black 400.00 1.00 400.00 100.00 300.00
Colored 100.00 5.00 500.00 25.00 475.00
Long (Half Ream)
Black 200.00 2.00 400.00 52.00 348.00
Colored 50.00 7.00 350.00 13.00 337.00
Daily Income 1,650.00 190.00 1,460.00
Table 18
Projected Monthly and Annual Sales for Printing
Projected Monthly Income

Sales 42,900.00
CGS Paper (4,940.00)
Ink (760.00) (5,700.00)
Income 48,600.00
Projected Annual Income
Sales 514,800.00
CGS Paper (59,280.00)
Ink (9,120.00) (68,400.00)
87
Income 446,400.00
Projected sales were obtained by multiplying the average number of customers
accommodated by Isko-Aralan by the average number of hours that the customer would
intend to stay and also from the sales from our printing services and laptop rentals.
I. SYSTEM AND FORMS DESIGN
Figure 21
Measured and Improved Marketing Performance
This marketing system is designed to measure and improve marketing

performance of Isko Aralan to have a better understanding and better implementation of
marketing programs that we will apply for the business.
There are five steps that we are planning to do for our marketing program to be
successful and the first one is "analyze". Analyzing of the customer patterns, marketing
performance, and sales results will help us gather information and be able to understand
our market. After we analyze our market, we will create a plan on what we are going to
do and how much budget we are going to allocate. After planning, we will know and focus
on our target for us and execute our marketing programs and lastly, to monitor the effects
of our programs and always improve on the areas to we are lacking
88
TOPIC 4: Technical Study
A technical feasibility study assesses the details of how you intend to deliver a
product or service to customers. It includes the materials, labor, transportation, where
your business will be located, and the technology that will be necessary to bring all this
together. It's the logistical or tactical plan of how your business will produce, store,
deliver, and track its products or services.
Example for the Isko Aralan Feasibility Study
A. THE SERVICE
Isko Aralan: Where learning never ends
PUP students normally study in their houses or dormitories, but some of them don’t
really have a good study area. If they are in school, they go and study usually in the
crowded library with no proper ventilation, classroom with no electric fan, in the hallways,
beside the PUP Chapel, and in the university oval which is quite noisy and uncomfortable
for the many. Isko-Aralan will be the first learning space for the Polytechnic University of
the Philippines Students specifically built for their needs to have a comfortable, accessible
and cheap place to study.
Isko Aralan will give the students the access to well designed and quality area to
study that includes, fully air-conditioned facility, comfortable chairs and tables, optimum
lighting, high speed internet connection, books and other learning resources and of
course a spacious and quiet place to study at an affordable and reasonable price.
The study hub will offer seats for group and individual customers. They are free to
choose where they want to seat. The rate of entrance per head (individual) to Isko Aralan
will be P20.00 per hour. Also, there will be an exclusive room good for maximum of 10
persons at the second floor which costs P180.00 per hour. The entrance fee to Isko Aralan
will give a free access to the following facilities and amenities:
◼ Free High Speed Internet Connection (Wi-Fi)
◼ Free Electricity for charging of devices
◼ Books and Other Learning Materials
◼ Printing Services
89
◼ Friendly Staff
◼ Noise Free environment
◼ Soft Ambient Music Background
◼ Clear Ambiance
◼ Spacious Study Area
◼ Secured Facility with CCTV
◼ Air-Conditioned Place to Study
The customers can also rent laptop or a computer for their use if they need to.
The price for Laptop/Computer Rental will be P25.00 per hour. Printing services is
available and the price per age of print in black text is P1.00 while the colored print rangers
from 4-7 pesos.
B. SERVICE PROCESS
Below is the service process:
90
Figure 22
Service Process
C. PROJECT SITE
The proposed location of Isko-Aralan will be at Teresa St., Sta. Mesa, Manila.
Teresa Street is the heart and main pathway of students going in and out the Polytechnic
University of the Philippines. The said location will be accessible and convenient for the
target market. The proposed business site is surrounded by indirect competitors which
are mostly the computer shops and the Milk Tea Shops. Its direct competitor which is the
“Condo Unit turned Study Unit for rent” is 1 kilometer away and located at Maui Oasis
Condominium. Therefore, the proposed project site can cater to the demand of the target
market since there are only few competitors.
91
The proposed project site is a two story facility. It is a 36 square-meter facility which
can accommodate 40 persons. It is located in front of a convenience store and at its both
sides are two computer shops. Isko Aralan’s proposed site will only be 100 meters away
from the university entrance.
The challenges perceived to be present in the proposed site is noise and children
who usually enter business stores to ask for money from customers. The noise emanates
from the street where students walk and ride in and out the university. Isko-Aralan will be
fully enclosed with quality glass wall to make it sound proof from the inside. Isko-Aralan
will put restrictions to prevent street children from entering facility so as not to disturb the
customers. If the proposed site will not be feasible, the alternative location will be at
Newton Plaza which is 700 meters away from the University entrance and is less noisy
and not crowded.
The space for Isko Aralan will be a rented building. Rental cost is approximately
P25,000 monthly. The rent term will be for as long as the renters can pay. The initial
payment costs P75,000 which is for the 2 months’ advance and 1 month deposit.
Also, the rented 2 story project site is a newly renovated concrete building. there
There will be small renovations such as painting of its interior, putting up a glass wall and
door for the entrance and a fully enclosed glass atleast 10 persons per room.
D. PROJECT LAYOUT
Figure 23
1st floor Project Layout
Figure 24
92
Cashier’s View
Figure 25
Entrance’s View
Figure 26
2nd Floor Project Layout
93
Figure 27
VIP Room for 10 persons
E. PLANT SIZE AND PRODUCTION SCHEDULE
The size of the store is 36 square meters or 9meters by 4 meters.
94
Table 19
Production Schedule
The table below shows the production schedule for renovation, installation, and
customization of Isko Aralan Study Hub.
Table Start Date

