CHAPTER 1
INTRODUCTION
I. BACKGROUND OF THE STUDY
Pharmacies are very important business establishments in a community or city because this is where people buy drugs and other medical supplies needed especially for home medications, hospitals, or emergencies. Pharmacies are varying in demand anywhere that is why this can also be a good business idea. The main job of a pharmacy is to fill prescriptions made by doctors or other medical professionals. A pharmacist offers advice on medication and a pharmacy technician helps package the prescription. Today, added services are being offered by most pharmacies while some also have their own health and food convenience stores. Some medicines that can be bought from pharmacies don’t require prescription.
Handling a business is not easy as one two three. An interested owner that deals with selling of pharmaceutical products need determination to operate business, the guts to get it going, the power to motivate his employees and the financial commitment to make it happen. You should also be competitive, a positive thinker and a goal minded person in order for you to make the business successful. One of the ways to be successful in business is to manage the cash properly and wisely.
Cash management is a marketing term for certain services offered primarily to larger business customers. It may be used to describe all bank accounts (such as checking accounts) provided to businesses of a certain size, but it is more often used to describe specific services such as cash concentration, zero balance accounting, andautomated clearing house facilities. Sometimes, private banking customers are given cash management services.
Cash management is a broad area having to do with the collection, concentration, and disbursement of cash including measuring the level of liquidity, managing the cash balance, and short-term investments. If at any time, because of a lack of cash, a corporation fails to pay an obligation when it is due, the corporation is insolvent. Insolvency is the primary reason firms go bankrupt. Obviously, the prospect of such dire consequence compels companies to manage their cash with care. Moreover, efficient cash management means more than just preventing bankruptcy. It improves the profitability and reduces the risk the firm is exposed to.
As the researchers talk about pharmacy, Guico-Olivares Pharmacy is one of the known drug store in San Pedro Laguna, operating for more than 10 years and selling cheaper medicines than those commercial stores nearby. It is a sole proprietorship business owned by Ms. Baby Olivares. Similarly there are also a thousand of pharmacies in the Philippines that provide Bureau of Food and Drugs approved medicines. Most of the standard pharmacies are manned with professionals that have studied and trained in top medical schools in the country. Also, the Philippines is not that very lenient when it comes to prescription drugs. While there are some countries that allow their patients to obtain drugs without being prescribed by their respective doctors, the Filipino pharmacies are very strict in dealing with such situations.
The pharmaceutical retail market in the Philippines is made up of outlets composed of commercial drugstores, government hospital pharmacies, and privatehospital pharmacies. Drugstores account for 85% of all drugs sold in the Philippines. Pharmacies in government and private hospitals serve the rest of the market.
Single proprietors and community-based, non-government organizations own most of the small outlets in rural and small urban communities. Medicines in public facilities are accessed through government hospital pharmacies controlled by the Department of Health (DOH) and through provincial and district hospital pharmacies and health centers controlled by local governments.
Since Guico-Olivares Pharmacy is a community based organization in San Pedro, its profitability is dependent on how they deal with compounding, counseling, and dispensing of drugs on prescription to the customers with care, accuracy, and legality.
II. OBJECTIVE OF THE STUDY
The study “Cash Management of Guico-Olivares Pharmacy in San Pedro, Laguna” is generally concerned with the procurement, allocation and control of cash management of the drugstore. The objectives of the study are:
1. To ensure regular and adequate supply of funds of Guico-Olivares Pharmacy.
2. To determine adequate income to the owner which depend upon the earning capacity and expectations of customers?
3. To ensure optimum funds utilization. Once the funds are produced, they should be utilized in maximum possible way.
III. STATEMENT OF THE PROBLEM
The purpose of the research is to determine the problem of this study. Specially, the researchers want to answer the following questions:
1. How does Guico-Olivares Pharmacy manage its capital?
2. How does the management handle the cash resources they receive?
3. What are the ways that the management does to administer the cash resources in order for them to stay in the business?
4. How much profit does the company earn?
5. How much does the company allotted for savings and for the continuity of the business?
IV. SIGNIFICANCE OF THE STUDY
The significance of the study is to know the Cash Management of Guico-Olivares Pharmacy in San Pedro, Laguna. This study will benefit the following:
1. Business Owner. There are many problems that the business may encounter. The study seems to identify the primary problems of owning or managing a drugstore. It can help the managers to be ready for whatever consequences they will be having the idea on how to solve it.
2. Customers. A customer should know the strengths and weakness of the store where they are buying. This study will determine the advantages and disadvantages buying in drugstores.
3. Prospective Pharmacy Owner. The study tends to inform those who are interested of owning a business that deals with pharmaceutical products that they may encounter if they would engage in this type of business. It will help them to decide continue and help them to know more about the business and manage their money.
4. Local government. The local government may know in this study if a certain drugstore is following the rules and regulations they are implementing especially in paying the right amount of taxes, if they are complying with the right selling prices of the goods they are selling and if they are following the policies about the cleanliness and sanitation of their premises.
5. Employees. Since this is a study of cash management of a pharmacy, employees may get the knowledge on where to apply for work. This study will be useful for them in the way that they can check if the management of the store are going to get their jobs can pay salaries and wages in the right time and in the right amount. This study might help them for deciding to go or not to apply on a certain pharmacy.
6. Future Researchers. Giving emphasis on the evaluation of cash management of Guico-Olivares pharmacy could give the future researchers a great idea that they could also conduct similar studies with.
V. SCOPE AND LIMITATIONS
This study focuses on the cash management of Guico-Olivares Pharmacy in the municipality of San Pedro, Laguna. The researchers used the indirect method through questionnaires and observation method to achieve the goal of this study.
VI. CONCEPTUAL FRAMEWORK
This diagram is showing the conceptual framework of the study which will serve as a guideline. This shows the expected output of the study which is the evaluation of cash management of Guico-Olivares Pharmacy through the use of the information gathered by the inputs and process.
OUTPUT
Evaluated Cash Management of Guico-Olivares Pharmacy
PROCESS
*Questionnaire answered by the owner
*Observation Method
INPUT
* Internal control of cash
*Policies relating to cash management
*Payment of salary of employees

