SUPPLY CHAIN MANAGEMENT PRACTICES OF J&N AUTO AND FISHING

SUPPLY IN ATIMONAN, QUEZON AND ITS FINANCIAL

PERFORMANCE FOR THE YEARS 2020-2022

Rosa Lia C. Paz

Mirasol T. Relleve

Reina Mae M. Riego

Southern Luzon State University

College of Administration, Business, Hospitality and Accountancy

January 2024
 ii

BIOGRAPHICAL SKETCH

Name: Rosa Lia C. Paz

Birthdate: February 17, 2002

Birthplace: Mauban, Quezon

Permanent Address: Brgy. Caridad Ibaba Atimonan, Quezon

Contact Number: 09203472221

Email Address: [email protected]

Educational Background:

School/University Inclusive Years Honor/Award

Caridad Ibaba Elementary School 2008-2014 8th Honor

Atimonan National Comprehensive High School 2014-2018 With Honors

Atimonan National Comprehensive High School 2018-2020 With High Honors

Southern Luzon State University 2020-Present

Academic Affiliation:

SLSU – Junior Philippine Institute of Accountants

 iii

BIOGRAPHICAL SKETCH

Name: Mirasol T. Relleve

Birthdate: May 11, 2002

Birthplace: Plaridel, Quezon

Permanent Address: Brgy. Inalig Atimonan, Quezon

Contact Number: 09197746030

Email Address: [email protected]

Educational Background:

School/University Inclusive Years Honor/Award

San Rafael Elementary School 2008-2014 Salutatorian

Atimonan National Comprehensive High School 2014-2018 With Honors

Atimonan National Comprehensive High School 2018-2020 With High Honors

Southern Luzon State University 2020-Present

Academic Affiliation:

SLSU – Junior Philippine Institute of Accountants

 iv

BIOGRAPHICAL SKETCH

Name: Reina Mae M. Riego

Birthdate: November 18, 2000

Birthplace: Atimonan, Quezon

Permanent Address: Brgy. Balubad Atimonan, Quezon

Contact Number: 09633617150

Email Address: [email protected]

Educational Background:

School/University Inclusive Years Honor/Award

Manggalayan Labak Elementary School 2006-2008 4th Honor

Manggalayan Bundok Elementary School 2008-2013 Valedictorian

Atimonan National Comprehensive High School 2014-2018 With High Honors

Atimonan National Comprehensive High School 2018-2020 With High Honors

Southern Luzon State University 2020-Present

Academic Affiliation:

SLSU – Junior Philippine Institute of Accountants

College of Administration, Business, Hospitality and Accountancy – Student Council

 v

CERTIFICATE OF ORIGINALITY

We hereby affirm that this compliance is our work and that, to the best of my

understanding and certainty, it covers no material previously published by another

person nor material to which to a considerable range has been acknowledged for the

award of any other degree or diploma of a university or other institute of higher learning,

except where due credit is made in the text.

We also declare that the logical content of this thesis is the product of my/our

effort, even though I/we may have customary assistance from others on style,

presentation, and semantic expression.

Rosa Lia C. Paz

Mirasol T. Relleve

Reina Mae M. Riego

Lourdes Judith S. Sarabia, CPA

Research Adviser

January 2024

Date
 vi

APPROVAL SHEET

In partial fulfillment of the requirements for the Bachelor of Science in

Accountancy, this research paper entitled SUPPLY CHAIN MANAGEMENT

PRACTICES OF J&N AUTO AND FISHING SUPPLY IN ATIMONAN,

QUEZON AND ITS FINANCIAL PERFORMANCE FOR THE YEARS 2020-2022

has been prepared and submitted by MIRASOL T. RELLEVE, ROSA LIA C. PAZ and

REINA MAE M. RIEGO who are hereby recommended for the oral examination.

LOURDES JUDITH S. SARABIA, CPA LOURDES JUDITH S. SARABIA, CPA

Research Instructor Research Adviser

Approved in partial fulfillment of the requirements for the degree of Bachelor of

Science in Accountancy, by the oral defense examination committee.

RANIEL R. RAMILO, CPA CHRISTEEN ERRIES S. SARIO, CPA

Member Member

MAY ANNE C. CALUBAYAN, CPA

Chairperson

Approved in partial fulfillment of the requirements for the DEGREE OF BACHELOR

OF SCIENCE IN ACCOUNTANCY.

CHONA V. CAYABAT, DBA

Date Dean, College of Administration,
Business, Hospitality and Accountancy
 vii

DEDICATION

This work is dedicated to those who have been instrumental in its completion. Firstly, to

our research adviser, PROF. LOURDES JUDITH SARABIA, CPA, whose guidance,

expertise and encouragement have been invaluable throughout this journey.

Secondly, we thank our PARENTS, whose love, patience, and unending

support have kept us going during this study. Thank you

for believing in us. Moreover, to our Lord GOD

Almighty. With their support, the

completion of this work

is possible.

-RLCP

-MTR

-RMMR
 viii

ACKNOWLEDGEMENT

Completing this thesis was only possible with the support and guidance of several

individuals and institutions. The researchers would like to express their sincere gratitude

to:

Mr. and Mrs. Jenerchito Jacinto, owners of J&N Auto and Fishing Supply for

allowing the researchers to conduct study in their business.

Mr. Christoper Galero, the store manager for his utmost cooperation in

providing the necessary information to complete this study.

Mr. Raniel Ilagan, for his assistance and encouragement during the data

collection process.

Prof. Lourdes Judith Sarabia, for her guidance and expertise that have

facilitated the enhancement of this study.

The Researcher’s Family, for giving love, patience, and unending support be it

moral or financial to finish this work.

Above all, to Almighty GOD, for His strength, guidance, and blessings

throughout this journey.

 ix

TABLE OF CONTENTS

Page

Title Page i

Biographical Sketch ii

Certificate of Originality v

Approval Sheet vi

Dedication vii

Acknowledgement viii

Table of Contents ix

List of Tables xi

List of Figures xii

List of Appendices xiii

Abstract xiv

Chapter I – Introduction 1

Background of the Study 3

Objectives 5

Significance of the Study 7

Scope and Limitation 8

Definition of Terms 9

Chapter II - Review of Related Literature 12

Related Literature 12

Research Paradigm 43
 x

Chapter III – Methodology 46

Research Locale 46

Unit of Analysis/Respondents/Treatments 46

Research Design 47

Research Instrument 47

Procedures/Data Collection 48

Data Analysis 48

Chapter IV – Results and Discussion 50

Profile of the Business 50

Supply Chain Management Practices 62

Financial Performance 79

Effect of SCM Practices to Financial Performance 106

Problems and limitations in operation 115

Proposed Output – POS System and Inventory Tracker 118

Chapter V – Summary, Conclusion and Recommendations 124

Summary 124

Findings 125

Conclusions 130

Recommendations 131

References 134

Appendices 142
 xi

LIST OF TABLES

Table

1. Vertical Analysis of Balance Sheets years 2020-2022 80

2. Vertical Analysis of Income Statement years 2020-2022 82

3. Horizontal Analysis of Balance Sheet year 2021 and 2022 85

4. Horizontal Analysis of Balance Sheet year 2020 and 2021 87

5. Horizontal Analysis of Income Statement year 2021 and 2022 89

6. Horizontal Analysis of Income Statement year 2020 and 2021 91

7. Gross Profit Margin 93

8. Net Profit Margin 94

9. Return on Assets 95

10. Current Ratio 96

11. Quick Ratio 97

12. Inventory Turnover Ratio 98

13. Average Sales Period 99

14. Total Asset Turnover 100

15. Accounts Receivable Turnover 101

16. Average Collection Period 102

17. Debt Ratio 103

18. Equity Ratio 104

19. Debt to Equity Ratio 105

 xii

LIST OF FIGURES

Figure

1. Research Paradigm 43

2. J&N Auto and Fishing Supply’s Products 51

3. Organizational Structure 52

4. Physical Store 55

5. Storage Area 56

6. Procurement Process 58

7. Sales Process 60

8. Point of Sale System using Excel 119

9. J&N’s Products 120

10. Sales History 120

11. Inventory Tracker 122

 xiii

LIST OF APPENDICES

Appendix

A Letter of Request 143

B Interview Guide Questions 144

C Financial Statements 150

D Variety of Products and Price 154

E Documentation Picture 160

 xiv

ABSTRACT

Title: SUPPLY CHAIN MANAGEMENT PRACTICES OF J&N AUTO

AND FISHING SUPPLY IN ATIMONAN, QUEZON AND ITS

FINANCIAL PERFORMANCE FOR THE YEARS 2020-2022

Authors: Rosa Lia C. Paz, Mirasol T. Relleve, and Reina Mae M. Riego

Adviser: Mrs. Lourdes Judith S. Sarabia, CPA

This study examined the impact of supply chain management (SCM) practices on
the financial performance of J&N Auto and Fishing Supply from 2020-2022. This paper
aims to identify J&N's supply chain management practices, their finances for 2020-2022,
and the challenges they encountered. Using a qualitative, descriptive approach, the
researchers analyzed J&N's supply chain management practices across four key areas:
supplier relationship management, inventory management, logistics, and customer
relationship management. They then assessed their effect on J&N's financial
performance through key ratios like profitability, liquidity, activity, and stability.
Findings revealed a distinct relationship between effective supply chain management
and positive economic performance. J&N demonstrated profitability, liquidity, and
strength during most years, with fluctuations primarily attributed to external pressures
like inflation and the pandemic. Effective supply chain management practices in each
area significantly impacted J&N's success in stronger supplier and customer
relationships, cost reduction, and enhanced efficiency. This study underscores the
critical role of effective supply chain management in fostering financial resilience and
sustained success, especially in challenging economic environments. J&N's case
highlights the potential of strategic supply chain management to mitigate external
pressures and drive long-term financial performance.

Keywords: customer relationship, financial performance, supplier relationship, supply

chain management practice
 CHAPTER I

INTRODUCTION

Today's business environment is highly dynamic and volatile. That is why

businesses are adopting several strategies to become efficient and effective. Many

companies find themselves in tight and intense competition with others offering the same

products and services. For the business to have a competitive edge, it must stay updated

on the latest consumer trends, as the merchandising industry is constantly evolving.

Every participant within this industry responds to another competitor with the aim of

either outdoing or outshining them. A business may ensure its competitiveness, stability,

and profitability in a particular sector by implementing strategies and necessary

measures to capture consumer's needs and satisfaction.

It is well known that supply chain performance substantially impacts the net

income generated for the firms. Many companies are searching for techniques to

enhance their supply chain management practices and improve their financial growth.

The issues that supply chain professionals face include determining how to monitor

supply chain performance and determining which technology, strategies, solutions, and

methods to improve financial results. For this reason, it piqued the interest of the

researchers about its effects. They chose this subject because they want to assist

businesses in developing strategies that would successfully improve their financial

performance by evaluating the function and influence of supply chain management

methods.
 Across the country, general merchandise stores rank among the most popular

establishments. Specifically, it offers a large selection of goods. Over the past decade,

the
 2

merchandising industry has experienced exponential growth in the country. In 2020, the

Department of Trade and Industry stated that the province of Quezon is anchoring its

development as 11 municipalities are identified as Potential Economic Zones (as per

R.A. 7916- Special Economic Zone Act) that will enable it to partake in

the industrialization of the region, and one of those municipalities is Atimonan. The

researchers leveraged their connections to locate a willing subject in Atimonan, Quezon.

Aiming to investigate retail companies, the researchers set out to address the challenges

supply chain experts face to boost their financial performance effectively. Financial

performance is a measure of the companies' policies and operations in terms of their

monetary outcomes. The metric is employed to assess the overall financial well-being of

a company during a specific timeframe. It can also be utilized to compare similar

companies within the same industry or to compare industries or sectors as a whole

(Verma, 2022). Supply Chain managers are in charge of decision-making and utilizing

organizational resources that ultimately influence the company's financial outcomes. To

accomplish this task with efficiency, they must establish a connection between the

outcomes of supply chain choices and the financial objectives and associated

measurements of the company. By creating a set of linkages between the work that is

being performed and the financial outcomes of the firm, the organization's supply chain

function can gain organizational visibility and demonstrate the impact of supply chain

decisions and resource utilization on the firm's financial performance (Raja, n.d.).3

Businesses must develop a clear strategy and be prepared with a workable plan

for the next crisis. Having the necessary tools and techniques to support any operational
 3

situation is vital to staying afloat in the market. Through the implementation of supply

chain management practices, the company can effectively manage the movement of

materials and finances in both the upstream and downstream directions. This

encompasses activities such as sourcing, manufacturing, distribution, retailing, and

ultimately delivering the products to the end consumer. Supply chain management

ensures a continuous and efficient flow of products at an optimal level to meet customer

demand, while minimizing inventory levels and associated costs.

The study aims to ascertain the significance of supply chain management in

enhancing the overall performance of the business and addressing the challenges

associated with it.

Background of the Study

The merchandising industry comprises all companies selling goods and services

to consumers. This sector has consistent annual expansion and employs a significant

number of individuals globally, especially due to the increasing prevalence of internet

retailing. The highly competitive and frequently changing character of this profession

has been especially noticeable in recent years. In 2022, merchandising stores have been

required to reevaluate their existing procedures and tactics that have influenced the

sector for a long time. The significant changes in management and modifications in

supply chain thinking for many well-known companies highlight the essential role that

merchandising or trading sales play in the economy.

In the present merchandising trend, only a small number of companies are

currently leveraging the opportunities presented by the new digital tools to obtain a
 4

competitive advantage. Nevertheless, many organizations have yet to integrate the

merchandising and supply chains. Many merchandising businesses employ the

traditional delivery models, making flow and inventory warehousing decisions in

isolation and forwarding them to logistics and distribution to determine the execution.

There are numerous potential benefits to transforming the merchandising and supply

chain, including increased sales, a reduced need for markdowns, reduced inventory

holding costs, and a faster time to market. This instrument will make a substantial

contribution to the organization's overall prosperity.

To guarantee that products are delivered in an economical and timely manner,

organizations must establish effective supply chain management procedures. The

systematic administration of the movement of commodities and services from their

source to their destination is known as logistics. It involves coordinating and integrating

all operations related to the production, distribution, and transportation of products and

services. Efficient supply chain management is essential, resulting in a more efficient

production cycle and reduced expenses. To prosper in a competitive market and attain

high-quality growth, a company must allocate resources to competent supply chain

management. This will allow the organization to effectively manage disruptions, reduce

expenditures, and preserve its competitive advantage.

Businesses like Auto and Fishing Supply consist of several levels of suppliers,

manufacturers, distributors, and service providers worldwide. These businesses must

develop a clear strategy and prepare a workable plan for the next crisis. The tools and

strategies to support any operational situation are vital to staying afloat in the market. By
 5

implementing supply chain management strategies, the firm may effectively regulate the

movement of materials and finances in both the upstream and downstream directions.

This includes sourcing, manufacturing, distribution, retailing, and ultimately delivering

the products to the end consumer. Supply chain management also guarantees that a

business maintains a consistent supply of products at an optimal level that aligns with

customer demand while simultaneously minimizing inventory levels to achieve

efficiency and cost savings and minimize carrying costs.

Auto and fishing supply is a great business option in the municipality of

Atimonan because it mostly caters to the needs of the Atimonanins since fishing is their

primary job. The procedures and general functioning of a business can greatly benefit

from the application of supply chain management practices in retailing fishing and auto

supplies. It can improve product quality, build a strong consumer brand, and improve

company efficiency.

This research aims to ascertain how J&N Auto and Fishing Supply manage their

supply chains and how this affects their financial performance. Moreover, it aims to

strengthen supply chain management practices despite the challenges faced.

Objectives of the Study

This study aims to determine the supply chain management practices of J&N

Auto and Fishing Supply and its effect on the financial performance for the years 2020-

2022.

Specifically, it sought answer to the following objectives:

 6

1. To determine the business profile of J&N Auto and Fishing Supply in terms of:

1.1 Historical Background

1.2 Organizational Structure

1.3 Technical Structure

2. To determine the Supply Chain Management Practices of J&N Auto and Fishing

Supply in terms of:

2.1 Supplier Relationship Management

2.2 Inventory Management

2.3 Logistics Management

2.4 Customer Relationship Management

3. To evaluate the financial performance of J&N Auto and Fishing Supply for:

3.1 Vertical Analysis

3.2 Horizontal Analysis, and

3.3 Financial Ratios:

3.3.1 Profitability;

3.3.2 Liquidity;

3.3.3 Activity; and

3.3.4 Stability

4. To determine the effects of supply chain management practices on the financial

performance of J&N Auto and Fishing.

5. To determine the problems and limitations in the operation of the business in relation

to their Supply Chain Management Practices.

 7

6. To propose a Point of Sale (POS) system and Inventory Tracker for performance

enhancement, efficiency, and effectiveness of the company’s operation.

Significance of the Study

The research will provide a thorough comprehension of the financial

performance and supply chain management of J&N Auto and Fishing Supply. The

significance of this research is as follows:

J&N Auto and Fishing Supply - It may be significant to J&N Auto and Fishing

Supply's previous development because it will provide updated and enhanced supply

chain management, which may benefit the overall status of the business. It would also be

advantageous to have information regarding the company's stability, liquidity,

profitability, and activity. The study's results are significant because they will inform the

current state of J&N Auto and Fishing Supply's supply chain management practices in

Atimonan, Quezon. They will also facilitate the development of enhanced purchasing

policies, sales policies, inventory management methods, and customer service for the

business firm. It has the potential to improve their organizational administration.

Other Merchandising Businesses—This study may be valuable to other merchandising

companies because it will assist them in resolving their current supply chain issues. It

will serve as a guide to the level of knowledge of the people involved in supply chain

management, making them more accountable for the business's strengths and flaws. The

study will provide guidance to other merchandising teams on how to make strategic

modifications based on the company's profitability and capacity to spend in this industry.

This could aid them in maintaining focus and enhancing their business.
 8

Researchers - This may also be useful to the researchers in expanding their expertise

and becoming acquainted with the supply chain domain. The study's findings are

significant since they will determine the financial performance of the researchers'

specified.

objectives.

Future Researchers - It may aid future researchers who wish to perform similar studies

by serving as a guide and reference material for the current study. This study benefits

academics and students since it educates them on the processes involved in the supply

chain and the operation of a company's supply network. It would be important

information for businesses, industries, and future studies to identify the elements

influencing supply chain management and decisions and solutions to these factors.

Scope and Limitation

This research study was carried out in 2023 and specifically examines the Supply

Chain Management Practices of J&N Auto and Fishing Supply in Atimonan, Quezon.

The primary focus is on the company's procedures in managing its supply chain,

including supplier relationship management, inventory management, logistic

management, and customer relationship management. The study will examine how

improving the supply chain's financial performance can help organizations achieve their

supply chain goals. The process begins with the firm's primary product suppliers and

continues to the final client. It involves the profile of the organizational structure,

historical background, technical structure, and the determination of the business's

financial performance in terms of vertical analysis, horizontal analysis, and financial

 9

ratios such as profitability, liquidity, activity, and stability. Thus, the respondents to the

questionnaire will be limited to the employees of J&N Auto and Fishing.

Several difficulties were encountered during the study, which could lead to

additional research. Limited access to financial records hinders a qualitative evaluation

of the supply chain's impact on financial performance. The financial statements for

2020–2022 and some documents are confidential and not to be shown publicly. The

accuracy of the data is determined by the answers provided by respondents in the

questionnaires.

Definition of Terms

To help you better comprehend the research, the following terminologies are

defined both theoretically and operationally.

Activity Ratios are financial metrics used to assess an organization's operational

efficiency.

Customer Relationship Management (CRM) is the methodical administration of a

company's interactions and connections with its customers. It allows firms to enhance

customer satisfaction, retention, and loyalty.

Financial Ratios are generated by combining numerical numbers from financial accounts

to provide relevant information about a company.

Horizontal analysis is a way of assessing financial statements that involves comparing

specific financial facts for a specified period.

 10

Inventory management is the process of managing inventory movement from

producers to warehouses and then to the point of sale. It is an essential part of the supply

chain.

Liquidity Ratio relates to the company's ability to pay its short-term debt. It is a handy

tool for determining if your company's assets can cover its debts when they come due.

Logistic management involves overseeing the various aspects of supply chain

management to help firms effectively plan, manage, and execute systems for the

transportation and storage of goods.

Point of Sale (POS) system- is the proposed output of this study which helps the

business to record and keep track of sales.

Profitability is the ability of a business to generate profit concerning its income,

operational expenses, balance sheet assets, or shareholders' equity.

Stability assesses the company's capacity to sustain a specific level of debt and

determines if the quantity of debt is balanced with equity.

Supplier Relationship Management is charged with establishing and preserving a

connection between a company and its suppliers.

Supply Chain consists of interrelated networks, assets, and processes that generate and

deliver goods and services to final consumers.

Supply Chain Management Practices are the independent factors that control how the

business is doing in terms of growth.

 11

Technical Structure is the traces and the framework of the technical aspects of J&N

Auto and Fishing Supply.

Vertical Analysis is a technique for analyzing financial statements that express every

line item as a proportion of a specific reference figure.

List of abbreviated terms:

ACP- Average Collection Period

ART- Average Receivable Turnover

ASP- Average Sales Period

CRM- Customer Relationship Management

GPM- Gross Profit Margin

ITO- Inventory Turnover

NPM- Net Profit Margin

POS- Point of Sale

ROA- Return on Asset

SCM- Supply Chain Management

SRM- Supplier Relationship Management

SCMP- Supply Chain Management Practices

TAT- Total Asset Turnover

12
 CHAPTER II

REVIEW OF LITERATURE

This chapter examines relevant studies and literature on the subject linked to the

study's objectives. The following concerns address the available data regarding financial

performance and supply chain management practices. It includes ideas and theories

compiled from various trustworthy sources, including books, papers, journals, and

online publications.

Related Literature and Studies

SUPPLY CHAIN

According to Hayes (2023), a supply chain is a network of businesses and

individuals manufacturing and distributing a product or service. A supply chain's

functions include product creation, marketing, operations, distribution, finance, and

customer service. Good supply chain management results in cheaper costs and a shorter

production cycle. Lutkevich (2021) states that the supply chain is the web of the people

and organizations involved, the resources, activities performed, and the technology

involved in selling and manufacturing a product. The supplier will produce raw

materials for finished products for the final customer. According to a Corporate Finance

Institute (2023) publication, mapping out a supply chain plays a more significant role in

doing external-internal analysis that is essential to the strategic planning process in the

business. It is critical to precisely describe the supply chain since it assists the

organization in defining its market and determining where it wants to be in the future.
 13

Chopra and Meindl (2015) define a supply chain as the collection of all the

procedures, both directly and indirectly, that are necessary to fulfill a customer's request.

The supply chain includes manufacturers, customers, suppliers, carriers, retailers, and

warehouses. Supplier chain management encompasses our endeavors to exert influence

over supplier conduct and oversee the diverse processes necessary to effectively

coordinate the movement of products and services to best serve our end customers. Chen,

L. et al. (2017) examined the pricing and effort choices made by a supply chain. The

results suggest that customers are unlikely to benefit from a power retailer. The customer

gains from the supply chain when both the retailer and manufacturer have equal

negotiating leverage. Xiao, Q. et al. (2020) investigated the influence of retailers' fairness

and manufacturers' overconfidence on the most effective contract design in a supply

chain. The researchers concluded that the revenue-sharing agreement provides the most

advantages to the supply chain.

