A Five year Financial Plan for Stelsen Corporation / De la Pena, Arcy Grace Z.; De Pedro, Princess B.; Cervantes, Sugar M.; Dionisio, Reney Anne Charmaine D.; Cahilig, Dannesa R.; Caindoc, Maria Buenalyn; De Guzman, Lanz M.; Deloso, Meryl Joice A. and Era, Krysette Anne Geline C. 6

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

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EXECUTIVE SUMMARY: According to the Development Bank of the Philippines, SMED defines Stelsen Corporation as a medium enterprise headed by Josefina Ofelia S. Fructuoso and is engaged in importing and merchandising auxiliary products, electrical protection and control equipment. Stelsen Corporation was established of Php 25,000,000. The company aims to provide high quality standard of auxiliary, electronic protection and control products. However, the company is experiencing a decline in their net income that leads to poor profitability and poor performance in the industry. Based on their financial statements, there is a continuous increase in the cost of sales and operating expenses which results to a decrease in their net profit. The company also has a large amount of uncollected accounts receivable that is exposed to greater chance of delayed and probably postponed profit. Large amount of the company's current assets are only tied up with the merchandise inventory which the company holds for a longer period of time therefore resulting to unprofitability of the company. The proponents aim to provide Stelsen Corporation certain actions that would not only answer their problems theoretically, but also actions that would give them possible ways to recover from their financial distress. The proponents highly recommend the following courses of actions to be considered and performed. First, is to manage and control merchandise inventory using Two-bin system. This course action will help the company to determine the appropriate level of inventory and more importantly reduce their number of inventories. However, there is uncertainly in determining the appropriate level of inventory. The company might experience adjustments in the adopting to the new inventory and ordering system. Therefore, regular inspections should be done along with these alternative course of action. Second, is the selling of aging inventory at a book value. This alternative course of action helps the company to utilize the acquired capital to other relevant expenses and will help them generate additional cash for their additional capita. Third, is the implementation of 50% down payment followed by progress billing of new clients. This will help the company to increase assurance with the clients compliance with their follow up payments. The company's generated cash will also increase due to the 50% down payment of the clients. Moreover, the company's accounts receivable will decrease due to the down payment. Fourth, is to reduce the company's commission rate at 15%. This alternative course is for the company to lessen its operating expense and where portion of the cut off amount of the commission rate will be absorbed by the net profit of the company. Last alternative course of action is to minimize the miscellaneous fees to 5%. This will also be a way to decrease the company's operating expenses and will lead to an increase in the net profit. The company will be profitable if the proposed courses of actions are executed afterwards. An effective management of the accounts receivable, accounts payable and inventories should be the main focus of the company. Also, the company should be more careful in dealing with their liabilities for them not to suffer financially. Through these courses of action, the company will have an edge to other competitors in the industry.

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