FINANCIAL PERFORMANCE OF A RICE MILL BUSINESS IN

SAN FABIAN, PANGASINAN

An Accountancy Research
Presented to the
COLLEGE OF ACCOUNTANCY
University Of Luzon
Dagupan City

In partial fulfilment
of the Requirement
In RES 11 (Principles of Method of Research)

Aeron Macalanda
Arjay Cabatbat
Claire Malixi
Mariel Camagay
GeliaqimSenting
Krizea Ciara Ferrer
Allen Cedrick Astro
Elaine Grace Manzano
Jonathan Rivera

October 2018
 University Of Luzon
College Of Accountancy
Dagupan City

Chapter I

THE PROBLEM AND ITS BACKGROUND

Rationale

Statement of the Problem

This study aims to analyze the financial performance of JTS Rice

mill in San Fabian, Pangasinan with the intention of determining the

financial issues in order to have a basis for the enhancement of the

business.

To attain the purpose stated above, the study will address the

following specific problem:

1. What is the status of financial performance of JTS Rice mill in terms

of the following

a. Horizontal Analysis; and

b. Vertical Analysis?

2. What financial performance -related problems are encountered by

JTS Rice mill in San Fabian?

3. What measures can be proposed to improve the status of income of

JTS Rice mill?

Scope and Delimitation

The main focus of this study is the three year period 2015, 2016 and

2017 statement of financial performance of the JTS Rice Mill, a business

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Dagupan City

that offers milling services and is legally registered and licensed operating

in Barangay Binday, San Fabian, Pangasinan. The researchers analyzed

the data gathered from the owner through horizontal analysis using

comparative statements and trend ratios and vertical analysis using

common-size statements and profitability ratios. The data gathered from

the entity is the Statement of Financial Performance or the Income

Statement. An income statement is a financial statement that reports a

company's financial performance over a specific accounting period.

Financial performance is assessed by giving a summary of how the

business incurs its revenues and expenses through both operating and

non-operating activities. It also shows the net profit or loss incurred over

a specific accounting period. The study is also limited only to the analysis

of the three consecutive year income statement of the entity since the

primary focus of the study is financial performance and not financial

position. The study is also limited only in using profitability ratio such as

gross profit margin and profit margin

The researchers did not include the balance sheet, statement of cash

flow and other components of the financial statement and is and did not

include ratios such as earnings-per-share and price earnings ratio for the

reason that JTS Rice Mill is not maintaining the accounts needed to

compute the aforesaid ratios.

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 University Of Luzon
College Of Accountancy
Dagupan City

Significance of the Study

The accomplishment of this study aims to impart additional

knowledge to the readers and is significant not only to the researchers but

also contributes for the benefit of the following

Management of the JTS Rice Mill

This study will give an understanding to the management about

the current situation of their business. It can also help them achieve their

goals and objectives by making use of available resources in an efficient,

effective and best way possible to prevent unwanted problems that may

hamper the success of the business.

Other Milling Service

This will serve as a guide to other similar milling businesses and it

will give them ideas concerning the financial performance of a milling

business.

To the University of Luzon College of Accountancy

The study will help them and serve as a basis in teaching about

financial performance of a business.

To the Business related Students

The study may provide additional knowledge to the students of

Business- related students that is pertinent to their chosen field.

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 University Of Luzon
College Of Accountancy
Dagupan City

To the Future Researchers

The study will serve as a guide and a foundation in doing or

accomplishing your goal to have ideas on the similar topic.

Definition of Terms
The following terms were defined based on their purpose and on how

those have been applied in the study:

Financial performance of a Rice Mill Business in San Fabian,

Pangasinan- There are many ways to measure financial performance of a

company. Specifically, Horizontal and vertical analysis are mostly done by

the companies for the analysis of financial statements, and both are useful

in analyzing trends for the financial statements, and also another way to

analyze financial statements is by computing ratios. These are used to

evaluate various aspects of a company’s operating and financial

performance such as its efficiency, liquidity, profitability and solvency of a

business.

Financial Performance- related problems encountered By JTS Rice

Mill in Binday, San Fabian, Pangasinan- These are the obstructions

that limit the financial performance of JTS Rice Mill that is additional

expense caused by the workers and others.

Proposed measures to improve the Financial Performance status of

JTS Rice Mill in Binday, San Fabian, Pangasinan- These are the steps

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College Of Accountancy
Dagupan City

or ways that the researchers will be able to recommend to improve,

enhance and develop the financial performance of JTS Rice Mill upon the

end of the study.

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 University Of Luzon
College Of Accountancy
Dagupan City

Chapter III

RESEARCH DESIGN

This chapter describes the methodology of research study. The

discussion includes the methods used in research, the locale of the study,

the subject of the study, the data gathering instrument used, the data

gathering procedure and the tools for data analysis further understand the

nature and focus of the study that will serve as a tool guide to effectively

address the research problem.

Research Methodology

In this study, the method used by the researchers in conducting the

study is the descriptive method of research. The descriptive method of

research is a fact-finding study that involves efficient and precise

interpretation of the study findings. (Fox and Bayat, 2007) This method is

focused in analyzing ant interpreting the business information regarding

their financial performance specifically the income statement of the entity.

It involves the description, recording, and interpretation of the present

nature, composition or processes of phenomena. (https://bit.ly/2ECHj2P

retrieved: 10/06/18)

The researchers used this method since the focused of the study is

to describe, interpret and analyze the financial performance of the

research project. The data collected in the income statement and other

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College Of Accountancy
Dagupan City

information gathered that can affect and is relevant to the understanding

of the accounts stated in the entity’s income statement of its previous years

were analyzed to simply understand the elements that affects the

business.

