LIQUIDITY RATIOS

2016 2015 2014

Current Ratio 0.60 0.62 0.54
Acid-Test Ratio 0.40 0.40 0.37
Net Working
- 1,703,587 - 1,469,941 - 2,034,889
Capital

Current Ratio
Max’s Group’s current ratio indicates that its current liabilities are larger than
its current assets and that the company may have a hard time paying its
current obligations.

Quick Ratio
The company’s low quick ratio indicates that the company may have a hard
time paying its current obligations using its quick assets, or assets that can
easily be turned into cash.

Net Working Capital

SOLVENCY RATIOS

2016 2015 2014

Receivables
Turnover 13.88 15.15 14.67
Days Sale
Outstanding 26 Days 24 Days 25 Days
Inventory
Turnover 17.00 17.75 9.30
Days Inventory
Outstanding 21 Days 20 Days 39 Days
Payable Turnover
4.04 3.45 3.27
Days Payable
Outstanding 89 Days 104 Days 110 Days
Receivables Turnover Ratio and Days Sale Outstanding
Days Sale Outstanding indicates the company’s efficiency in collecting its
credit or receivables from customers. Max’s Group’s average collection period
is 26 days, which is good as the company is able to collect cash from its credit
sales for a shorter time.
-----------------

Payable Turnover Ratio

Max’s Group’s has been efficient in paying its suppliers, with payable turnover
of 209 days in one year. However, the given data was not sufficient in
calculating the company’s payable turnover in 2014, thus leaving us with no
ratio to compare with.

Inventory Turnover Ratio

Max’s Group’s inventory turnover has decreased from 32 days of selling their
inventories in 2014 to 20 days in 2015. These ratios indicate that the
company’s ability to generate profit from selling inventories have decreased.

PROFITABILITY RATIOS

2015 2014
Rate of Return on Net 5% -1%
Sales
Gross Profit Rate 27% 21%

Rate of Return on 11% -2%

Investments
Rate of Return on Total 4% -1%
Assets
Asset Turnover 0.92 0.46
Working Capital -5.37 -2.44
Productivity Ratio
Earnings per share 0.65 (0.05)

Profitability ratios are ratios used to assess the ability of the business to
generate profit.

Rate of Return on Sales

Max’s Group’s rate of return on sales increased from -1% in 2014 to 5% in
2015. These ratios indicate that in 2014, -1% of the company’s sales was
converted into profit or income, considering the company had net loss of
P66,204. Although it increased in 2015, only 5% of the company’s net sales
was converted into income. Using this ratio, we can see that the company is
not quite profitable but has room for improvement.

Gross Profit Rate

The gross profit rate of Max’s Group increased from 21% in 2014 to 27% in
2015. This means that the percentage of sales left as gross profit is more
sufficient in 2015 than in 2014. 27% of the sales can be used to pay other
expenses.

Rate of Return on Investment

Max’s Group’s rate of return on investment increased from -2% to 11% in
2014 and 2015, respectively. In 2014, a -2% loss was generated on
investment, considering the company had net loss of P66,204. It improved in
2015, when the gain generated on investment increased to 11%.

Rate of Return on Total Assets

Max’s Group’s rate of return on total assets increased from -1% in 2014 to
4% in 2015. Comparing these ratios, we can see that the use of assets to
generate earnings have improved in 2015. This also means that 4% of the
company’s net income was produced by the company’s total assets. Since a
higher rate is preferred, the company might not be profitable enough.

Asset Turnover Ratio

Max’s Group’s asset turnover ratio has a significant increase, from 0.46 in
2014 to 0.92 in 2015. These ratios indicate that the company’s efficiency in
generating sales from its assets have improved in 2015.

