Re: PNL understanding, thin lot GP and why there is a need for prudent and frugal operations management

On Wed, Nov 5, 2025 at 6:59 AM Jorge Saguinsin <jorge@holygardens.ph> wrote:

 

Hi All,

This email outlines the fundamental principles of fiscal discipline and the necessity of prudent financial management and resource conservation within our business.

1. **Basic Business Formula: Sales - Cost = Gross Profit**

Our core objective is to consistently increase sales while simultaneously reducing costs and expenses. These are the primary drivers of our business, ensuring salaries are paid and operations are sustained. Unlike government entities, we must diligently account for every peso spent, as our revenues are not guaranteed.

2. **Break-Even Analysis of a Sales Transaction**

To illustrate, let's analyze the deductions from each sales transaction:

* **Standard Deductions (52% of Transaction Value):**

* VAT: 12%

* Memorial Care Fund: 15%

* Marketing Expense: 15%

* Collection Fee: 5%

* Insurance: 5%

* **Total: 52%**

* **Joint Venture (JV) Share:**

* Ranges from 40% to 50% (potentially higher if the land was purchased).

* **Development Cost (P3,500/sqm, potentially higher at current costs):**

* Lawn: P8,750

* SSN: P35,000

* GE: P105,000

**Example Application (for a lot previously sold at P60,000 during a promotion):**

* Total Selling Price (TSP): P60,000

* Less 52% Deductions: P31,200

* **Net Gross Profit:** P28,800

* Less JV Share (e.g., 50%): P14,400

* Less Cost of Goods Sold (COGS): P8,750

* **Gross Profit (GP): P5,650**

This P5,650 represents the margin available to cover our operating expenses. In this example, the profit margin is 9.4% (P5,650 / P60,000).

    Break even computation:

            Using 5,650 as margin as base:

           Monthly OE   (Estimate

                          Telephone:                              P2,000

                          Electricity                                 10,000

                          Water                                        20,000

                          Security F                                 25,000

                          Staff salary    6 x  16                96,000

                         Executive salary                        30,000

                         Total                                          183,000

                        BE  =   183,000/5,650              32 lots

                       This means for the entire year to break even we have to have 32 x 12 =     384!!!   Our target of 100, 200, 300 are not enough to break even!

                       Thus as seen from reality/background:    wherein we had 1 sale, 10 sales,     

          To address this PNL issue:

          1   We have to increase sales by:

                Increasing sales

               1.  Asking for marketing plan

               2.  Increasing TLP

                   In HGOMP our former price of P75,000 is way below the competitors P150,000  same as in HGGMP

                Reduce cost:

             1.  Make our marketing events relevant to achieve sales;    Marketing is at "AT A PROFIT"

                 One sbu spent P190,000 for Marketing Event

            2.  Keep labor costs to a minimum;    

            3.  FInd the leaks the small holes where expenses are leaking

 Anyone;    please show computation on the contrary that we are making profit

                  is there a substitute for the formula -  sales- cost  =  GP,   BE  =  Total expenses/ GP plot

OTHERWISE WE SEEK ABCD FROM EVERYONE

                                   

Best regards,

Jorge Saguinsin