University of Southern Mindanao

College of Business Development Economics and Management

Accountancy Department
Financial Management

Financial Statement Analysis

PHINMA CORPORATION

Group Members:
GALOPE, Jeffrey
PERALTA, Philip Jay
REGONIEL, Kheny

February 2023
I. Introduction

PHINMA is a proudly Filipino conglomerate that seeks to improve people's

lives and build the nation by operating profitable businesses that uphold core
values of integrity, competence, professionalism, and patriotism. With
professional and effective management as their distinguishing feature, they
aim to provide communities, not only in the Philippines but anywhere there is
a need, with improved access to the necessities of a dignified life. For over
65 years, Phinma Corp. has pursued its mission in a wide range of industries
and sectors, including oil and gas, agriculture, steel and cement, energy,
education, banking and finance, business process outsourcing, paper,
insurance, housing and property development, hotels and hospitality, and
business intelligence and consulting.
They will continue to demonstrate that private businesses can mutually
serve the needs of society and the aspirations of shareholders as they grow
their current core businesses in education, construction materials, property
development, and hospitality and expand into other sectors and industries.
They see tradition, experience, reputation, and, most importantly, people as
the primary factors allowing them to achieve lofty goals in pursuing their
mission.
On March 12, 1957, Phinma Corporation (PHN), formerly Bacnotan
Consolidated Industries, Inc., was incorporated. PHN is a holding company
investing in education, steel, housing, and outsourcing business processes.
The Securities and Exchange Commission approved the current corporate
name on May 27, 2010. PHN’s subsidiaries include Union Galvasteel
Corporation (UGC); Phinma Education Holdings, Inc.; Pamantasan ng
Araullo (Araullo University), Inc.; Cagayan de Oro College, Inc.; University of
Iloilo; University of Pangasinan; Southwestern University; St. Jude College
Inc.; PhilCement Corporation (PC); P & S Holdings Corporation; Asian
Plaza, Inc. In December 2020, PHN sold its entire stake in Phinma Solar
Energy Corporation (Phinma Solar) to UGC, transforming Phinma Solar into
a wholly-owned subsidiary of UGC. Phinma Property Holdings Corporation,
ABCIC Property Holdings, Inc., Coral Way City Hotel Corporation, and
PHINMA Hospitality, Inc. are all subsidiaries of PHN. PHINMA Saytanar
Education Company Limited and PT Ind Phil Management are two joint
ventures in which the Company has a compelling interest.
.
REFERENCES
Retrieved from:
https://edge.pse.com.ph/companyInformation/form.do?cmpy_id=107
https://www.phinma.com.ph/
II. Financial Ratios

A. Liquidity Ratios

Current Assets
Current Ratio =
Current Liabilities

P 12,251,241
=
P 7,166,235

= 1.71x

Industry Average = 4.82x

Comment: Low

 Current Ratio indicates a company's capacity to repay short-

term loans due within the next year. In the calculation above, the
firm is capable of paying its debts off but not too much finance
tied up in current assets which could be reinvested or distributed
to shareholders.

Current Assets−Inventories
Quick Ratio =
Current Liabilities

P 12,251,241 – 2,309,295
=
P 7,166,235

= 1.39x

Industry Average = 4.37x

Comment: Low

 Quick ratio is a calculation that measures a company's ability to

meet its short-term obligations with its most liquid assets. The
calculation implies that the firm has an acceptable current asset
that they can pay off its debts 1.39 times over.

Total Assets
Solvency Ratio =
Total Liabilities

P 30 , 081 , 295
=
P 20,148,234

= 1.49x
 Industry Average = 1.64x

Comment: Somewhat low

 Solvency Ratio measures the margin of safety a company has

for paying interest on its debt during a given period. Based on
the calculation of 1.49, it indicates that a company has a
difficulty meeting the interest on its debts.

B. Asset Management Ratios

Sales
Inventory Turnover Ratio =
Inventories

P 15,820,133
=
P 1,974,054

= 8.01x
Industry Average = 10.56x

Comment: Low

 Inventory Turnover Ratio measures how efficiently a company

uses its inventory. A ratio of 8.01 tells that the company will
restock its inventory every 45.6 days.

Receivables
Days Sales Outstanding =
Annual Sales/ 365

P 4,935,304
=
P 15,820,133/365

= 113.8666761 ≈ 114 days

Industry Average = 61 days

Comment: High

 Days Sales Outstanding measures the average number of days

it takes a business to receive payment for goods and services
purchased on credit. It takes 114 days for the firm to be able to
collect payment from their customers after the completion of a
sales which means that the company’s cash is flowing in at an
inefficient rate.
 Sales
Fixed Assets Turnover Ratio = Assets ¿
Net ¿

P 15,820,133
=
P13,416,331

= 1.18x

Industry Average = 0.86x

Comment: High

 Fixed asset turnover ratio calculates how efficiently a company

is generating net sales from its fixed-asset investments. Based
on the result, 1.18 means that the value of the assets used is
lower than the income generated from them, which speaks for
high efficiency. The company therefore uses its assets very
efficiently to generate income.