SUPPLY CHAIN MANAGEMENT

According to Hugos (2018), supply chains encompass the company and the

necessary business procedures involved in the creation, production, delivery, and

utilization of a product or service. Businesses depend on their supply chains to acquire

the necessary resources for their survival and growth. According to Moussa et al. (2017),

supply chain management (SCM) encompasses the administration of services, goods, and

products. Traditional supply chains, as described by Korenblit (2021), primarily

concentrate on production and delivery. In contrast, modern (digital) supply chains have a

broader focus on meeting the overall needs of the customer. Instead of focusing solely on
 14

distribution, they also aim to increase the value of the product they deliver to end-users.

Rakovska and Stratieva (2018) define supply chain management as a network or system

that facilitates the flow of materials and information between different points, enabling

effective control mechanisms. Several academics employ this term to characterize the

transfer of information both within and among companies (Dujak, 2019). This phrase has

also encompassed the logistic process, material planning, and control (Wieland, 2021;

Saberi et al., 2019). Tiwari et al. (2018) have examined the strategic and organizational

difficulties associated with their supply chain management system.

According to Desai et al. (2016), supply chain management is the process of

integrating essential management tasks from the supplier to the manufacturer, who

enhances the value of the final consumer product by providing the final products and

services. According to Christopher and Matthias (2017), supply chain management is the

organized coordination and oversight of all operations related to the planning, execution,

and monitoring of the movement of goods and services from suppliers to customers,

intending to meet customer expectations most effectively. Transportation and storage of

raw materials, work-in-process inventory, and finished goods are integral components of

supply chain management. The citation originates from Mukhamedjanova and A.'s 2020

study. Supply chain management enhances the quality of the products sold by high-end

merchants, leading to increased value and a direct influence on net profit (Wahdan &

Emam, 2017). In their study, Saragih, Tarigan, Pratama, Wardati, and Silalahi (2020)

examined the correlation between operational performance and ten supply chain

management practices (SCMPs). These practices encompass IS and site visits, supplier
 15

relationships, inventory management, product development, agility, implementing

quality, and integrating logistics, transportation, and purchasing activities with the

manufacturing process. In their study, Saragih et al. (2020) found that supply chain

management (SCM) has the potential to enhance long-term operational performance.

SUPPLY CHAIN MANAGEMENT PRACTICES

William Stevenson explains the SCM concept in his book "Operation

Management 13th Edition". The author's concept of supply chain management of a

typical manufacturing business shows a network of goods from suppliers-storage

manufacturing-storage-storage-distributor-retailer and finally to customers. This concept

is also applicable to a merchandising business. However, the difference is that the

merchandising business does not manufacture its products but orders goods held for sale.

In the author's concept of supply chain, a merchandising business can be a distributor if

a company orders directly from the manufacturer, or it can be a retailer in cases where it

orders from the distributor.

In the study conducted by Kaliani Sundram et al. (2016), it is stated that SCM

practices refer to a series of activities carried out by a company to achieve efficient

supply chain management. There is no commonly recognized understanding of what

defines SCM practices, just as there is no universally accepted definition of SCM.

Ayman et al. identified several key factors that determine supply chain

management performance (SCMP), including lead time, delivery, flexibility, resources,

performance, customer satisfaction, product quality, supply chain, and commodity

demand, as stated by Shahin et al. Enterprises implement supply chain management

 16

practices (SCMPs), and the integration of the supply chain yields their overall impact.

Retailing plays a crucial role in supply chain management strategies. Retailers are

responsible for facilitating the connection between producers and end users. They

function as intermediaries connecting manufacturers and clients, guaranteeing accurate

delivery and collection of products. Retailers also contribute to the promotion of goods

and services, thereby increasing product sales (Keenan, 2022).

Various researchers have recognized the importance of supplier partnerships,

process improvement, outsourcing, information quality, cycle time reduction, customer

relationships, continuous process flow, just-in-time practices, inventory management,

information sharing, and supply chain integration in the effective management of supply

chains (Jie et al., 2013; Kaliani Sundram et al., 2016; Tatoglu et al., 2016). Logistics

management is a component of supply chain management that focuses on optimizing the

efficiency of product administration. The management process encompasses the seamless

movement of goods, services, data, and financial resources from their source to their

destination (Springinklee & Wallenburg, 2013). The study identifies and concentrates on

four supply chain management (SCM) practices emphasized in the conceptual

framework. Organizations commonly use these strategies, particularly in the industrial

sector. The four disciplines of supply chain management (SCM) encompass supplier

relationships, inventory management, logistics management, and customer relationship

management. Supply chain management (SCM) practices refer to the specific activities

undertaken by a business to achieve efficient and successful management of its supply

chain (Kaliani Sundram et al., 2016). There is no widely acknowledged consensus on the
 17

specific characteristics that define SCM practices, just as there is no broadly agreed-upon

definition of SCM (Tatoglu et al., 2016). SCM practices encompass the operational or

functional actions undertaken by a company to enhance its effectiveness in supply chain

management. The implementation of different supply chain management (SCM) methods

will result in a firm operating in a highly competitive environment and achieving long-

term financial and economic success.

On the other hand, supply chain management (SCM) aims to establish strong

connections between internal departments and external entities such as customers,

suppliers, and partners. We recognize SCM techniques as complex concepts requiring a

broader viewpoint analysis. The goal of supply chain management (SCM) is to improve

individual and organizational performance, as well as the overall effectiveness of the

supply chain.

MERCHANDISING IN THE PHILIPPINES

Merchandising refers to the methods and procedures used to market and display

products to customers. Retailers employ merchandising strategies to influence client

behavior and achieve sales objectives through online channels or physical stores (What

Is Merchandising? 2023). Genie (2022) defines " merchandising " as customer-centric

corporate practices. Product promotions might include price changes, attention-grabbing

displays, special offers, and other strategies that affect a customer's purchasing decisions

("Merchandise and Merchandising: What is the Difference?" 2022). According to

Trading Economics (2023), the Philippines' goods trade, as a percentage of GDP, was

55.23% in 2022, as documented. According to Tilley (2023), merchandising operations

 18

involve planning and replenishment. As Ptabhu TL (2019) believes, merchandising

companies' customers buy certain products or necessary goods at wholesale prices, and

then the strategized action is to resell them at retail prices. They are referred to as "buy-

and-sell" firms. They gain money by selling their products at a higher price than they

paid.

In certain nations, merchandising begins with a purchasing plan and then uses advanced

consumption mathematics to calculate the whole life of each item or collection to be

sold. Other countries separate the purchase and merchandising procedures;

merchandising is only responsible for the product's existence inside the shop and its

fundamental presentation to the consumer (Blessa, 2015). According to Topps and

Taylor (2018), the ultimate objective should be to ensure that the appropriate product is

available in the correct location, in the right amount, and at the appropriate moment.

Kaur, A. (2013) revealed many sorts of visual merchandising that can impact

customers' purchasing decisions. His research concluded that visual merchandising has a

direct association with sales performance. Customers are drawn in, increasing the store's

footfall, which benefits sales figures. Makhal, A.B. (2015) discovered an interaction or

association between the type of shopper and the visual merchandising aspects. Saini, C.,

R. Gupta, and I. Khurana. (2015) investigated the impact of visual products on

consumers' impulse buying behavior and discovered the essential characteristics of

visual merchandise that contribute the most to impulse buying. The study discovered

that visual merchandising methods significantly impact client purchasing behavior and

can lead to impulse purchases.

 19

AUTOMOTIVE SUPPLY INDUSTRY

The automotive sector was widely recognized as a crucial driver of economic

growth in both industrialized and developing countries following World War II

(Irsyadillah & Dadang, 2020). The industry is complex due to its incorporation of several

sectors, including textiles, glass, plastics, electronics, rubber, steel, and other metals, each

requiring distinct production processes (Aldaba, 2014). The automobile industry is vital

to economic development, job creation, and export expansion (Sugata, 2014). According

to Matsumoto (2016), importing products from Thailand is favorable for ambitious

owners of the automotive parts sector because it boosts their income. As a result, the

Philippine government can benefit from importing products from Thailand, as it will

reduce the country's unemployment rate and increase revenue. Automotive suppliers are

businesses that produce items that go into the making of automobiles or are utilized in the

production process; as a result, they provide these items to automakers either directly or

indirectly—manufacturers of original equipment (OEM) (Gelowicz, 2023). Research

from Transport Intelligence indicates that the supply chain for the complete power train

will change, along with the kinds of parts that are utilized, the ways that logistics are used

to transfer them, the markets where they are sold, and the structure of automotive supply

networks will have a significant impact on the automotive hierarchy.

The COVID-19 pandemic primarily affected the global healthcare system and

posed a significant threat to the automotive manufacturing sector and its supply networks

(Schliebener & Nickel, 2021). According to the Department of Trade and Industry

(2015), the automotive industry has a significant influence on the Philippine economy.
 20

This sector deals with the production, assembly, importation, distribution, reconstruction,

and manufacturing of automotive parts and components. It encompasses many industries,

such as composite, rubber, plastic, electrical, and metal. Ahn and Seo (2014) introduced a

paradigm for organizing items in the inventory system. The authors incorporated the

order range (s, S) into the inventory system. The uppercase letter S' represented the

maximum inventory level, while the lowercase letter s' denoted the order point. We

utilized a multi-item ordering model, implementing order ranges instead of order points

in the system. Ghodrati and Kumar (2015) argue that industry and industrial systems have

become increasingly complex, and their availability has become more crucial due to

ongoing technological advancements in the twenty-first century. Having access to

product support and troubleshooting services, as well as spare parts, was of utmost

importance. A lack of prompt and comprehensive support, such as a scarcity of necessary

spare parts, frequently resulted in unforeseen periods of inactivity, which consequently

led to financial losses.

FISHING SUPPLY INDUSTRY

According to the market research report, the worldwide fishing equipment market

is divided into four segments: type, nature, distribution channel, and region. The market

is segmented into fishing gear and equipment like lines, floats, hooks, sinkers, reels,

traps, rods, nets, spears, and gaffs. The market is naturally separated into three categories:

fresh water, salt water, and fly fishing. The market distribution channels are offline and

online segments. The Food and Agriculture Organization (2020) stated that fish serves as

a vital protein source and provides key micronutrients for almost 3.3 billion individuals,
 21

especially those residing in low- and middle-income nations. Marine fishing in the

Philippines is more than just an industry. The Philippines boasts the most extensive

uninterrupted coastline, spanning more than 7,600 islands. NZ's 2015 survey revealed

that over one million Filipinos depend on marine fishing for their livelihood. The fishing

industry in the Philippines has an estimated worth of USD 7.26 billion and makes a

substantial contribution to the country's gross domestic product (GDP) (Lamarca, 2017).

The Philippines ranks 11th globally in terms of total capture production (FAO, 2020).

The Philippines has a strong economic dependence on fish and ranks second worldwide

in terms of relying on coastal and marine ecosystems for nourishment (Selig et al., 2019).

According to B'en'e et al. (2016) and Serpetti et al. (2017), sustainable fisheries tackle

both environmental concerns and socioeconomic challenges. These challenges include

population growth, climate change, growing consumer demand for sustainable seafood,

and the need to ensure the resilience of livelihoods and food security in developing

nations. According to the 2009 Poverty Incidence for Basic Sectors report (FAO, 2021a),

fishers in the Philippines have the lowest social status, with a poverty rate of 41.4%.

Poverty has been linked to ecosystem degradation due to illegal fishing and ethical

concerns that justify fishermen's actions (Fabinyi, 2013). A study examined the strategies

employed at the local fishing level to adapt to and mitigate the effects of climate change.

Research examines socioeconomic factors, including the influence of climate change on

individuals' fishing and livelihoods (Macusi et al., 2020). It also investigates the gender

dimensions of climate change (Graziano et al., 2018), the impact of climate change on

fisheries and commodities (Jacinto et al., 2015), and business models that enhance
 22

sustainable fishery management and the resilience of fishing communities by improving

the income of local populations (Lomboy et al., 2019).

SUPPLIER RELATIONSHIP MANAGEMENT

Supply chain management professionals employ supplier relationship

management. They maintain regular communication with vendors as they are responsible

for overseeing procurement, project management, and operations (Landau, 2022). In their

contributions, Wieteska Grayna (2016) elucidated the importance of firms establishing

connections with suppliers to navigate the challenges posed by high market volatility.

The focus is on adaptability and flexibility in managing relationships with suppliers

(SRM). Supply chain flexibility allows for a timely response to changes in supply,

demand, and product. Adapting to substantial alterations in the environment cultivates

adaptability. Adopting adaptable purchasing strategies and fostering supplier flexibility

can achieve flexibility in relationships. Peter Kraljic, a director at the consulting firm

McKinsey & Company, pioneered supplier relationship management. Kraljic argued that

for organizations to effectively address risks, complexities, and potential disruptions in

supply and pricing, they must undergo a fundamental shift in perspective. This shift

involves moving from a focus on purchasing as a mere operational function to viewing

supply management as a strategic imperative. By adopting this new mindset,

management can proactively take action to maximize their advantage.

INVENTORY MANAGEMENT

Inventory management is a vital component of supply chain management that

oversees the transportation and storage of items from producers to warehouses and
 23

subsequently to the point of sale (What Is Inventory Management and How Does It

Work? | IBM, n.d.). According to the article "Global Economics, Management, and

Trades," effective inventory management is essential for the maintenance and

enhancement of an organization's well-being. "Implementing efficient inventory

management practices will enhance the organization's profitability." S.R.

Kasisomayajula, 2014 Inventory management plays a crucial role in helping businesses

decide which specific stocks to order, how much to order, and when to place the orders.

Merchandise has a record of its journey from purchase to sale. Effective inventory

management necessitates comprehensive data on procurement, replenishment,

transportation, storage, reception, customer contentment, theft prevention, and product

turnover. According to the 2017 "State of Small Business Report," around 50% of small

businesses, even those that depend on manual processes, fail to maintain inventory

records. Rickerby (2020) suggests that implementing an automated inventory system

could be the decisive element that distinguishes your brand and enables unlimited

growth, regardless of the type of business you are in, whether it is selling seasonal,

perishable, or personalized products. He noted that implementing an effective

computerized inventory system might simplify the paperwork involved in both foreign

and local operations. In addition, it has the potential to streamline restocking by

automatically issuing purchase orders when stock levels drop below the minimal

threshold. Goals (2020) conducted a study utilizing panel regression models and

discovered a positive association between enhancing inventory management efficiency

and financial performance, particularly in terms of the return on operating assets.

 24

Furthermore, statistical evidence unequivocally demonstrates the importance of

inventory's influence on both the global and domestic economies as a macroeconomic

indicator. "Historically, a decrease in the inventories-to-sales ratio has consistently

resulted in a corresponding increase in economic output." (Kalivas, 2018, page 6).

Marsudi (2018) conducted a study to investigate inventory management in the

manufacturing industry. The findings revealed that the demand pattern policy plays a

crucial role in determining the most effective approaches. Additionally, the

implementation of inventory systems such as economic ordering quantity, material

requirement planning, and just-in-time has proven to be advantageous for the industry in

terms of planning, delivery processes, and timely production. The interplay of various

factors, including the environment, technology, systems, and procedures, is responsible

for these benefits. Nemtajela and Mbohwa (2017) found that organizations with a higher

inventory stock percentage are more likely to have unfavorable financial outcomes

compared to those with a lower inventory stock percentage. Zhiteng and Haifeng's

(2017) research underscores the need for organizations to conduct analytical

investigations on the impact of inventory strategies on their financial performance. In

addition, Yan et al. (2017) shows that manufacturing companies that implement

advanced inventory management systems for high-tech products enhance their

performance and gain a competitive edge in their production process. Deveshwar and

Dhawal (2013) asserted that inventory management is a business process that involves

organizing, storing, and replenishing inventory to maintain a sufficient supply of

commodities while minimizing expenses.

 25

According to Anna Marie Beltran Distor's (2013) review of the proposed sales

monitoring system, the company's fast-paced organizational framework requires

efficient monitoring to oversee its sales operations. Her approach aims to develop an

efficient and precise automated system for generating invoices, monitoring daily

transactions, and producing reports. This study will yield crucial data to showcase the

computerization of the company's operations and acquire a more reliable and effective

method of monitoring daily activities. Edwin Bello and his colleagues conducted a study

in March 2015, finding that numerous firms have many inventory items that require

computerized systems for monitoring and control, including a warning level. Without

the computer's distinct abilities to store and retrieve information, the task of estimating

usage and keeping records would rapidly become overwhelming. In his book,

"Enhancing Efficiency and Lowering Operating Costs" (2014), the esteemed accounting

expert, Waldo T. Passion, asserted the need to improve productivity and reduce

expenses. People are now producing reports with greater timeliness and accuracy.

Computers have a large storage capacity and exceptional speed for altering and

retrieving data in the desired format, which makes it more cost-effective to use

microcomputer-based corporate calculation.

LOGISTICS MANAGEMENT

Supply chain management, as defined by Advanced Solutions International, is

the organized and precise management of the acquisition, transportation, and storage of

materials, components, and finished products within a company and its distribution

networks. Logistics management, as defined by Axestrack Software Solutions (2022), is

 26

the process of efficiently managing various activities along the supply chain to ensure

the highest level of accuracy in meeting client demands. Logistics management has

become essential due to the growing complexity of transporting commodities from the

place of origin to the point of consumption. This is necessary to meet evolving customer

expectations, increase competitiveness, and change market dynamics (FarEye et al.,

2023). Efficient logistics management guarantees clear oversight of transportation

activities, which improves the seamless operation of the supply chain. Transportation

transports merchandise from sites of origin in the supply chain to points of use and

consumption. (The Definitive Guide to Transportation, n.d.). The APICS Dictionary

defines distribution as transferring materials, usually finished products or service

components, from the manufacturer to the customer. These operations encompass

transportation, data processing, order administration, warehousing, industrial packaging,

inventory control, site and location analysis, material handling, and the communications

network necessary for efficient management. In harmony with the PLS Logistics blog,

some of the most prevalent problems are customer expectations, transportation costs,

risk management, supplier relationships, and laws. It is critical to optimize the logistics

of this complex web of interactions and duties to ensure that a corporation uses time and

energy wisely to bring its goods to market.

CUSTOMER RELATIONSHIP MANAGEMENT

Initially, organizations kept their contact information between business cards,

email records, and spreadsheets. However, as organizations grow and change,

maintaining a single database for client information becomes crucial. According to

 27

Kulpa (2017), customer relationship management is a fantastic instrument that allows

businesses to improve customer satisfaction, efficiency, and revenues. CRM enables a

firm to identify the value of its customers and leverage improved customer relationships.

Customer relationship management (2023) is the practice of enhancing a company's

understanding of its clientele to improve responsiveness to their needs. CRM is an

essential element of supply chain management. It requires a comprehensive

understanding of consumer desires and expectations, as well as the ability to align them

with specific requirements (B. Team, 2022). In their recent publication, "Competing on

Analytics: The New Science of Winning," authors Thomas Davenport and Jeanne Harris

argue that many companies in various industries are enhancing their customer

relationship management (CRM) and supply chain management (SCM) capabilities by

employing predictive analytics. Consequently, these companies are experiencing

exceptional growth and achieving superior performance in the market. Alshurideh

claims that EA established a client loyalty program based on CRM analysis. EA serves

the demands of its clients by letting them save money and collecting personal

information about them. It also developed a discount system to encourage users to stay

with EA for an extended period by providing discounts. The CRM analysis strategy

suggests that EA deploy Emirates Skywards, a membership mileage system.

DEMAND MANAGEMENT

Demand Management regulates how much material a company requires by

forecasting how much material will be consumed. Demand forecasting is a strategic

method to predict, strategize for, and oversee the demand for goods and services
 28

(Informer, 2023). The most typical goal of demand management is revenue generation.

According to Agatz and Fleischmann (2023), demand management supplements supply

(chain) management by giving extra levers for managing a firm's operational

sustainability.

SUPPLY MANAGEMENT

Supply management involves the strategic identification, acquisition, and

oversight of essential resources and suppliers that are vital to an organization's

functioning and expansion. Procurement involves the acquisition of tangible goods,

information, services, and other necessary resources to sustain and expand a business

(Kenton, 2022).

RETURN MANAGEMENT

Returns Management is a crucial component of outstanding customer- and

Business interactions, such as quick repair, replacement of damaged things, or credits for

returned items, are seen as part of good customer service (Thakur, 2021). Returns

management receives and examining returned products before refunding or exchanging

them. It is an integral part of every firm since it affects customer happiness and financial

performance (Returns Management: A Comprehensive Guide, 2023).

CUSTOMER SERVICE MANAGEMENT

Customer service plays a crucial role in the fields of logistics and supply chain

management. Customer service provides clients with a perception of both the product and

the firm that is selling it (Burger, 2023). The customer service department equips the

team with the necessary tools, training, and ongoing support to deliver exceptional
 29

customer service experiences. The objective is to develop client relationships, enhance

customer retention, foster brand loyalty, and boost revenues (Inabo, 2023).

COMPETITIVENESS

According to Sutar and Lahamge (2022), supply-chain management is strategic.

It recognizes that a firm's competitive strength is determined not solely by its product but

also by the operations and activities that place the product in customers' hands and

provide supporting services. Economic and effective supply-chain management

improves business performance and adds value by enhancing quality usage to gain a

competitive market advantage. The market is competitive and dynamic today. Rapid

technological advancement, globalization, and changing customer expectations are

shifting market contests away from competitive independent enterprises and toward

competitive supply networks (Farahani et al., 2014).

COMPETITIVE ADVANTAGE

Supply chain management methods impact organizational performance and

competitive advantage (Karimi & Rafiee, 2014). Gunasekaran et al. (2017) state that

supply chains must have agility, alignment, and adaptability to obtain a competitive

advantage. Supply chain agility (SCA) is a technique that allows businesses to gain a

competitive edge.

FINANCIAL PERFORMANCE

Hartill (2021) argues that financial success serves as a comprehensive indicator of

a company's fiscal well-being. When people hear about a company's great financial

performance, it typically signifies an increase in revenues and effective debt

 30

management. It holds a significant quantity of liquid assets. A firm's financial

performance is equivalent to its financial strength. Emeritus (2023) asserts that financial

performance measurement is critical for organizations because it evaluates their financial

health. Moreover, it provides them with comprehensive information regarding their

earnings, expenditures, possessions, debts, and cash movement, enabling them to make

informed and astute business choices. Financial performance refers to the thorough

assessment of a company's total condition in terms of its assets, liabilities, equity,

expenses, revenue, and profitability. Financial performance studies necessitate the

creation of precise financial formulas and ratios. We subsequently compare these

measures with historical and industry data to gain a more comprehensive understanding

of a company's financial status and performance (Team, 2023). According to Kenton

(2023), financial success is a subjective evaluation of a firm's ability to effectively utilize

assets from its primary business model to generate income. The financial success of a

corporation provides investors with information regarding its overall well-being. This

provides a brief indication of the management's economic well-being and performance.

