MARTIN MANUFACTURING COMPANY

Balance Sheets (PHP)

2009 2008
ASSETS
Current Assets
Cash 25,000.00 24,100.00
Accounts receivable 805,556.00 763,900.00
Inventories 690,425.00 748,445.00
Prepaid expense 10,200.00 15,000.00
Total current assets 1,531,181.00 1,551,445.00
Gross fixed assets (at cost) 2,093,819.00 1,691,707.00
Less: Accumulated depreciation 500,000.00 348,000.00
Net fixed assets 1,593,819.00 1,343,707.00
TOTAL ASSSETS 3,125,000.00 2,895,152.00
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 230,000.00 400,500.00
Notes payable 311,000.00 370,000.00
Accruals 75,000.00 100,902.00
Total current liabilities 616,000.00 871,402.00
Long-term debt 1,165,250.00 700,000.00
Total Liabilities 1,781,250.00 1,571,402.00
Stockholders' equity
Preferred Stock (2,500 shares, PHP1.20 dividend) 50,000.00 50,000.00
Common Stock (100,000 shares @ PHP4 par)* 400,000.00 400,000.00
Paid-in capital in excess of par value 593,750.00 593,750.00
Retained earnings 300,000.00 280,000.00
Total stockholders' equity 1,343,750.00 1,323,750.00
Total liabilities & stockholders' equity 3,125,000.00 2,895,152.00
*The common stock market price closed 2009 at PHP11.38 per share
MARTIN MANUFACTURING COMPANY
Income Statements (PHP)
2009 2008
Sales revenue 5,075,000.00 4,039,000.00
Less: Cost of sales 3,704,000.00 2,827,300.00
Gross profits 1,371,000.00 1,211,700.00
Less: Operating expenses
Selling expense 650,000.00 599,250.00
General & administrative expense 346,000.00 280,111.00
Depreciation expense 152,000.00 110,000.00
Lease payment 70,000.00 60,000.00
Total 1,218,000.00 1,049,361.00
Operating profit 153,000.00 162,339.00
Less: Interest expense 93,000.00 98,000.00
Net profit before tax 60,000.00 64,339.00
Less: Tax (at 30%) 18,000.00 19,301.70
Net profit after tax 42,000.00 45,037.30
December 31
For the year ended December 31
LIQUIDITY RATIO
CURRENT RATIO = CURRENT ASSETS = 1,531,181.00 = 2.49
CURRENT LIABILITIES 616,000.00
QUICK RATIO = CURRENT ASSETS - INVENTORIES - PREPAID EXPENSE = 830,556.00 = 1.35
(or acid test ratio or working capital ratio) CURRENT LIABILITIES 616,000.00
ACTIVITY/TURNOVER RATIO
ACCOUNTS RECEIVABLE TURNOVER = CREDIT SALES = 5,075,000.00 = 6.47 TIMES
(BEGINNING ACCOUNTS RECEIVABLE + ENDING ACCOUNTS RECEIVABLE)/2 784,728.00
AGE OF RECEIVABLES = NUMBER OF DAYS = 365 = 56.44 DAYS
ACCOUNTS RECEIVABLE TURNOVER 6.47
AGE OF RECEIVABLES = (BEGINNING ACCOUNTS RECEIVABLE + ENDING ACCOUNTS RECEIVABLE)/2 = 784,728.00 = 56.44 DAYS
CREDIT SALES 5,075,000.00
X X
NUMBER OF DAYS 365
INVENTORY TURNOVER = COST OF SALES = 3,704,000.00 = 5.15 TIMES
(BEGINNING INVENTORY + ENDING INVENTORY)/2 719,435.00
AGE OF INVENTORY = NUMBER OF DAYS = 365 = 70.89 DAYS
INVENTORY TURNOVER 5.15
AGE OF INVENTORY = (BEGINNING INVENTORY + ENDING INVENTORY)/2 = 719,435.00 = 70.89 DAYS
COST OF SALES 3,704,000.00
X X
NUMBER OF DAYS 365
ACCOUNTS PAYABLE TURNOVER = CREDIT PURCHASES = 3,645,980.00 = 11.57 TIMES
(BEGINNING ACCOUNTS PAYABLE + ENDING ACCOUNTS PAYABLE) / 2 315,250.00
AGE OF ACCOUNTS PAYABLE = NUMBER OF DAYS = 365 = 31.56 DAYS
ACCOUNTS PAYABLE TURNOVER 11.57
AGE OF ACCOUNTS PAYABLE = (BEGINNING ACCOUNTS PAYABLE + ENDING ACCOUNTS PAYABLE) / 2 = 315,250.00 = 31.56 DAYS
CREDIT PURCHASES 3,645,980.00
X X
NUMBER OF DAYS 365
FIXED ASSETS TURNOVER = SALES = 5,075,000.00 = 3.46 TIMES
(BEGINNING FIXED ASSETS + ENDING FIXED ASSETS) / 2 1,468,763.00