Buying of materials that are needed for leasehold May 20, 2019
improvement and customization
Installation for insulation May 22, 2019
Renovation of door jamb (standard height is 210 cm) May 23, 2019
Installation of walls May 27,2019
Installation of electrical outlets May 28, 2019
Installation of air conditioner My 29, 2019
Installation of light bulb May 30, 2019
Repainting of walls and ceiling May 31, 2019
Repainting of exterior walls June 3, 2019
Placing the chairs and tables into place June 3, 2019
Installation of paintings on the wall June 4, 2019
Adding a window glass June 5, 2019
Adjusting of glass door June 5, 2019
Putting the book shelves into place June 6, 2019
Partition room in 2nd floor June 7, 2019
95
F. PRODUCTION COST
Table 20
Production Cost
Renovation/Improvements Unit Cost Qty Cost Total Cost

Salaries Expense
Foreman ₱ 1.00 ₱
14,400.00 14,400.00
Labor Workers ₱ 3.00 ₱ ₱
8,100.00 24,300.00 38,700.00
Materials
Raw Materials ₱ ₱
34,299.55 34,299.55
96
G. FLOOR PLAN
Figure 29
Floor Plan for the 1st Floor
Figure 30
Floor Plan for the 2nd Floor
97
98
H. MACHINERIES AND EQUIPMENTS
MACHINERIES, EQUIPMENT, APPLIANCES, FURNITURE AND FIXTURES
Table 21
EQUIPMENTS
Unit Total
Description Function Quantity
Cost Cost
Laptops are fully functional

computers that are ₱22,00 ₱176,00
8
designed for portability and 0 0
LAPTOP convenience
It is a device that accepts

text and graphic output
from a computer and
2 ₱4,500 ₱9,000
transfers the information to
paper, usually to standard
PRINTER
size sheets of paper.
It is used for ventilation of

the surrounding air in the
4 ₱500 ₱2,000
study area
WALL FAN
99
AIR CONDITIONER
A split type air conditioner
₱63,00
will be used in the study ₱132,00
3 0
area to maintain the 0
P6,000
coolness ventilation.
TOTAL: ₱319, 400
Table 22
Office Supplies
Quantit Unit Total

Description Function
y Cost Cost
2 rim
8.5 by
11
A high quality writing paper ₱125 ₱250
used in printing services. ₱130 ₱260
2 rim
Bond Paper
8.5 by
13
100
1 Black
A high quality ink used for Ink ₱40 ₱40
printing services. 1 RBY ₱120 ₱120
Ink
Ink
TOTAL:
₱670
Table 23
FURNITURE AND FIXTURES
(STUDY AREA IN THE 1ST FLOOR)
Unit Total
Cost Cost
It is used as a surface for

₱10,00
working at. (Good for 8 1 ₱10,000
0
people)
LONG STUDY TABLE

STUDY TABLE
It is used as desktop table

or can be a surface on 6 ₱3,200 ₱19,200
which to place things.
101
It is used to seat a single
14 ₱2.000 ₱28,000
person.
SINGLE CHAIR
Used to bring light and

brightness in the study 8 ₱350 ₱2,800
area
CEILING LIGHTS
It is a surface for keeping

1 ₱3,500 ₱3,500
all the books organized.
BOOK SHELF
TOTAL: ₱63,500
102
Table 24

(STUDY AREA IN THE 2ND FLOOR)
Unit Total
Cost Cost
It is used as a surface for

working at. (Good for 2) 3 ₱5,000 ₱15,000
ROUND TABLE
SINGLE CHAIRS

6 ₱3,000 ₱18,000
person.
STUDY TABLE
or can be a surface on
10 ₱2,800 ₱28,000
(Good for 2)
SINGLE CHAIR

10 ₱1,690 ₱10,690
person.
103
CEILING LIGHTS

brightness in the study 8 ₱300 ₱2,400
area.
TOTAL: ₱74,090
Table 25

(GROUP STUDY AREA)
Unit
Description Function Quantity Total Cost
Cost
It is a surface for keeping

1 ₱1,000 ₱1,000
all the books organized.
SMALL CABINET
THROW PILLOW
It adds comfortability and