PROFITABILITY RATIO

The amount of money made after accounting for all sources of income and

expenses is the business's profitability (Datarails, 2023). Profitability refers to the

relationship between an organization's profit and its expenses. According to the report by

Horton (2023), profit and profitability are distinct concepts. In addition, according to

Sengupta (2023), the profitability ratio is a measure of a company's potential to generate

profits over a period, considering operational expenses, sales, and shareholders' equity. A
 31

higher ratio is advantageous for the firm as it enables steady profit generation. According

to the study by Haryono and Lisiantara (2018), profitability (ROA) is not influenced by

cash, inventory, and accounts receivable. Nevertheless, Sanjiwani and Suardana (2019)

discovered that accounts receivable, cash, working capital, and inventory turnover

considerably influenced profitability.

GROSS PROFIT MARGIN

The gross profit of a business measures its efficiency in using labor and supplies

to produce goods or services. It is used to compute another metric, the gross profit

margin. According to Hayes (2023), this statistic compares a company's production

efficiency with time. A corporation's ability to maintain a more significant profit margin

allows it to accumulate more funds, which may be used to cover more expenses or fulfill

debt commitments (Bloomenthal, 2022).

NET PROFIT MARGIN

A high net profit margin indicates a company's strong financial well-being.

Similarly, a decreasing net profit margin suggests the need to reassess current strategies

and make profit projections appropriately (Rehayem, 2022). In 2022, Murphy, C.B.,

stated that the net profit margin is a useful metric for investors to assess a company's

management's ability to generate profit from sales and effectively manage operating and

overhead expenses. It is a highly significant indicator of a company's overall financial

well-being.

RETURN ON ASSET
 32

A company uses return on assets (ROA) as a metric to assess its efficiency in

generating profits from its assets. Managers and financial analysts employ this metric to

evaluate the effectiveness of a company's resources in generating profits (Birken, 2021).

The return on assets (ROA) metric provides investors with insight into the company's

ability to efficiently generate net income from its investments. A higher return on assets

(ROA) is preferable since it indicates that the firm can generate larger profits with a

smaller amount of investment. A higher return on assets (ROA) indicates greater asset

efficiency (Hargrave, M. 2022).

LIQUIDITY RATIO

The ease with which one can convert an asset or security into cash without

significantly affecting its market value is known as liquidity. The ease of purchasing or

selling an item at a price that accurately reflects its intrinsic value is known as liquidity.

Due to its rapid and effective transformation into other assets, cash is widely considered

the most liquid asset (Hayes, 2023). We should use financial metrics like the liquidity

ratio to assess the company's capacity to meet its financial commitments and sustain

adequate cash flow within the specified period. According to Beaver (2021), the liquidity

ratio plays a crucial role in enabling the company to monitor its financial well-being and

fulfill its financial responsibilities. Assessing liquidity facilitates the identification of an

optimal equilibrium and positions the organization for strategic expansion.

CURRENT RATIO

The current ratio quantifies a company's capacity to settle its immediate liabilities

by utilizing its existing assets. A high current ratio indicates that the organization has an
 33

abundance of current assets that are not being used efficiently (Deli, 2017). A high

current ratio indicates poor management of working capital (Sari & Dwirandra, 2019).

QUICK RATIO

Seth (2023) argues that it solely assesses the company's capacity to fulfill

immediate obligations without considering inventory sales or obtaining additional

funding. A higher ratio indicates more substantial liquidity and financial health for a

corporation, whereas a lower ratio suggests the opposite, indicating a higher likelihood of

struggling with debt payments. To effectively manage their liquidity, organizations use a

variety of liquidity ratios, including the current, quick, cash, and defensive interval ratios.

These ratios have a substantial impact on a company's financial success (Robinson et al.,

2015).

ACTIVITY RATIO

According to Fahmi (2020), an "activity ratio" is a quantitative measure that

assesses how well a company employs its resources to support its activities. Anticipate

the activity ratio to reach a desirable balance between sales and different assets, including

inventory, fixed assets, and other assets. Kasmir (2018) defines activity ratios as metrics

employed to evaluate the effectiveness of a company's operational activities. Working

capital, cash, inventory, and profitability are examined in this study.

INVENTORY TURNOVER RATIO

According to Abby Jenkins (2022), inventory turnover ratios are a reliable tool for

identifying new patterns influenced by market demand, as well as outmoded or slow-

moving inventory. By doing so, companies can obtain a timely and crucial indication of
 34

how to expand or reduce the size of a certain product line or brand, thereby gaining more

command over inventories and maximizing sales prospects. A higher ratio of value

typically indicates strong sales, making it more desirable. A lower ratio may indicate

subpar sales performance and a decline in product demand.

POINT OF SALE SYSTEM

As defined by Carolina Barcode Inc. (2013), a point-of-sale system is a

networked integration of computer software and hardware that enables real-time sales

and inventory monitoring. Point-of-sale systems can address a wide range of business

difficulties. The cash register is a crucial component of every retail or hospitality

operation. The ability to carry out transactions and handle cash is crucial for the proper

functioning of the organization. Implementing a point-of-sale (POS) system in place of

cash registers can result in cost savings, mainly if it can process numerous cash

transactions. The article 'Design of Point of Sales (POS) Information Systems Based on

Web and Quick Response (QR) Code' defines point of sale (POS) as software used to

document sales transactions. Prior to the introduction of point-of-sale (POS) systems,

individuals depended on cash registers or manual techniques to manage their business

operations.

Nevertheless, more than the teller's machine function is required, POS has been

developed. Wamba's research found that the retail industry, particularly supermarket

chains, can benefit significantly from adopting the POS system, ensuring timely

replenishment and faster shelf filling (Wamba & Boeck, 2008, as cited by Njenga,

2017). According to Njenga's (2017) research, clients would line up at the cash counter,
 35

waiting their turn. In the present era, we have an intelligent electronic point of sale that

is adaptable and insightful, providing shops with critical information such as inventory

levels, customer behavior, business performance, and reports and analysis. The system is

quick, and clients no longer have to wait long to be served.

AVERAGE SALES PERIOD

In a study on working capital management and company profitability for

manufacturing and construction enterprises registered on the Nairobi Securities

Exchange in Kenya, Makori (2013) found a negative association between return on

assets and the firm's average collecting period and cash conversion cycle. The findings

suggest that managers can enhance shareholder value by decreasing the duration of

accounts receivable and maximizing the accounts payment period and inventory to a

reasonable extent. When it comes to production and resource planning, a shorter average

selling time is more advantageous for the firm. The industry will have a significant

impact on our circumstances (Sam A., 2023).

TOTAL ASSETS TURNOVER

A high total asset turnover value suggests that the business is becoming more

efficient in using its assets to generate operational profitability. The level of activity in a

corporation is directly proportional to its efficient use of assets to generate operational

income.

As a result, the link between TATO and ROA is likely favorable (Deli, 2017).

Total Asset Turnover is a ratio that depicts total asset turnover as determined by the

sales volume, or, in other words, how far all assets' capabilities generate sales. This ratio
 36

can illustrate how well a corporation uses its assets to produce revenues (Harahap,

2013).

ACCOUNTS RECEIVABLE TURNOVER

As stated by Kashmir (2017), receivables turnover states that organizations must

understand how the turnover will adjust to income and expenses because the amount of

turnover significantly impacts the company's operations in terms of profits created. The

accounts receivable turnover ratio evaluates how long it takes to recover receivables or

how frequently the capital invested changes over a certain period. A higher ratio

indicates a lower amount of working capital allocated to receivables (relative to the

previous year's ratio), which signifies the company's improved performance. It is stated

that the faster the accounts receivable turnover, the more influential the company is in

controlling its receivables. According to reference (2019), receivables are company

claims for money, products, or services owed to other parties due to previous

transactions.

AVERAGE COLLECTION PERIOD

 37

Brett Johnson (2022) asserts that a company's average collection duration offers

insights into the soundness of its accounts receivable, credit conditions, and cash flow.

Monitoring the ACP (actual cost performance) will enable organizations to strategize

and prepare for upcoming expenditures and initiatives. The average collection period is a

metric that calculates the number of days it takes for a company to convert its accounts

receivable into cash. Reducing time through efficient accounts receivable management

enhances business performance.

STABILITY RATIO

Long-term stability is the enduring equivalent of liquidity. The stability study

assesses the company's capacity to handle debt and determines if there is a proper balance

between debt and equity. The debt-to-equity ratio and gearing, also known as leverage

(Ashokkeeli, 2016), are the primary stability metrics frequently employed. According to

Basu (2019), solvency ratios are indicators of a company's financial stability, as they

measure the company's debt in relation to its assets and equity. If a corporation has

excessive debt, it may face difficulties in effectively managing its cash flow in the event

of rising interest rates or deteriorating business conditions.

DEBT RATIO

Malini et al. (2013) claim that a temporary increase in financial debt causes the

debt ratio. This increase also statistically accounts for the negative correlation between

financial debt ratios. In the present economic environment, numerous entrepreneurs,

regardless of their scale, rely on external sources of funds such as credit or debit. Debt
 38

refers to the obligation to repay money, goods, or services to external entities at a later

time as a result of past or prior transactions. Organizations that have a high level of debt

and low equity values can actually gain an advantage when there is an increase in

business risk. In the event of project failure, the stockholders will not experience any

negative consequences. However, in the event of a successful project, there will be an

ample amount of revenue to fully repay the debt (Miglo, 2016).

EQUITY RATIO

The shareholder-equity ratio gauges how much of a company's assets come from

stock issuance as opposed to borrowing. It represents the organization's enduring

financial stability. A company's ratio nearing 10% signifies a greater proportion of assets

funded through equity rather than debt (Hayes, 2022). Dheeraj Vaidya, CFA, and FRM

define the equity ratio as a solvency ratio that evaluates the value of assets financed by

the owner's equity. We obtain the computation by dividing the company's equity by its

total assets. The financial ratio measures the extent to which an owner's investment funds

a company's assets.

DEBT-TO-EQUITY RATIO

The debt-to-equity ratio quantifies the extent to which a company depends on debt

in its operations. It calculates it by comparing the company's total liabilities to its

shareholders' equity. It can help investors identify highly indebted firms that may pose

risks during economic downturns (Fernando, 2023). According to Khaddafi and Ummah

(2014), companies that have a high debt-to-equity ratio (DER) will require assistance in

obtaining additional funding from external sources. An obligation is not inherently

 39

immoral if it is advantageous to its possessor and generates sufficient funds to

consistently cover interest. The debt-to-equity ratio (DER) assesses the potential for

higher profits in comparison to the substantial risk of the company experiencing

significant losses.

SUPPLY CHAIN MANAGEMENT PRACTICES ON FINANCIAL

PERFORMANCE

Companies within the supply chain function as interconnected links, acting as

producers and assemblers in the creation, distribution, and sale of various components

and raw materials. Consequently, the approach advocating for supply chain management

(SCM) prioritizes the development of organizational skills to enhance the company's

financial reports. Amidst a competitive supply chain environment, it is imperative for

small and medium-sized enterprises (SMEs) to enhance their core competencies in order

to enhance supply chain performance and competitiveness (Lee, 2021). Managers must

evaluate whether supply chain management (SCM) can positively influence the

company's financial performance. They are also required to focus their investments in the

supply chain on enhancing competitive advantages and optimizing financial outcomes.

Managers are required to exhibit the positive financial impacts of supply chain

management (SCM) and provide a rationale for the associated costs (Shi & Yu, 2013).
 40

According to Liu et al., economic sustainability reduces process costs, increases

market share, and increases profit. It returns on assets related to the performance's

economic intents. In 2013, the analysis of Demir Pioneers' organic marketplace from the

supply from a management standpoint focused on network structure and essential

activities. Special inventory handling techniques, such as cross-docking, are used, and

transportation is a significant concern. La Rosa (2020) states that reporting, evaluating,

and assessing an organization's financial performance is critical for ensuring its financial

well-being and longevity. Financial performance primarily concerns money, which is

assessed in numbers, so it may be predicted that the more money earned, the better the

financial success appears.

According to Abdel-Kader et al. (2022), the use of supply chain management

(SCM) strategies has a substantial positive impact on financial performance. Activities

such as demand forecasting, inventory management, supplier relationship management,

and customer relationship management are crucial components of supply chain

management (SCM) that positively impact financial performance. Wahdan (2017) asserts

that supply chain management decreases direct expenses by enhancing efficiency and

effectiveness. Effective supply chain management can have a significant impact on a

company's financial performance by generating more revenues and lowering direct costs.

This can lead to a big increase in net income and enhance the company's return on

investment. Kumar and Kushwaha (2018) provided empirical analysis on the correlation

between several supply chain management approaches (CRM, information technology,

and information quality) and the operational effectiveness of fair-priced businesses in

 41

India. The study found that three components of supply chain management (SCM)

practices are strongly and positively correlated with operational effectiveness. The

greater influence of supply chain management on the operational and financial success of

companies demonstrates its increased strategic role. According to the survey regarding

the correlation between supply chain practices and operational results, almost all

companies that improved their supply chain performance experienced more rapid growth

in market capitalization. Cost management involves a greater number of elements as

supply chain management expands along the value chain, and effectively managing

supply chain expenses is critical to a company's financial performance. Supply chain

costs encompass inventory costs, logistics charges, and any other expenses necessary to

fulfill customer needs.

Ting Shen (2020). According to Miraye's 2014 study, supply chain management

techniques are highly associated with profitability, with superior standards leading to

improved profitability. Disruptions in the supply chain regarding customer delivery

could have downstream repercussions for brand reputation, regulatory compliance,

product safety, and other issues. Furthermore, effective supply chain management

lowers companies' finance costs and distribution expenses, enhancing profitability.

PROBLEMS AND LIMITATIONS ON SUPPLY CHAIN MANAGEMENT

PRACTICES

As stated by Durugbo and Al-Balushi (2022), the intricacies of crises compel

supply chain managers to develop strategies specifically designed for crisis situations.

These strategies differ from the usual ones that prioritize competitive priorities. Recent
 42

crises, such as coronavirus outbreaks, large-scale product recalls, and financial crises,

highlight the increasing frequency and seriousness of crises in supply chain

management. These crises provide valuable socioeconomic information on the settings,

priorities, and issues related to supply chain management. Businesses encounter many

obstacles during the epidemic, including disruptions in product supply, shortages of

personnel, diminished consumer demand, and financial strain. Inventory is one of the

most significant assets of the merchandising business and is the primary source of venue.

That is why managing the inventory affects the business's profitability. Failure to

manage the inventory may result in heavy losses to the organization because of spoilage,

loss of customers, and high inventory. One of the challenges in business inventory

management practices is that they rely heavily on traditional inventory management,

which limits them from realizing the maximum potential to increase their profit.

According to Macas et al. (2021), small and medium-sized enterprises (SMEs) typically

do not invest resources in complex systems; instead, they primarily use manual

inventories, an essential enterprise resource planning (ERP) system, or even programs

like Excel that leads to ineffective inventory management.

 43

SUPPLY CHAIN MANAGEMENT PRACTICES OF J&N AUTO AND FISHING

SUPPLY AND ITS FINANCIAL PERFORMANCE FOR THE YEARS 2020-2022

INPUT PROCESS OUTPUT

1. Background Characteristics
of J&N Auto and Fishing Interview with the
Supply. general manager of
1.1 Historical Background J&N Auto and
1.2 Organizational Fishing Supply
Structure
1.3 Technical Structure
2. Supply Chain Management Observation of
Practices of J&N in terms of: financial statement
Improvement of the
2.1 Supplier Relationship
business operation by
Management using POS system and
2.2 Inventory Management Measurement of Inventory Tracker
2.4 Logistics Management (OUTPUT)
financial
2.4 Customer Relationship performance
Management
3. Financial Statements for the
years 2020-2022. Analysis of the
4. Problems and limitations in effects of supply
the operation of the business chain management
in relation to their Supply practices to the
Chain Management financial
Practices. performance
 44

Figure 1. Research Paradigm

Figure 1 shows the study's input, which includes the company's background

characteristics in terms of its historical background, organizational structure, and

technical structure. The data also contains J&N Auto and Fishing Supply's supply chain

management practices, specifically in supplier relationship management, inventory

management, logistics management, and customer relationship management. The input

also included the business's financial statements for 2020–2022 and problems

encountered with supply chain management.

This study seeks to link the variables in each supply chain management practice

to the variables in the company's financial performance and produce a descriptive and

thorough explanation for each variable and its correlation. J&N Auto and Fishing

Supply's financial performance is assessed using financial statement analysis. The

researchers will use a descriptive research method on the accumulated data from the

interview with the general manager of J&N Auto and Fishing Supply, their observations,

and the financial statement for the years 2020–2022 to correlate the variables, arrive at a

coherent conclusion and provide an explanation based on related literature.

The study produced an inventory tracker and POS to improve supply chain

management processes at J&N Auto and Fishing Supply. Its basis is the study of

Mukesh Lal and Apratul Chandra. Shukla (2018) about the Study of Effectiveness of

POS Data in Managing Supply Chain. A point-of-sale (POS) system provides a

computerized business environment that offers real-time information, whereas

traditional cash registers are intricate and have limited storage and data collection
 45

capabilities. The point-of-sale (POS) system also integrates with orders and sales,

enabling more efficient inventory management. Up-to-date inventory information

empowers supply chain managers to make informed decisions on reorder points.

Adequate POS data can be used to improve supply chain management. According to

Edwyne Fernandes (2023), the tracking system industry of inventory study identifies

various significant industry methods that can assist businesses in leveraging their market

position and diversifying their product offerings. It is an effective market research

method for overcoming specific company challenges. This type of innovative market

research produces essential data promptly. It also conducts data-driven research to get

insights into market growth trends. Most of the study's key conclusions are based on

thorough information from primary and secondary sources.

 CHAPTER III

METHODOLOGY

This chapter outlines the specific research methodologies that the researcher will

employ to carry out the study. The key components of the study encompass the research

locale, research design, units of analysis/respondents/treatments, research instrument and

its development, ensuring its validity and reliability, data collection procedure, data

analysis, and the suitable statistical analysis of the data.

Research Locale

As per the Department of Trade and Industry, in 2020, the province of Quezon is

at the forefront of development due to the designation of 11 municipalities, including

Atimonan, as Potential Economic Zones under R.A. 7916, Special Economic Zone Act.

This allows them to actively participate in the rapid industrialization of the region. The

researchers found a willing respondent in Atimonan Quezon, one of the municipalities in

the fourth district of Quezon Province. The respondent's store in Zone IV, Governor

Castro Street Atimonan, Quezon, served as the data collection and interview site. The

researcher examined the study using J&N Auto and Fishing Supply management as

respondents.

Units of Analysis/Respondents/Treatments

The study population was the employees of J&N Auto and Fishing Supply,

specifically the general manager and the owner of the merchandising business.

Convenience sampling was used in the study. It is a non-probability sampling strategy

that involves selecting a study sample based on its ease and accessibility.
 47

Research Design

The researchers utilized a qualitative methodology and a descriptive study

design, with a specific emphasis on collecting, presenting, and analyzing data. The

primary goals were to analyze and evaluate the supply chain management procedures of

J&N Auto and Fishing Supply, as well as assess its financial performance. The

researchers also sought to resolve the difficulty and substantiate and fulfill the study's

objectives.

Research Instrument

The researchers employed an interview guide document and conducted personal

interviews to collect all the necessary data. The primary focus of the study was the

business's supply chain management practices and their impact on financial performance

from 2020 to 2022. The interview guide was derived from the study of "Operation

Management 13th Edition" by Willian Stevenson and included information on the

company's history, organizational structure, technical structure, and supply chain

management procedures. This information was relevant to customer relationship

management, inventory management, supplier relationship management, and logistics

management. It also addressed the constraints and issues associated with the business's

daily operations and these procedures. The researchers also employed the financial

statements of the respondents from the previous four years to evaluate the respondents'

financial performance using financial ratios and to determine the impact of each supply

chain management method on that performance.

 48

Procedure/Data Collection

In gathering the data, the researcher sought permission from the owner of J&N

Auto and Fishing Supply through a letter with the approval of the research adviser to

conduct a study wherein the researchers explained that the information gathered through

this study will be kept at utmost confidentiality and will be used solely for academic

purposes. A structured interview serves as a tool for gathering the data for this study.

The researcher employed an interview guide document to collect all the required data,

with a primary emphasis on the financial performance of the business and supply chain

management practices. In order to accomplish the objectives, the data was collected,

processed, and assessed in the most impartial and accurate manner possible.

Data Analysis

The study employed various financial ratios to evaluate the economic

performance of J&N Auto and Fishing Supply over 2020-2022. These ratios offer a

thorough examination of the company's financial health and operations, encompassing

critical factors such as profitability, liquidity, activity, and stability.

Profitability Ratio

Gross Income
Gross Profit Margin=
Net Sales

Net Income
Net Profit Margin=
Net Sales

Net Income
Returnon Asset (ROA)=
Average Total Assets
 49

Liquidity Ratios

Current Assets
Current Ratio=
Current Liabilities

Current Assets−Inventory
Quick Ratio=
Current Liabilities

Activity Ratios

Cost of Sales
Inventory Turnover=
Average Inventory

365
Average Sales Period=
Inventory Turnover

Net Sales
Total Assets Turnover=
Average Total Assets

Net Sales
Receivable Turnover=
Average Accounts Receivable

365 days
Average Collection Period=
Accounts Receivable Turnover

Stability Ratios

Total Liabilities
Debt Ratio=
Total Assets

Total Equity
Equity Ratio=
Total Assets

Total Liabilities
Debt ¿ Equity=
Total Equity
50
 CHAPTER IV

RESULTS AND DISCUSSIONS

This chapter presents the findings and analysis of the gathered data by the

researchers. The statistics presented in this chapter were derived from the study of

financial data and interview responses collected from J&N Auto and Fishing Supply.

This chapter elucidates the impact of the business's supply chain management techniques

on its financial performance.

I. Company Profile

J&N Auto and Fishing Supply's business profile was identified based on its historical

history, financial structure, and technical structure.

Background of the Company

Established in 1998 by Jenerchito and Nenita Jacinto, J&N Auto & Fishing

Supply serves Atimonan, Quezon, and beyond as the region's dedicated automotive and

fishing equipment supplier. It is operating with a 12-person workforce from their

Governor Castro St. Brgy. Zone IV location, J&N, distinguishes itself from hardware

stores by specializing in auto parts, accessories, maintenance products, fishing gear, bait,

tackle, and related accessories. Over the decades, the business has achieved steady

growth through its commitment to exceeding customer expectations in three key areas:

value pricing, product quality, and service. Notably, J&N maintains three warehouses in

Atimonan to support its single storefront, strategically catering to customers across

Quezon and Bicol Province.

 51

Figure 2. J&N Auto and Fishing Supply’s Products

 52

Organizational Structure

GENERAL

MANAGER

FINANCE OPERATION QUALITY

ADMINISTRATOR HEAD
SUPERVISOR

SALES LADY/ QUALITY STAFF/

INVOICE CLERK SALESMAN INSPECTORS

PACKER

DRIVER

Figure 3. Organizational Structure

The general manager oversees daily operations in the auto and fishing retail

industry, including managing staff, inventory, finances, and customer services. The

general manager ensures the smooth running of the store, from opening and closing to

handling deliveries and maintaining equipment. Regarding auto supplies, the general

manager knows various car parts and accessories and manages repairs or installation
 53

services offered by the store. On the other hand, in fishing supplies, the general manager

has enough expertise to understand different types of fishing gear, lures, bait, and others.