TOTAL ASSET TURNOVER = SALES = 5,075,000.00 = 1.69 TIMES
(BEGINNING TOTAL ASSETS + ENDING FIXED ASSETS) / 2 3,010,076.00
SOLVENCY RATIO
DEBT RATIO = TOTAL LIABILITIES = 1,781,250.00 = 57.00%
TOTAL ASSETS 3,125,000.00
EQUITY RATIO = TOTAL STOCKHOLDERS' EQUITY = 1,343,750.00 = 43.00%
TOTAL ASSETS 3,125,000.00
DEBT-TO-EQUITY RATIO = TOTAL LIABILITIES = 1,781,250.00 = 132.56%
TOTAL STOCKHOLDERS EQUITY 1,343,750.00
TIMES INTEREST EARNED = NET PROFIT + INCOME TAX + INTEREST EXPENSE = 153,000.00 = 1.65 TIMES
INTEREST EXPENSE 93,000.00
FIXED PAYMENT COVERAGE RATIO = NET PROFIT + INCOME TAX + INTEREST EXPENSE + LEASE PAYMENT = 223,000.00 = 0.89 TIMES
INTEREST EXPENSE + LEASE PAYMENT + ((PRINCIPAL LOAN PAYMENT + PREFERRED DIVIDENDS)/(1-TAX RATE) 251,571.43
PROFITABILITY RATIO
GROSS MARGIN RATIO = GROSS PROFIT = 1,371,000.00 = 27.01%
SALES 5,075,000.00
NET PROFIT RATIO = NET PROFIT AFTER TAX = 42,000.00 = 0.83%
SALES 5,075,000.00
RETURN ON TOTAL ASSETS = NET PROFIT AFTER TAX = 42,000.00 = 1.40%
(also called RETURN ON INVESTMENT) AVERAGE TOTAL ASSETS 3,010,076.00
RETURN ON TOTAL ASSETS = NET PROFIT RATIO X TOTAL ASSET TURNOVER = .83 X 1.69 = 1.40%
(Using Dupont Analysis)
RETURN ON TOTAL ASSETS = NET PROFIT AFTER TAX + INCOME TAX + INTEREST EXPENSE = 153,000.00 = 5.08%
(also called RETURN ON INVESTMENT) (BEGINNING TOTAL ASSETS + ENDING TOTAL ASSETS) / 2 3,010,076.00
RETURN ON EQUITY = NET PROFIT AFTER TAX - PREFERRED DIVIDENDS = 39,000.00 = 3.04%
(BEGINNING COMMON STOCKHOLDERS' EQUITY + ENDING COMMON STOCKHOLDERS' EQUITY)/2 1,283,750.00
RETURN ON EQUITY = NET PROFIT AFTER PREFERRED DIVIDENDS / SALES
(Using Dupont Analysis) X
TOTAL ASSET TURNOVER = .768 X 1.69 X 2.34 = 3.04 %
X
AVE. TOTAL ASSETS / AVE. COMMON STOCKHOLDERS EQUITY
EARNINGS PER SHARE (EPS) = NET INCOME AFTER TAX - PREFERRED DIVIDENDS = 39,000.00 = 0.39
WEIGHTED COMMON SHARES OUTSTANDING 100,000
MARKET RATIO
PRICE EARNINGS RATIO = MARKET PRICE = 11.38 = 29.18 TIMES
(PE RATIO) EPS 0.39
MARKET-TO-BOOK VALUE RATIO = MARKET PRICE = 11.38 = 0.88
BOOK VALUE PER SHARE OF COMMON SHARES 12.94
MARTIN MANUFACTURING COMPANY
Balance Sheets (PHP)
2009 2008 INCREASE/(DECREASE) Percent
ASSETS
Current Assets
Cash 25,000.00 24,100.00 900.00 3.73%
Accounts receivable 805,556.00 763,900.00 41,656.00 5.45%
Inventories 690,425.00 748,445.00 (58,020.00) -7.75%
Prepaid expense 10,200.00 15,000.00 (4,800.00) -32.00%
Total current assets 1,531,181.00 1,551,445.00 (20,264.00) -1.31%
Gross fixed assets (at cost) 2,093,819.00 1,691,707.00 402,112.00 23.77%
Less: Accumulated depreciation 500,000.00 348,000.00 152,000.00 43.68%
Net fixed assets 1,593,819.00 1,343,707.00 250,112.00 18.61%
TOTAL ASSSETS 3,125,000.00 2,895,152.00 229,848.00 7.94%
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 230,000.00 400,500.00 (170,500.00) -42.57%
Notes payable 311,000.00 370,000.00 (59,000.00) -15.95%
Accruals 75,000.00 100,902.00 (25,902.00) -25.67%
Total current liabilities 616,000.00 871,402.00 (255,402.00) -29.31%
Long-term debt 1,165,250.00 700,000.00 465,250.00 66.46%
Total Liabilities 1,781,250.00 1,571,402.00 209,848.00 13.35%
Stockholders' equity
Preferred Stock (2,500 shares, PHP1.20 dividend) 50,000.00 50,000.00 - 0.00%
Common Stock (100,000 shares @ PHP4 par)* 400,000.00 400,000.00 - 0.00%
Paid-in capital in excess of par value 593,750.00 593,750.00 - 0.00%
Retained earnings 300,000.00 280,000.00 20,000.00 7.14%