10 ₱150 ₱1,500
style.
CEILING LIGHTS
brightness in the study 1 ₱1,000 ₱1,000
area
104
TOTAL: ₱3,500
Table 26
Materials
Unit Total
Cost Cost
Extension cords are used

for the electrical appliances
5 ₱250 ₱1,250
that are from the power
EXTENSION CORD
source.
A window blind is a type P520.0 P1,560.0

3
of window covering 0 0
WINDOW BLINDS
TOTAL: ₱2,810
105
Table 27
Outdoor Materials
Unit Total
Cost Cost
It is an item designed to
1 ₱800 ₱800
protect from the sun
BEACH UMBRELLA

1 ₱1,800 ₱1,800
or can be a surface on
OUTDOOR TABLE
2 ₱2.000 ₱4,000

person.
SINGLE CHAIR
TOTAL: ₱6, 600
106
Table 28
Security and Maintenance Materials
Unit Total
Cost Cost
Fire extinguishers are

pressurized with nitrogen
or carbon dioxide (CO2) to
1 ₱1,500 ₱1,500
propel a stream of fire-
squelching agent to the
FIRE EXTINGUISHER fire.
CCTV (closed-circuit
television) is a TV system 4 ₱3,000 ₱12,000
in which signals are not
publicly distributed but are
monitored, primarily for
surveillance and security
CCTV CAMERA
purposes.
BROOM AND DUST
PAN Used for maintaining the 1 ₱400 ₱400
cleanliness of the study
area.
107
TRASH BIN
Used for proper disposal of 4 ₱200 ₱800
waste.
TOTAL: ₱14,700
I. UTILITIES
Table 29
Utility Requirements
Utility Description Source/s Unit Cost Consumpt Total

ion Rate
Electricity A utility Meralco – it is Metro P5,000

expense Manila’s only electric per month P7,00
owed for power distributor. on 2,625 0
electric average wattage
power used.
Water A utility Maynilad – it is the P500 per

expense water service provider month on 21 cubic P500
owed for of cities and average meter
water municipalities in Metro
consumption Manila.
used.
108
Internet A utility Converge – one of the P1,500 25mbps
expense internet services per Unlimited P1,50
owed for provider in the month, Internet 0
internet used. Philippines. fixed price
Table 30
Utility Consumption
Utility Monthly 2018 2019 2020 2021 2022

Consumpti
on
Electricity P7,000 P84,000 P84,000 P84,000 P84,000 P84,000
Water P500 P6,000 P6,000 P6,000 P6,000 P6,000
Internet P1500 P18,000 P18,000` P18,000 P18,000 P18,000`
Total P9,000 P108, P108, 000 P108, 000 P108, 000 P108, 000
000
109
J. RAW MATERIALS REQUIREMENTS
Table 31
Materials for Partition in 1st And 2nd Floor
NO. & QUANTIT

MATERIAL DESCRIPTION SOURCE COST
SIZE Y
SAMPALO
Plywood is a sheet
C
material manufactured 10 PHP400.0
¼ DIAMOND
from thin layers or pieces 0
HARDWA
"plies" of wood.
Plywood RE
PHP180.0
5 pieces 0
2x2x10 Kiln dried lumber is SAMPALO PHP160.0
22
1½x lumber that has been C 0
pieces
2x 10 heated in a kiln so that DIAMOND PHP150.0
1 piece
2x3x10 it has a low moisture HARDWA 0
1 piece
Kiln dried 2x3x8 content. RE PHP115.0
No. 1 ½ kilo PHP50.00

No. 2 SAMPALO 1 kilo PHP110.0
No. 3 A hardened-steel nail C 1 kilo 0
(Clifton that has a flat DIAMOND (Clifton) PHP130.0
Nail ) countersunk head and HARDWA 2 pieces 0
(Finishing) ½ a tapered point RE (Clifton)
x2x10
PHP 13.00
110
A door handle is an
attached object or ACE 1 piece PHP299.0
mechanism used to HARDWA 0
manually open or RE
close a door.
Doorknob
A large glass window

Glass and
opening in a structure P15,
Glass Door 2 Glass
that provides door 000.00
ACE wall and
access usually in a
HARDWA 2 glass
wood or metal frame
RE door
Bisagra
Butt/Mortise hinges
usually in threes or ACE
PHP100.0
fours, which are inset HARDWA 1 box
0
(mortised) into the RE
door and frame.
111
Table 32
Materials for Paint
MATERIAL NO. DESCRIPTION SOURCE QUANTIT COST

& Y
SIZE
#800 is a flat alkyd
type paint that SAMPALO
provides great C PHP535.0
1 gallon
#800 durability while being DIAMOND 0
Flatwall
noted as a fast drying HARDWAR
Enamel
paint E
Quick
Quick Drying Enamel
Drying SAMPALO
is an alkyd type paint
Enamel C
that provides great PHP742.0
DIAMOND 1 gallon
durability while being 0
HARDWAR
noted as a fast drying
E
paint.
A paint thinner is a
solvent used to ACE
PHP190.0
thin oil-based HARDWAR 1 gallon
0
Paint paints or clean up E
thinner after their use.
112
Paint Roller
No. 6 A paint roller is a SAMPALO