Finance administrators and invoicing clerks are essential to the financial teams at

J&N Auto and Fishing Supply. Their precision, focus on details, and organizational

aptitude greatly enhance the company's profitability and success. To be more precise, the

invoice clerk organizes and keeps track of invoices, receipts, and other financial papers,

while the finance administrator oversees the company's entire financial administration.

The operations chief, salesperson, packer, and driver are essential to J&N's

overall success, as they collaborate to guarantee a seamless operation and a positive

customer shopping experience. The operations director frequently serves as the

orchestrator of the organization, overseeing inventory and guaranteeing that the

appropriate products are available in the appropriate quantities at the appropriate

periods, ranging from automobile batteries to fishing rods. The operation head also

oversees supplier deliveries, coordinating with drivers to guarantee prompt arrivals to

satisfy client requirements. Conversely, the salesman and salesladies serve as the store's

welcoming front desk representatives, forming bonds with customers and assisting them

in making the ideal buy. They are highly knowledgeable about the goods they sell,

covering everything from the intricate details of fishing lures to the precise specs of auto

parts. On the other hand, the packers are the meticulous brains working behind the

scenes to ensure customer items are correctly and effectively chosen, packed, and ready

for delivery or pickup. They identify things in the warehouse, attentively read orders,

and package them securely to guard against damage during transit. Meanwhile, drivers
 54

are an essential link between J&N and the consumers; they ensure that the goods arrive

at their destination on time and undamaged.

Quality control is paramount in the fast-paced auto and fishing retail industry.

Every tire, fishing rod, and engine part must meet the expected standards to ensure

customer satisfaction and safety. That is where the quality supervisor and quality

staff/inspector come in, playing crucial roles in safeguarding the quality of products

sold. The quality supervisor acts as the vigilant guardian of quality standards. They

oversee the entire quality control process of J&N Auto and Fishing Supply, from setting

quality benchmarks to implementing inspection procedures and ensuring compliance. At

the same time, the Quality staff/inspectors are the boots on the ground, meticulously

examining products at various stages, from receiving deliveries to pre-sale checks. They

are the first defense against defective or substandard products reaching customers.
 55

Technical Structure

FISHING

SUPPLY

STORAGE

CASHIER/OFFICE
AUTO SUPPLY
COUNTER
STORAGE FISHING SUPPLY
STORAGE

HARDWARE

SUPPLY

Figure 4. Physical Store

 56

FISH

FISHING SUPPLY

STORAGE AREA
P

AUTO SUPPLY

STORAGE AREA
 57

Figure 5. Storage Area

Figure 4 represents the physical store of J&N Auto and Fishing Supply at Brgy.

Zone IV Governor Castro Street, Atimonan, Quezon. Its counter is in front of the store,

entertaining walk-in customers. The space in front of the store is used for packing and

testing of products. Inside the store is a cashier/mini office intended to issue customer

invoices. The physical store comprises storage for fishing, auto, and hardware supplies.

According to the general manager, the stocks for auto, fishing, and hardware stored

inside the physical store either sell the fastest or consume minimal space.

Figure 5 represents the storage area of J&N Auto and Fishing Supply. The

business has three storage areas. The first one is located across from the physical store of

J&N Auto, and Fishing Supply is also at Governor Castro St., Brgy. Zone IV Atimonan,

Quezon. This storage comprises all the parts and materials for auto supply. The second

storage area is located at Sergio Osmeña St. Brgy. Zone II, Atimonan Quezon. They

store all the fishing supplies in this area since it is more spacious than the other storage

areas. Due to their seasonal demand, fishing supplies occupy the larger warehouse for

optimal organization and storage. The third storage area is located at Bonifacio St. Brgy.

Zone III Poblacion. This is where the business parks all of their delivery vehicles.

Furthermore, they also store some of their inventory, particularly those for fishing during

peak season.
 58

Procurement Process

Demand Planning
and Forecasting

Selecting Suppliers

Sending Purchase
Requisition

Negotiating prices
and terms

Issuing purchase
order

Invoice processing
and payment

Order Tracking

Receiving and
inspecting
 59

Figure 6. Procurement Process

Figure 6 showcases J&N Auto and Fishing Supply's dynamic procurement

process. According to the general manager, it starts with forecasting demand,

anticipating clients' needs and wants, and estimating future demand for various products.

Next comes the process of identifying and choosing suppliers. In this step, prospective

suppliers are investigated and assessed according to price, reliability, quality, and

timeliness criteria. The general manager will next review the purchase requisition, which

includes information on the products they order, like the product's name and kind,

quantities, preferred delivery dates, and others. The next step is to negotiate terms and

prices. This includes obtaining bulk discounts, longer payment terms, or packaged offers

for product combinations. The selected supplier will receive official purchase orders

after the negotiations. These binding contracts specify the amount, quantity, delivery

date, and payment conditions. The processing and payment of the invoices come next.

The supplier's invoice is checked for accuracy and compared to the purchase order and

the delivered products. The agreed-upon terms are adhered to, and the supplier receives

timely payments after completing the appropriate approval procedures. The next step is

order tracking, which entails carefully monitoring the supplier's product order status. It

guarantees on-time delivery and prevents inventory shortages that can let down

customers. Upon arrival, the delivered goods are rigorously inspected to ensure they are

defect-free and meet the requirements stated in the purchase order. Items that are broken

or have discrepancies are immediately reported to the supplier for settlement.

 60

Sales Process

WALK-IN DELIVER

Preparation of
Identify the need
purchase requisition

Checking of Payment

availability and processing/Clearing of

specifications checks

Preparation and Final

Payment processing Inspection

Packing
Final inspection

Delivery
Packing

Customer feedback
 61

Figure 7. Sales Process

Figure 7 shows the sales process for J&N Auto and Fishing Supply. The general

manager stated that their sales process consists of walk-ins and online transactions to

cater to customers. In walk-in transactions, the first thing to do is to identify the needs of

every individual. The salesman and saleswoman assist the customers in identifying what

products they want to purchase. Then, the salesman and saleswoman will state the

availability and specification of the product units that the customers want to purchase.

Next is payment processing, which the invoice clerk will issue. Before the products are

handed to the customers, the business performs a final product inspection, which the

quality staff or inspector will do. Moreover, if the product requires testing, the inspector

will also test it. The purpose of the final inspection is to check if the products are in

perfect condition, the volume of the products is complete, and whether the products meet

the specifications agreed upon with the customers to guarantee satisfaction. The

inspector will then hand the items to the packer to pack them.

For online transactions, the general manager entertains calls and messages from

customers who want to purchase online. Those who transact online are usually

wholesalers and retailers in different parts of Quezon Province and the Bicol region.

These customers usually purchase every 2 to 3 times a month. The general manager will

then prepare a customer order request that specifies the items, quantity, unit cost, and

total cost of the product ordered. After the customer confirms the order request, the

payment will be processed. The payment will be made through bank transactions, which
 62

the finance administrator will handle to ensure the checks are cleared. After clearing of

checks, the product will be prepared and will undergo a final inspection by the quality

staff or inspector to check if the products are in perfect condition, the volume of the

products is complete, and whether the products meet the specifications agreed upon with

the customers to guarantee satisfaction. The next step will be packing and delivering

orders. Lastly, the general manager will ask for customer feedback on the performance

of their products by contacting them through calls, messages, and personal interaction.

II. Supply Chain Management Practices

Supplier Relationship Management

Supplier relationship management (SRM) is critical to discovering and selecting

the best suppliers for the company. It goes beyond selecting the cheapest alternative and

develops strategic partnerships with critical suppliers to help the company's long-term

success. According to the interview material, J&N Auto and Fishing Supply have

organizational processes that begin with finding qualified suppliers.

First, J&N Auto and Fishing Supply emphasized aiding supplier identification

and selection. The company has multiple suppliers for automotive and fishing supplies.

They choose their suppliers based on their price terms and whether they are direct

importers or direct distributors. As the respondent stated:

“Unang factor sa pagpili ng suppliers ay kung direct importer ba sila or direct

distributor dito sa region 4A. Mahalaga yung malaman para makasabay ka sa market

kasi pag sa direct importer ka or direct distributor kumukuha ng supply, usually yong

patong non sa produkto ay mababa pa. Habang nagpapasa-pasa kasi ang produkto
 63

nagkakaron din yan ng patong sa presyo. Also, isa pang factor na pagpili ay yung price

terms nila.” (Christopher Galero, personal interview)

They identify and select their suppliers thoroughly because investing and finding

the right partners pave the way for the business's flourishing and sustainable future.

First, they select whether it is a direct importer or distributor because it helps ensure the

materials' authenticity and the products' quality. It will also give the business an

advantage, allowing it to capitalize on market trends and reach customers faster than its

competitors. They also consider the price terms of the suppliers and match them to their

allotted budget.

The company's objectives, goals, and risk tolerance must be meticulously

evaluated to identify and select suppliers on a continuous basis. The organization can

achieve substantial cost, efficiency, competitiveness, and long-term success benefits by

dedicating time and effort to this process. Second, J&N Auto and Fishing Supply invest

in strong purchasing strategies and processes to help them create a foundation for their

business's success. As the respondent mentioned:

"Unang tinitingnan namin bago kami mag purchase ay yung stocks namin, kung

necessary ba na mag-order na ulit kami. Next is if legit ba na importer yung kukuhanan

namin and then if legit din yung mga piyesa nila para sigurado kami na yung mga

dadating sa amin na products ay walang mga factory defects and hindi delayed."

(Christopher Galero, personal interview)

The company's purchasing process starts with demand forecasting, seeking a

direct importer and supplier, sending a purchase requisition, negotiating prices and
 64

terms, issuing a purchase order, processing invoices and payments, tracking orders, and

receiving and inspecting goods. Successful purchasing strategies and processes require a

data-driven, strategic approach focusing on quality, cost optimization, and long-term

growth.

J&N Auto and Fishing Supply have a total of twelve (12) suppliers: five (5) for

their automotive supply, one (1) of which is directly from China, seven (7) for their

fishing supply, and three (3) of those are also from China. J&N has no contracts or

memorandums of agreement with its suppliers; its negotiation process is based on their

face-to-face conversations. When the suppliers need more stock of the materials, the

business looks for other suppliers.

Third, J&N Auto and Fishing Supply assesses the performance of their suppliers.

The general manager states that they evaluate the supplier's performance based on

pricing, quality, and delivery time. Price is undoubtedly a significant factor. A thorough

price evaluation can lead to more informed decisions that ensure the best fit for J&N's

needs and contribute to the business's sustainable success. Assessing the quality of the

products is also one of the most crucial aspects of evaluating a supplier's performance. It

should be a systematic and data-driven process as it will evaluate product defects and the

supplier's legitimacy. As the respondent stated:

"Kaya mahalagang ma-assess kung yung importer ay legit, kasi kung legit sila

hindi naman yun magpapadala ng mga patapon na products dahil magiging kasiraan

nila yun. It just means na kapag mababa ang credentials nila, magiging mababa din ang
 65

sales nila kasi nagrereflect sa kanila yong behavior nila as a supplier, na hindi sila

maayos kausap.” (Christopher Galero, personal interview).

According to the general manager, delivery time is a significant metric for

evaluating a supplier's performance. By implementing precise delivery times, tracking

performance data, and communicating effectively with suppliers, J&N can ensure

reliable deliveries, build strong partnerships, and drive long-term value for the business.

Finally, J&N Auto and Fishing Supply seeks long-term supplier connections.

Building and nurturing long-term relationships with suppliers goes beyond the mere

transactional aspect of purchasing goods. It is about fostering trust, collaboration, and

mutual benefit, leading to a dynamic partnership that drives efficiency, innovation,

resilience, and sustainable success for the business in the long run. The respondent

explained:

“In striving for long term relationship sa aming supplier, ang factor na

pinapahalagahan namin dito ay yung payment terms. Kailangang makabayad kami on

time and at the same time ay ma-meet namin yung terms nung importer or supplier

pagdating sa kung papaano nila gustong mabayaran.” (Christopher Galero, personal

interview).

Inventory Management

Inventory management aids businesses in determining the appropriate quantity

and timing of stock orders, as per (S.R. Kasisomayajula, 2014). First, J&N Auto and

Fishing Supply monitor their stocks because they play a crucial role in the effective day-

to-day operation of the business. They keep a constant pulse on their available goods and
 66

ensure a smooth flow from procurement to customer fulfillment. In monitoring their

stocks, they base them on their customers' orders. When someone buys a specific item

from the store, that is the only time they can check if it is in low or high supply. As the

respondent explained:

"Every time na may bumibili, tinitingnan namin kung maunti na or marami pa

ang isang klase ng item kasi hindi naman siya naka-program sa computer e, so ang

tendency is to estimate dahil wala naman kaming specific na inventory management na

sinusunod." (Christopher Galero, personal interview).

By monitoring the stocks, J&N gains insights and control over its inventory. This

empowers them to make decisions, improve operational efficiency, reduce costs, and

ultimately contribute to a thriving and adaptable business.

Second, J&N Auto and Fishing Supply ensure that their inventory control

strategies are effective because they create a foundation for sustainable success by

optimizing efficiency, mitigating risks, enhancing competitiveness, and driving long-

term growth for the business. As the respondent mentioned:

"Sa inventory control strategies, we base on the sales of a specific type of item

para malaman namin kung aling items ang fast moving at hindi. Sa ganoong paraan, we

can list kung anong mga products ang dapat hindi kami nawawalan sa aming storage or

stock room." (Christopher Galero, personal interview)

Third, J&N Auto and Fishing Supply keep their products in separate storage

rooms because it significantly benefits physical security and operational efficiency. As

the respondent stated:

 67

"Mayroon kaming magkakahiwalay na stock rooms para sa fishing supply, auto

supply, and hardware materials kaya nagiging madali para sa amin ang pag tingin sa

level of stocks namin specifically doon sa mga fast moving items kasi araw-araw

nakikita namin yung mga stocks every time na may bumibili. At the same time, kapag

napapansin namin na maunti na yung specific na item, nililista na namin iyon para sa

susunod ay yun na ang io-order." (Christopher Galero, personal interview)

Keeping products in different stock rooms based on their usage and type helps

J&N with regulatory compliance and traceability of each material.

Finally, J&N Auto and Fishing Supply secure their items in demand for their

customers' satisfaction because keeping readily available items is not just about

preventing stockouts but about creating a customer-centric approach that prioritizes

satisfaction, builds trust, and drives positive business outcomes. As the respondent

stated:

"Nagho-hoard kami ng mga items na in demand para ma-meet namin yung mga

needs and wants ng aming mga customers. Pagdating sa auto supply, ang mga items na

madalas namin i-hoard ay log screw, eye terminal, motor oil, inverted knot, clutch

spring, etc. Samantalang sa fishing supply naman ay nylon, bait, fishing hook, epoxy

paint, stainless square head, etc. Tapos sa hardware ay common nail, fuse metal screw,

led bulb, flyer, etc. In addition, we hoard items based on our past sales and take note of

the fixed seasons for some of the materials." (Christopher Galero, personal interview)

Logistics Management
 68

First, J&N Auto and Fishing Supply ensures that enough products are in stock.

Distribution management is the process of moving completed items or products from a

producer or supplier to the consumer. The general manager stated that the company's

transportation and distribution management practices are walk-in and by-delivery. They

have enough vehicles to accommodate all the clients, and time management is also

necessary. As the respondent explained:

"Yung iba ay walk-in at yung ibang malalayo ay by deliver and sagot ng

customer ang tracking. Customer din ang magdedecide kung kelan nila gusto ideliver

basta bayad na yung ni-purchase nila bago namin ideliver. Mayroon kaming sasakyang

pang-deliver lang sa malapit at mayroon ding pang-malayuan and kailangan time

management." (Christopher Galero, personal interview).

Second, in business practices, a final inspection is performed to guarantee that

the products fulfill the requirements and safety standards agreed upon by the customer

and seller. A final quality control inspection is performed before a product is shipped. It

enables the business to detect any quality control concerns that may have gone unnoticed

earlier in manufacturing.

During the final inspection, there are three processes. The inspection team's

responsibility is to meticulously go through each item, detailing each criterion and

looking for any cosmetic or functional faults. If any faults are discovered, the objects are

either rectified or rejected. To ensure product safety while being transported, it

adequately prepares and packs the product, placing it in appropriate boxes. These are
 69

only a few of their ways of guaranteeing that the products are not damaged before being

delivered to clients. As the respondent mentioned:

“Kailangan ay good condition ang mga produkto hindi basta mo lang sya

idedeliver. Kung kailangang testingin ay ite-test kung ayaw naman ng customer na

ipatest ay bibigyan ng warranty yung product. Kung sino nag-resibo iba dapat ang

magi-inspect, iba din dapat ang mag-kakahon at mag-gagayak bale tatlong proseso

yun.” (Christopher Galero, personal interview)

Third, consumers and clients are exceedingly satisfied with punctual deliveries.

The delivery process will be made enjoyable by the courteous courier services, and they

will be delighted to receive their items on schedule. Customers are more inclined to

continue the business through good and bad times if satisfied. Customer loyalty is

something that cannot be measured. The disadvantage was that customers could

sometimes be upset because of the delay during delivery, and they may lose income. As

the respondent stated:

“Syempre mahalaga yun, natutuwa ang customer kapag on time naidedeliver at

nagkakaroon ng good relationship towards sa customer at may tendency na lagi na sa

amin kumukuha ng mga products. Disadvantages is parang wala naman since we value

our customers siguro ay yong part lang na disappointed kapag hindi na-idedeliver on

time pero nagbibigay kami ng reasons bakit hindi nadeliver on time and konting oras

lang naman pag nadedelay.” (Christopher Galero, personal interview)

Fourth, J&N Auto and Fishing Supply has a customer order cycle time between

placing and receiving the item. The client order cycle involves processing, preparation,
 70

and shipment. The estimated time before the products arrive in the customer's area is

approximately 2 hours if it is across the sea, and the basis for the arrival of the products,

if it is far, is through Google Maps. As the respondent said:

"There are two types of delivery, mayroong malapit at mayroon ding malayo.

Kapag malapit tawid dagat lang siya inaabot ng 2hrs within that day, if malayo naman

kung ano ibinibigay ng google maps yun ung nasusunod, madedelay minsan pero

konting oras lang.

Bumabase rin kami sa maps kung gaano katagal magiging delivery time or estimated

time of arrival. Naka-adjust na din yung oras namin kapag mayroong time na kakain or

magpapahinga para maiwasan ang delay ng pagdating ng products." (Christopher

Galero, personal interview)

The four primary modes of conveyance (or types) in the logistics industry are air,

road, sea, and rail. Road and sea are the modes of conveyance that J&N Auto and

Fishing Supply employ to deliver products to customers. When arranging the shipment

method, it is essential to carefully consider the mode of transportation. In addition to

expenses, the mode of transportation must be determined by the urgency of the cargo,

the value of the products being delivered, and the size and weight of the goods. The

mode of transportation for traversing the sea is by boat, with a designated courier. An

individual responsible for the products on the ship is employed by this courier to

guarantee that they are in appropriate condition. Tracking is the responsibility of the

consumer. The business delivers the products to the customer via road. Per the

respondent's statement:
 71

“Kapag tawid dagat ang mode of transportation is bangka may certain courier

dito. Itong courier na ito is may taong namamahala sa mga products sa sasakyang

pandagat at sila na ang bahala doon. Ang customer ang nagso-shoulder ng tracking and

naka-bukod ito ng resibo sa binabayaran nila sa amin kaya wala na silang babayaran

pa pagdating sa courier kami na ang bahala magasikaso. Kapag through land ay kami

ang nagdedeliver.” (Christopher Galero, personal interview)

Choosing the correct delivery vehicle for the company can be a critical decision

that affects the business's bottom line, customer satisfaction, and overall performance.

J&N Auto and Fishing Supply have two delivery vehicles, a multi-cab and a closed van.

The capacity of a multi-cab is approximately 2000 to 3000 kilograms, while that of a

closed van is 4000 to 5000 kilograms. As the respondent stated:

"Dalawa ang sasakyan namin pangdeliver, ang capacity ng multicab ay mababa

lang inaabot ng 2000 to 3000 kilograms habang yung isa ay closed van inaabot ng 4000

to 5000 kilograms." (Christopher Galero, personal interview)

Lastly, product safety is an essential feature of logistics management, particularly

in transportation. Whether delivering fragile items, dangerous materials, or high-value

products, the business must ensure they arrive safely. The company always double-

checks the number, quality, and condition of the products and the accuracy and

completeness of the documentation and labeling. The business also ensures that the

packing is undamaged and secure by the shipping mode and destination. They also

document and report any faults, damages, or discrepancies they discover and, if

necessary, take corrective action. The respondent explained:

 72

"Palaging naka-box, naka-packaging, naka-balot at maayos ang

pagkakasalansan ng lagay sa sasakyan bago ideliver." (Christopher Galero, personal

interview)

Customer Relationship Management

The primary customer of J&N Auto and Fishing Supply consists of local

customers. A local firm possesses a clear and specific emphasis, a well-defined target

market, and a stronger sense of personal branding. Consumers go for organizations that

inspire trust, and establishing a connection with a nearby, in-person business is

considerably more convenient. There exist wholesalers, small companies, and retail

clients. According to the respondent:

"The main clients of the company is only in local. Wholesaler ang main clients

and sila mismo ang dinideliveran namin which is kadalasan mga maliliit lang din na

hardware store and auto supply. Sila yung mga sole proprietorship na mas maliliit sa

amin na store. Mayroon ding walk-in na tinatawag na mga retailers." (Christopher

Galero, personal interview)

The order management department is responsible for accepting, monitoring, and

completing consumer orders. The order management procedure commences at

placement of an order and concludes upon the consumer's receipt of the package. J&N

Auto and Fishing Supply have processes or steps for making an order and delivering it:

communicating, issuing receipts, clearing, and then delivering. Some terms need to be

considered when delivering the location and the time. In walk-in purchases, there are

normal circumstances for buying the products. As the respondent explained:

 73

"Una muna is magchachat sa amin, then reresibuhan, tapos sa bangko

processing or clearing. Kapag cleared na ang cheke, pwede na namin siyang i-deliver

pero depende rin sa location at time. Kapag kaya at abot pa sa oras maide-deliver na

namin sya within that day pero pag di na kaya kinabukasan na. Then cocontact-in muna

namin ang customer para ipaalam. Kapag walk-in naman ay edi yung normal na

scenario lang ng pagpurchase." (Christopher Galero, personal interview).

Contracts are essential to supplier agreements since they define both parties'

responsibilities and rights. They also divide the risk among the parties. However, in J&N

Auto and Fishing Supply, there are no contracts or memoranda of agreement with the

suppliers, only if there is a purchase in cases where suppliers have terms, and it depends

on the discussion of two parties. Contracts are preferred over customer purchase orders.

The business does not have contracts or memorandum of understanding with its

customers; instead, they receive a purchase order from them. Most of the time, there are

no specific contracts or memoranda of agreement because the customers use cash. As the

respondent mentioned:

“Wala namang memorandum of understanding, basta pag umorder lang sila

nagbibigay kami o sila ng terms at napagkakasunduan naman ito ng parehong panig,

but mostly through cash ang ginagawa ng mga customers kaya maayos ang usap.”