Locale of the Study

In doing the research, it is very important to state the exact location of the

business being studied. Pangasinan is the third biggest province in the

whole Philippine Archipelago, derived its name from salt or "asin" in

vernacular. Owing to the rich and fine salt beda which were the prime

source of livelihood for the province's coastal towns, PanagASINan or

"pangasinan" which means "where salt is made" came to be its name.

There are 4 cities and 44 municipalities in Pangasinan and one of them is

San Fabian. San Fabian town is quite popular in Pangasinan because of

its beautiful beaches and resorts. Though the sand may not be as beautiful

as Boracay's white sand but it's powdery anyway, still a lot of people flock

to this place and it gets too crowded at times. Maybe because of its easy

access and short distance from the neighboring towns and less expensive.

In addition, San Fabian is known as one of the top producers of

agricultural products in Pangasinan such as palay, root crops and the-

like, for they have a large field for the plantation of such. It is also a place

where businessmen are putting up their business like convenience store,

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College Of Accountancy
Dagupan City

Figure 1: Site Map of JTS Rice Mill located at Binday, San Fabian

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 University Of Luzon
College Of Accountancy
Dagupan City

milk tea shop, resorts, gasoline station, drug stores and the- like. Aside

from the above mentioned businesses, businessmen also establishes a rice

mill service for the conversion of paddy rice into rice. Binday is one of the

barangay in San Fabian which has a large area for the plantation of palay

and other root crops. It is also the place where JTS Rice Mill is located and

one of the rice mill who offers milling service in San Fabian.

Subject of the Study

The chosen entity by the researchers is the JTS Rice Mill. It is

situated at the Binday, San Fabian, Pangasinan which offers a rice mill

services for the customers. The qualitative data will be needed in

conducting the study which was obtained from the financial performance

of JTS Rice mill and was permitted by the owner namely Mr. Johnny Solis.

Mr. Johnny Solis, the owner, is the key person in obtaining the data

needed by the researchers in conducting the study. They are the ones who

have an access to the financials of the business that will be needed by the

researchers in analyzing the financial performance of the business, and at

the same time, they could provide the relevant and much needed

information for they are the ones who has the most knowledge about the

business’ day-to-day operation.

The primary data were collected from the written documents of the

business such as the Income Tax Return which was given by the

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College Of Accountancy
Dagupan City

bookkeeper of the business, Mrs. Lulu Velasco. While the secondary data

were gathered through an interview with Mr. Solis, the owner of JTS Rice

Mill, and some other employees of the entity that are capable in answering

the questions asked by the researchers relating to the collection of

information about the entity.

Data Gathering Instrument

For this research study, the researchers used an interview guide as

an instrument in conducting the research. Interview guide can be used to

help you direct the conversation toward the topics and issues you want to

learn about. Interview guides vary from highly scripted to relatively loose,

but they all share certain features: They help you know what to ask about,

in what sequence, how to pose your questions, and how to pose follow-

ups. They provide guidance about what to do or say next, after your

interviewee has answered the last question. A good interview guide also

acknowledges four important facts of human social interactions that

influence what people are likely to say to you. These four facts are: (1)

Research questions are not the same as interview questions; (2) People's

espoused theories differ from their theories-in-use; (3) Interviews are social

occasions; and (4) Testimony by itself is relatively weak form of evidence.

(https://bit.ly/2Dr75Gc retrieved: September 19, 2018).

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 University Of Luzon
College Of Accountancy
Dagupan City

The researchers conducted an interview with the management of

JTS Rice Mill to know their personal opinion, feelings, and insight about

the research. An interview is a conversation where questions are asked

and answers are given. In common parlance, the word "interview" refers

to a one-on-one conversation with one person acting in the role of

the interviewer and the other in the role of the interviewee. The interviewer

asks questions, the interviewee responds, with participants taking turns

talking. The results and findings of the study will be thoroughly presented,

analyzed and interpreted to benefit not only the management but also the

individual. (https://bit.ly/2dKv1bl/ retrieved: 10/06/18)

Data Gathering Procedure

First, upon the approval of the title of research, the researchers went

to the entity to ask for their approval regarding the conduct of the research

study. The letter was prepared and presented to Professor Carmelo John

E. Vidal, DA, Ph.D. for his approval, which was addressed to Johnny T.

Solis, Owner of JTS Rice Mill in Binday, San Fabian, Pangasinan

requesting a formal permission to conduct the study about the entity. The

researchers went back to the entity with the letter to ask for the access of

financial data, predominantly, for income statement that will be used in

analyzing the research study.

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College Of Accountancy
Dagupan City

Second, after having the permission to do so, the research team went

to Mabilao, San Fabian to meet Mrs. Lulu Velasco, the bookkeeper of JTS

Rice Mill, to have a copy of the income tax return which will be used in

preparing the income statement of JTS Rice Mill for the three year period.

Third, the researchers prepared an interview guide based on the

income statement. In conducting the interview, the researchers made clear

comprehensibly to the respondents what data they need and during the

interview a followed up question was also done in order to finalize the

knowledge of the researchers.

Lastly, after having all the necessary documents and information

needed for the research project, the researchers started to analyze and

interpret all the data gathered to have a conclusion and recommendation

about the financial performance of a rice mill business in San Fabian,

Pangasinan.

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