Holy Name University

City of Tagbilaran

PERFORMANCE TASK FOR FINALS

In Partial Fulfillment of the Requirements

In FIN 2 Business Finance

by:

Molina, Ivanne D. BSA 1

Bonao, Mary Angelie J. BSA 1

Batingal, Asteria B. BSA 1

Oray, Jean Rea A, BSBA-MM2

Arat, Leira Mae BSHM 1

November 2023
 Petron Corporation is the largest oil company in the Philippines,

operating the country’s only remaining refinery. Also, a leading

player in the Malaysian market, we have a combined refining

capacity of 268,000 barrels per day, producing a full range of world-

class fuels and petrochemicals to fuel the lives of millions of Filipinos

and Malaysians.

Here in the Philippines, we are capable of supplying around 40% of

the country’s total fuel requirements through the operation of our

180,000 barrel-per-day oil refinery in Bataan. Considered one of the most advanced facilities in the

region, our refinery processes crude oil into various petroleum products including gasoline, diesel, LPG,

jet fuel, kerosene and petrochemicals. From Bataan, we move our products mainly by sea to nearly 30

terminals located across the archipelago.

Through our robust distribution network, we fuel strategic industries such as power generation,

manufacturing, mining, and agribusiness, among others. Petron also supplies jet fuel at key airports to

international and domestic carriers.

Through our service station network – the most extensive in the country – we retail gasoline and diesel to

motorists and the public transport sector. We source our fuel additives from our blending facility at the

Subic Bay Freeport. This gives us the unique capability to formulate additives suited for Philippine driving

conditions.

Our product leadership also extends to our premium line of engine oils that meet or even exceed global

standards. These are formulated, tested, and produced locally at our Lube Oil Blending Plant in Tondo,

Manila, having twice the capacity of our former plant in Pandacan.

We are guided by our vision “to be the leading provider of total customer solutions in the energy sector

and its derivative businesses.”

 Petron Corporation
Comparative Statement of Financial Position
As of December 31, 2022 and 2021

2022 2021 Amount Change % Change

ASSETS
Current Assets
Cash and cash equivalents P37,183 P36,406 P777 2.13
Financial assets at fair 1,753 1,005 748 0.74
Trade and other receivables - 81,979 51,745 30,234 58.42
Inventories - 85,347 67,684 17,663 26.1
Other current assets 37,025 31,195 5,830 18.7
Total Current Assets P243,287 188,035 P55,252 100
Noncurrent Assets
Investment in shares P1,075 1,012 P63 6.22
Property, plant and equipment - 170,153 171,602 (1,449) (0.84)
Right -of-use assets - 5,398 5,648 (250) (4.42)
Investment property - 28,437 29,175 (738) (2.52)
Deferred tax assets - 1,812 2,172 (360) (16.6)
Goodwill - 8,509 8,235 274 3.32
Other noncurrent assets - 1,400 1,541 (141) (9.14)
Total Noncurrent Assets P216,784 P219,385 P(2,601) (1.19)
Total Assets P460,071 P407,420 P52,651 12.92