PHP
No. 4 paint application tool C
2 pieces 70.00
(cotton used for painting DIAMOND
2 pieces PHP
) large flat surfaces HARDWAR
60.00
rapidly and efficiently. E
Paint brush
SAMPALO
A paintbrush is a
C
No. 1 brush used to PHP
DIAMOND 2 pieces
apply paint or 25.00
HARDWAR
sometimes ink.
E
Paint trays are made SAMPALO

Paint tray
of aluminum or C
PHP
plastic and come in DIAMOND 1piece
65.00
standard 7-inch and HARDWAR
9-inch versions. E
113
Table 33
Other Materials for Leasehold Improvement
MATERIA NO. DESCRIPTION SOURCE QUANTIT COST

L & Y
SIZE
Plyboard is a wood SAMPALO
based panel, made of a C
core of softwood DIAMOND 4 pieces P 930.00
stripes that are glued HARDWAR
Plyboard
together. E
No.2x
3x1
SAMPALO
No. 5 pieces
Kiln dried lumber is C P95.00
2x3x 7 pieces
lumber that has been DIAMOND P115.00
8 15 pieces
heated in a kiln. HARDWAR P160.00
No.½
Kiln dried E
x1x1
0
Wood glue is an
Stickwell SAMPALO
adhesive used to tightly
C
bond pieces of wood
DIAMOND 1 kilo P27.55
together. Many
HARDWAR
substances have been
E
used as glues.
114
Sandpape
r Sandpaper is produced SAMPALO
in a range of grit sizes C
No.
and is used to remove DIAMOND 10 pieces P 63.00
120
material from surfaces to HARDWAR
make them smoother. E
Total Cost PHP 34,299.55
K. MANPOWER REQUIREMENT
Table 34
Manpower Requirements
Job Description Responsibilities Requirements and

Qualification
Foreman • Coordinate renovation • Proven experience
work according to as construction
The one who
priorities and plans foreman
supervise the
• Produce schedules and • In-depth knowledge
construction while
monitor attendance of of renovation
the architect is not
crew procedures and
on site and leads
• Allocate general and equipment
the team to finish
daily responsibilities • Understanding the
tasks
• Supervise and train electrical and
workers hydraulic systems
115
• Ensure manpower and • Ability to read
resources are adequate drawings, plans and
• Guarantee all safety blueprints
precautions and quality • Excellent
standards are met organizational and
• Supervise the use of leadership skills
equipment • Ability to
• Monitor expenditure and communicate and
ensure it remains within report effectively
budget • Aptitude in math
• Report on progress to • Problem-solving
higher management abilities
• Oversight of field • Good physical
operations condition and
• Organize, facilitate, stamina
motivate and • High school diploma
communicate or a diploma in a
• Set and maintain skilled trade like
customer expectations electrician,
• Ensure project quality carpenter, etc.
and cost control
• Resolve issues during
construction
Labor Worker • Read blueprints, • Proven experience
drawings and sketches as construction
They Perform tasks
to fully grasp worker
and conduct
requirements • Knowledge of
constructions
• Take measurements and mixing and pouring
calculate the size and construction
116
amount of material material like
needed concrete and sand
• Cut, shape and smooth • Knowledge of basic
lumber and other engineering and
materials according to construction
measurements principles and
• Build window frames, methods
doors, staircase and • Able to work in an
frame buildings by using team
raw materials or pre- • Able to read
constructed items instructions and
• Lay out floorings, roofing blueprints
or drywall ensuring they • Good physical
are levelled and condition and
compatible stamina
• Carve and assemble • Building and
furniture, cabinets, Mechanical
shelves and other items knowledge
and install them where • Math and Language
designated literate
• Inspect places and • Written and oral
conduct repairs or communication
maintenance • Willingness to learn
• Build scaffolding and
other construction
structures
117
Table 35
Manpower salary
# Per day (8hrs) 3 weeks TOTAL
Foreman 1 800 P14,400 P14,400
Labor Worker 3 450 P8,100 P24,300
Figure 30
Manpower Organizational Layout
Three labor workers are enough to help the foreman finish the renovation in 2 to 3weeks
time depending on the availability of the materials needed. The renovation includes Roof
replacement, Insulation, Dry wall, installing windows, Fine carpentry, Interior painting,
Flooring, Electrical and Plumbing, Air conditioning, putting up dividers, arranging furniture
and fixtures.
118
L. WASTE AND WASTE DISPOSAL METHOD
Our customers are always our priority. We would like to give them a one hundred
percent satisfaction and the maintenance in terms of cleanliness in all areas of our store.
So, Isko Aralan encourages all the members of the organization, especially since we are
in the Service Industry, to strictly comply with the set of standard of cleanliness,
specifically with the proper disposal of waste.
Isko Aralan will provide two trash bins for the first and second floor of our study hub
with cover and proper labelling of segregation. We will provide small trash bins in the
counter area and restroom as well so the customer can easily locate or see where they
can throw their candy wrappers, tissues and food wrappers. The accumulated garbage
per day will be put in the big trash bin outside our study hub and will be collected by the
Manila garbage collection unit per their schedule.
119
TOPIC 6: Financial Feasibility
Projects are considered viable only when they are expected to be profitable to
meet short-term obligations, to be liqui and to remain liquid during adversities, to grow in
their ability to finance operations mostly from net-worth sources rather than credit
applications, to be able to service their financing charges. Thus, the financial viability part
of the feasibility study is very crucial.
The financial study of the project/business include the following:
1. Major assumptions
2. Total Project costs
3. Initial Working Capital Requirements
4. Alternative Source of financing considered
5. Sources of financing the project
6. Financial Analysis
Major Assumptions
In the formulation of financial projetion, assumptions play a major role because