(Christopher Galero, personal interview).

A customer is an individual or business that buys goods or services from another

entity. J&N Auto and Fishing Supply has individual customers. Customers are vital

because they drive revenue. Loyal customers are the most crucial sector to please and
 74

should be at the top of any company's priority list. Furthermore, devoted customers are

more inclined to recommend the company's items to others. Need-based customers are

motivated by a specific requirement. In other words, they rush into the store, get what

they need, and then leave. These customers need help upselling because they purchase

for a specific necessity or event. Small entities have also purchased the company and are

starting to create businesses related to this kind of business. As the respondent said:

"Parehas ang customer namin, individual and smaller businesses. Yung smaller

businesses is store din sya na parang katulad din namin pero maliit lang sya na

kumukuha sila ng bultohan o maramihan para ibenta rin. Ito ung mga nasa malalayong

lugar halimbawa Bicol at tawid dagat pa na nagnanais ring magkaroon ng negosyo sa

kanilang lugar." (Christopher Galero, personal interview)

The number of times clients buy from the business in a certain period is called

purchase frequency. This data is critical in understanding the client retention rate, the

customers' purchasing habits, and even the degree to which they are satisfied. Retailers'

daily purchases depend on their needs for their respective work and doings.

Simultaneously, wholesalers visit 2-3 times every month as they are individuals or

businesses that sell goods in large quantities to multiple retail outlets or shops for the

purpose of resale, either directly or through an intermediary. Wholesalers can provide

their products at a reduced price due to their ability to sell in large quantities, resulting in

less handling time and expenses. According to the respondent's statement:

"Kapag mga walk-in ay everyday sila bumibili depende sa pangangailangan

pagdating sa kanilang hanapbuhay kung araw-araw nila kailangan araw-araw din

 75

silang napunta sa amin. Kapag naman yung mga wholesalers ay 2-3 times a month sila

bumili bultohan sila kapag bumibili" (Christopher Galero, personal interview).

J&N Auto and Fishing Supply always meet the demands of their customers.

Companies will be able to develop their business models in ways that will increase

profitability and sales if they understand the wants of their target demographic. Meeting

consumer demand will boost customer satisfaction and retention, allowing brands to

retain long-term profitability. However, there are occasions when we cannot provide

what other clients desire or look for at Auto Supply since the model, they are looking for

is too old, and we no longer have inventories like that. It also depends on the customer's

location and the products' arrival time. Sometimes, demand is not met due to a lack of

stocks in the market, which is not controllable. As the respondent mentioned:

"Oo syempre, pero mayroong time na hindi namin nabibigay yung gusto o hanap

ng ibang customer sa Auto Supply dahil sobrang outdated na noong model na hanap

nila pagdating sa mga Auto parts or supply and wala na kaming stocks ng ganoon, hindi

na kami kumukuha dahil mas priority namin na mga model ay yung latest year dahil yun

yung in demand. Depende rin sa location ng customer, if willing to wait saka namin siya

ioorder sa market and also binibigyan namin sila ng options para ma-solusyonan or

ma-resolve ung certain demand na kailangan nila. The cause kaya minsan hindi rin na

me-meet yung demand is sometimes out of stocks na sa market." (Christopher Galero,

personal interview)

J&N Auto and Fishing Supply asked for the customers' phone numbers to ensure

that their clients are satisfied and happy with their products through follow-up
 76

procedures to establish methods to improve their products continuously. They do follow-

up procedures with customers, such as asking for their feedback on product quality or

inquiring about the products they receive. Engaging in post-sale customer follow-up can

enhance the company's provision of exceptional customer care. Customers are likely to

exhibit greater loyalty towards organizations that provide superior products and services

and treat their clientele with respect. Contacting a customer after a sale might help the

business determine whether they have any lingering or current problems with the

product or service. When following up proactively, the management can solve issues

before they get larger, which can harm the connection with clients. As the respondent

said:

"Yes, hinihingi namin ang number ng customer para malaman namin kung

maganda ba ang perfomance ng isang produkto na ni-purchase nila and para malaman

din namin kung may defects ba para maagapan ito." (Christopher Galero, personal

interview)

Most of the time, there are few returns from customers since they aim to have no

defective products. If there are returns of products, it is because of factory defects that

were not immediately seen or noticed in the final inspection. J&N Auto and Fishing

Supply receives approximately 50–80 monthly items from customer returns. As the

respondent explained:

"Madalang may magbalik ng returns ang customers at kung mayroon man ito

yung mga products na factory defects na hindi agad nakita or napansin and
 77

approximately 50-80 times a month nagre-range ang return." (Christopher Galero,

personal interview)

J&N Auto and Fishing Supply seek long-term client relationships. Giving

customers a decent product, delivering on time, and charging a reasonable price all assist

the company in striving for a long-term customer relationship. Long-term success

requires businesses to focus on creating client connections, providing the highest level of

satisfaction, and gaining a loyal customer base. Good service, communication, and

dedication are the requirements to acquire long-term relationships. The discounts and

incentives the company gives customers are also significant. Long-term client

connections benefit customers and suppliers and are vital in the company's supply chain

management. As the respondent said:

“Magandang serbisyo, pakikisama, kapag wala samin nakukuha ay

hinahanapan namin sila sa iba. Kapag nasa lugar nila ang customer at malayo sa

mismong tindahan namin. Minsan kailangang kailangan agad nila ng produkto at

magagawan ng paraan ay kami na ang nagdadala para hindi na sila pumunta samin.

Mahalaga din ang discounts and incentives kasi mas lalong naeenganyo ang customer

na sa amin bumili.” (Christopher Galero, personal interview).

Building a functioning customer relationship is critical for a company's long-term

success. Strong client relationships will assist the company in a variety of ways. They

boost the worth of their company by fostering goodwill. Businesses must prioritize

positive consumer interactions to achieve profitability and success. The business can
 78

generate additional revenue by fostering customer relationships, which in turn

encourages recurrent visits. As the respondent mentioned:

“Mahalaga yong may magandang samahan kayo ng customer mo syempre para

mapangalagaan ang sales ng tindahan o negosyo at ma-maintain ang benta or yung

flow at ganda ng bentahan.” (Christopher Galero, personal interview)

Lastly, if any exist, J&N Auto and Fishing Supply handles client inquiries and

answers consumer complaints. They are constantly willing to answer consumers'

questions and strive to enhance their products. J&N Auto and Fishing Supply receives

customer complaints for incorrect delivery, incorrect goods, and inadequacy. According

to the management, it is common for a business to have clients who have problems. To

resolve it, the company provides and examines the problem before replacing or repairing

the device. Following that, they attempt to ensure that the same error or problem is not

repeated. As the respondent explained:

“Mayroon, halimbawa maling deliver or maling items o di kaya ay kulang ang

naipadalang items. Kung kayang gawan ng paraan ng araw na din na yun na maideliver

at maibigay agad kung ano man yung kailangan, kung ano man ang complaint nila

ginagawan namin agad ng paraan para maiayos.” (Christopher Galero, personal

interview)
79
 80

III. Financial Performance

VERTICAL AND HORIZONTAL ANALYSIS

A. Vertical Analysis

Vertical analysis is an accounting tool that enables proportional analysis of

financial statements. Every line item on a financial statement is entered as a

percentage of another item in performing this analysis. This method is done to

ascertain and understand relative proportions of the balances of each line items of

J&N Auto and Fishing Supply for the years 2020, 2021, and 2022. Table 1 shows the

vertical analysis of the balance sheet with the total assets and total liabilities and

equity as the base amount, while Table 2 shows the analysis of the income statement

with the net sales as the base amount.

 81

Table 1. Vertical Analysis of Balance Sheets Years 2020-2022

J&N Auto and Fishing Supply

STATEMENT OF FINANCIAL POSITION
For the year ended December 31

2022 % 2021 % 2020 %

ASSETS
Current Assets
Cash ₱ 198,096 1.10% ₱ 84,370 0.48% ₱ 110,170 0.63%
Account Receivables 155,040 0.86% 172,060 0.97% 150,220 0.86%
Inventories 10,357,811 57.65% 9,703,650 54.85% 9,035,950 51.62%
Total Current Assets 10,710,947 59.61% 9,960,080 56.30% 9,296,340 53.11%

Noncurrent Assets
Property, Plant and Equipment 7,256,000 40.39% 7,732,000 43.70% 8,208,000 46.89%

TOTAL ASSETS 17,966,947 100.00% 17,692,080 100.00% 17,504,340 100.00%

TOTAL LIABILITIES AND

EQUITY
Current Liability
Trade and other payables 1,505,000 8.38% 1,663,028 9.40% 1,543,235 8.82%

Non-current Liability
Loan Payable 8,625,064 48.01% 8,921,395 50.43% 9,160,646 52.33%

TOTAL LIABILITIES 10,130,064 56.38% 10,584,423 59.83% 10,703,881 61.15%

Equity
J&N, Capital 7,836,883 43.62% 7,107,657 40.17% 6,800,459 38.85%

TOTAL LIABILITIES AND

17,966,947 100.00% 17,692,080 100.00% 17,504,340 100.00%
EQUITY

The table shows the vertical analysis of Balance Sheet for the years 2020 to 2022

of J&N Auto and Fishing Supply. The analysis shows that the inventories which consist

of all the goods held for sale has the most significant percentage of total assets over the

years, followed by the percentage of Property, Plant and Equipment which consist of all

the equipment, delivery vehicles and warehouse of the business. The inventory

percentage has increased by 3.23% in the year 2021 and 2.80% in 2022 which means
 82

that the company has bought more goods held for sale during the mentioned years. The

percentage of property, plants and equipment has decreased over the years due to

depreciation. This implies that the business did not purchase any additional PPE for the

last three years. The researchers also observed that there have been fluctuations in both

cash and receivables of J&N Auto and Fishing Supply. In the year 2021, the percentage

of receivables has increased while the percentage of cash has decreased. This data means

that the portion of sales on account has increased which resulted to a higher receivable

for year and a lower cash. On the other hand, the data in 2022 shows that the business

was able to collect some of its receivables and lessen the sales on account which resulted

to a lower receivable and a higher cash.

In terms of liabilities, loan payable has the most significant portion of the

liabilities which is due to the previous financing done by the business. The percentage of

current liabilities ranges from only 8% to 9% of the total liabilities and equity over the

years. Considering both the percentages of total current assets and total current liabilities,

the researcher concluded that the business is highly liquid and can settle its current

liabilities using its current assets resources.

Lastly, the researcher also noticed that the total liabilities continue to decrease

through the years while the total equity continue to increase. Even though the portion of

the total liabilities is still high compared to the total equity, the business is making an

effort in lowering financing by borrowings though the business still need to make further

effort to strike the balance between their financing using borrowings and funding using

their capital.
 83

Table 2. Vertical Analysis of Income Statement Years 2020-2022

J&N Auto and Fishing Supply

STATEMENT OF INCOME AND EXPENSES
For the year ended December 31

2022 % 2021 % 2020 %

SALES ₱15,831,146 100.00% ₱14,515,124 100.00% ₱12,144,614 100.00%
(14,015,75 (13,147,791 (11,200,
COST OF SALES 7) -88.53% ) -90.58% 766) -92.23%
943,8
GROSS PROFIT 1,815,389 11.47% 1,367,333 9.42% 48 7.77%

OPERATING
EXPENSES
Salaries and Wages 255,348 1.61% 250,188 1.72% 238,899 1.97%
Communication, Light and
Water 155,071 0.98% 152,726 1.05% 160,313 1.32%
Taxes and Licenses 74,876 0.47% 71,057 0.49% 75,689 0.62%
SSS, PhilHealth & Pag-
ibig 25,779 0.16% 25,779 0.18% 25,779 0.21%
Supplies Expense 7,289 0.05% 6,942 0.05% 6,662 0.05%
Delivery Expenses 24,111 0.15% 22,841 0.16% 25,860 0.21%
Repair and Maintenance 16,
Expenses 20,118 0.13% 18,992 0.13% 023 0.13%
Depreciation Expense 476,000 3.01% 476,000 3.28% 476,000 3.92%
Total Operating
Expenses (1,038,592) -6.56% (1,024,525) -7.06% (1,025,225) -8.44%

NET INCOME BEFORE

TAX 776,797 4.91% 342,808 2.36% 81,377 -0.67%
PROVISION FOR (47,57 (35,610 (15,
INCOME TAX 1) -0.30% ) 0.25% 757) -0.13%

NET INCOME AFTER

TAX ₱ 729,226 4.61% ₱ 307,198 2.12% (₱ 97,134) -0.80%

Table 1 shows the vertical analysis of Income Statement for the years 2020 to

2022 of J&N Auto and Fishing Supply. The table demonstrates that the sales of J&N

Auto and Fishing Supply for the last three years can cover the cost of sales incurred for

each year. The cost of sales covers the most significant percentage of sales. The highest

percentage of cost of sales is in the year 2020 and this is due to the impact of pandemic.

The Covid-19 outbreak has affected the business in such way that it caused a disruption
 84

in a supply chain which has led to an increased cost of parts and materials. There has

also been an increased cost for transportation and logistics due to restrictions and safety

measures. On the other hand, in the year 2021, the cost of sales has decreased by 1.65%

which resulted in a much higher percentage of gross profit from last year. This implies

that the company has slowly been able to cut cost from the cost of sales. The business

was also able to cut costs by 2.05% from the cost of sales in 2022 which resulted to a

gross profit margin of 11.47%.

The researcher observed that the percentages of cost of sales of J&N Auto and

Fishing Supply is decreasing over the years and the gross profit is increasing. This

implies that a company is trying to reduce the cost of sales in order to arrive at a much

higher gross profit.

In terms of operating expenses, it only consumes a low percentage of the net

sales. The highest percentage of operating expenses is in 2020 and this is facilitated

mostly by depreciation expense which accounted to 3.92%. The percentages of operating

expenses have decreased over the years. This only implies that the business was able to

manage these expenses effectively, helping them to improve profitability. The business

should maintain their effort in cutting some of their cost in their operation.

Furthermore, even though the business generated a gross profit of 7.77% in 2020,

they still suffered a net loss of 0.80% due to a high percentage of operating expenses. On

the brighter side, the business was able to recover from its net loss in 2020 and gained a

net income of 2.12% in 2021. The net income also has doubled in 2022, which is a good

sign for a company. This implies that a company is growing.

 85

Lastly, the researchers also observed that even though the sales continue to

increase through the years and cost of sales is slowly decreasing, the percentage of cost

of sales still constitutes a very high portion of total sales resulting in low percentages of

gross income. This implies that the company needs to make further effort in reducing the

cost of sales by considering pricing of every supplier, buying bargains, negotiating and

leveraging suppliers. In short, J&N Auto and Fishing Supply needs to find a supplier that

also helps in reducing the cost of products.

B. Horizontal Analysis

Horizontal analysis is an accounting tool used in financial statement

analysis to compare historical data, such as ratios, or line items, over a number of

accounting periods. Trends or changes are measured by comparing the current year’s

values against those of the base year. This analysis is done to assess relative

changes in different line items of J&N Auto and Fishing Supply for the years 2020,

2021, and 2022. Tables 3-6 show the horizontal analysis of J&N Auto and Fishing

Supply balance sheet and the income statement.

 86

Table 3. Horizontal Analysis of Balance Sheet Year 2021 and 2022

J&N Auto and Fishing Supply

STATEMENT OF FINANCIAL POSITION
For the year ended December 31

2022 2021 Increase/(Decrease) % Change

ASSETS
Current Assets
Cash ₱ 198,096 84,370 113,726 134.79%
Account Receivables 155,040 172,060 (17,020) -9.89%
Inventories 10,357,811 9,703,650 654,161 6.74%
Total Current Assets 10,710,947 9,960,080 750,867 7.54%

Noncurrent Assets
Property, Plant and Equipment 7,256,000 7,732,000 (476,000) -6.16%

TOTAL ASSETS 17,966,947 17,692,080 274,867 1.55%

TOTAL LIABILITIES AND

EQUITY
Current Liability
Trade and other payables 1,505,000 1,663,028 (158,028) -9.50%

Non-current Liability
Loan Payable 8,625,064 8,921,395 (296,331) -3.32%

TOTAL LIABILITIES 10,130,064 10,584,423 (454,359) -4.29%

Equity
J&N, Capital 7,836,883 7,107,657 729,226 10.26%

TOTAL LIABILITIES AND

EQUITY 17,966,947 17,692,080 274,867 1.55%

Table 7 shows the horizontal analysis of the balance sheet for 2022 and 2021.

The total assets have increased by only 1.55%, which is facilitated by the increased

in cash and inventories. Even though the inventories have increased by only 6.74%,

they cover a significant amount of the company's asset. The increase in inventories

means that the business either bought more goods held for sale or did not make

proper sales in year 2021. Considering the decrease in accounts receivable by 9.89%,
 87

this means the business was able to collect from its receivables which resulted to an

increased in cash by 134.79%. The lower receivables in year 2022 also means the

business was able to lessen their sales on account for the year.

In terms of the total liabilities of the business, it has decreased by 4.29%,

which is facilitated by the decrease in both current and non-current liabilities. The

decrease means that the business was able to settle some of its obligations. The total

equity of J&N Auto and Fishing Supply has increased by 10.26%, which implies that

the business is growing since there has been a reduction on the total liabilities and an

increase in total equity.

The researcher observed that the 2021-2022 analysis is favorable to the

business. Comparing both the percentages of total assets and total liabilities and

equity from the years 2020 to 2022, it can be seen that there has been both an

increase. This means that the business made an excellent performance in their

operation throughout the years, and they were able to maintain their good financial

position.
 88

Table 4. Horizontal Analysis of Balance Sheet Year 2020 and 2021

J&N Auto and Fishing Supply

STATEMENT OF FINANCIAL POSITION
For the year ended December 31

2021 2020 Increase/(Decrease) %Change

ASSETS
Current Assets
Cash ₱ 84,370 110,170 ( 25,800) -23.42%
Account Receivables 172,060 150,220 21,840 14.54%
Inventories 9,703,650 9,035,950 667,700 7.39%
Total Current Assets 9,960,080 9,296,340 663,740 7.14%

Noncurrent Assets
Property, Plant and Equipment 7,732,000 8,208,000 (476,000) -5.80%

TOTAL ASSETS 17,692,080 17,504,340 187,740 1.07%

TOTAL LIABILITIES AND

EQUITY
Current Liability
Trade and other payables 1,663,028 1,543,235 119,793 7.76%

Non-current Liability
Loan Payable 8,921,395 9,160,646 239,251 -2.61%

TOTAL LIABILITIES 10,584,423 10,703,881 (119,458) -1.12%

Equity
J&N, Capital 7,107,657 6,800,459 307,198 4.52%

TOTAL LIABILITIES AND

EQUITY 17,692,080 17,504,340 187,740 1.07%

The table shows the horizontal analysis of the balance sheet for 2021 and 2020.

The total assets have increased by 1.07%, which is facilitated by the increased in

accounts receivable and inventories. Increase in percentage of inventories means that

the business has acquired more goods held for sale in the year 2021. The high

percentage of decrease in cash by 23.42% did much affect the changes in total assets
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since it covers a small amount compared to the amount of inventories and property,

plant and equipment. The decrease in cash is mainly due to the increase in sales on

account in year 2021 which also resulted to an increase in accounts receivable.

In terms of the total liabilities of the business, the main reason of the

decreased of 1.12% is due to the decreased in non-current liability. The decrease of

non-current liability means that the business has settled some of its long-term

obligations for the year. Though non-current liability has decreased by only 2.61%, it

has a significant amount in terms of liability compared to the current liability that

increased by 7.76%. The total equity of J&N Auto and Fishing Supply has increased

by 4.52%.

The results show that the horizontal analysis is favorable to the business. The

company's operation has increased the total equity and reduced the total liabilities.

Although there has been only a 1.07% increase in total assets and total liabilities and

equity, it implies that the business was still in good financial position.
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Table 5. Horizontal Analysis of Income Statement Year 2021 and 2022

J&N Auto and Fishing Supply

STATEMENT OF INCOME AND EXPENSES
For the year ended December 31

2022 2021 Increase/(Decrease) %Change

SALES ₱ 15,831,146 14,515,124 1,316,022 9.07%

COST OF SALES (14,015,757) (13,147,791) 867,966 6.60%

GROSS PROFIT 1,815,389 1,367,333 448,056 32.77%

OPERATING EXPENSES

Salaries and Wages 255,348 250,188 5,160 2.06%

Communication, Light and Water 155,071 152,726 2,345 1.54%

Taxes and Licenses 74,876 71,057 3,819 5.37%

SSS, PhilHealth & Pag-ibig 25,779 25,779 - 0.00%

Supplies Expense 7,289 6,942 347 5.00%

Delivery Expenses 24,111 22,841 1,270 5.56%

Repair and Maintenance Expenses 20,118 18,992 1,126 5.93%

Depreciation Expense 476,000 476,000 - 0.00%

Total Operating Expenses (1,038,592) (1,024,525) 14,067 1.37%

NET INCOME BEFORE TAX 776,797 342,808 433,989 126.60%

PROVISION FOR INCOME TAX (47,571) (35,610) 11,961 33.59%

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NET INCOME AFTER TAX ₱ 729,226 307,198 422,028 137.38%

The table shows the horizontal analysis of the income and expenses for 2021 and

2022. The sales have increased by 9.07% while the cost of sales has also increased by

6.60%. The gross profit of the business has increased by 32.77%. If to compare the

increase on this amount from year 2020 and 2021, it can be seen that the business was

able to maintain their increase in sales over the years. This implies that the business is

effective in their marketing and sales strategy.

In terms of their cost, both the cost of sales and operating expenses has increased.

Even though there is an increase both in cost of sales and operating cost, J&N Auto and

Fishing Supply still managed to increase the net income by 137.38% from 2021 to

2022, this is primarily due to the increased in their sales which allowed them to cover

up for their expenses and remain profitable. Based on the data, the researcher observed

that the business can still improve its profitability if they will be able to cut cost from

their cost of sales and operating expenses whilst steadily increasing their sales.

The sales growth of the business indicates a financial strength. The increases in

sales indicate that the J&N Auto and Fishing Supply's marketing efforts are working,

and it has been meeting the demand of their customers.

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Table 6. Horizontal Analysis of Income Statement Year 2020 and 2021

J&N Auto and Fishing Supply

STATEMENT OF INCOME AND EXPENSES
For the year ended December 31

2021 2020 Increase/(Decrease) %Change

SALES ₱ 14,515,124 12,144,614 2,370,510 19.52%

COST OF SALES (13,147,791) (11,200,766) 1,947,025 17.38%

GROSS PROFIT 1,367,333 943,848 423,485 44.87%

OPERATING EXPENSES

Salaries and Wages 250,188 238,899 11,289 4.73%

Communication, Light and Water 152,726 160,313 (7,587) -4.73%

Taxes and Licenses 71,057 75,689 (4,632) -6.12%

SSS, PhilHealth & Pag-ibig 25,779 25,779 - 0.00%

Supplies Expense 6,942 6,662 280 4.20%

Delivery Expenses 22,841 25,860 (3,019) -11.67%

Repair and Maintenance Expenses 18,992 16,023 2,969 18.53%

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Depreciation Expense 476,000 476,000 - 0.00%

Total Operating Expenses (1,024,525) (1,025,225) (700) -0.07%

NET INCOME BEFORE TAX 342,808 (81,377) 424,185 -521.26%

PROVISION FOR INCOME TAX (35,610) (15,757) 19,853 125.99%

NET INCOME AFTER TAX ₱ 307,198 (97,134) 404,332 -416.26%

The table shows the horizontal analysis of the income and expenses for 2020 and

2021. The sales have increased by 19.52% which resulted to an increase in gross profit

of 44.87%. The analysis has a good result since the gross profit has increased from the

previous year. This means that J&N Auto and Fishing Supply made an extensive effort

in increasing their sales during the recovery stage to recover their loss in 2020.

