5.

Analysis and Discussions 5.1 Trend Analysis (5 years) 5.1.1 Common Size Income Statement

The common size income statement has information about the percentages that make up the income statements from 2007 to 2011.The highest expenses ever reported was in 2009 having been 82.69% of the gross profit whereas the lowest was during 2007 with only 73.62%. Highest gross revenue on the other hand was during 2011 or 95.04% of gross profit. Highest net income was in 2011 with the highest gross revenue as well at 18.73% and lowest net income was during 2009 with 11.26% being the percentage. Having said this, operations during 2011 were at its best and have not been good during 2009 due to the high gross revenue at 2011 and the lowest at 2009.

5.1.2 Financial Ratios Liquidity Ratios CURRENT RATIO 2009: 209,409,394 / 111, 759, 826 = 1.87 2010: 456,843,641 / 184, 449,702 = 2.48 2011: 586,875,602 / 224,999,066 = 2.61

Current Ratio
Liquidity ratios are found by dividing the current assets over liabilities and show whether or not the firms can pay their bills on time. Looking at the data we can see that in 2009 it was at its lowest then increased drastically during 2010. This is quite erratic but shows that the firm is fighting by making it as high as possible. The firm is getting more and more liquid as time goes by which is good.

ACID RATIO TEST (QUICK RATIO) 2009: (209,409,394 12, 588, 667) / 111, 759, 826 = 1.76 2010: (456,843,641 14, 256, 668) / 184,449,702 = 2.40 2011: (586,875,602 16,374,061) / 224,999,066 = 2.53 Quick Ratio A more accurate way of interpreting the liquidity of the firm is the Quick Ratio, which is the same as the current ratio sans the inventory. The same results were garnered, as the numbers seem to be erratic but increasing. We can still conclude the same thing, which is that the firm can pay off their bills on time.

Capital Structure Ratios DEBT RATIO 2009: 751,141,809 / 1,268,495,044 = 0.59 (59%) 2010: 968,554,149 / 1,598,781, 749 = 0.61 (61%) 2011: 1,002,797,500 / 1,943,297,324 = 0.51 (51%) Debt ratio The debt ratio is the ratio that measures how the assets were acquired from debt financing. It has started out 59% in 2009 and increased by 2 in 2010. In 2011, it sharply decreased by 10% The pattern of the percentages show that it increases and decreases sharply over the span of 1-2 years. Having a lower debt ratio means that the company is having more and more cash to finance their debt. TIMES INTEREST EARNED 2009: 80,019,248 / 44,851,310 = 1.78 times 2010: 136,983,589 / 60,019,802 = 2.28 times 2011: 171,208,144 / 57,906,491 = 2.96 times Times interest earned The ability to pay interest in debt is measured by the times interest earned ratio. Based on the results, the firm was better off in paying interest on debt during 2010 and 2011 rather than 2009, which was an all time low. The rates only fluctuate by a little except during 2009 and 2010 when it was pulled down and a bit up.

Asset Management Efficiency Ratios TOTAL ASSET TURNOVER 2009: 421,651,311 / 1,268,495,044 = 0.33 2010: 527,115,202 / 1,598,787,749 = 0.33 2011: 664,835,828 / 1,943,297,324 = 0.34 Total Asset Turnover

The asset turnover ratio serves as a guide for firms to know how well the assets are being utilized to make profit. It was its highest during 2008 and lowest during 2009-2010. Assets are utilized at a constant rate with a possible quota to keep the numbers at this rate. FIXED ASSET TURNOVER 2009: 421,651,311 / 326,815,392 = 1.29 2010: 527,115,201 / 344,620,698 = 1.53 2011: 664,835,828 / 379,435,664 = 1.75 Fixed Asset Turnover Fixed asset turnovers show how the firm utilizes their fixed assets such as PPE, Inventories, and what have you. The results for this are quite different from the total asset turnover as it is quite erratic. 2009 was its lowest and 2011 was the highest. The increases and decreases are quite sharp as well. This firm should be more careful with its fixed assets.

Profitability Ratios GROSS PROFIT MARGIN 2009: 462,213,105/ 421,651,311 = 1.10 2010: 561,695,925 / 527,115, 202 = 1.07 2011: 699,514,691 / 664,825,828 = 1.04 The gross profit margin The gross profit margin shows the amount of return on investments of a firm and how well the firm managed its expenses. The ratios from 2009-2011 decreased by about 0.6. The gross profit margin results show that the firm has not been managing its expenses as well as it should and must improve on this as well.

OPERATING PROFIT MARGIN 2009: 80,019,248 / 421,625,311 = 0.19 2010: 136,983,589 / 527,115,203 = 0.26 2011: 171,208,144 / 664,835,828 = 0.26 Operating Profit Margin is the margin that shows how well the firms manage their operating expenses and cost of goods sold. It starts off at 2009 at 0.19 and increases during 2010 and remains constant until 2011. The increase ranged to about 0.07 and it was kept constant in the following years.

 NET PROFIT MARGIN 2009: 52,038,238 / 421,651,311 = 0.12 (12%) 2010: 97,825, 365 / 527,115, 202 = 0.19 (19%) 2011: 130,995,211 / 664,835,828 = 0.20 (20%)

The net profit margin fluctuated quite a lot all up to 2009 and increased from 2010 to 2011. This ratio must be considered in knowing how well the firm manages their costs. It is through this ratio results that we see how the firm was able to bounce back up after having a sharp decrease before 2009 and in 2010 with an eventual 0.01 increase in 2011.

OPERATING RETURN ON ASSETS 2009: 80,019,248 / 1,268,495,044 = 0.06 (6%) 2010: 136,983,589 / 1,598,787,749 = 0.09 (9%) 2011: 171,208,144 / 1,943,297,324 = 0.09 (9%) Operating Return on Assets The operating return on assets matches expenses, the use of assets, and the rate of sales. This decreased in 2009 then increased in 2010 by 3% and maintained it until 2011. The firm had a bit of trouble in maintaining their ratios but the decreases arent too sharp except in that of 2009.

RETURN ON EQUITY 2009: 52,038,238 / 630,982,678 = 0.08 2010: 97,825,365 / 713,874,853 = 0.14 2011: 130,995,211 / 839,185,249 = 0.16

The return on equity measures the net income divided by the amount of equity. It takes into consideration the common stock, paid in capital, and retained earnings. It starts off at 0.08 during 2009 and gradually increases from 2010 to 2011. Having said this, the firm is having better returns on equity as the years progress that is good for future business ventures.

Conclusion and Recommendation

Based on the return on equity ratio we can safely say that the firm is doing quite well. However, there are some areas of this firm that needs to be closely watched such as the Asset Turnover Ratio because its increases and decreases seem to be sharp during the years. Despite this, the firm is doing so far so good and does not need to make any major improvements. In the following years, it can be predicted that this firm will do well as they go into the business of container ports among other things in which the demand is high. This is because the demand for shipment is always high however with high demand is highly competitive. In this light, the firm only needs to improve on operations to cope with demand and to constantly improve service. This firm is doing quite well but must do better in the coming years.