they serve as the foundation for estimating future expenditures, expenses, and revenues
of the project/business as accurate as possible.
Notes on Major Assumptions
Major Assumptions – state all changes that will change financial results here. (e.g. 5%
increase in salary annually , operating expenses, growth on sales and cost of sales) .
Inflation rate should be taken into consideration when establishing the increase of
expenses/cost especially the utilities. Capital Expenditures (equipment) may have a
useful life of five (5) years. However, equipment of small value can be expensed outright.
Total Project Cost
This is an estimation of the project’s total cost or initial asset requirement. Based
on the materials, supplies, equipment, physical plan, and manpower needs of the project
120
specified in the technical aspect, the total project cost is composed of planned fixed-asset
acquisitions and current-asset levels.
Notes on Projected Financial Statement and Financial Analysis
Projected Financial Statement – a 5 year comparative Financial Statement (Statement

of Financial Position, Statement of Income , Statement of Cash Flow, Changes in Owners
Equity). Consider that the first three years not be profitable.
1. Financial Analysis – In this section, you will try to test your projections vs
financial ratios . The following financial ratios should be reflected in the financial
feasibility.
a. The following ratios are necessary to validate viability of the business:
• Liquidity ratios
• Current Ratio= Current Assets/Currrent Liabilities
• Acid Test ratio= Cash+Receivables+marketable
securities/CurrentLiab.
▪ Profitability
• Return on Sales= Net Income/Sales( Revenues)
• Operating ratio= Operating Income/Sales(Revenues)
• Return on Equity= Net Income/Average Owners’Equity
▪ Solvency
• Debt Ratio=Total liabilities/Total Assets
• Equity Ratio=Owners Equity/Total Assets
121
TOPIC 7: Socio-Economic Study
A project or business should be geared towards not only profit generation but also
social and economic benefits. The socio-economic evaluation of the study will explain
how the project will affect:
1. Employment and income

2. Taxes
3. Supply of commodities, observing the different possibilities of influencing
prices and foreign exchange balances
4. Demand for materials, specifiying the use of local materials to support local
producers.
By generating emnployemnt and income, the project/business directly benefits

individuals and families. More income in the hands of people would mean greater
demand for other goods. This additional demad may, in turn, stiumulate the production
of more goods.
Example for the Isko Aralan Feasibility Study
A. Employment of Personnel
All employees have basic rights in their workplace, including the right to privacy,
fair compensation, and freedom from discrimination. A job applicant also has certain
rights even prior to being hired as an employee.
Isko Aralan will contribute to the personnel by providing them privacy in terms of
their personal possessions like, storage lockers for their personal stuff, giving them
privacy for their personal information like private conversations and private mail
addressed only to them, safe workplace free of dangerous conditions, toxic substances
and other potential safety hazards and giving them fair wages for their work performance.
B. CONTRIBUTION TO THE GOVERNMENT
Every business establishment will be of great help for the growth and development
of the Philippine Economy. These will be only being possible if every firm will be
122
responsible enough to perform their duties and obligations to their customers, community
and of course to the government.
Isko Aralan will definitely contribute additional earnings to our government by

means of paying right taxes. Through this, the government can able to perform its function
well including continuous support assistance to the business industry, providing projects
for community such as building infrastructure, public schools and hospitals, strengthening
arm forces for the security and protection of the country men and other indispensable
project that will benefit the people.
C. OTHER BENEFICIARIES
Contribution to the Economy
The business will provide employment to some individuals in the economy. Every
society wants all its qualified members to be gainfully employed. When individuals are
employed they are able to raise their children, support them through school, provide them
with decent homes and acquire medical services whenever its needed.
Isko Aralan will help to lessen the crimes in the economy like, illegal drug trade.
Theft, physical assault and such. It also help to lessen the rate of unemployment and
number of poor people.
Contribution to the Society
The proposed business will provide a learning hub for the student of Polytechnic
University of the Philippines. Filipinos are known to be competitive when it comes to
education. The proposed business will help the students especially those who are saving
money to have an opportunity to study and at the same time enjoy without worrying to the
money they will spend.
Isko Aralan is offering a quiet, spacious and affordable study hub that is located
near to the school so the students will free hustle to go. The goal of this business is to
inform and educate the students that there are some businesses who are offering a
convenient space for them to study, concentrate and relax.
123
TOPIC 2: The Project Summary
The project summary presents the highlights, descriptive definitions, long-range

objectives, history, and basic conclusions of the project/business proposal under study.
It contains the name of the firm, the location, the comprehensive description of the
product/service.
Major findings on the market, technical, financial, socio-economic and

management feasibility are likewise discussed.
Though this portion is presented at the beginning of the Feasibility Study