The operating expenses have also decreased by 0.07%. This decrease implies that

the business was able to cut some of its operating cost. However, despite being able to

cut costs, this decrease is still very low therefore the business needs to make further

effort in minimizing their cost concerning their operation in order to become more

profitable.

The percentage of net income has shown a positive result since it has increased

by 416.26%. The increase in net income is facilitated by the increase in sales which

allowed business to cover for their cost of sales and operating expenses.
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The years 2020 and 2021 is the adjusting and recovery stage for most businesses,

J&N Auto and Fishing Supply was able to recover from their loss in 2020 and gained a

net income in year 2021.

FINANCIAL RATIO ANALYSIS

I. Profitability Ratios

This section illustrates the analysis of the Gross Profit Margin, Net Profit Margin,

and Return on Assets of J&N Auto and Fishing Supply. Profitability ratios is used to

assess a business’s ability to generate earnings relative to its revenue, operating costs,

balance sheet assets, or shareholders’ equity. They indicate how efficiently a company

generates profit. Tables 7-9 show the profitability ratios of the business.

Table 7. Gross Profit Margin

2022 2021 2020

Gross Income ₱ 1,815,389.00 ₱ 1,367,333.00 ₱ 943,848.00

Net Sales ₱ 15,831,146.00 ₱ 14,515,124.00 ₱ 12,144,614.00

Gross Profit Rate 11.47% 9.42% 7.77%

Based from the table, the researcher observed that year 2022 has the highest

percentage of gross profit margin which is 11.47%. The lowest percentage of gross

profit margin which is 7.77% in 2020. By relating it to the vertical analysis, the low

gross profit margin is due to the high percentage of cost of sales which is 92.23% of total

sales which resulted to a low gross profit rate of 7.77%.

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According to Carleton (2021), the definition of a “good” gross profit margin

varies by industry, but 5% is low, 10% is average, and 20% is considered a “good” gross

profit margin.

J&N Auto and Fishing Supply gross profit margin increasing throughout the year

and it has reached the average of 10% gross profit margin by year 2022. Although the

result is favorable to the business, they still need to make further effort to increase their

gross profit margin.

Table 8. Net Profit Margin

2022 2021 2020

Net Income ₱ 729,226.00 ₱ 307,198.00 -₱ 97,134.00

Net Sales ₱ 15,831,146.00 ₱ 14,515,124.00 ₱ 12,144,614.00

Net Profit Rate 4.61% 2.12% -0.80%

J&N Auto and Fishing Supply net profit margin has increased from the year

2021 to 2022 despite also increased in the reduction in gross income due to increase in

operating expenses and provision to income tax in 2022. The business did not suffer a

net loss despite an increase in cost since the net sales has also increased which allowed

them to cover up all the expenses.

The researcher also observed the net profit rate of J&N Auto and Fishing Supply

is negative in 2020, this is because the business suffered a net loss during the year. By
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relating it to the vertical analysis, the business was able to cover up for the cost of sales,

however the percentage of the operating expenses is high compared to the percentage of

gross profit which resulted to a net loss.

In 2020, the COVID-19 outbreak has affected businesses and enterprises in such

way as increasing cost, reducing sales and net loss, which is reasonably observable in the

net profit rate of J&N Auto and Fishing Supply. According to the study of Hidalgo et. al

(2021), entitled "The COVID-19 outbreak and its impact on business establishments: A

study on challenges and strategic approaches", many firms experienced a decrease in

revenue due to the pandemic. This was due to factors such as a decrease in consumer

demand, problems in logistics, and disrupted supply chains.

Table 9. Return on Assets

2022 2021 2020

Net Income ₱ 729,226.00 ₱ 307,198.00 -₱ 97,134.00

Average Total Assets ₱ 17,829,513.50 ₱ 17,598,210.00 ₱ 17,489,302.00

Return On Asset 4.09% 1.75% -0.56%

The table shows that year 2022 has the highest ROA of J&N Auto and Fishing

Supply with 4.09%. The business a good return on assets which indicates more asset

efficiency, meaning the company is better at converting its investment in assets into

profits.

In 2020, the business has a negative return on assets with 0.56%. This situation

can occur when a company’s costs outweigh its revenues, leading to negative earnings.
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According to Dang (2022), a negative ROA can imply that the company is not able to

acquire or utilize its assets sufficiently enough to generate a profitable return.

The result of ROA in year 2020 is in line with the statement of Bradley and

Stumpner (2021), that many companies have faced operational challenges due to

lockdowns and social distancing measures, which led to decreased productivity and

increased costs, thereby affecting the Return on Assets.

The Return on Asset of J&N Auto and Fishing Supply is increasing throughout

the years, meaning the business is sufficiently doing its efforts to maximize their

resources in order generate a profit.

II. Liquidity Ratios

This section illustrates the analysis of the Current Ration and Quick Ratio of J&N

Auto and Fishing Supply. Liquidity ratios are used to determine a debtor’s ability to pay

off current debt obligations without raising external capital. It measures a company’s

ability to pay debt obligations and its margin of safety. Tables 10-11 shows the liquidity

ratios of the business.

Table 10. Current Ratio

2022 2021 2020

Current Asset ₱ 10,710,947.00 ₱ 9,960,080.00 ₱ 9,296,340.00

Current Liabilities ₱ 1,505,000.00 ₱ 1,663,028.00 ₱ 1,543,235.00

Current Ratio 7.12:1 5.99:1 6.02:1

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The current ratio is a financial metric that measures a company’s ability to pay

off its short-term liabilities. For the wholesale and retail industry, the average Current

Ratio was 2.03 in 2022.

From the result of calculating the current ratio of J&N Auto and Fishing Supply,

it can be seen the current ratio is stable and high throughout the years. 2022 has the

highest current ratio with 7.12 and the lowest in 2021 with 5.99.

The current ratio in 2020 has decreased by 0.03, due to the fluctuations in current

liabilities. The current ratio of the business is above the industry's average. Although it is

above the average, it is unfavorable. This implies that although J&N Auto and Fishing

Supply are capable of meeting current obligations, a large portion of their assets are tied

up to their inventory and the business may not be efficient in using their assets.

Table 11. Quick Ratio

2022 2021 2020

Quick Assets ₱ 353,136.00 ₱ 256,430.00 ₱ 260,390.00

Current Liabilities ₱ 1,505,000.00 ₱ 1,663,028.00 ₱ 1,543,235.00

Quick Ratio 0.23:1 0.15:1 0.17:1

The current ratio is a financial metric that measures a company’s ability to pay

off its short-term liabilities with its most liquid asset. For the wholesale and retail

industry, the average Quick Ratio was 1.25 in 2022.

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The table shows that 2022 has the highest Quick Ratio of 0.23 and the lowest in

2021 with 0.15. The quick ratios of J&N Auto and Fishing Supply has experienced a

fluctuations throughout the years.

The business Quick Ratio is below the industry's average, meaning it is not

favorable. This implies that the company may struggle to pay off its short-term

obligations with its most liquid assets. This is true since most of the current assets of the

business is tied up to the inventory.

III. Activity Ratios

This section illustrates the analysis of the Inventory Turnover, Average Sales Period,

Total Asset Turnover, Accounts Receivable Turnover and Average Collection Period of

J&N Auto and Fishing Supply. Activity ratios also known as efficiency ratios is used to

gauge how efficiently a company’s operations are. They indicate how well a company is

leveraging the assets on its balance sheet to generate revenues and cash. Tables 12-16

shows the activity ratios of the business.

Table 12. Inventory Turnover Ratio

2022 2021 2020

Cost of Sales ₱ 14,015,757.00 ₱ 13,147,791.00 ₱ 11,200,766.00

Inventory ₱ 10,357,811.00 ₱ 9,703,650.00 ₱ 9,035,950.00

Inventory Turnover 1.35 1.35 1.24

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From the previous table the turnover rate of merchandise inventory or inventory

turnover (ITO) of J&N Auto and Fishing Supply in 2020 was 1.24 times, in 2021 was

1.35 times and in 2022 was 1.35 times. According to Haeruddin (2023), the inventory

turnover rate measures a company's ability to rotate its merchandise and shows the

relationship between goods needed to support or offset predetermined sales levels and

inventory efficiency can be seen from the inventory turnover rate. The faster the

inventory turnover, the more efficient the use of inventory in a company.

Wholesale and retail industry's standard of good inventory turnover ratio is

between 2 and 4. Although the turnover rate of the business is stable, however, this is

not good because the turnover of merchandise inventory is too long compared to the

industry. Inventory of merchandise that has been circulating for too long is not good

which implies that the business is not managing its inventory properly.

According to the study of Haeriddun (2023) entitled "Accounts Receivable

Turnover Analysis and Company Merchandise Inventory Turnover" low inventory

turnover ratio usually happens because there is a lot of competition with other traders.

Competition between traders that usually occurs is the difference in the price of goods

and the quality. Buyers will choose merchandise that is sold cheaper.

Table 13. Average Sales Period

2022 2021 2020

Days 365 365 365

Inventory Turnover 1.35 1.35 1.24

Average Sales 269.74 days 269.39 days 294.46 days

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Period

Average collection period means how many days the business takes to sell its

inventory. The faster the time for the inventory to be sold, the better for the company.

From the results of calculation of the average sales period (ASP) of J&N Auto

and Fishing Supply, it can be seen that in 2020 the ASP was 294.46 days, 2021 was

269.39 days, and in 2022 with 269.74 days. ASP through the years has declined.

The ASP calculation data depends on the inventory turnover calculation results.

The inventory turnover has decreased which also resulted to the decreased in average

sales period. However, even though the declined shows a positive sign that the business

has able to cut the number of days to sell its inventory, it is still too long for the business

to sell its inventory. According to Baldesi et al. (2019), having slow-moving inventory

has risk, as the longer a business holds on to stock, the more opportunities there are for

the product to become obsolete or for the market value of the stock to decline.

Table 14. Total Asset Turnover

2022 2021 2020

Net Sales ₱ 15,831,146.00 ₱ 14,515,124.00 ₱ 12,144,614.00

Average Total Asset ₱ 17,829,513.50 ₱ 17,598,210.00 ₱ 17,489,302.00

Total Asset Turnover 0.89 0.82 0.69

The total asset turnover of J&N Auto and Fishing Supply has been increasing

throughout the year. 2022 had a 0.89 asset turnover. It is considered to have the highest
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turnover ratio. Asset turnover between 2021 and 2022 has been nearly stable. 2020 has

the lowest turnover with 0.69.

According to Larasati et al. (2023), total asset turnover measures the extent to

which a company can generate sales from its total assets, a high asset turnover reflects

the company's efficiency in optimizing its assets to generate income.

As part of the wholesale and retail industry, J&N Auto and Fishing Supply asset

turnover ratio is low compared to the industry's standard of 2.5 or more. Even though the

asset turnover is increasing if the business was not able to reach the industry's standard,

this only means that the business is not that efficient in optimizing its assets to generate

income.

Table 15. Accounts Receivable Turnover

2022 2021 2020

Net Sales ₱ 15,831,146.00 ₱ 14,515,124.00 ₱ 12,144,614.00

Average Accounts ₱ 163,550.00 ₱ 161,140.00 ₱ 152,915.00

Receivable
Accounts Receivable 96.80 90.08 79.42
Turnover

From the table, it can be seen that turnover rate of accounts receivable of J&N

Auto and Fishing Supply in 2020 was most significant in 2022 which is 96.80 times, in

2021 was 90.08 times and in 2020 was 79.42 times. According to Rudocha (2018), the

higher the receivables turnover rate means the faster the funds invested in trade

receivables can be billed into cash or shows a working model that is embedded in low
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receivables. Conversely, if the receivables turnover rate is low, it means that trade

receivables take longer to be billed in cash.

The business experienced an increased in receivable turnover over the years,

which implies that the business has tried in their collection policy and is working

effectively in reducing their receivables.

Pratiwi (2018) also states that the higher turnover indicates the working capital

invested in receivables is low, conversely if the ratio is lower it means there is over

investment in receivables so it requires further analysis, it may be because the credit and

collection departments are not working effectively or there may be a change in the credit

policy.

Table 16. Average Collection Period

2022 2021 2020

Days 365 365 365

Accounts Receivable Turnover 96.80 90.08 79.42

Average Collection Period 3.77 days 4.05 days 4.60 days

Average collection period means that within how many days the receivables will turn

into cash. The faster the time to pay back receivables, the better for the company.

From the results of calculating the average collection period (ACP) of J&N Auto and

Fishing Supply, in 2020 the ACP was 4.60 days, 2021 the ACP was 4.05 days, while in

2022 the ACP was 3.77 days. ACP through the years has declined.
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The ACP calculation data depends on the receivable turnover calculation results.

Since the business has a great receivable turnover, the capital tied up in their receivables

can quickly return to cash. The receivable turnover that occurred in the past years has

increased which resulted to the decreased in average collection period. The declined in

the average collection period of the business is a good sign since they were able to

collect receivables faster.

IV. Stability Ratios

This section illustrates the analysis of the Debt Ratio, Equity Ratio and Debt to

Equity Ratio of J&N Auto and Fishing Supply. Stability ratios is used to measure the

balance between a company’s debt and equity, and its ability to meet long-term

commitments. Stability analysis investigates how much debt can be supported by the

company and whether debt and equity are balanced. Tables 17-19 shows the stability

ratios of the business.

Table 17. Debt Ratio

2022 2021 2020

Total Liabilities ₱ 10,130,064.00 ₱ 10,584,423.00 ₱ 10,703,881.00

Total Assets ₱ 17,966,947.00 ₱ 17,692,080.00 ₱ 17,504,340.00

Debt Ratio 0.56 0.60 0.61

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As shown in the table, the debt ratio in 2020 is the highest ratio with 0.61 and the

lowest in 2022 with 0.56. The table shows that the business has a decreasing debt ratio

throughout the years. This only means that the business is reducing its debt relative to its

total assets. This could be due to a variety of factors, such as paying off debt, increasing

total assets, or a combination of both.

The debt ratio of J&N Auto and Fishing Supply means that the company has

more assets than liabilities because all the ratios are less than 1.

This is in line with the idea of Hayes (2023) that a debt ratio lower than 1

indicates that a company has more assets than debt. This means that a greater portion of

the company’s assets is funded by equity, rather than debt. In other words, the company

is less dependent on borrowed money to finance its assets. This is generally seen as a

positive sign as it suggests that the company is at a lower risk of defaulting on its loans

and may be more likely to secure favorable financing terms.

Table 18. Equity Ratio

2022 2021 2020

Total Equity ₱ 7,836,883.00 ₱ 7,107,657.00 ₱ 6,800,459.00

Total Assets ₱ 17,966,947.00 ₱ 17,692,080.00 ₱ 17,504,340.00

Equity Ratio 0.44 0.40 0.39

From the results of calculating the equity ratio of J&N Auto and Fishing Supply,

year 2022 has the highest equity ratio of 0.44 and the lowest in 2020 with 0.39. The

equity ratio of the business is stable and increasing throughout the years.
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According to the articles written by Wall Street Prep (2023), companies with

ratios ranging around 50% to 80% tend to be considered “conservative”, while those

with ratios between 20% and 40% are considered “leveraged”.

J&N Auto and Fishing Supply equity ratio is lower than 50%. The equity ratio is

still not favorable to the company, this indicates that the business is considered

leveraged and signifies that the company is dependent on creditors. If the percentage of

debt far exceeds the equity interests, the company may be at risk of insolvency. The

business still needs to improve to increase equity ratio.

Table 19. Debt to Equity Ratio

2022 2021 2020

Total Liabilities ₱ 10,130,064.00 ₱ 10,584,423.00 ₱ 10,703,881.00

Total Equity ₱ 7,836,883.00 ₱ 7,107,657.00 ₱ 6,800,459.00

Debt to Equity Ratio 1.29 1.49 1.57

The result of the calculation of debt-to-equity ratio shows that year 2020 has the

highest ratio with 1.57 and the lowest in 2022 with 1.29. J&N Auto and Fishing Supply

Debt to Equity Ratio is decreasing over time.

According to the article written by the Editorial Staff at Incorporated Zone

(2022), in essence, debt to equity ratio between 1 and 1.5 is considered a good ratio.

High debt to equity ratio indicates that the company is using more debt than equity to

finance its business operations and growth. In most cases, companies should not exceed

a D/E ratio over 2 based on the general views of financial analysis and investors. A debt
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equity ratio of 2 means that the company is funded 67% through debt and 33% through

equity capital.

The business has a debt-to-equity ratio between 1 and 1.5, meaning that it is

favorable. This implies that J&N Auto and Fishing Supply has been able to strike a

balance between debt and equity in its capital structure.

IV. Effects of Supply Chain Management Practices on the Financial Performance

of J&N Auto and Fishing Supply

Improving supply chain management is a potent tool for driving business

success, and this study has consistently shown its positive impact on key financial

metrics. This research suggests that supply chain management significantly influences

profitability and efficiency ratios compared to other factors. This principle applies to

J&N Auto and Fishing Supply. While the specific details of their challenges remain

unclear, it is evident that enhancing their supply chain practices holds immense potential

for improvement, paving the way for increased profitability, greater efficiency, and a

competitive edge.

Supplier Relationship Management

J&N Auto and Fishing Supply's proactive approach to supplier relationship

management (SRM) demonstrably strengthens their financial performance regarding

profitability, liquidity, activity, and stability ratios.

The COVID-19 pandemic forced businesses like J&N Auto and Fishing Supply to

get creative with their sales strategies as in-person shopping became limited or

impossible. Some essential business adaptations involved prioritizing exceptional

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customer service, focusing on responsiveness and relationship building. Additionally,

J&N strategically adapted to changing customer needs by introducing new products and

services. Financial analysis reveals that J&N Auto and Fishing Supply successfully

controls the costs of goods sold (COGS). This is evidenced by a steady increase in their

gross profit margin over the past three years, from 7.77% in 2020 to 11.47% in 2022.

Further solidifying this positive trend, the company's net profit margin improved, rising

from -0.80% in 2020 to 4.61% in 2022. It indicates enhanced efficiency in generating

profit from revenue.

The quick ratio of J&N Auto and Fishing Supply has steadily declined over the

past three years, indicating a significant decrease in liquidity. The ratio decreased from

0.23:1 in 2020 to 0.15:1 in 2021, then slightly increased to 0.17:1 in 2022. These

changes suggest a diminished capacity to pay off immediate debts using assets that are

easily accessible. The low ratio in 2021 had a small effect on J&N's connections with

raw material suppliers, which could potentially impact credit conditions and delivery

priority. Reduced trust and confidence from the fluctuating quick ratio led suppliers to

offer shorter payment deadlines and lower delivery priority for J&N. However, J&N's

consistent on-time payment history is a beacon of hope amidst these concerns. It

demonstrates their commitment to fulfilling financial obligations, potentially mitigating

the adverse effects of the low quick ratio and fostering trust with suppliers.

Regarding activity, J&N Auto and Fishing Supply demonstrated strong supplier

relationship management in 2020 and 2022. Positive supplier relationships facilitated

access to fewer defective materials, which streamlined business operations and

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minimized disruptions. Rigorous evaluation and inspection of raw material quality

contributed to overall product quality, potentially leading to decreased inventory levels

during periods of increased sales.

J&N Auto and Fishing Supply's capital structure exhibits stability, as evidenced by its

debt ratio. However, the equity ratio indicates a higher reliance on debt, making the

company appear leveraged. Despite this, J&N has struck a balance between debt and

equity, which can positively impact supplier relationship management. Financial

stability stemming from this balanced structure can lead to more substantial negotiation

power with suppliers.

Inventory Management

The supply chain management practices in inventory management show how it

affects the profitability, liquidity, activity, and stability ratio of J&N Auto and Fishing

Supply.

Concerning the profitability of the company, J&N Auto and Fishing Supply

experienced a rise in gross profit margin from 7.77% in 2020 to 9.42% in 2021 and

climbed to 11.47% in 2022. This movement in gross profit margin exemplifies how the

business adjusted and thrived amid the pandemic. However, rising raw materials and

labor costs during the pandemic likely squeezed profit margins despite the headline

gross profit figures. This pressure on the business's profitability impacted its inventory

management strategies, potentially leading to increased focus on cost optimization,

inventory holding reduction, and product mix changes.

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The inventory accounts for most of the business's present assets, leading to

limited liquidity. The low quick ratio of J&N indicates that the company faced

challenges in fulfilling its immediate financial obligations by utilizing its readily

available liquid assets. It led them to prioritize reducing their inventory levels to free up

cash and improve their liquidity position. It involved J&N's tactics of lowering

inventory targets to minimize the amount of cash tied to their stock and selling excess

inventory to generate quick cash. By further exploring these factors, scholars better

comprehend the intricate relationship between immediate cash availability, stock

control, and overall financial success within the framework of J&N's situation.

J&N Auto and Fishing Supply's financial performance is demonstrably linked to

its operational efficiency or activity, evidenced by its resource optimization strategies.

However, the business needed a formal inventory control system and relied solely on

past sales data to estimate stock levels, particularly for less popular items. Thus, it

results in frequent stockouts of their rarely ordered products. This case study raises

questions about the effectiveness of sales-based inventory management for diverse

product portfolios and suggests further research into alternative demand forecasting

methods in optimizing inventory control. On the other hand, to achieve efficiency and

enhance inventory practices, J&N must change its approach. It should adopt formal and

uniform inventory management to bolster its business management approach further.

They consider the robustness of this system to be crucial in fulfilling the changing

requirements of the business and its clients in a dynamic market setting.

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Regarding stability, J&N's balanced capital structure, reflected in a stable debt-

to-equity ratio, demonstrably positively impacts its sales inventory management. The

reduced cost of capital frees up valuable resources for J&N. This allows them to invest

in cutting-edge technology and skilled personnel, all of which contribute to operational

excellence. Furthermore, financial flexibility, enabled by access to debt and equity

financing options, enables J&N to adapt to market fluctuations and unexpected

inventory needs with agility. This responsiveness allows them to react quickly to

disruptions or stockout threats without solely relying on external vendors or depleting

cash reserves.

Logistics Management

The Supply Chain Management practices in logistics show how they affect the

profitability, liquidity, activity, and stability of J&N Auto and Fishing Supply. Kumar

(2013) investigated logistics performance across four criteria. These are the logistics

activities' cost, efficiency, quality, and completion time.

Logistics significantly influences J&N Auto and Fishing Supply's profitability.