VII. THEORETICAL FRAMEWORK
Motives for holding cash
A distinguishing feature of cash as an asset, irrespective of the firm in which it is held, is that it does not earn any substantial return for the business. In spite of this fact cash is held by the firm with following motives.
1. Transaction motive. A firm enters into a variety of business transactions resulting in both inflows and outflows. In order to meet the business obligation in such a situation, it is necessary to maintain adequate cash balance. Thus, cash balance is kept by the firms with the motive of meeting routine business payments.
2. Precautionary motive. A firm keeps cash balance to meet unexpected cash needs arising out of unexpected contingencies such as floods, strikes, presentment of bills for payment earlier than the expected date, unexpected slowing down of collection of accounts receivable, sharp increase in prices of raw materials, etc. The more is the possibility of such contingencies more is the cash kept by the firm for meeting them.
3. Speculative motive. A firm also keeps cash balance to take advantage of unexpected opportunities, typically outside the normal course of the business. Such motive is, therefore, of purely a speculative nature.
4. Compensation motive. Banks provide certain services to their clients free of charge. They, therefore, usually require clients to keep minimum cash balance with them, which help them to earn interest and thus compensate them for the free services so provided.
Business firms normally do not enter into speculative activities and, therefore, out of the four motives of holding cash balances, the two most important motives are the compensation motive.
There are two basic objectives of cash management: * To meet the cash disbursement needs as per the payment schedule; * To minimize the amount locked up as cash balances.
1. Meeting cash disbursements. The first basic objective of cash management is to meet the payments Schedule. In other words, the firm should have sufficient cash to meet the various requirements of the firm at different periods of times. The business has to make payment for purchase of raw materials, wages, taxes, purchases of plant, etc. The business activity may come to a grinding halt if the payment schedule is not maintained. Cash has, therefore, been aptly described as the “oil to lubricate the ever-turning wheels of the business, without it the process grinds to a stop.”
2. Minimizing funds locked up as cash balances. The second basic objective of cash management is to minimize the amount locked up as cash balances. In the process of minimizing the cash balances, the finance manager is confronted with two conflicting aspects. A higher cash balance ensures proper payment with all its advantages. But this will result in a large balance of cash remaining idle. Low level of cash balance may result in failure of the firm to meet the payment schedule.
The finance manager should, therefore, try to have an optimum amount of cash balance keeping the above facts in view.
VII. DEFINITION OF TERMS 1. Bankruptcy - a legal status of a person or organization that cannot repay the debts it owes to creditors. 2. Bureau of Food and Drugs - a regulatory agency that ensures the safety, efficacy, purity and quality of processed foods, drugs, diagnostic reagents, medical devices, cosmetics and household hazardous substances through state-of-the art technology, as well as the scientific soundness and truthfulness of product information, for the protection of public health. 3. Capital Structure – The permanent long-term financing of a company, including long-term debt, common stock and preferred stock, and retained earnings. 4. Cash Management- The corporate process of collecting, managing and (short-term) investing cash. A key component of ensuring a company's financial stability and solvency. Frequently corporate treasurers or a business manager is responsible for overall cash management 5. Department of Health - is the administrative department of the Philippine government charged with overseeing the health of the public. The department is obligated to make sure that health services are made available and accessible to all Philippine citizens. Their task is to improve health care quality, and to ensure that health care facilities are up to standard. 6. Disbursement - paying out in the discharge of a debt or expense. 7. Drug - a substance which may have medicinal, intoxicating, performance enhancing or other effects when taken or put into a human body or the body of another animal and is not considered a food or exclusively a food. 8. Insolvency - incapacity to pay debts upon the date when they become due in the ordinary course of business; the condition of an individual whose property and assets are inadequate to discharge the person's debts. 9. Investment - The purchase of a financial product or other item of value with an expectation of favorable future returns. 10. Medicine - the science of diagnosing, treating, or preventing disease and other damage to the body or mind. 11. Pharmacist - also known as druggists or chemists, are healthcare professionals who practice in pharmacy. 12. Pharmacy - is the health profession that links the health sciences with the chemical sciences and it is charged with ensuring the safe and effective use of pharmaceutical drugs. 13. Pharmacy technician - also sometimes known as a pharmaceutical technician, is a health care worker who performs pharmacyrelated functions, generally working under the direct supervision of a licensed pharmacist or other health professional. 14. Profitability - refers to the potential of a venture to be financially successful. This may be assessed before entering into a business or it may be used to analyze a venture that is currently operating. 15. Sole proprietorship - also known as the sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business.