LIABILITIES AND EQUITY

Current Liabilities
Short -term loans P137,886 P109,196 P28,690 26.27
Liabilities for crude oil and petroleum products 51,067 42,641 8,426 19.76
Trade and other payables 22,896 14,001 8,895 63.53
Lease liabilities - current portion 1,380 1,335 45 3.37
Derivative liabilities 723 997 (274) (27.48)
Income tax payable 204 302 (98) (32.45)
Current portion of long -term debt - 13,399 21,580 (8,181) (37.91)
Total Current Liabilities P227,555 P190,052 P37,503 19.73
Noncurrent Liabilities
Long -term debt - net of current portion P93,662 P81,065 P12,597 15.54
Retirement benefits liability - 3,261 3,327 (66) (1.98)
Deferred tax liabilities - 3,601 3,784 (183) (4.84)
Lease liabilities - net of current portion 13,714 14,220 (506) (3.56)
Asset retirement obligation 3,527 2,857 670 23.45
Other noncurrent liabilities 1,201 1,202 (1) (0.08)
Total Noncurrent Liabilities P118,966 P106,455 P12,511 11.75
Total Liabilities P346,521 P296,507 P50,014 16.87
EQUITY
Attributable to Equity Holders of the Parent Company
Capital stock P9,485 P9,485 - -
Additional paid-in capital 37,500 37,500 - -
Capital securities 62,712 62,712 - -
Retained earnings 30,357 30,232 125 0.41
Equity reserves (16,887) (18,341) 1,454 (7.93)
Treasury stock (18,000) (18,000) - -
Total Equity Attributable to Equity Holders
of the Parent Company 105,167 103,588 1,579 1.53
Non-controlling Interests 8,383 7,325 1,058 14.44
Total Equity 113,550 110,913 2,637 2.38
Total Liabilities and Equity P460,071 P407,420 P52,651 12.92
Comment on Horizontal Analysis of balance sheet.

As we can see from the horizontal analysis we conducted, the assets of Petron from 2021 to 2022
increases 12.92% which amounting to 52 651. The total liabilities and equity of Petron also increases
from year 2021 to 2022 which indicates that the corporation is still in operation and continue expanding
and growing its business.

\
 Petron Corporation
Comparative Income Statement
For the year ended 2022 and 2021

2022 2021 Amount Change % Change

SALES 857,638 438,057 419,581 95.78

OTHER OPERATING INCOME 1,538 1,273 265 20.81
INTEREST INCOME 898 564 335 59.21
SHARE IN NET INCOME OF ASSOCIATE 63 8 58 87.30
INCOME BEFORE INCOME TAX 8,021 7,297 724 9.92
OTHER INCOME 1,021 482 539 111.83
COST OF GOODS SOLD 823,638 407,558 416,230 50.53

44,770 39,159 5,211 13.31

SELLING AND ADMINISTRATIVE EXPENSES 16,175 14,557 1,618 11.11

INTEREST EXPENSE 13,094 10,008 3,086 30.84
INCOME TAX EXPENSE 1,404 1,161 243 20.93

NET INCOME 6,697 6,136 561 9.14

As we can see from the analysis that Petron's sales from 2022 increases to almost 100% of the sales in

2022. Also, as the sales increases their cost of goods sold also increases.
 Petron Corporation
Comparative Statement of Financial Position
As of December 31, 2022 and 2021

2022 %
ASSETS
Current Assets
Cash and cash equivalents P37,183 8.08
Financial assets at fair 1,753 0.38
Trade and other receivables - 81,979 17.82
Inventories - 85,347 18.55
Other current assets 37,025 8.05
Total Current Assets P243,287
Noncurrent Assets
Investment in shares P1,075 0.23
Property, plant and equipment - 170,153 36.98
Right -of-use assets - 5,398 1.17
Investment property - 28,437 6.18
Deferred tax assets - 1,812 0.39
Goodwill - 8,509 1.85
Other noncurrent assets - 1,400 0.30
Total Noncurrent Assets P216,784
Total Assets P460,071

LIABILITIES AND EQUITY

Current Liabilities
Short -term loans P137,886 39.80
Liabilities for crude oil and petroleum products 51,067 14.74
Trade and other payables 22,896 6.61
Lease liabilities - current portion 1,380 0.40
Derivative liabilities 723 0.21
Income tax payable 204 0.06
Current portion of long -term debt - 13,399 3.87
Total Current Liabilities P227,555
Noncurrent Liabilities
Long -term debt - net of current portion P93,662 27.03
Retirement benefits liability - 3,261 0.94
Deferred tax liabilities - 3,601 1,09
Lease liabilities - net of current portion 13,714 3.96
Asset retirement obligation 3,527 1.02
Other noncurrent liabilities 1,201 0.35
Total Noncurrent Liabilities P118,966
Total Liabilities P346,521
EQUITY
Attributable to Equity Holders of the Parent
Capital stock P9,485 2.06
Additional paid-in capital 37,500 8.15
Capital securities 62,712 3.63
Retained earnings 30,357 6.60
Equity reserves (16,887) 3.67
Treasury stock (18,000) 3,91
Total Equity Attributable to Equity Holders
of the Parent Company 105,167 22.86
Non-controlling Interests 8,383 1.82
Total Equity 113,550 24.68
Total Liabilities and Equity P460,071
Comment on Vertical Analysis of balance sheet.