Efficient management of a company's logistics is essential for minimizing operational

expenses while maintaining uninterrupted production and sales. Consequently, the field

of logistics will have an influence on both expenses and earnings. The influence of

logistics organization on expenses will differ based on the sector in which the firm

operates. The manager of J&N Auto and Fishing Supply highlighted the impact of supply

chain management on their financial performance, specifically in terms of costs. The cost

of sales constitutes the largest proportion, followed by expenses related to transportation

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and delivery, which are crucial for ensuring the safety, security, and high quality of their

products. Logistics is responsible for the timely and accurate delivery of the correct

products to their designated locations. Inadequate execution can lead to significant

disruptions and decreased revenue, exerting a severe impact on earnings. All of this is

reflected in the high percentages of their cost of sales in 2020–2022. The pandemic had a

significant impact on corporate performance in 2020, resulting in a financial deficit for

the company during that period. The pandemic has had a negative impact on businesses,

resulting in increased expenses, reduced sales, and labor-related challenges such as wage

concerns or layoffs. In addition to expenses, revenues are the second most critical

determinant of profit and, consequently, the company's overall financial performance. We

should evaluate the impact of logistics on a company's profitability in three specific

areas: the profitability of sales revenue, the immediate and easily observable impact on

assets, and its effect on equity. In the latter scenario, the indirect influence of logistics on

equity is minimal. This type of subject matter is crucial for optimizing inventory

management strategies, as they have the greatest impact on logistical charges.

Additionally, these practices contribute to the company's liquidity. The current ratio is a

frequently utilized measure of liquidity. The manager states that the company's

performance is contingent upon the profit generated by operational activities, and a

higher current ratio is considered more desirable. The current ratio is a quantitative metric

that assesses a company's ability to effectively manage its assets to meet its immediate

financial obligations and sustain its operations for a long period of time. Although there
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have been some fluctuations during the year, the current position remains advantageous,

and the company has the potential for further growth.

However, there are times, particularly during the pandemic, when J&N Auto and

Fishing Supply's average sales period and average college period decline, implying that

cash is linked to inventory rather than being able to fulfill current obligations. Because

the pandemic occurred at different times around the world, different types of restrictions

were imposed and implemented at different times. Some have utilized entire lockdown

measures, while others have partially blocked borders and set transportation limitations.

The company's liquidity was impacted because a large inventory represents high

working capital.

In terms of activity, the sourcing and delivery times have an impact on the

production schedule and flow. The improvement in return on assets may be mainly

attributed to the company's net income, but the supply chain process also played a role

through inventory management. Inventory management can impact sales costs, lowering

J&N Auto and Fishing Supply's gross profit. J&N Auto and Fishing Supply's cost-

cutting approach is to acquire products based on the stock of the current model in auto

supply and demand in fishing supply when the customer requests.

Stability leads to customer reliability, consistency in planning and execution, and

pricing predictability. J&N Auto and Fishing Supply may build their logistics resiliency

and improve their bottom line by prioritizing long-term sustainability and stability over

seeking the lowest cost. The researchers needed help uncovering the significant direct

consequences of logistics management on the company's stability. However, by utilizing

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logistics management, the company can indirectly increase its competitive advantage

while continuing to ship on time. As a result, if the company is known for being

competitive, it may attract more investors. Whatever the reason, the researchers found

that a lack of stability raises risks, causes production delays, supply disruption, and,

eventually, customer discontent. J&N Auto and Fishing Supply must re-strategize their

logistics operations to be more resilient against potential and unavoidable supply chain

failures, avoid these typical challenges, prepare for the unforeseen, and retain

consumers.

Customer Relationship Management

The Supply Chain Management practices show how it affects the profitability,

liquidity, activity, and stability in the customer relationship of J&N Auto and Fishing

Supply.

Regarding profitability, providing high-quality products and maintaining good

customer relationships helps the company gain regular customers and clients, which helps

them generate profits. It implies that quality and profitability are inextricably linked,

demonstrating that high quality helps produce higher asset returns. According to Faed

(2013), CRM has been described in various ways. It is the skill of recruiting clients and

maintaining long-term relationships with them. CRM is also a combination of people,

processes, and technology used to understand and acquire consumers for a business. It

focuses on customer retention and relationship building. The full benefit of CRM

deployment is that businesses must have effective CRM systems to ensure client loyalty.

J&N Auto and Fishing Supply can boost their profitability by using a CRM-based
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approach. Companies can increase income while decreasing costs by strengthening

customer interactions, increasing efficiency and productivity, better services or

performance, and improving communication and collaboration. The business experienced

a detrimental impact on its return on assets in 2020 due to the pandemic; nonetheless, this

does not signify the company's demise. The return on assets (ROA) for J&N Auto and

Fishing Supply has exhibited a consistent and upward trend from 2021 to 2022,

indicating the company's diligent efforts to secure the prosperity of its operations.

Customers have a crucial role in the company's financial performance,

particularly in terms of liquidity. The company's sales are contingent upon the level of

demand and satisfaction from its clients, which directly contributes to its profitability.

Nonetheless, based on the liquidity measures, there is no compelling evidence that an

increase in earnings aids in paying the company's short-term obligations. However, the

researchers discovered that J&N Auto and Fishing Supply's quick ratio is lower than the

industry average, indicating unfavorable. The business may require assistance fulfilling

its immediate financial obligations using its most readily convertible assets. Indeed, this

statement holds as most of the company's assets are directly linked to its inventory.

In terms of activity, having solid client relationships can assist in reducing

inventories and improving revenue. The inventory turnover for 2020-2022 is steadily

increasing, resulting in excellent and lousy performance. A high turnover ratio enhances

the organization's efficiency, and the recommended range for a favorable inventory

turnover ratio in the wholesale and retail industries is 2 to 4. Over the last three years,

J&N Auto and Fishing Supply has only experienced a 1.24-1.35 inventory turnover.
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Although the business's turnover rate is consistent, this could be better because the

inventory turnover is too long compared to the industry. The company's inventory has

been circulating for too long, implying that the organization must adequately manage its

inventory. Inventory impacts both the client relationship and the business's performance.

If the organization does not try to establish and create strategies to remedy specific

challenges in the business, it may experience unanticipated losses, poor performance,

and bad customer service.

Regarding stability, the researchers needed help discovering a direct relationship

between customer relationship management and the organization's stability. However,

consumers' reviews or opinions about J&N Auto and Fishing Supply's services and

products indirectly impact the company's image and brand, which means that investors

or potential creditors may consider this image. The corporation is reliant on a few

creditors. To increase equity, the company must continue to improve.

PROBLEMS AND LIMITATIONS ENCOUNTERED

Supplier Relationship Management

J&N Auto and Fishing Supply’s problem in supplier relationship management

pertains solely to its defective products. As the respondent stated:

“When it comes to defective products, there are suppliers na tinatanggap yung

mga products na may defects and goods yun sa amin, pero mayroon din namang mga

suppliers na hindi. And kapag ang supplier ay mayroong no return no exchange policy,

ang ginagawa namin ay binebenta namin ng mababa sa usual price ang isang item pero
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hindi kami magbibigay ng warranty sa customers. Unlike sa ibang items na talagang

mayroong warranty.” (Christopher Galera, personal interview)

Dealing with defective products can throw a significant wrench in the gears of
J&N.

Auto and Fishing Supply, and by taking proactive steps, the business can mitigate the

negative consequences of dealing with defective products and protect its financial

stability, brand reputation, and customer relationships.

Inventory Management

In inventory management of J&N Auto and Fishing Supply, depending only on

the sales of every item when monitoring the stocks can lead to a minor inventory

problem. According to the general manager:

“Dahil nga sa dami ng aming materials and parts na binebenta, there are times

na hindi namin namo-monitor lahat and nagkakaroon ng instance na nauubusan kami

ng stock sa ibang items na hindi naman talaga laging in demand, but through time hindi

namin agad napapansin na unti-unti ng nabebenta.” (Christoper Galera, personal

interview)

This problem is complex for J&N because they need a fixed inventory

management system. The absence of effective inventory management can harm the

business, causing negative consequences, including financial losses, operational

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inefficiencies, supply chain issues, reduced customer satisfaction, and limiting the

business's growth potential.

Logistics Management

The ultimate stage of the logistics process is product delivery. The hurdles are

congested urban locations, time-sensitive deliveries, and consumer expectations for

rapid and convenient service. Route optimization, different delivery techniques, and

improved communication can all help increase delivery efficiency. Depending on

unexpected events, J&N Auto and Fishing Supply sometimes experience delivery delays

because of damaged vehicles, bad weather, or traffic. As for their logistics management

in the local market, the general manager stated that they were fine.

“Mostly ay wala naman ay wala namang problema sa delivery ng products,

siguro yung delay lang kapag nasisiraan ng sasakyan halimbawa masama ang panahon

o traffic depende sa pangyayari na hindi inaasahan.” (Christopher Galero, personal

interview)

Customer Relationship Management

J&N Auto and Fishing Supply encountered problems in its customer relationship

management. The customer sometimes complains because some of the products have

defects. They no longer respond when some products are damaged while in transit

because the courier is to blame. Depending on the situation and what was agreed upon,

they sometimes share the payment or answer half of the payment.

“Complaint, kapag may defects but kapag kayang gawan ng paraan ng tindihan,

ginagawan naman namin. Kapag nagkaroon ng damage habang nasa courier yung
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certain products sila na ang liable hindi na namin sagot yun. Minsan 50/50 ang hatiin

ng bayad or sagot namin depende sa situation na nangyari at napagkasunduan.”

(Christopher Galero, personal interview)

OUTPUT

The researchers proposed a Point-of-Sale system and an inventory tracker using

Excel to improve the operation and overall performance of J&N Auto and Fishing

Supply. The researcher chose this output after analyzing the financial performance and

the problems encountered by the business. The researchers noticed that the business has

a meager inventory ratio and a very high average sales period. The inventory turnover

ratio of the business from 2020 to 2022 is 1.24, 1.35, and 1.35. The number of days the

business takes to sell its inventories is 294.46 days, 269.39 days, and 269.74 days. The

circulation of J&N Auto and Fishing Supply's merchandise inventory, which is the most

significant asset and the primary source of revenue, should be shorter. Having slow-

moving inventory affects the business since it imposes the risk of product obsolescence,

the decline in market value, and the risk of getting burdened with inventories that do not

sell. Furthermore, it can impact the organization's profitability by immobilizing valuable

resources like warehouse space, cash, and personnel.

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The researchers proposed a POS system and inventory tracker as an output. After

analyzing the business data, the business heavily relies on estimations of the amount that

appears in the financial statement, primarily due to a lack of formal practice of

monitoring and tracking sales and purchases. The purpose of a POS system is to identify

customers and record sales in one place. It will help the business to keep track of sales in

real time. It can also print customer receipts, handle credit card payments, and store

customer information for future interactions. On the other hand, the inventory tracker

and the POS system will help the business track its inventory level, updating the stock

level each time. It enables the organization to track the movement of its goods along the

supply chain from the supplier to the end user, the consumer. The inventory tracker can

also track each transaction the business makes, whether a purchase or a sale transaction.

The proposed POS system only records sales, while the inventory tracker will serve as a

monitoring file of the inventory level of the business every time the business makes a

sale or purchase transaction. Both systems are essential to keep track of the business

operation and assess whether they are operating effectively and efficiently.

POINT OF SALE
Sales Receipt
Item Name Acxel Stud Subtotal: ₱ 7,255.00 J&N Auto and Fishing Supply
Customer Ricson Alano Tax: - Gov. Castro St. Brgy. Zone IV
Total: ₱ 7,255.00 Atimonan, Quezon
Price: ₱ 15.00 Pay Type: Cash Receipt No.:
Payment: ₱ 8,000.00 Date:
Quantity: 3 Change: ₱ 745.00 Cashier:

Scan Item: Item Qty. Price Total

Acxel Stud 3 ₱ 15.00 ₱ 45.00
Alternator 1 ₱ 4,800.00 ₱ 4,800.00
Auto Bulb 3 ₱ 20.00 ₱ 60.00
1 2 3 AVR 1 ₱ 780.00 ₱ 780.00
Ball Joint 1 ₱ 650.00 ₱ 650.00
Ball Mirror 1 ₱ 250.00 ₱ 250.00

4 5 6 PAYMENT Banjo Volt

Battery Clip
2
2
₱ 85.00
₱ 75.00
₱ 170.00
₱ 150.00
Battery Cable 2 ₱ 175.00 ₱ 350.00

7 8 9 PRINT
Subtotal:
Tax:
₱ 7,255.00
-
Total: ₱ 7,255.00
Paid Amount: ₱ 8,000.00
0 CLEAR . NEXT Change: ₱ 745.00

Thank You Come Again!

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Figure 8. Point of Sale System using Excel

PRODUCTS
Product No. Product Name Sales Price Type Qty. on Hand Product Description
Acxel Stud ₱ 15.00 Auto
Alternator ₱ 4,800.00 Auto
Alternator Hose ₱ 250.00 Auto
Auto Bulb ₱ 20.00 Auto
AVR ₱ 780.00 Auto
Ball Joint ₱ 650.00 Auto
Ball Mirror ₱ 250.00 Auto
Banjo Volt ₱ 85.00 Auto
Banjo Volt Washer ₱ 20.00 Auto
Battery Cable ₱ 175.00 Auto
Battery Clip ₱ 75.00 Auto
Battery Lug ₱ 35.00 Auto
Battery Terminal ₱ 75.00 Auto
Bearing ₱ 980.00 Auto
Bosch Relay ₱ 260.00 Auto
Box Wrench ₱ 85.00 Auto
Brake Hose ₱ 280.00 Auto
Brake Master Assembly ₱ 2,200.00 Auto
Brake Master Kit ₱ 480.00 Auto
Brake Pad ₱ 1,400.00 Auto
Bulb Socket ₱ 20.00 Auto

Figure 9. J&N’s Products

SALES HISTORY
Record No. Date Cashier Item Qty Price Total
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Figure 10. Sales History

Figures 8, 9, and 10 show the proposed POS system of this study. This system

tracks explicitly and records sales. The above figures are connected with each other in

order to properly reflect the record of the sales as well as the inventory. This POS system

first lists all J&N Auto and Fishing Supply products in Figure 9; it comprises the product

numbers or serial numbers, product names, sales prices, types of products, quantity on

hand, and product pictures. This step is required to automate the sale of every transaction.

The Point-of-Sale system works by scanning the item; in the absence of the scanner, this

step can be done by just entering the product number, and the information about the

product will appear in Figure 8, including the item name, price, and type. The cashier

shall fill out all other information, such as the customer's name and quantity. All the

scanned items will appear in the sales receipts shown in Figure 8, which can be printed

after the cashier receives the payment. Every sales transaction shall be reflected in the

sales history shown in Figure 10, including receipt number, date, cashier, item, quantity,

price, and total amount.

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INVENTORY MANAGER
PURCHASE SALE New Transaction Delete Transaction Save Transaction Cancel Transaction

PURCHASE TRANSACTION Show

Supplier: Transaction Date: Details

Product No.: Sales Price: Qty. on Hand: Hide

Details

Product Name: Type:

Std. Purchase Qty.: Product Description:

Sales Qty.: Total: Notes:

Trans. Type Vendor/Customer Trans. Date Product No. Price Quantity Total Notes

INVENTORY MANAGER
PURCHASE SALE New Transaction Delete Transaction Save Transaction Cancel Transaction

SALES TRANSACTION Show

Customer: Transaction Date: Details

Product No.: Sales Price: Qty. on Hand: Hide

Details
Product Name: Type:

Std. Purchase Qty.: Product Description:

Sales Qty.: Total: Notes:

Trans. Type Vendor/Customer Trans. Date Product No. Price Quantity Total Notes
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Figure 11. Inventory Tracker

Figure 11, on the other hand, only assists the POS system in recording the

inventory. This system is used to track every sales transaction and the purchases. Unlike

in the POS system, the inventory manager also keeps track of the purchase transactions

made by J&N Auto and Fishing Supply to reflect the inventory levels properly. This

system works by just entering the product number the business wishes to track, and all

the information about the item will appear in all the columns above and the table. The

data that appears in sales history in the POS system is relevant to the inventory tracker

system since all the information shall be linked to the system for the inventory for that

particular item to be correctly reflected. Since the POS system does not record the

purchases made by the business, it should also gather all the data about purchase

transactions. As in sales transactions, all the information concerning the purchases of the

business shall be linked to the system to keep track of the inventory levels, both from

sales transactions and purchase transactions.

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 CHAPTER V

SUMMARY, FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS

This chapter explains the research on Supply Chain Management Practices of

J&N Auto and Fishing Supply in Atimonan, Quezon, and its Effect on Financial

Performance for 2020-2022 by presenting the findings, conclusions, and actionable

recommendations.

Summary

An analysis was conducted on the supply chain management practices of J&N

Auto and Fishing Supply in Atimonan, Quezon, with a focus on their influence on the

company's financial performance throughout the period of 2020–2022. They are building

on existing research on supply chain efficiency and profitability. The study aims to (1)

analyze J&N's business profile and supply chain management practices across supplier

relations, inventory control, logistics, and customer relations; (2) assess the company's

financial performance using vertical and horizontal analysis and key financial ratios on

profitability, liquidity, activity, and stability; (3) test the hypothesis that effective supply

chain management practices positively influence financial performance; (4) identify

challenges and limitations faced in J&N's supply chain; and (5) propose an POS system

and inventory tracker to enhance operational efficiency and effectiveness.

A qualitative, descriptive case study approach is employed. Data is collected

through semi-structured interviews with the company's general manager, supplemented

by company financial statements for 2020-2022. This focused approach allows an in-
depth exploration of J&N's specific case and provides valuable insights for similar small

and medium-sized enterprises.

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Findings

1. Company profile of J&N Auto and Fishing Supply

Founded in 1998 by Jenerchito and Nenita Jacinto, J&N Auto and Fishing

Supply is the sole automotive and fishing equipment provider in Atimonan,

Quezon, and surrounding towns. Catering to customers across Quezon and into

Bicol Province through a single storefront strategically supported by four

dedicated warehouses, J&N has experienced consistent growth over the years.

The remarkable achievement may be ascribed to their steadfast dedication to

surpassing client expectations in three crucial domains: reasonable price,

meticulously sourced product quality, and outstanding customer service. J&N's

unique position as the region's dedicated supplier and customer-centric approach

presents a relevant case study for understanding the impact of small and medium-

sized enterprises' effective supply chain management and customer service

strategies on financial performance.

2. Supply Chain Management Practices of J&N Auto and Fishing Supply

2.1 Supplier Relationship Management

J&N Auto and Fishing Supply recognizes its suppliers as critical

partners in maintaining operational efficiency and ensuring product

availability. They have established a supplier selection process prioritizing

competitive pricing, reliable delivery timeframes, and consistent product

quality. While formal contracts are not employed, J&N engages in

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informal negotiations to establish clear agreements on these critical

aspects. Their commitment to fostering strong supplier relationships,

characterized by open communication and mutual trust, is driven by the

belief that effective collaboration leads to improved operational efficiency

and ultimately contributes to business success.

2.2 Inventory Management

J&N Auto and Fishing Supply relies on a traditional inventory

management system that tracks sales data to monitor stock levels. While

this offers essential stock visibility, it presents potential challenges,

primarily occasional stockouts for less frequently purchased items. For

instance, recent shortages of specialized fishing lures, not reflected in their

primary sales data, led to missed customer sales and potential revenue

loss. This reliance on sales data without additional forecasting or demand

analysis highlights the limitations of informal inventory management

practices. It underlines the potential benefits of implementing more formal

systems in the business.

2.3 Logistics Management

J&N Auto and Fishing Supply's logistics management is well

organized. When they receive the purchase order, they evaluate their

products for quality, condition, and readability. The company guarantees

that its product will be transported without flaws from when it is correctly

packed until delivered to the clients. Before reaching the customer, the
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company assures that all the products have been tested. They are

responsible for ensuring that the products are delivered on schedule.

2.4 Customer Relationship Management

J&N Auto and Fishing Supply customers are local. Wholesalers,

retailers, and individuals technically acquired products. The company has

a purchase order, is walk-in, and communicates effectively with clients.

The company strives to develop solid customer connections by providing

high-quality items, on-time delivery, in-demand products, exceptional

performance and services, and a competitive price. When J&N Auto and

Fishing Supply receives a complaint from a customer, they analyze the

situation and offer relevant remedies. The company occasionally receives

returns for a variety of reasons. They ensure the customer-company

relationship does not negatively impact the business's performance.

3. Financial Performance

3.1 Profitability

J&N Auto and Fishing Supply's profitability has steadily increased

over the years. Although the increase in their profitability is low, the

business was able to cover their cost of sales and operating expenses in

2021 and 2022 due to the significant increase in their net sales. The

inflation and pandemic have affected the business in terms of

experiencing a net loss in 2020. Although the business could cover the
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cost of sales, more than its generated gross income was needed to cover its

high operating expenses.

3.2 Liquidity

J&N Auto and Fishing Supply need better liquidity because most of

their assets are tied up to their inventory, which implies that they need to

utilize their assets more efficiently. However, they may be able to meet

current obligations. The business may also need help paying off its short-

term obligations using its most liquid assets since a significant portion of

its current assets is tied to its inventory. The business needs to reduce its

inventory level by improving the inventory turnover rate and increasing its

quick assets to avoid problems in meeting short-term obligations.

3.3 Activity

With a low inventory turnover rate, J&N Auto and Fishing Supply

allocates a significant portion of their current assets to their inventory. The

business requires efficient inventory management as it takes a significant

amount of time to sell its inventory during a typical working day. To

increase its inventory turnover rate, the business must exert significant

effort to improve inventory management and eradicate stagnant inventory.

The business has a low asset turnover rate, indicating a potential

inefficiency in effectively utilizing its assets to generate revenue.

Conversely, the business demonstrates a high receivable turnover,

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indicating a strong collection program and efficient efforts to decrease

outstanding receivables.

3.4 Stability

J&N Auto and Fishing Supply has balanced financial stability. Even

though they are still considered leveraged, they were able to strike a

balance between their debt and capital. The business has been able to

increase its equity and lower its debts over the years, which means it is

doing its best to reduce its financing using debts and improve funding

using capital.

4. Effects of supply chain management practices on the financial

performance of J&N Auto and Fishing Supply

Supply Chain Management (SCM) strategies significantly impact J&N

Auto and Fishing Supply's financial performance. According to the company,

inventory management has the most significant impact on financial

performance. The COVID-19 pandemic also impacted financial performance,

particularly in 2020, and the rest of the following year was rather complex,

necessitating significant adjustments and adaptations to keep the business

running constantly. They cultivate close relationships with suppliers to obtain

lower prices and higher-quality materials. They also cultivate positive

customer relationships to sustain customer and client loyalty and increase

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sales and profit. Profit from operational activities determines the company's

performance. Logistics is the first step in doing so and minimizing the costs of

business performance results. Effective SCM management aids the company

in profitability, liquidity, activity, and stability, all of which contribute to the

company's success.

5. Problems and limitations encountered in supply chain management

J&N Auto and Fishing Supply ran into issues at every stage of their

supply chain. They require suppliers that can benefit them from the items, but

some terms and conditions must be met, limiting their supplier options. They

lack appropriate inventory management, resulting in financial losses,

consumer unhappiness, and supply chain problems. They are also suffering

delivery delays. Despite the inspection system, they also received customer

complaints concerning product flaws.