CHAPTER II
REVIEW OF RELATED LITERATURE

I. FOREIGN LITERATURE
Walgreens is the largest drug retailing chain in the United States. As of January 31, 2012, the company operates 8,300 stores in all 50 states, the District of Columbia, Puerto Rico, and Guam. It was founded in Illinois in 1901. Walgreens headquarters are in the Chicago suburb of Deerfield.
Cash Management
The cash management of pharmacies and health systems is a combination of the traditional management of personnel and drug and supply costs with the management of the total costs of care. It includes determining the consequences of less than optimal drug therapy, improving drug therapy, and reengineering pharmacy departments and services across all patient care settings to deliver optimal pharmacotherapy. Prevention and reduction of adverse drug events, disease state management, and other methods to improve quality of care are of major importance.
CASH DISBURSEMENT
Internal control for the Cash Handling Policies is primarily concerned with cash receipts; however, that does not change its basic meaning in a financial setting. Internal controls are to safeguard assets, record financial transactions, and set standards for implementing financial policies and procedures that promote productivity and efficiency in the organization.
Financial statements and reports present a picture of the activities and status of an organization. In order to have confidence that transactions are reliably reported, internal controls are employed. Internal controls minimize errors in recording a large number of activities and help to ensure the reliability of financial reports. Accountants record financial activities according to a set of rules and thereby measure the effects of economic activity.
Internal control of retail drugstores is accomplished through procedures designed to safeguard assets, generate appropriate accounting data, and ensure efficient productivity. Controls are established primarily to prevent and minimize errors and fraud. Common internal control procedures for cash receipts include the precepts that:

