LIQUIDITY RATIOS

Interpretation: Generally, the liquidity ratios of BDO Unibank Inc. signify that the bank is illiquid. The BDO bank has a big
debt, and the assets owned by BDO are not sufficient to pay its current liabilities. However, banks usually entail big amount of
liabilities because of the nature of its operations. It is just normal for banks to have large debt. Banking crises are disastrous for
the entire economy, hence the level of indebtedness of banks are tolerable. Banks are legally required to hold some cash
reserves in case depositors want to make withdrawals, but beyond that they largely kick profits out to shareholders as
dividends rather than use them to finance investment. Instead, investments are overwhelming financed with debt. This is why
banks like BDO borrow funds in order to cover the remaining liabilities that the current assets cannot pay for.


ACTIVITY / EFFICIENCY RATIOS

Ratio Formula Computation Answer Reference
Accounts Receivable
Turnover
Net Sales
Average Accounts Receivable
P 43,166
(P 922,553 + P 760,500)/2


0.05
Net Sales: page 8
Account Receivable: page 7
[(AR,2013 + AR, 2012)/2]
Average Collection Period 360
Accounts Receivable Turnover
360
0.05
]
7018.24


Generally, the activity ratios of BDO Unibank Inc.signify that the bank is inefficient in the management of debts. It takes BDO a very long
time to collect debt and they might face difficulties in its cash flow and operations. The ratios imply that BDO should change its credit policies and
improve its management of debt. However, it is very normal for banks to provide large debt.


Ratio Formula Computation Answer Reference
Current Ratio Current Assets
Current Liabilities
P 1,154,735
P 1,389,768


0.83 or 83%
Current Assets: page 70
Current Liabilities: page 71
Liquid Ratio Liquid Assets
Current Liabilities


43%
Page 165
LONG-TERM SOLVENCY / LEVERAGE RATIOS

Ratio Formula Computation Answer Reference
Interest Rate Coverage Earnings Before Interest and
Taxes
Interest Expense

24750 - 13440
P 13,440

284.20%
Profit before tax: page 8
Interest Expense: page 8
Debt to Asset:
Total assets
Total Liabilities
Total Assets
P 1,508,424
P 1,672,778


90.17%
Total Liabilities: page 7
Total Assets: page 7
Debt to Asset:
Average Assets

Total Liabilities
Average Assets

P 1,508,424
(P 1,241,527 + P 1,672,778)/2


103.52%
Total Liabilities: page 7
Total Assets: page 7
[(TA,2013 + TA,2012)
/2]
Debt to Equity Total Liabilities
Total Equity

P 1,508,424
P 164,354

917.8%
Total Liabilities: page 7
Total Equity: page 7

Interpretation: Banking is a highly leveraged business requiring regulators to dictate minimal capital levels to help ensure
the solvency of each bank and the banking system. Based on the computed ratios from the BDO Unibank Inc.s financial
statements, a big portion of BDOs assets and equity came from borrowings. The majority of operations of the bank is financed
by creditors. However, it is normal for the nature of businesses in banking industry to depend much on debt. There is a good
long term profit potential because the operating income is greater than the interest expense paid by BDO Unibank Inc.. The
BDO Unibank Inc. is prone to high risks because of great dependence on debts. But the bank is also expecting high returns
from these risky borrowings because of utilization of these borrowed funds.

PROFITABILITY RATIOS

Ratio Formula Computation Answer Reference
Profit Margin Net Income
Revenues
P 43,166

25.6% Page 166
Total Assets Turnover Net Sales
Average Assets
P 43,166
(P 1,672,778 + P 1,241,527)/2
3% Net Sales: page 8
Total Assets: page 7
[(TA,2013 + TA,2012) /2]
Net Profit P 22,646 1.6% Net Profit: page 8
Return on Average Assets Average Total Assets (P 1,672,778 + P 1,241,527)/2 Total Assets: page 7
[(TA,2013 + TA,2012) /2]
Return on Average Equity Net Profit
Ave Total Capital Accounts
P 22,646
(P 164,354 + P 154,371)/2

14.2% Total Capital: page 7
[(TC,2013 + TC,2012) /2]
Return on Common Equity Net Profit
Return on Average Common
Equity


14.5%

Page 3
Basic Earnings Per Share Net Profit
Weighted Average Number of
Issued and Outstanding Shares

P 22,268
3,581

6.22
Solution: page 162

Diluted Earnings Per Share Net Profit Attributable to
Shareholders of Parent Bank
Weighted Average Number of
Issued and Outstanding Shares

P 22,608
P 3,656
6.18 Solution: page 162
Net Income: page 8
Price Earnings Market Price Per Share
Basic Earnings Per Share
P 68.60
P 6.22
11.03 Market Price per Share:
page 3
EPS: page 3
Dividend Payout Cash Dividends Paid
Net Profit-Prior Year
P 7,520
P 14,542
51.9% Cash Dividends Paid: page
3
Net Profit-Prior Year: page
8
Dividend Yield Cash Dividend
Market Price Per Share

P 1.8
P 68.6
2.6% Cash dividend: Page
Stock price: page 3
Book Value Per Share

44.28 Page 3
Market Value Ratio Stock Price
Book Value per share
P 68.60
P 44.28
1.55 Stock price: page 3
Book value per share: page
3
Working Capital Current Assets Current
Liabilities

P 1,154,735 - P 1,389,768 (235,033) Current Assets: page 70
Current Liabilities: page 71

Interpretation: The profitability ratios of the BDO Unibank Inc, show that it is in fact, profitable. It shows a profitable status for the
bank because of its good dividend declaration practices. This might also be the reason why investors confidence is very high with the
BDO Unibank Inc.s stocks. They are willing to pay a good price for a peso of the current earnings of the bank. The ratios also showed
that creditors are most likely to continue to receive their interest payments. The invested and borrowed funds are being used efficiently
by the BDO Unibank Inc. as reflected in the figures. But inspite of an efficient management of funds, return on assets is low because it
is affected by the amount of interest expenses that is usually high due to the nature of banking industry.

Additional Ratios:
Ratio Formula Computation Answer Reference
Cost to Income Ratio Operating Expenses
Gross Operating Income
P 43,259,000
P 75,010,000

57.70%
Operating Expenses: page 8
Gross Operating Income: page 8
Cost to Asset Ratio Operating Expenses
Total Assets

P 43,259,000
P 1,672,778

30%
Operating Expenses: page 8
Total Assets: page 7
Assets to Equity Total Assets
Total Equity
P 1,672,778
P 164,354

10.2x

Total Assets: page 7
Total Equity: page 7

Interpretation: The above ratios signify that BDO Unibank Inc. have a great amount of expenses. Operating expenses comprise a great
portion of the gross operating income and total assets of BDO. Although banks usually have a big amount of expenses, it is preferable
for BDO to decrease its operating expenses in order to increase net profit.

Net Interest Margin Net Interest Income
Average Interest Earnings
Resources




3.2%

Page 166