6. The proposed Point of Sale (POS) System and Inventory Tracker in this

study will help businesses better manage their inventory and enhance their

performance and overall operation.

Conclusions

Supply chain management heavily influences J&N Auto and Fishing Supply's

financial success. Effectively managing supplier relationships, inventory, logistics, and

customer relationships allows the company to retain business productivity, acquire a

competitive advantage, boost customer happiness, and produce more profits. Each supply
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chain process has a cost, and these costs can be lowered if the supply chain is handled in

a way that is appropriate for the business. J&N Auto and Fishing Supply's financial

statements can advance and increase even more if the company's inventory is managed

wisely and accurately. They are developing strategies and ideas to reduce the company's

costs and expenses. Long-term relationships with customers and suppliers require

dedication and fulfillment. Maintain and develop new approaches to meet the demands

and desires of the business.

Recommendations

The researchers recommend the following:

For J&N Auto and Fishing Supply

1. Supplier Relationship Management

Cultivating robust and mutually beneficial supplier relationships should be

a cornerstone of J&N Auto and Fishing Supply's strategic approach. Strong

supplier relationships can demonstrably positively impact a company's success.

When trust and effective communication are fostered between buyer and seller,

several tangible benefits can accrue to J&N. Priority access to high-quality

products becomes a distinct possibility, ensuring J&N's customers receive reliable

and sought-after merchandise. Additionally, preferential pricing arrangements

could be negotiated, boosting J & N's profit margins and enhancing its

competitive edge. Moreover, enhancing communication and cooperation with

suppliers can decrease supply chain disruptions and order delays, guaranteeing

that J&N maintains a steady supply of products and high customer satisfaction.
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By developing strong supplier relationships, J&N can secure a reliable source of

quality products, optimize its procurement costs, and ultimately strengthen its

position within the market.

2. Inventory Management

Instead of relying solely on sales history for inventory management, J&N

Auto and Fishing Supply should consider using a Point-of-sale (POS) System and

an inventory tracker using Excel. POS System allows businesses to process sales

quickly and efficiently. It goes beyond basic transactions, offering valuable sales

data to help businesses understand what is popular and not and how to optimize

their stock. POS System streamlines operations by automating tasks, improving

customer experience with faster checkouts and more comprehensive payment

options, and empowering data-driven decision-making through inventory tracking

and sales analysis. By implementing a POS system, J&N Auto and Fishing

Supply can gain efficiency, reduce costs, and boost revenue, making it a tool for

achieving a competitive advantage.

Consequently, an inventory tracker built using Excel offers significant

advantages. The system offers a centralized and readily available inventory

record, enabling enhanced stock management and well-informed buying choices.

To mitigate the likelihood of inventory shortages and excess inventory, resulting

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in more streamlined operations, enhanced customer satisfaction, and reduced

storage expenses. The inventory tracker can track each J&N Auto and Fishing

Supply transaction, whether a purchase or a sale transaction.

3. Logistic Management

J&N Auto and Fishing Supply experienced courier issues and logistical

delays, particularly during this pandemic. Incorrect products or insufficient

delivery are sometimes encountered. The researchers advise always seeking

alternate ports, a reasonable courier, and giving freight more lead time. Before

shipping, always double-check the products during the inspection. To prevent

delivery delays, it is advisable to thoroughly verify maps and transportation

options and make a reservation ahead of time. These solutions increase the

likelihood that the product will reach its intended destination and be delivered to

customers. Furthermore, the company might invest in and supply more trucks to

carry things to assure the safety and security of the products as well as manage the

exact delivery date.

For future researchers

Researchers doing the same study should adopt a quantitative method to acquire

more accurate data regarding the impact of supply chain management on a company's

financial performance. In addition, it is advisable to prioritize the examination of several

firms in order to compare the results. Furthermore, it will provide guidance to academics
 134

as they conduct further investigations and gather additional insights on supply chain

management strategies for retailing enterprises.

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paperid=115258
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APPENDICES
 143

APPENDIX A
LETTER OF REQUEST

Republic of the Philippines

Southern Luzon State University
College of Administration, Business, Hospitality and Accountancy
Lucban, Quezon

October 06, 2023

Mr. Jenerchito Hipolito Jacinto and Ma’am Nenita N. Jacinto

J&N Auto and Fishing Supply
Atimonan, Quezon

Dear Ma’am,

Greetings of Peace and Prosperity!

The undersigned are 4th-year students of BS Accountancy, currently enrolled in the
subject Research 01, at Southern Luzon State University, with research working title
“SUPPLY CHAIN MANAGEMENT PRACTICES OF J&N AUTO AND
FISHING SUPPLY IN ATIMONAN, QUEZON AND ITS FINANCIAL
PERFORMANCE FOR THE YEARS 2020-2022.”

We would like to request from your good office to allow us to conduct our study by
asking permission to provide us with our needed data for our research study. We would
like to have an interview schedule and kindly provide us with the financial statement for
the years 2020-2022. Rest assured that the data gathered will be strictly for research
purposes and will be kept with utmost confidentiality.

We are looking forward to a favorable response to our request.

Our contact numbers are: 09203472221, 09939627650 and 09197746030.

Email Address: [email protected], [email protected], and
[email protected]

Thank you and God bless!

Respectfully yours,

Rosa Lia C. Paz

Reina Mae M. Riego Noted by:
Mirasol T. Relleve Lourdes Judith Salvacion Sarabia, CPA
Researchers Research Coordinator
 144

APPENDIX B

INTERVIEW GUIDE QUESTIONS

COMPANY PROFILE:

Name of the Company:

Tel. No.:

Type of Business:

Nature of Business:

Numbers of Years in Operation:

Part 1: Background characteristics

a. Background of the company

i. Who are the principal owner/s?

ii. When was the company established?

iii. Where is the location of the enterprise?

iv. What are the goals, mission and vision of the business?

v. What are the organizational goals of the business?

vi. What are main products of J&N Auto and Fishing Supply?

vii. How many employees do you have at present?

viii. Does the company have other branches?

b. Organizational Structure

c. Technical Structure

i. Layout of the business

ii. Storage Area

 145

Part 2: Supply Chain Management Practices

a. Supplier Relationship Management

i. How do you identify and select your suppliers?

ii. What are the factors you consider in selecting your suppliers?

iii. What are the purchasing strategy and processes of J&N Auto and

Fishing Supply?

iv. How many suppliers you have at the moment?

v. Do you have suppliers globally?

vi. Do you have contracts or memorandum of agreement with suppliers? If

so, why?

vii. If your regular supplier of products doesn't have enough stock do you

look for other supplier?

viii. When do you decide to make an order?

ix. How often do you order from your supplier?

x. How do you evaluate the performance of suppliers?

xi. Does your suppliers always deliver on time?

xii. How do you strive for long-term relationships with your suppliers?

xiii. Why do you think it is important to build long-term relationships with

suppliers?

xiv. Do you consider negotiations with your suppliers at a fixed rate or by

quota? Why?
 146

b. Inventory Management

i. How do you monitor your stocks?

ii. Do you practice inventory management?

a. If so, what are your inventory management practices?

b. If not, how do you manage your inventory and how will you know

if you need to purchase another stocks?

iii. What are the inventory control strategies used by your company?

iv. How do you account for damaged items?

v. Do you have your own storage area or you are renting it?

vi. How do you keep your products in your storage area?

vii. How do you manage to keep items in demand to satisfy customers

without having to bear carrying costs for unsold items?

c. Logistics Management

i. What are your transportation and distribution management practices?

ii. What factors do you consider for the final inspection of products

before delivering them to customers?

iii. Do you always deliver on time? If yes, what are its advantages? If not,

what are its disadvantages?

iv. How long does it take before the products arrive in your customer’s

area?

v. What mode of transportation do you use in delivering products to the

customers?
 147

vi. What kind of delivery vehicles do you have? What is the capacity of

each vehicle?

vii. How do you ensure the safety of products while transporting it?

d. Customer Relationship Management

i. Who are the main clients of the company? Local and Global

ii. What are the processes or steps in making an order?

iii. Do you have contracts or memorandum of agreement with suppliers?

If so, why?

iv. What type of clients do you have? Are they a company or individual

customers?

v. How often do your customers buy?

vi. Do you always meet the demand of your customer? If not, what do you

do? What do you think is the cause?

vii. Do you have frequent follow-up procedures with customers?

viii. What is the approximate amount of returns from customers?

ix. How do you strive for long-term relationships with your customers?

x. Why do you think it is important to strive for long-term relationships

with customers?

xi. Are there any circumstances where you receive a complaint from a

customer? How did you solve it?

 148

Part 3: Effects of Supply Chain Management Practices to Financial Performance

a. How did you adapt your sales strategy to cope with limited in-person

shopping during the pandemic?

b. In the context of the COVID-19 pandemic, what were the main challenges

faced by J&N Auto and Fishing Supply in 2020 that led to lower gross profit

margins?

c. The business managed to turn a -0.80% net profit margin in 2020 to a +2.12%

in 2021. What innovative cost-cutting measures or revenue generating tactics

did you adopt to overcome these challenges and achieve profitability?

d. J&N Auto and Fishing Supply, a merchandising business, had quick ratios of

0.17 in 2020, 0.15 in 2021, and 0.23 in 2022. While the 2021 ratio seems

low, your payment history to suppliers was always on time. How might this

fluctuation in quick ratio, particularly the low value in 2021, have affected

your relationships with suppliers in terms of credit terms or delivery

priorities?

e. To ensure efficient operations and improve customer satisfaction, what key

strategies and process can you adopt to establish a productive inventory

management system for the next years?

f. J&N Auto and Fishing Supply has been able to strike a balance between debt

and equity in its capital structure. Do you believe they have a positive impact

on the supplier relationship and inventory management?

g. What was the reason why net profit margin fell to -0.80% in 2020?
 149

h. The cost of sales of your company from 2020-2022 is around 88% to 92% of

your net sales. How does the logistic management affect the large percentage

of cost of sales?

i. Do you think supply chain management has an influence in the financial

performance of J&N Auto and Fishing Supply?

j. What is the main goal of your company regarding supply chain management?

k. In your perspective, which in the profitability, liquidity, activity and stability

has the most influence that affect in the financial performance?

l. How has customer relationship management benefited J&N Auto and Fishing

Supply's growth over the years?

m. Does your customer relationship affect the inventory turnover for the year

2020-2022? What will be the outcome of it in the performance of the

business?

Part 4: Problems encountered in relation to Supply Chain Management Practices

a. Please state the major and minor encountered by the business in supply chain

management practices.

i. Supplier Relationship Management

ii. Inventory Management

iii. Logistics Management

iv. Customer Relationship Management

 150

APPENDIX C

Financial Statements

Balance Sheets

J&N Auto and Fishing Supply

STATEMENT OF FINANCIAL POSITION
For the year ended December 31

2022 2021 2020

ASSETS
Current Assets
Cash ₱ 198,096.00 ₱ 84,370.00 ₱ 110,170.00
Account Receivables 155,040.00 172,060.00 150,220.00
Inventories 10,357,811.00 9,703,650.00 9,035,950.00
Total Current Assets 10,710,947.00 9,960,080.00 9,296,340.00

Noncurrent Assets
Property, Plant and Equipment 7,256,000.00 7,732,000.00 8,208,000.00

TOTAL ASSETS ₱ 17,966,947.00 ₱ 17,692,080.00 ₱ 17,504,340.00

TOTAL LIABILITY AND EQUITY

Current Liability
Trade and other payables ₱ 1,505,000.00 ₱ 1,663,028.00 ₱ 1,543,235.00

Non-current Liability
Loan Payable 8,625,064.00 8,921,395.00 9,160,646.00

TOTAL LIABILITY 10,130,064.00 10,584,423.00 10,703,881.00

Equity
J&N, Capital 7,836,883.00 7,107,657.00 6,800,459.00

TOTAL LIABILITY AND EQUITY ₱ 17,966,947.00 ₱ 17,692,080.00 ₱ 17,504,340.00

 151

Statement of Income and Expenses

J&N Auto and Fishing Supply

STATEMENT OF INCOME AND EXPENSES
For the year ended December 31

2022 2021 2020

SALES ₱ 15,831,146.00 ₱ 14,515,124.00 ₱ 12,144,614.00
LESS: COST OF SALES 14,015,757.00 13,147,791.00 11,200,766.00
GROSS PROFIT 1,815,389.00 1,367,333.00 943,848.00

LESS: OPERATING EXPENSES

Salaries and Wages 255,348.00 250,188.00 238,899.00
Communication, Light and Water 155,071.00 152,726.00 160,313.00
Taxes and Licenses 74,876.00 71,057.00 75,689.00
SSS, PhilHealth & Pag-ibig 25,779.00 25,779.00 25,779.00
Supplies Expense 7,289.00 6,942.00 6,662.00
Delivery Expenses 24,111.00 22,841.00 25,860.00
Repair and Maintenance Expenses 20,118.00 18,992.00 16,023.00
Depreciation Expense 476,000.00 476,000.00 476,000.00
Total Operating Expenses 1,038,592.00 1,024,525.00 1,025,225.00

NET INCOME BEFORE TAX 776,797.00 342,808.00 - 81,377.00

LESS: PROVISION FOR INCOME TAX 47,571.00 35,610.00 15,757.00

NET INCOME AFTER TAX ₱ 729,226.00 ₱ 307,198.00 -₱ 97,134.00

 152

Statement of Changes in Equity

 153

Statement of Cash Flow

J&N Auto and Fishing Supply

J&N Auto and
STATEMENT OFFishing Supply
CASH FLOWS
STATEMENT OF CHANGES IN31EQUITY
For the year ended December
For the years ended 2020, 2021, and 2022

2022 2021 2020

CASH FLOW FROM OPERATING ACTIVITIES
Total Equity
Net Income ₱729,226.00 ₱ 307,198.00 -₱ 97,134.00
Balance as
Adjustment forofdepreciation
December 31, 2021, as previously reported
expense 476,000.00 ₱
476,000.00 7,107,657.00
476,000.00
Net Income
Operating Incomeforbefore
the year
working capital changes 1,205,226.00 ₱
783,198.00 729,226.00
378,866.00
Balancein at
Increase December 31, 2022
receivables 17,020.00 - ₱
21,840.00 7,836,883.00
5,390.00
Increase in Inventories - 654,161.00 - 667,700.00 - 495,406.00
Increase in trade and other payables - 158,028.00 119,793.00 18,045.00
Balance as of December 31, 2020, as previously reported ₱ 6,800,459.00
Net cash used in operating activities ₱ 410,057.00 ₱ 213,451.00 -₱ 93,105.00
Net Income for the year ₱ 307,198.00
Balance
CASH at December
FLOW 31, 2021 ACTIVITIES
FROM INVESTING ₱ 7,107,657.00
Acquisition of noncurrent assets during the year - - -
Net cash used
Balance as ofin December
investing activities
31, 2019, as previously reported - - ₱ - 6,897,593.00
Net Income for the year -₱ 97,134.00
CASH FLOW FROM FINANCING ACTIVITIES
Balance at December 31, 2020
Increase in Loans Payable -₱ 296,331.00 -₱
₱
239,251.00 ₱
6,800,459.00
109,165.00
Net cash used in investing activities - 296,331.00 - 239,251.00 109,165.00

NET CASH OUTFLOWS ₱ 113,726.00 -₱ 25,800.00 ₱ 16,060.00

CASH AT BEGINNING OF THE YEAR ₱ 84,370.00 ₱ 110,170.00 ₱ 94,110.00

CASH AT THE END OF THE YEAR ₱ 198,096.00 ₱ 84,370.00 ₱ 110,170.00

 154

APPENDIX D

J&N AUTO AND FISHING SUPPLY

VARIETY OF PRODUCTS AND IT’S PRICE

AUTO SUPPLY

₱
Acxel Stud 15.00
₱
Alternator 4,800.00
₱
Alternator Hose 250.00
₱
Auto Bulb 20.00
₱
AVR 780.00
₱
Ball Joint 650.00
₱
Ball Mirror 250.00
₱
Banjo Volt 85.00
₱
Banjo Volt Washer 20.00
₱
Battery Cable 175.00
₱
Battery Clip 75.00
₱
Battery Lug 35.00
₱
Battery Terminal 75.00
₱
Bearing 980.00
₱
Bosch Relay 260.00
₱
Box Wrench 85.00
₱
Brake Hose 280.00
 155

₱
Brake Master Assembly 2,200.00
₱
Brake Master Kit 480.00
₱
Brake Pad 1,400.00
₱
Bulb Socket 20.00
₱
Bushing 140.00
₱
Calliper Piston 250.00
₱
Clamp 25.00
₱
Clutch Disk 3,000.00
₱
Clutch Master Assembly 1,000.00
₱
Clutch Master Kit 350.00
₱
Clutch Operating Kit 250.00
₱
Clutch Spring 110.00
₱
Connrod Bearing 180.00
₱
Copper Tube 25.00
₱
Copper Washer 35.00
₱
Cross Joint 680.00
₱
Cylinder Head Gas Kit 2,900.00
₱
Diesel Oil 360.00
₱
Disc Pad 750.00
₱
Engine Support 220.00
₱
Eye Terminal 5.00
Fan ₱
 156

680.00
₱
Fan Belt 200.00
₱
Fittings 25.00
₱
Flap 180.00
₱
Flasher Relay 205.00
₱
Fuel Cap 220.00
₱
Fuel Filter 280.00
₱
Fuel Hose 250.00
₱
Fuel Pump 2,300.00
₱
Fuse 10.00
₱
Fuse Box 350.00
₱
Halogen Bulb 330.00
₱
Hanger 380.00
₱
Horn 380.00
₱
Hub Volt 220.00
₱
Ignition Switch 480.00
₱
Inverted Knot 15.00
₱
Log Screw 65.00
₱
Lug nut 45.00
₱
Molye 1,100.00
₱
Motor Oil 190.00
₱
Nozzle 600.00
 157

₱
Nozzle Tip 900.00
₱
O Ring 50.00
₱
Oil Filter 380.00
₱
Oil Hose 250.00
₱
Oil Ring 45.00
₱
Oil Seal 240.00
₱
Oil Seal 220.00
₱
Open Box Wrench 70.00
₱
Open Wrench 50.00
₱
Peanut Bulb 20.00
₱
Piston 800.00
₱
Piston Pin 250.00
₱
Piston Ring 900.00
₱
Pressure Plate 3,800.00
₱
Radiator Cap 220.00
₱
Shock 1,000.00
₱
Shock Bushing 65.00
₱
Shock Volt 75.00
₱
Side Lamp 180.00
₱
Side Mirror 280.00
₱
Silicon Gas Kit 145.00
Silicon Oil ₱
 158

110.00
₱
Sim Brass 100.00
₱
Sleave 3,200.00
₱
Spring 20.00
₱
Steel Tube 25.00
₱
Switch 90.00
₱
Tierod End 1,002.00
₱
Transmission Support 280.00
₱
Tube 350.00
₱
Valve Exhaust 480.00
₱
Valve Intake 480.00
₱
Water Pump 2,800.00
₱
Wheel Cap 65.00
₱
Wiper Arm 250.00
₱
Wiper Blade 230.00
FISHING SUPPLY
Bait ₱ 580.00
Ball Joint ₱ 205.00
Brass Pipe ₱ 360.00
Carburator ₱ 700.00
Chain Lock ₱ 50.00
Copper Nail ₱ 850.00
Cover ₱ 400.00
Cross Joint ₱ 1,500.00
Engine ₱ 3,500.00
Epoxy ₱ 755.00
Epoxy Hardener ₱ 140.00
Epoxy Paint ₱ 300.00
 159

Evelone Rope ₱ 1,290.00

Fish Net ₱ 6,500.00
Fishing Hook ₱ 620.00
Float ₱ 100.00
Fuel Line ₱ 200.00
Fuel Tank ₱ 720.00
Fuel Tank Gas Kit ₱ 50.00
Galvanize Nail ₱ 300.00
Generator ₱ 8,500.00
Generator Plug ₱ 220.00
Ignition Coil ₱ 220.00
Ignition Coil Plug ₱ 50.00
Lead ₱ 180.00
Life Vest ₱ 250.00
Light Lite ₱ 350.00
Nozzle Tip ₱ 580.00
Nylon ₱ 500.00
Paddle ₱ 165.00
Paint ₱ 200.00
Plastic ₱ 450.00
Pollytilin Rope ₱ 2,300.00
Propeler ₱ 890.00
Propeler Nut ₱ 50.00
Reel ₱ 200.00
Ring Vest ₱ 250.00
Roller Chain ₱ 1,500.00
Spurk Plug ₱ 105.00
Spurk Plug Wrench ₱ 260.00
Stainless Hook ₱ 75.00
Stainless Shafting ₱ 350.00
Stainless Square Head ₱ 65.00
Stainless Wire ₱ 120.00
Straw Rope ₱ 85.00
Styro Foam ₱ 280.00
Timon ₱ 1,500.00
Twine ₱ 55.00
HARDWARE SUPPLY
₱
Acrylic 75.00
₱
Adaptor 68.00
Adjustable Wrench ₱
 160

320.00
₱
Black Screw 2.00
₱
Bronze Brush 80.00
₱
Bulb 90.00
₱
C Clam 380.00
₱
Carburandom 140.00
₱
Common Nail 75.00
₱
Cotton Tape 120.00
₱
Drill Bit 65.00
₱
Elastomeric Paint 320.00
₱
Elastoseal 100.00
₱
Electrical Tape 50.00
₱
Eveready Battery AA 70.00
₱
Eveready Battery AAA 100.00
₱
Eveready Battery D Size 45.00
₱
Extension Wire 280.00
₱
Female Plug 38.00
₱
Flat Screw 120.00
₱
Flyer 390.00
₱
Fuse 25.00
₱
Fuse Box 400.00
₱
Hacksaw 280.00
 161

₱
Hacksaw Blade 65.00
₱
Hammer 380.00
₱
Janction Box 240.00
₱
Led Bulb 150.00
₱
Liha 20.00
₱
Long Nose 240.00
₱
Lucquer Thinner 60.00
₱
Masking Tape 75.00
₱
Metal Screw 2.00
₱
Neeple 68.00
₱
Outlet 120.00
₱
Packaging Tape 85.00
₱
Paint Brush 1 28.00
₱
Paint Brush 2 45.00
₱
Paint Thinner 55.00
₱
Palette 25.00
₱
Philip Screw 120.00
₱
Receptacle 48.00
₱
Regulator 270.00
₱
Regulator Host 140.00
₱
Roof Paint 320.00
Rubber Plug ₱
 162

38.00
₱
Screw 150.00
₱
Sealant 180.00
₱
Shoe Tacks 130.00
₱
Side Cutter 240.00
₱
Socket 65.00
₱
Stapple Wire 68.00
₱
Steel Brush 45.00
₱
Switch 100.00
₱
Tapelon 20.00
₱
Universal Adaptor 100.00
₱
Vice Grip 880.00
₱
Vulcaseal 85.00
₱
Wire 38.00
 163

APPENDIX E

DOCUMENTATION PICTURE
 164

Physical Store

Fishing Supply Products

 165

Testing of product
 166

Storage room of Auto Supply Products

 167

Storage Room Fishing Supply Products

 168

Storage room for other fishing supplies and delivery vehicles