Total stockholders' equity 1,343,750.00 1,323,750.00 20,000.00 1.51%
Total liabilities & stockholders' equity 3,125,000.00 2,895,152.00 229,848.00 7.94%
*The common stock market price closed 2009 at PHP11.38 per share
MARTIN MANUFACTURING COMPANY
Income Statements (PHP)
2009 2008 INCREASE/(DECREASE) Percent
Sales revenue 5,075,000.00 4,039,000.00 1,036,000.00 25.65%
Less: Cost of sales 3,704,000.00 2,827,300.00 876,700.00 31.01%
Gross profits 1,371,000.00 1,211,700.00 159,300.00 13.15%
Less: Operating expenses
Selling expense 650,000.00 599,250.00 50,750.00 8.47%
General & administrative expense 346,000.00 280,111.00 65,889.00 23.52%
Depreciation expense 152,000.00 110,000.00 42,000.00 38.18%
Lease payment 70,000.00 60,000.00 10,000.00 16.67%
Total 1,218,000.00 1,049,361.00 168,639.00 16.07%
Operating profit 153,000.00 162,339.00 (9,339.00) -5.75%
Less: Interest expense 93,000.00 98,000.00 (5,000.00) -5.10%
Net profit before tax 60,000.00 64,339.00 (4,339.00) -6.74%
Less: Tax (at 30%) 18,000.00 19,301.70 (1,301.70) -6.74%
Net profit after tax 42,000.00 45,037.30 (3,037.30) -6.74%
December 31
For the year ended December 31
HORIZONTAL ANALYSIS
HORIZONTAL ANALYSIS
MARTIN MANUFACTURING COMPANY
Balance Sheets (PHP)
2009 2008 2009 2008
ASSETS
Current Assets
Cash 25,000.00 24,100.00 0.80% 0.83%
Accounts receivable 805,556.00 763,900.00 25.78% 26.39%
Inventories 690,425.00 748,445.00 22.09% 25.85%
Prepaid expense 10,200.00 15,000.00 0.33% 0.52%
Total current assets 1,531,181.00 1,551,445.00 49.00% 53.59%
Gross fixed assets (at cost) 2,093,819.00 1,691,707.00 67.00% 58.43%
Less: Accumulated depreciation 500,000.00 348,000.00 16.00% 12.02%
Net fixed assets 1,593,819.00 1,343,707.00 51.00% 46.41%
TOTAL ASSSETS 3,125,000.00 2,895,152.00 100.00% 100.00%
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 230,000.00 400,500.00 7.36% 13.83%
Notes payable 311,000.00 370,000.00 9.95% 12.78%
Accruals 75,000.00 100,902.00 2.40% 3.49%
Total current liabilities 616,000.00 871,402.00 19.71% 30.10%
Long-term debt 1,165,250.00 700,000.00 37.29% 24.18%
Total Liabilities 1,781,250.00 1,571,402.00 57.00% 54.28%
Stockholders' equity
Preferred Stock (2,500 shares, PHP1.20 dividend) 50,000.00 50,000.00 1.60% 1.73%
Common Stock (100,000 shares @ PHP4 par)* 400,000.00 400,000.00 12.80% 13.82%
Paid-in capital in excess of par value 593,750.00 593,750.00 19.00% 20.51%
Retained earnings 300,000.00 280,000.00 9.60% 9.67%
Total stockholders' equity 1,343,750.00 1,323,750.00 43.00% 45.72%
Total liabilities & stockholders' equity 3,125,000.00 2,895,152.00 100.00% 100.00%
*The common stock market price closed 2009 at PHP11.38 per share
MARTIN MANUFACTURING COMPANY
Income Statements (PHP)
2009 2008 2009 2008
Sales revenue 5,075,000.00 4,039,000.00 100.00% 100.00%
Less: Cost of sales 3,704,000.00 2,827,300.00 72.99% 70.00%
Gross profits 1,371,000.00 1,211,700.00 27.01% 30.00%
Less: Operating expenses 0.00% 0.00%
Selling expense 650,000.00 599,250.00 12.81% 14.84%
General & administrative expense 346,000.00 280,111.00 6.82% 6.94%
Depreciation expense 152,000.00 110,000.00 3.00% 2.72%
Lease payment 70,000.00 60,000.00 1.38% 1.49%
Total 1,218,000.00 1,049,361.00 24.00% 25.98%
0.00% 0.00%
Operating profit 153,000.00 162,339.00 3.01% 4.02%
0.00% 0.00%
Less: Interest expense 93,000.00 98,000.00 1.83% 2.43%
Net profit before tax 60,000.00 64,339.00 1.18% 1.59%
