A Five Year Financial Plan For Comm Trend Construction Corporation / Redona, Daisy L.; Suniga, Bryan Joseph B.; Picpic, Hiyasmin E.; Sabusap, Charizza Mae M.; Palacio, Maan Cyrel M.; Pineda, Grace Shalom O.; Ramon, Michael Angelo Z.; Reyes, Mae Faith B.; Singh, Syrone Kelvin D. and Villaruz, Geraldine R. 6

Financial Plan: (BS in Business Administration major in Finance and Treasury Management) - Pamantasan ng Lungsod ng Maynila, 2012. 56

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EXECUTIVE SUMMARY: Common Trend Construction Corporation was established and formed as a corporation in December 6, 2001. It belongs to the Construction Industry specifically Industrial Construction. It is involved in the construction of infrastructures that telecommunication industry needs. Comm Trend Construction Corporation's Net worth is Php 20,323,911.63. It is a large enterprise with Total Assets amounting to Php 290,471, 353.39 and 307 employees. Comm Trend Construction Corporation seeks to achieve their mission and vision which is...to adapt to the needs of our clients and consistently provide them with quality of work and services, and ...to grow as a company recognized for its vast expertise and for the unlimited opportunities it provides its people to maximize their career potentials. Comm Trend places high emphasis on continually improving its processes and products to exceed the requirement of its customers. Comm Trend Construction Corporation maintains its standing as one of the top player in the construction industry. It offers variety of services that spans the different phrases in building all types of telecommunications infrastructure - from civil works construction to equipment installation and system integration. On the other hand, there is an intense competition in the nationwide market scene. Since it is a saturated industry, every now and then the firm must introduced latest innovations that will serve as their edge against its competitors. The company incurs a justifiable amount of net income despite high costs and expenses. Gross profit shows inadequacy to cover operating expenses and provide desired profit due to expense's increase. Operating ratio shows that the greatest percentage of income sales is absorb by the expenses alone. The capital structure is highly leveraged. The stability and liquidity of the firm is highly unstable. Invested capital turn over declines which mean there is a corresponding decrease in the invested capital from the owners. Accounts Receivable composes more than half of the firm's total assets; it shows that the firm has problems in collecting receivables. Comm Trend Construction Corporation maintains huge amount of payables that are fast-maturing. For the year 2010, cash and cash equivalents decreased and trade and accounts receivable increased. Trade and other receivables and payables are drastically increasing. Generally, Comm Trend Construction Corporation experiences liquidity problems that can be reflected by the liquidity ratios that are far from the industry average. Specifically, the company is suffering from limited sources of revenue. It has a large and increasing amount of receivables due to loose collection policy. It has insufficient fund because of slow cash cycle and it has high risk exposure and low working capital. The company's current assets are inadequate to meet its maturing obligations. To help the company solve their financial problems, the researchers strongly propose that Comm Trend hire additional collectors. This may increase the salaries expense however; there will also be an increase in receivable turnover. Through this course of action, the accounts receivable will be promptly collected and eventually bad debts will be avoided. Comm Trend may also add its collection days. By this course of action, the idle period of receivables will decrease by 30% yearly and there will also be an increase in the level of cash. The period of idle accounts will be shortened and delayed payments will lessen. The company may also revise its Collection Policies to resolve the company's exposure to high risk of uncollected and delayed payment from clients. Revising the company's collection policy will reduce its accounts receivable by 30% per year and diminish the collection period from 45 - 90 days to 30 - 45 days per year. The company's liquidity will be enhanced for there will be an increase in current ratio. There will also be an increase in additional income from penalties or interests because of overdue payments by 10%. This will motivate the clients to settle their accounts at the period of discount. It should also improve coordination between Finance and Accounting Department to Operations Department to expedite the collection of accounts receivable from 5% to 15% and reduce the cost of collection by 5%.

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