Findings Report, it is also the last to be written considering the key contents of the
summary are drawn for the feasibility study findings per aspect.
124
INTRODUCTION
Education is essential to every student’s life. Polytechnic University of the

Philippines is known for its quality education system and one of the top producers of
Engineers, Accountants, Architect, Managers, Teachers. The challenge for PUP is how
to sustain providing quality education to students amidst its limitations in resources.
The proponents of Isko Aralan came up with the idea of establishing a study hub
near the university to provide a quality yet affordable study area for the students of
Polytechnic University of the Philippines Manila. Since most of the PUP students has no
choice but to study in a crowded library, rooms with no proper ventilation and noisy area
within the vicinity of the university to review for upcoming exam, do assignments and
accomplish requirements, the proponents of this project wanted to help the students to
have a comfortable, safe, clean, accessible, spacious and quiet place to study with an
affordable price. In this way, it will be easier for every student to study because there will
be enough resources and a quality facility that will make them focused in studying. The
proponents of this project believes that the best place for a student to study is a place
where there is nothing to do but to study.
ISKO ARALAN LOGO
125
Figure 1
Isko Aralan Logo
The logo of Isko Aralan is a minimalist representation of its target market and what
kind of service it offers. The semi-circle symbolizes a building or the study hub itself. The
3 rectangular shape and the star came from the Polytechnic University Logo. The three
black rectangle represents the Pylon which is a representation and landmark of the
university together with the star. The maroon wing shape is actually a book which
symbolizes learning or to study. With this concept, Isko Aralan’s logo is formed.
There are four colors in the logo which are black, maroon, yellow and orange.
Orange is used to give impact and pin point the word ‘study hub’ which is our proposed
business. Maroon is used to the word ‘Isko’ since that is the color of the university and
Isko means students from PUP. Black is used to give balance to the said colors and make
the logo more appealing to the eye.
PROJECT PROPONENTS
Table 1
Proponents of the Project
Nationalit % of
Name Address
y Ownership
John Carlo E. Tablac Filipino Brgy. San Roque, Antipolo, 10%

Rizal
Jake R. Taghoy Filipino Sub-urban, San Jose, 10%

Rodriguez, Rizal
Ivan Russel R. Filipino 117 D. Arellano St., Bagong 10%

Brocoy Barrio, Caloocan City
126
Charish Aiza R. Filipino #53 Victory Ave., Brgy. 10%
Terrano Tatalon, Quezon City
Xyzamae G. Filipino Talipapa, Novaliches, 10%

Clemente Quezon City
Kimberly U. Urge Filipino DPWH Compound, Jesus St., 10%

Pandacan , Manila
Ginia Emyl Darian M. Filipino 53 Cuatro de Julio St., Galas, 10%

Andan Quezon City
Marivic Joy D. Filipino 1267 Metrica St., Sampaloc, 10%

Sumajit Manila
Christin Joy B. Filipino Unit #3412 4th floor MRH 10%

Alvarez Building, Gov. Pascual Ave.,
Brgy. Baritan, Malabon City
Sheena Mae Filipino #20 H Royal road, Apolonio 10%

B. Talens Samson, Balintawak,
Quezon City
B. MISSION, VISION AND COMPANY OBJECTIVES
Mission
“Isko Aralan is committed and dedicated to deliver a quality service to provide a

comfortable and affordable study place for every PUP Students.”
Vision
“To make Isko Aralan the place of choice that serves as an educational anchor
for the students of Polytechnic University of the Philippines to experience a quality yet
affordable service that gives comfortability and ease in studying to every student.”
127
Business Objectives:
⚫ To satisfy the strong need and demand of Polytechnic University of the

Philippines Students to have a comfortable and accessible study hub
⚫ To provide a study area where students can focus and be at ease while studying
⚫ To offer a conductive and affordable place to study for PUPians
⚫ To promote the importance of good education
⚫ To earn the trust and loyalty of the customers and personnel
⚫ To ensure to our customers the quality service they need
C. PROPOSED NAME OF THE BUSINESS
The business proponents came out with the name "Isko Aralan" as the proposed
name of the business. ‘Isko’ is derived from the phrase “Iskolar ng Bayan” (Scholar of the
Nation) that locally describes the students studying in state universities like Polytechnic
University of the Philippines. While ‘Aralan’ came from the word “Silid-Aralan” which
means a room for studying and learning. Thus combined, formed the word Isko Aralan
which merely describes a place for the students of Polytechnic University of the
Philippines to study and learn.
D. TYPE OF BUSINESS ORGANIZATION
This project shall adopt the partnership form of business organization.
Partnership is a business type relatively easy to establish, owned by a minimum

