Page 420 - Manual-of-Operation-Merged

CvSU MANUAL OF OPERATIONS
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It can be noted that incentives are only given to the
college/project personnel if the project’s ROI is 15% or higher.

5. Return on Equity (ROE) = Net Income

Total Project’s Equity

-This ratio shows the earning rate of the project’s equity. The
project is profitable if ROE is greater than opportunity cost of
capital.

6. Return to labor = Total Revenue – All costs Other than
Labor

Total Labor Cost

This ratio shows the net earnings realized per peso labor cost
incurred in the project.

Labor Sales Ratio = Labor Cost

Sales

7. Labor Sales Ratio- This ratio shows how much is spent on
labor per peso sales revenue generated by the project.

8. Labor – Sales Generation Efficiency = Sales

Labor Cost
-This ratio shows the amount of sales revenues generated per
peso labor cost incurred in the project.

9. Labor – Income Generation Efficiency = Net Income

Labor Cost
e. Break Even Analysis

The Project Manager should know the minimum level of
production and sales volume that must be maintained by the
project to at least breakeven. The cost structure of the project
can also be considered in setting the selling price and the
desired profit in a given production period. To breakeven means
that the project will neither earn a net income/profit nor incur a
net loss in its operation.
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