Based on the information obtained, a financial model was prepared using the following values:
| a) | Number of Worker | - | 1 |
| b) | Number of Rafts | - | 4 |
| c) | Stocking Density of Fingerlings | - | 400 per cage |
| d) | Selling Price/fish (Grouper) | - | M$8.00 |
| e) | Selling Price/fish (Sea bass) | - | M$7.00 |
| f) | Survival Rate (Grouper) | - | 60.00% |
| g) | Survival Rate (Sea bass) | - | 70.00% |
| h) | Feed Conversion Ratio | - | 7.02 |
| i) | Cost of Trash Fish/kg. | - | M$0.30 |
| j) | Fingerling Price/fish (Grouper) | - | M$2.80 |
| k) | Fingerling Price/fish (Sea bass) | - | M$1.65 |
| l) | Salary/worker/month | - | M$300.00 |
| m) | Marketable Size (Grouper & Sea bass) | - | 600g |
| n) | Repairs, Maintenance & Miscellaneous/raft/year | - | M$500.00 |
| o) | Investment Cost/Raft | - | M$1,850.00 |
| p) | Depreciation Rate On Investment | - | 25% |
Assuming that the model reflects closely the typical present cage culture operation, a culturist with sixteen cages (four rafts) will be able to obtain a profit of $5,558 per year with return on Sales and Investment of 11.58% and 75.11% respectively (see Table 18).
Table 18: Financial Model of A Cage Culture Operation (M$)
| Sales: | Grouper | 25,600.00 | ||
| Sea bass | 22,400.00 | |||
| 48,000.00 | ||||
| Cost: | Fingerlings: Grouper | 14,933.33 | ||
Sea bass | 7,542.86 | |||
| 22,475.19 | ||||
| Feed | 12,515.66 | |||
| Labour | 3,600.00 | |||
| Repair & Maintenance | 2,000.00 | |||
| 18,115.66 | ||||
| 1,850.00 | ||||
| 42,441.85 | ||||
| Profit: | 5,558.15 |
| Return on Sales | = | 11.58% |
| Return on Investment | = | 75.11%1 |
| Profit per culturist | = | $5,558.15 |
In order to determine the effect of changes of the various components on the profitability, a sensitivity test was carried out based on variations in the stocking, density, selling price, survival rate, fingerling price, cost of trash fish and the food conversion ratio. It was found that selling price has the strongest influence on the profitability (see Table 19). A 10% decrease in the selling price led to more than 40% decrease in profit. The component that least influenced the profitability was the fingerling price of sea bass. Stock density, food conversion ratio and cost of trash fish per kg had the same degree of importance on the profitability. However, it was interesting to note that, although the cost of trash fish was low, i.e. M$0.30/kg compared to other components, it was able to exert a substantial influence on profitability.
This sensitivity analysis can provide some guidelines to any potential and present culturists as to the profitability of the fish cage culture operation as well as indicate the degree of sensitivity with respect to each of the various cost components.
1 Return on Investment = Profit ÷ (Investment Cost Per Raft × Number of Rafts)
| Component | Loss/increase in profit when the value of each component drops by 10% | Model Value of Each Component | Loss/increase in Profit when the value of each component increases by 10% | |||
| M$ | % | M$ | % | |||
| a) Selling /fish (grouper) | -2,560.00 | -46 | M$8.00 | +2,560.00 | +46 | |
| b) Selling /fish (sea bass) | -2,240.00 | -40 | M$7.00 | +2,240.00 | +40 | |
| c) Survival Rate (grouper) | -2,408.06 | -43 | 60% | +1,970.23 | +35 | |
| d) Survival Rate (sea bass) | -1,479.92 | -27 | 70% | +1,210.85 | +22 | |
| e) Fingerling Price/fish (grouper) | +1,600.00 | +29 | M$2.80 | -1,600.00 | -29 | |
| f) Fingerling Price/fish (sea bass) | +685.72 | +12 | M$1.65 | -685.71 | -12 | |
| g) Stocking Density Per cage (fingerlings) | -1,300.81 | -23 | 400 | +1,300.82 | +23 | |
| h) Feed Conversion Ratio | +1,283.66 | +23 | 7.02 | -1,212.34 | -22 | |
| i) Cost of Trash fish per kg. | +1,251.57 | +23 | $0.30 | -1,251.57 | +23 | |