The vertical analysis shows that the Petron Corporations has an equal amount and percentage rate from
the year 2022.

Petron Corporation
 Comparative Income Statement
For the year ended 2022 and 2021

2022 % Change

SALES 869,224 100

COST OF GOODS SOLD 823,638 94.76

45,586 5.24

SELLING AND ADMINISTRATIVE EXPENSES 16,175 1.86

INTEREST EXPENSE 13,094 1.51
INCOME TAX EXPENSE 1,404 0.16

NET INCOME 6,697 0.77

As we can observe from the analysis Petron Corporation has a 94.76% of its Cost of Goods Sold which

results to its gross profit, 45 586- 5.24% of the sales. Also, they gain an income of 0.77% amounting to 6

697 for the year 2022.

Liquidity ratio.

1. Working Capital = CA – CL

= 243,287 – 227,555

= 15,732

2. Current Ratio = CA
CL

= 243,287
227,555

= 1.07

3. Quick Ratio = QA
CL

= 119,162
227,555

= 0.52

In terms of liquidity, the current ratio of 1.07 indicates a healthy short-term financial strength, as it reveals

the company's ability to meet its short-term obligations using its short-term assets. The quick ratio,

however, is 0.52, slightly low but it shows that the company can cover its current liabilities without relying

on inventory sales.
Efficiency ratio.

1. Inventory Turnover Ratio = Cost of Goods Sold

Average Inventory

= 823,788
66,862

= 12.32

2. Accounts Receivable Turnover Ratio = Sales

Average Accounts Receivable

= 857,638
66,862

= 12.82

3. Accounts Payable Turnover Ratio = Purchases

Average Accounts Payable

= 85,347
18,445.05

= 4.63

4. Asset Turnover Ratio = Net Sales

Average Assets

= 857,638
433,445.05

= 1.98

Efficiency ratios are quite impressive. The inventory turnover ratio of 12.32 demonstrates an efficient
inventory management - the company is able to sell its inventory 12.32 times over the year. The high
account receivable turnover ratio of 12.82 is also a positive sign, indicating the company's effectiveness in
extending credit and collecting debts. Likewise, the asset turnover ratio of 1.98 indicates the company's
efficiency in utilizing its assets to generate sales.
Profitability ratio.

1. Net Profit Margin = Net Profit

Gross Sales

= 4,581
857,638

= 0.54%

2. Return on Equity = Net Income

Shareholder’s Equity

= 4,581
113,550

= 0.04

3. Return on Assets = Net Income

Total Average Assets

= 4,581
433.745.05

= 0.01

Looking at profitability ratios, the net profit margin is 0.54%, which could be improved. This shows that the

company retains 0.54% of every peso of revenue as profit. The returns on equity and assets are quite

low, at 0.04 and 0.01 respectively, indicating a potential need for improvement in the way the company is

generating net income.

Solvency ratio.

1. Debt Equity Ratio = Total Liabilities

Shareholder’s Equity

= 346,521
113,550

= 3.05

2. Debt Ratio = Total Liabilities

Total Assets

= 346,521
460,071

= 0.75

3. Equity Ratio = Total Equity

Total Assets

= 460,071
460,071

= 1

Solvency ratios, which measure the company's ability to meet its long-term obligations, show mixed
results. The debt-equity ratio is quite high at 3.05, indicating the company is heavily financed by debt.
However, the equity ratio of 1 indicates that the company's assets are entirely financed by equity.

Documentation.