of two up to maximum of twenty people, who operate the business for the purpose of
making a profit. Because of this, the organization has the advantage of having a wider
pool of knowledge, skills, resources, and business contacts.
Isko Aralan is a General Partnership type of business organization wherein the

partners manage the company and assume responsibility for the partnership's debts and
128
other obligations. The partners own and operate the business and assume liability for the
partnership.
Partnership is the best type of business ownership for Isko Aralan wherein the
partners share money, skills and other resources, and share profit and lost in accordance
with the terms of partnership agreement. In the absence of such agreement, a partnership
is assumed to exit where the participants in an enterprise agree to share the associated
risks and rewards proportionately. Establishing terms of the business with the partners in
case of disagreement or dissolution by drawing up a specific business agreement to
protect themselves, is included in the articles of co-partnership which is on the other hand,
be registered with the Securities and Exchange Commission (SEC).
Complementary skills and additional contacts of each pattern can lead to the
achievement of greater financial results together than would be possible apart. Mutual
support, motivation, communication, and good attitude towards work are needed for the
business to last longer.
E. LOCATION OF THE BUSINESS
Choosing a business location is perhaps the most important decision a start-up or

small business owner will make. It requires a precise planning and research. It involves
looking at demographics, supply and demand assessment, scoping the competition,
budgeting, understanding the state laws and taxes existing in the target location and
much more. On the basic concept of 4P’s namely Product, Price, Place and Promotion,
‘Place’ is the most permanent and often most overlooked by start-up business owners.
129
Figure 2
Location of the Business
The proposed location of Isko Aralan is at 207 Teresa Street, Brgy. 591, Sta. Mesa,
Manila. As per the outcome of the survey, the majority of the respondents chose Teresa
Street as the most accessible and convenient place to establish a study hub. Thus, this
only shows that it is the most strategic location to penetrate and reach out the target
market which are the Polytechnic University of the Philippines students.
Figure 3
Vicinity Map
130
LEGEND:
A. HIGHLIGHTS
PROJECT BACKGROUND
Name of the Proposed Project: ISKO ARALAN
Type of Business Organization: General Partnership
Location of the Project: Teresa Street, Brgy. 591, Santa Mesa, Manila, Metro
Manila
Proponents: The proponents of Isko Aralan are namely the following: Ginia Emil
Darian M. Andan, Christin Joy B. Alvarez, Ivan Russel R. Brocoy, Xyza Mae G. Clemente,
Marivic Joy D. Sumajit, John Carlo E. Tablac, Jake R. Taghoy, Sheena Mae B. Talens,
Charish Aiza R. Terrano and Kimberly U. Urge.
MANAGEMENT AND PERSONNEL FEASIBILITY SUMMARY
Isko-Aralan is a line type organization, the oldest and simplest type of business
organization that has only three personnel in the business which is the store manager
and two maintenance staff. It flows from top to bottom. It is a Partnership type of
organization. Isko Aralan as partnership will be registered with the different government
agencies as Securities and Exchange Commission (SEC), Business Permit and Licensing
Office of Manila, Bureau of Internal Revenue (BIR), and Social Security System (SSS).
We will be open every Mondays to Saturdays at 8 in the morning until 8 in the

