This case study discusses research aspects relating to a Real Options model that values the strategies to lend or to idle a loan portfolio in a chaotic system. Here, discussion focuses on associating events with changes in data, and advocates the basis of data interpretations upon practices and events in the real world. The study examined data from annual reports for actively traded Philippine Universal Banks during an eight-year window of observation, from 2008 to 2015. A Real Options model was developed and forwarded to examine the lending behavior of these formal lending institutions as affected by income inflows, contingent claims, time, volatility, growth rates, a discount rate, and information asymmetry. This study expressed that actively traded Philippine Universal Banks should create more micro lending and risk mitigation facilities to encourage a more inclusive banking system.

With new micro and small-scale ventures, a founder may know of the risks associated with bank financing. Furthermore, the fact that these small-scale ventures were not eligible for such facilities, as they lacked proof of business concept, dictated that a founder seek alternatives to finance an enterprise. As a result, founders forego bank financing, and instead choose to finance the going concern with funds generated internally. This particular case study examined the beginning six months of a restaurant venture founded by a female Alumnus of the Entrepreneurship Department at the University of Santo Tomas. More specifically, this case investigated how a female entrepreneur assessed market tastes while controlling for costs and monitoring the company cash position. Discourse in this case study revolved about: (1) factors regarding pricing product offerings for a specific market, (2) assessing items that breakeven versus loss leaders, and (3) financing periodic operations with internally generated cash flows, more specifically, anticipating the cash position based on the cash burn rate per period. Analyses placed an emphasis on the cash position of a new venture, as an income statement may only partially explain operations. Hence, the cash position was used to assess the progress of the new venture, rather than solely through the income statement. This case study was developed to communicate the financing needs of newly conceived ventures that an entrepreneur faces upon implementation. As of 2018, the company this case study considered continued to operate.