* Individual accountability should be maintained over change funds and cash drawers. * Cash receipts should be complete. Each day’s receipts should be promptly collected and deposited in full. * Cash receipts should be uniquely and sequentially numbered. * Restrictive endorsements should be placed on all checks once received. * Approval should be required for disbursing cash refunds. * Any over or short identified during the reconciliation process should be investigated and documented. * Areas where physical handling of cash takes place should be adequately safeguarded. * Daily cash receipts should be checked for overall reasonableness. * Someone independent of the cashiering process should review the check and cash composition of the daily bank deposit during unannounced cash counts. * Individuals who have access to the safe combinations should be limited and the combination changed annually or after any staff change. * A reasonable segregation of duties should be established so that no employee has complete control over any one of the following duties: * Receiving and depositing cash. * Recording cash payments to departmental or clinic receivable records. * Preparing cash receipts for deposit and/or Reviewing Oracle financial system reports. * Billing customers or patients for goods or services. * System access to create or approve journal entries to the Oracle general ledger.
Walgreen Pharmacy implement rigid Cash Management processes to provide security and financial controls similarly found in a large chain operation. Industry accounting standards must be utilized where applicable in order to comply with strict auditing practices. Implementation of checks and balances to alleviate potential errors and improve compliance to those generally accepted accounting principles and standards of practice. (GAP) Payroll System Walgreen manages and controls the preparation, auditing, and entry of payroll information into the payroll system to assure all employees are paid accurately and in a timely manner and the payroll charges are properly recorded. The pharmacy ensures that all information is received on a timely basis to ensure processing schedules can be met. Walgreen recommends and implements changes and enhancements to the payroll system to improve system functionality, productivity, and abilities without decreasing controls or service levels to employees. It develops detailed test plans and scenarios to test all changes and updates to the payroll system. It evaluates the impacts of these changes and updates to the various Accounting and Human Resources interfaces. It also manages, coordinates, and controls the preparation and balancing of payroll to all current and former employees to ensure that they are accurate and distributed on a timely basis. Walgreen manages and controls the handling of inquiries, reissues, and corrections of payroll information. It reports adjustments and corrections of payroll to the Tax Department for use in the final tax reporting. It develops and gathers information relating to executive compensation for reporting in the annual proxy statement. It also maintains and updates security for the corporate payroll system by developing user profiles with appropriate view/update access based on the user’s specific needs and requirements. It assigns log on and initial passwords for corporate payroll system users. It assures that any changes or updates to the payroll system comply with proper accounting standards, tax laws, governmental regulations, and company policies and procedures.
LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities for the three months ended November 30, 2012 was $601 million compared to $809 million a year ago. When compared to the prior year, cash from operating activities decreased primarily as a result of lower net earnings and changes in working capital balances. For the three months ended November 30, 2012, working capital was a cash use of $214 million as compared to the prior year where working capital used $133 million. Cash provided by operations is the principal source of funds for expansion, acquisitions, remodeling programs, dividends to shareholders and stock repurchases. Net cash used for investing activities was $809 million for the three months ended November 30, 2012 compared to $497 million a year ago. Additions to property and equipment were $336 million compared to $419 million last year primarily due to decreased investments in existing stores. | II. LOCAL LITERATURE
Watson, (PHILS.), INC., is a joint venture between the SM Group of Companies and A.S Watson & Co., Ltd, a Hutchison Whampoa Group company. The company is in need of dynamic people who would like to join and build a career with Asia's leading health and beauty chain. Watsons continually sets the standards in the health, wellness and beauty market, providing personalized advice and counseling in health, beauty and personal care on top of its market-leading product range, making customers look good, feel great every day.
Cash Management
In the Philippines, numerous corporations continue to manage cash manually or using spreadsheets, practices that are both time-consuming and prone to error. The use of spreadsheets can present issues in terms of control over data, segregation of duties, accuracy of calculations, auditability and the sharing of information within the department and across the organization. Additionally, cash management can become equally as difficult when data needs to be compiled from disparate locations and systems.
A unified treasury system can afford corporations access to a timely view of all of their cash inflows and outflows across divisions and regions.
CASH DIBURSEMENTS
The cash disbursement process in any company or type of industry usually has the highest risk of error or fraud due to the amount of company funds involved. The Watson Company provides proper cash disbursement. All their transactions for goods and services was authorized and documented before payment is made. The accounts payable process was controls over methods of payment (check, wire, credit) that include matching authorized purchases to receipt of goods or services and to the vendor’s invoice. Shipping and delivery, storage costs, discounts, tax exempt purchases, timeliness of payment and a myriad of other issues can be addressed to save money if inefficiencies are discovered and corrected. Ascertaining that the cash disbursements process has a good internal control environment further safeguards the Watson company’s assets and lessens business risk of fraud, misappropriations and misuse of funds.
Watson recognizes income generally in the year of actual or constructive receipt. Expenses are deductible generally in the year of actual payment. There are many advantages for Watson to the cash method of accounting. For one thing, it is simple to use and audit. It provides for the payment of taxes when the taxpayer has the funds with which to make payment. Other advantages include:
• The potential for an indefinite deferral of time as to when income must be reported;
• Control over the timing of deductions; and
• The simplification of the accounting process for determining the amount of income taxable.