evening. The store manager and staff will open the store and be there before the opening
to operate and manage the store.
MARKETING FEASIBILITY SUMMARY
131
The target market of Isko Aralan are the students of Polytechnic University of the
Philippines. Isko Aralan offers a quality service that every students of the university
wanted and needed.
There is no existing study hub in the project location that makes the business
easier to penetrate the market. The market acceptability for Isko Aralan is 91.33 %. This
shows that there is a strong and high demand from the market. Isko Aralan is a business
that focuses on the customer's needs and satisfying it for a profit.
For our promotion strategy, we will be using poster and fliers to give awareness
and position our business to our market. The rate per hour each person is P20.00 an
hour, same price as the laptop rental. Also, there is a promotion price which include
P45.00 for 3 individuals per hour, P95.00 for 5 individuals per hour and a VIP room that
is good for 10 persons which costs 180 per hour. Isko Aralan also offers a printing
services.
TECHNICAL FEASIBILITY SUMMARY
As for the service, the students usually study in their houses or dormitories, but
some of them don’t have a good place to study. Isko-Aralan will be the first learning space
that will serve as an educational anchor for the students of Polytechnic University of the
Philippines. It is built in accordance to their needs to have a comfortable and quality study
area.
We are located in Teresa St., Sta. Mesa, Manila which is very accessible to the
students, which is only a few meters away from the university. The proposed project site
is a 36 square-meter and a two story facility with a 40-persons capacity. It is in front of a
convenient store and alongside are computer shops and other establishments. The
proponents will pay a P25,000.00 monthly rent.
The project site needed a minor renovation and leasehold improvement. The
improvement of the establishment will last up to 3 weeks, and a Foreman and 3
labor/construction workers are needed to finish the renovation.
132
FINANCING AND FINANCIAL FEASIBILITY SUMMARY
Financing and Financial feasibility is the assessment of the financial aspects of the
study. As per the Isko Aralan, it had a P750, 000.00 investment capital since the expenses
and cost of materials, labor and equipment needed to make the business operational is
not quite big as other businesses. The sources of capital for this business are the 10
proponents of the business and owners of Isko Aralan. The return of investment for Isko
Aralan will take up less than a year only.
SOCIO-ECONOMIC FEASIBILITY SUMMARY
The Isko Aralan will provide the personnel for the privacy in terms of their personal
stuff and safety. It will also help the business to be more efficient by treating the staff in
good terms.
This business also helps the economy growth especially when the market is
responsible enough to do their obligations to the customers, community and the also the
government. As for contributing to the government, it means that paying the right taxes
so the government can execute its task well including continuous support to the whole
country. The society will also benefit in Isko-Aralan because it can help the students to
be more persevere of studying so that they can get a job and not to be unemployed after
graduate.
B. CONCLUSION TO FEASIBILITY
Based on the research and study conducted by the proponents of this project, we
therefore conclude that our business is feasible and viable in the market. The factors that
contributed to make our business feasible are:
• First, it is the first and only study hub near Polytechnic University of the
Philippines.
• Second, there is a strong need and demand from the student of Polytechnic
University of the Philippines for a study hub.
133
• Third, it only have indirect competitors which are the computer shops and
the 2 Milk Tea Shops. If Isko Aralan enters the market, it will have a 52%
market share.
• Fourth, it has a market acceptability rate of 91.33% .
These factors made this project a feasible one. Isko Aralan will offer a great
service specially designed and offered for the students of Polytechnic University of the
Philippines for them to have a quality, comfortable and affordable study place that every
PUP students dreamt to experience.
134
Bibliography
Aduana, Nick L. (2015), Writing Project Feasibility Study, C&E Publishing, Inc., South
triangle, Quezon City.
Alvarez, Christin Joy B. et.al (2017), Isko Aralan Hub, Feasibility Study, Department of
Marketing Management, College of Business Administration, Polytechnic
University of the Philippines, Sta.Mesa, Manila.
Calmorin, L.P. and M.A. Calmorin (2007). Research Methods and Thesis Writing. 2nd
edition. Rex Book Store, Manila.
135

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INSTRUCTIONAL MATERIAL FOR

DR. ALIPIO M. GARCIA

PUP A. Mabini Campus, Anonas Street, Sta. Mesa,

“Feasibility” is defined in the Cambridge Dictionary as the possibility that it can be

At the end of the course, the students are expected to:

• Understand the notion of “feasibility study”

TOPIC 1: Introduction to Feasibility Studies………………………………………………………1

Introduction to Feasibility Studies

Introduction the Need for Feasibility Studies

Year Local Production Importation Total

Weighted Moving Average

The procedural steps involved are:

Capital Expenditures Estimated Amount

The management study determines the human resource requirements of the

No. of Position Qualification Job Description

Supporting schedule of net sales

Total manufacturing cost xxxxx

Statement of Financial Position

Lastly, the Financial Statement Analysis is a reflection of the value of the

Current 𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 − 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛 − 𝑎𝑚𝑜𝑟𝑡𝑖𝑧𝑎𝑡𝑖𝑜𝑛 Indicates the

Dividend- 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 Indicates the percentage

Administrative Personnel Requirements

Position Job Description Job Requirements

• Plans and directs the day-

• Responsible for • Graduate of any

• Responsible for collecting • Must have a good

Proposed Salary Rate and Benefits

Computation: P512.00 x 26 days = P13, 312.00

Computation: P256.00 x 26 days = P6,656.00 x 2 staff = P13, 312.00

Personnel Weekly Work Schedule

Tim WEDNES THURSDA SATURDA

Store Store Store 1Store Store Store

Availability and Source of Administrative Personnel

For the Store Manager/Cashier

For the Maintenance Staff/Cleaner

The type of business is a partnership. It is to be registered with the Securities and

Isko Aralan as partnership will be registered with the different government

Organizational Policies (Governing Rules and Policies)

⚫ Form of payment shall be cash based

Schedule and Attendance

Attendance and punctuality are important qualities that the company

If employees must go on emergency leave, he must file an absence slip

An employee who is absent from work without written approval is subject to

Under-time is allowed on a case-to-case basis and only if approved by the

In case an employee intends to resign, he/she must give a one-month prior

In all cases involving a termination of an employee’s service from the

Every employee shall be provided with a rest period of twenty-four (24)

·New Year’s Day - January 1

·Maundy Thursday - movable date

·Good Friday - movable date

·Araw ng Kagitingan - April 09

·Labor Day - May 1

·Independence Day - June 12

·National Heroes Day - last Sunday of August

·Ramadan - movable date

·Christmas Day - December 25

·Rizal Day - December 30

The following shall be considered special holidays:

·Eid'lFtr– movable date