Less: Tax (at 30%) 18,000.00 19,301.70 0.35% 0.00%
Net profit after tax 42,000.00 45,037.30 0.83% 0.00%
December 31 VERTICAL ANALYSIS
For the year ended December 31 VERTICAL ANALYSIS
MARTIN MANUFACTURING COMPANY Martin Manufacturing Corporation
Balance Sheets (PHP) Cash Flow Statement
For the year ended December 31, 2009
2009 2008
ASSETS CASH FLOWS FROM OPERATING ACTIVITIES
Current Assets Income before income tax 60,000.00
Cash 25,000.00 24,100.00 Adjustments for:
Accounts receivable 805,556.00 763,900.00 Interest expense 93,000.00
Inventories 690,425.00 748,445.00 Depreciation expense 152,000.00
Prepaid expense 10,200.00 15,000.00 Gain on sale fixed assets ( - )
Total current assets 1,531,181.00 1,551,445.00 Provision for bad debts (+) -
Operating income before changes in working capital changes 305,000.00
Gross fixed assets (at cost) 2,093,819.00 1,691,707.00 Increase in accounts receivable (41,656.00)
Less: Accumulated depreciation 500,000.00 348,000.00 Decrease in inventories 58,020.00
Net fixed assets 1,593,819.00 1,343,707.00 Decrease in prepaid expense 4,800.00
Decrease in accounts payable (170,500.00)
TOTAL ASSSETS 3,125,000.00 2,895,152.00 Decrease in accruals (25,902.00)
Cash generated from (used in) operations 129,762.00
LIABILITIES & STOCKHOLDERS' EQUITY Income tax paid (18,000.00)
Current liabilities Net cash generated (used in) operating activities 111,762.00
Accounts payable 230,000.00 400,500.00
Notes payable 311,000.00 370,000.00 CASH FLOWS FROM INVESTING ACTIVITIES
Accruals 75,000.00 100,902.00 Increase in fixed assets (402,112.00)
Total current liabilities 616,000.00 871,402.00 Gain on disposal of fixed assets (+) -
Dividend income (+)
Long-term debt 1,165,250.00 700,000.00 Interest income (+) -
Net cash generated (used in) investing activities (402,112.00)
Total Liabilities 1,781,250.00 1,571,402.00
CASH FLOWS FROM FINANCING ACTIVITIES
Stockholders' equity Decrease in notes payable (59,000.00)
Preferred Stock (2,500 shares, PHP1.20 dividend) 50,000.00 50,000.00 Increase in longterm debt 465,250.00
Common Stock (100,000 shares @ PHP4 par)* 400,000.00 400,000.00 Dividend paid to stockholders (22,000.00)
Paid-in capital in excess of par value 593,750.00 593,750.00 Interest expense (93,000.00)
Retained earnings 300,000.00 280,000.00 Net cash generated (used in) financing activities 291,250.00
Total stockholders' equity 1,343,750.00 1,323,750.00
Net increase (decrease in cash) 900.00
Total liabilities & stockholders' equity 3,125,000.00 2,895,152.00 Add: Cash, December 31, 2008 24,100.00
Cash at end of year 25,000.00
*The common stock market price closed 2009 at PHP11.38 per share
This is a cash flow prepared using indirect method
MARTIN MANUFACTURING COMPANY
Income Statements (PHP)
2009 2008
Sales revenue 5,075,000.00 4,039,000.00
Less: Cost of sales 3,704,000.00 2,827,300.00
Gross profits 1,371,000.00 1,211,700.00
Less: Operating expenses
Selling expense 650,000.00 599,250.00
General & administrative expense 346,000.00 280,111.00
Depreciation expense 152,000.00 110,000.00
Lease payment 70,000.00 60,000.00
Total 1,218,000.00 1,049,361.00
Operating profit 153,000.00 162,339.00
Less: Interest expense 93,000.00 98,000.00
Net profit before tax 60,000.00 64,339.00
Less: Tax (at 30%) 18,000.00 19,301.70
Net profit after tax 42,000.00 45,037.30
December 31
For the year ended December 31