October 12, 2018

Dean, Roma S. Salvador

Dean, College of Business Education
Mondriaan Aura College

Mam,

This is to successfully submit my final requirement in Management

Consultancy, titled, Feasibility Study, QUIRINA LANDIFA CORPORATION.

Thank you.

Respecfully yours,

Romeliza S. Dela Cruz

Student
 FEASIBILITY STUDY

QUIRINA LANDIFA CORPORATION

 Introduction

Paving Tiles are very popular design for floors and even walls nowadays. It also helps to

prevent stagnant water and muddy areas on pathways when it’s raining. Instead of pouring cement

or using blocks, Paving Tileswas use more often. A certain group of people want to form a business

with these type naming, QUIRINA LANDIFA PAVERS CORPORATION and wants to conduct a

feasibility study to prove if this type of business will be feasible and profitable.

They want their tiles become more durable, being able to withstand strong pressures and

damage. By these they can make tiles with artistic design while maintaining its durability, pressure-

strong and damage free quality.They want to produce a tile more like a block that can compressed

strength tensile splitting strength, water absorption and abrasion resistant.

Statement of the Problem

CASE1
QUIRINA LANDIFA CORPORATION
I. Financial Projection
The expected value of sales estimates for QL. Corp. is 12,000 units selling price
of P 48. Unit variable costs are as follows:
Direct Materials P 12.00
Direct Labor 8.00
Variable FOH 5.00
Variable Operating
Expenses 4.00

The estimated cost of plant, machinery and equipment is P 1,600,000 with economic life of
8 years.
Fixed factory OH and fixed operating expenses are P 72,000 and 128,000, respectively. Income
tax is 32%, while cost of capital is 18%

Management intends to observe the following with regards to some accounts:

10 days
Minimum cash balance requirement
Accounts receivable turnover 10%
Finished goods inventory turnover 15%
Raw materials inventory turnover 25%
Accounts payable turnover 10%
Work in process is insignificant in amount:

Requirement:
a. Part 1 of the feasibility study is the company profile.
a. Prepare the projected income statement for the first two years of operation.
b. Determine the capital requirement in terms of fixed and variable capital. Assume one year is
equal to
300 days.
c. Compute for the expected net present value and the rate of return on the project.

II. Projected statement of Financial Position and changes therein

 Assume that BCD Corp. in Part 1 can raise the required capital as follows:
Issuance of 500 shares of common stock (par P 100) at 110. Obtaining a 22% 5-year
loan
for any deficiency (in multiple of P 25,000) with uniform payments due at the end of each year.
(Consider the average accounts payable.)

Requirement:
1. Compute the following:
a. Amount of loan to be obtained, if any, and the corresponding schedule of payments
b. Earnings per share and earnings price ratio.
c. Cost of Capital

II. Prepare the projected statement of financial position and the changes therein supported
schedule of changes in working capital.

III. Analysis of Projected Financial Statements

Analyze the projected financial statements giving emphasis to the following:

a. Adequacy of funds flow from operations to sustain the debt-service charges and the
dividend
requirements.
b. b. Rate of Returns on: 1) investment; 2) owner's equity 3) sales and 4)total
assets

IV. Evaluations and Recommendations

What is your personal evaluation of the various analysis in I, II, III and your recommendations
also.
Objectives of the Study

This study is conduct to determine the feasibility of establishing a Paving Tiles Company by

the QUIRINA LANDIFA PAVERS CORPORATION. Its main focus is on its financial aspect.

3. Financial aspect

3.1 To be able to estimate the capital that the researcher needed to invest to the business.

3.2 To know the capital needed for tools, equipment, machines and supplies to build up the

business.

3.3 To be able to know if the capital is sufficient enough or that will be needed for loans

and other capital acquisitions.

3.4 To estimate the capital that will be allocated to cover liabilities.

3.5 To be able to know the Return of Investment (ROI) and other related Financial Ratios

Conceptual Framework

The success of this project depends on the result of the compressive test, if it will meet the

standard strength of a regular paving stone and how will the product satisfy the customers. The

proponents created the study to see whether the construction of Paving Tiles is feasible. Below is

the conceptual framework of the study. Construction process begins in the preparation of the

materials and ends with deliverance of the end product.

Return on Investment (ROI) - is a performance measure, used to evaluate the efficiency of an

investment or compare the efficiency of a number of different investments. ROI measures the

amount of return on an investment, relative to the investment’s cost. To calculate ROI, the benefit
(or return) of an investment is divided by the cost of the investment. The result is expressed as a

percentage or a ratio.

SWOT analysis- is a framework used to evaluate a company's competitive position by identifying

its strengths, weaknesses, opportunities and threats. Specifically, SWOT analysis is a foundational

assessment model that measures what an organization can and cannot do, and its potential

opportunities and threats

RECOMMENDATIONS

The feasibility study of QUIRINA LANDIFA CORPORATION FOR PAVING TILES

can be feasible. As seen in the financial aspects computations, there are strengths and weaknesses in

the study. Financial ratios conducted is a very helpful tool in analyzing financial ability.

First to discuss is the working capital. It is one of the most observed figures in analyzing

project feasibility tools. As presented, there is a decrease in working capital on the first year of

operation and a little increase in the succeeding projected year. Take note that it doesn’t mean that

the project cant be profitable. It is expected that in the first year of operation, the business has a

possibility in incurring a loss. However, we must also consider the other related ratios before

forecasting.

Second, a big amount of loan that the business needed to obtain is a high chance to

bankruptcy. I might advise that the owners must contribute or invest on their own rather than loans.

Another alternative is to promote their stocks to increase their paid in capital.

As to interpretaions and analizations of other figures in the income statement and balance

sheet. There were prepared necessary computations in the appendices sections.

Inspite of some disadvantages, the feasibility can be assumed as feasible and profitable.
APPENDICES
RECOMMENDATIONS

The feasibility study of QUIRINA LANDIFA CORPORATION FOR PAVING TILES

can be feasible. As seen in the financial aspects computations, there are strengths and weaknesses in

the study. Financial ratios conducted is a very helpful tool in analyzing financial ability.
 First to discuss is the working capital. It is one of the most observed figures in analyzing

project feasibility tools. As presented, there is a decrease in working capital on the first year of

operation and a little increase in the succeeding projected year. Take note that it doesn’t mean that

the project cant be profitable. It is expected that in the first year of operation, the business has a

possibility in incurring a loss. However, we must also consider the other related ratios before

forecasting.

Second, a big amount of loan that the business needed to obtain is a high chance to

bankruptcy. I might advise that the owners must contribute or invest on their own rather than loans.

Another alternative is to promote their stocks to increase their paid in capital.

As to interpretaions and analizations of other figures in the income statement and balance

sheet. There were prepared necessary computations in the appendices sections.

Inspite of some disadvantages, the feasibility can be assumed as feasible and profitable.