Sales
Total Assets Turnover =
Total Assets

P 15,820,133
=
P 30 , 081 , 295
= 0.53x

Industry Average = 0.36x

Comment: Somewhat high

 Asset turnover is the ratio of total sales or revenue to average

assets. A ratio of 0.53 is favored because it implies that the
company is efficient in generating sales or revenues from its
asset base.

C. Debt Management Ratios

Total Debt
Debt Ratio =
Total Assets

P 20,148,234
=
P 30 , 081 , 295

= 66.98%
Industry Average = 32.91%

Comment: High (Risky)

 Debt Ratio is a ratio that shows what portion of a business's

assets are financed through debt. The firm’s ratio equaled to
66.98% indicates that the company is backed almost 67%
percent by long term and current portion debt. It is a high risk
and may discourage investments.

EBIT
Times-Interest-Earned (TIE) ratio =
Interest C h arges

P 2,618,531
=
P 649,248

= 4.03x

Industry Average = 11.99x

Comment: Low (Risky)

 Times-Interest-Earned (TIE) ratio defines a company's ability to

meet its debt obligations on a periodic basis. a ratio of 4.03
means that a company makes enough income to pay for its total
interest expense 4.03 times over.

Total Debt
Debt to Equity =
Total Equity

P 20,148,234
=
P 9,933,061

= 2.03x

Industry Average = 0.69x

Comment: High

 Debt-to-equity ratio measures the company's total debt relative

to the amount originally invested by the owners and the
earnings. A 2.03 ratio tells us that for every dollar invested in the
company, about 66 cents come from debt, while the other 33
cents come from the company's equity which is generally good.
D. Profitability Ratios

Operating Income(EBIT )
Operating Margin =
Sales

P2,618,531
=
P 15,820,133

= 16.55%

Industry Average = 35.80%

Comment: Poor

 Operating margin measures the percentage of revenue a

company keeps as operating profit. An operating margin of
16.55% is an indicator a company is not being managed well
and has potential risk.

Net Income
Profit margin =
Sales

P 1,872,737
=
P 15,820,133

= 11.68%

Industry Average = 16.65%

Comment: Poor

 Profit margin is a measure of a company's earnings (or profits)

relative to its revenue. An 11.68% margin is good, but it does
not cover the firms costs efficiently and it does not generate a
return on their investment effectively.

Net Income
Return on Total Assets =
Total Assets

P 1,872,737
=
P 30 , 081 , 295

= 6.23%

Industry Average = 3.17%

 Comment: High

 Return on Total Assets is an indicator that measures how

efficiently the firm manages its assets to earn profits. Based on
the calculation, 6.23% ROA indicates that the company is good
enough to be able to make maximum use of its assets for
getting more profits.

EBIT
Basic Earning Power (BEP) =
Total Assets

P 2,618,531
=
P 30 , 081 , 295

= 8.70%

Industry Average = 9.63%

Comment: Low

 Basic Earning Power (BEP) measures how efficiently a

company is allocating its resources (i.e. asset base) to generate
operating income. The firm has 8.70% BEP ratio, which means it
is ineffective at generating income from its assets.

Net Income
Return on Common Equity =
Common Equity

P 1,872,737
=
P 9,933,061

= 18.85%

Industry Average = 6.53%

Comment: High

 Return on common equity ratio measures how much money

common shareholders receive from a company compared with
how much they invested originally. An 18.85% ROCE indicates
the company is generating high profits from its equity
investments, thus making dividend payouts more likely

E. Market Value Ratios

 Price per s h are
Price/Earnings (P/E) Ratio =
Earnings per s h are

P 20.50
=
P 4.12

= 4.98x

Industry Average = 21.19x

Comment: Poor

 Price-to-earnings (P/E) ratio is the ratio for valuing a company

that measures its current share price relative to its per-share
earnings. The company’s P/E ratio is low which implies that the
business is potentially undervalued.

Common Equity
Book Value per Share =
S h aresOutstanding

P 7,467,147
=
272,246

= 27.46x

Industry Average = 12.85x

Comment: High

 Book value per share (BVPS) is a ratio that weighs stockholders'

total equity against the number of shares outstanding. The entity
shows 27.46 equity on its balance sheet that indicates the better
off the company is.

Market price per share

Market/Book (M/B) Ratio =
Book value per s h are

P 20.50
=
27.46

= 0.75x
Industry Average = 2.43x

Comment: Low
  The market-to-book ratio refers to the measure of the market
value of the share compared with its book value. Based on the
calculation, 0.75 M/B ratio implies that a company can be
bought for less than the value of its assets.

F. Du Pont Equation

ROE = Profit margin x Total assets turnover x Equity Multiplier

Net Income Sales

= x x
Sales Total Assets
Total Assets
Total Common Equity

P 1,872,737 P 15,820,133 P 30 , 081 , 295

= x x
P 15,820,133 P 30 , 081 , 295 P 9,933,061

= 11.68% x 0.53 x 3.03 = 18.76%

IA = 16.65% x 0.35x x 1.84x = 13.60%

Com. Low Somewhat High High High

III. Financial Statement Analysis

Present here your general analysis about the company’s financial state
using the ratios you have computed. You may present here the comparison
between the company and industry average. The notes to financial statement
may help you in analyzing the financial state of the company. Current events and
news about the company, the financial market and over-all market condition may
help you in making more relevant financial analyses.
IV. Appendix