Cash collection system
Watson aim to reduce the time it takes to collect the cash that is owed to a firm. Some of the sources of time delays are mail float, processing float, and bank float. The measure is important for tracking the ability of a business to grant a reasonable amount of credit to worthy customers, as well as to collect receivables in a timely manner. The concept is not the same as the cash conversion cycle, which is a longer period beginning with the outflow of cash to pay for goods and ending with the subsequent receipt of cash from the sale of those goods. The calculation for the collection cycle is to divide annual credit sales by 365, and divide the result into average accounts receivable.

Accounts Payable/Cash Disbursements Watson Company has an authorized signature list of officers that are the only personnel to make purchases and authorize expenditure amounts. Prior to payment, there are matching processes performed to ascertain that only authorized goods and services are being paid after they are matched to receiving documents and vendor invoices. Watson also has a preventative controls exist to prevent duplicate payments and lost discounts. Internal audits in this area usually lead to efficiency recommendations (cost savings through best practices or retrieving duplicate payments) and tightening controls to minimize potential fraud and minimize errors.

Payroll Watson have a controls exist to prevent creation of fictitious employees or inappropriate and unauthorized pay rates. There is an adequate automated computer controls to prevent payroll errors such as having minimums and maximums on check amounts. The Human Resources have the knowledge and experience to keep in compliance with labor laws. Internal audits ascertain controls are in place to prevent fictitious employees, unauthorized rates or bonuses. However, management remains responsible for the controls over the payroll process even if it is outsourced.
Net Revenues
Watson develops, manufactures, markets, sells and distributes generic products that are the therapeutic equivalent to their brand name counterparts and are generally sold at prices significantly less than the brand product. As such, generic products provide an effective and cost-efficient alternative to brand products.
Net revenues in Watson include product sales and other revenue. Watson product line includes a variety of products and dosage forms. Indications for this line include pregnancy prevention, pain management, depression, hypertension attention-deficit/hyperactivity disorder and smoking cessation. Dosage forms include oral solids, transdermal, injectable, inhalation products and transmucosals.

Other revenues consist primarily of royalties, milestone receipts, commission income and revenue from licensing arrangements.
Net revenues within the Watson increased 86.0% or 516.0 million to 1,116.1 million for the three months ended March 31, 2012 compared to net revenues of 600.1 million in the prior year period.

CHAPTER III
METHODOLOGY
This chapter describes how this study was conducted. It presented the research description, instruments used, data gathering procedures and procedures of statistical tools.
RESEARCH METHOD A lot of information is needed in the preparation of the research study in order to determine the feasibility justification. The researchers use the descriptive method of research. In gathering the necessary data for the study, the researchers made use of the indirect or questionnaire method to meet the objectives of the study.
DATA GATHERING METHOD The researchers use both the primary data and secondary data to meet its objectives. Primary data consist of information collected for the specific purpose at hand. The questionnaires distributed to the drugstores with the space provided for responses to each question given out to acquire the needed data or information of the study. Secondary data consist of information that directly exists somewhere, having been collected for another purpose. It can usually be obtained more quickly and lower cost than primary data.
RESEARCH INSTRUMENT The indirect or questionnaire is the research instrument use by the proponents in collecting data. It consists of a list of well planned written questions related to a particular topic. It is consider as one of the fastest way of getting information from the point of view of the respondents and the easiest way of covering more respondents. Distribution and collecting of such are easy to control.
DETERMINING THE SAMPLE SIZE The study “Evaluating the Cash Management of Guico-Olivares Pharmacy” is limited to gather information to the total number of its employees. Guico-Olivares Pharmacy has a total number of 8 employees. The researchers decided to use 100%experimentation in acquiring necessary information.