Working Capital Productivity Ratio

Max’s Group’s working capital productivity ratio is -5.37 and -2.44 in 2015
and 2014, respectively. The ratios are negative due to the negative working
capital, which means that the company’s current liabilities exceeded the
company’s current assets. This may be caused by the company’s outstanding
balance from its short-term loans from banks amounting to P1,367,238 and
P1,634,085 in 2015 and 2014, respectively, and the company’s revolving
promissory notes amounting to P296,108 and P440,430 in 2015 and 2014,
respectively. This means that the company might have not been effective in
utilizing its working capital to generate sales.
Earnings per Share
Max’s Group’s earnings per share have increased from a loss of (-)0.05 per
share in 2014 to earnings of 0.65 per share in 2015, considering the company
had net loss in 2014. This means that in 2015, each ordinary share has earned
P0.65, from the company’s net income attributable to the equity holders of
the Parent company.

STABILITY RATIOS

2015 2014
Debt/Equity Ratio 1.54 1.65

Equity Ratio 39% 38%

Fixed Assets to Long- 1.79 1.80

term Liabilities
Book Value per share 1.39 1.39

Stability ratios are ratios used to assess the company’s stability and ability to
meet its long-term financial obligations.

Debt/Equity Ratio
Max’s Group’s Debt/Euity ratios decreased from 1.65 in 2014 to 1.54 in 2015.
These ratios indicate that the company has been financing its growth with
debt. The decrease in the ratio means that the company had lowered its take
on their debts.

Equity Ratio
Max’s Group’s equity ratio has increased from 38% in 2014 to 39% in 2015.
This indicates that in 2015, 39% of the company’s assets are financed by the
owner’s equity. This is not a good ratio, because it means that only 39% of
the company’s assets actually belong to the owners of the company, which
they would receive in time of liquidation, and the rest are from debt.
Fixed Assets to Long-term Liabilities
Max’s Group’s fixed assets to long-term liabilities decreased insignificantly,
from 1.80 in 2014 to 1.79 in 2013. These ratios indicate that the company’s
long-term liabilities may be secured with its fixed assets, and that it has
enough fixed assets to be used as collateral for mortgage.

Book Value per share

The book value per share of Max’s Group has been consistent at 1.39. This
ratio indicates the recoverable amount in time of liquidation, with assets
realized at their book value.

RECOMMENDATION
If possible, the company should reduce its expenses and strive for higher
sales, to be more profitable. They can also improve their strategic
management.
For high-risk investors and creditors, they can use this opportunity to invest
in and finance Max’s Group, in order for the company to create more strategic
plans that might guarantee them return.
As for low-risk investors and creditors, they could wait for the company to
recover from their indebtedness before they invest, since the company has
been improving in terms of their debt/equity and equity ratios, and their
overall profitability ratios.
 MAX'S GROUP, INC.
Doing business under the names and styles of Pancake House;
Maple; Dencio's; Kabisera ng Dencio's; and Singkit
(FORMERLY MAX'S GROUP, INC.) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in Thousands)

2015 2014
ASSETS
Current Assets
Cash 817,921 956,522
Trade and other receivables 536,911 677,559
Inventories 484,724 364,286
Prepaid expenses and other current assets 357,365 363,473
Total Current Assets 2,196,921 2,361,840
Noncurrent Assets
Property and equipment 2,402,768 1,751,220
Intangible Assets 5,015,751 4,899,277
Investment properties 0 426,281
Net retirement plan assets 389,722 462,153
Net deferred income tax assets 189,740 196,605
Security deposits on lease contracts 374,534 320,567
Other noncurrent assets 320,486 289,119
Total Noncurrent Assets 8,693,001 8,345,222
10,889,922 10,707,062

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables 1,948,860 2,191,442
Loans payable 1,663,346 2,085,486
Current portion of long-term debt 462,814 73,697
Current portion of mortgage payable 3,165 8,165
Income tax payable 51,491 37,939
Total Current Liabilities 4,129,676 4,396,729
Noncurrent Liabilities
Long-term debt 1,583,165 1,212,790
Mortgage payable 1,000 -
Net retirement liabilities 140,669 101,887
Accrued rent payable 33,984 37,328
Net deferred income tax liabilities 969,439 909,159
Provision for share in equity in net losses of a joint
venture 3,548 6,741
Other noncurrent liabilities 3,185 9,557
Total Noncurrent Liabilities 2,734,990 2,277,462
Total Liabilities 6,864,666 6,674,191
Equity
Capital stock 1,087,082 1,087,082
Additional paid-in capital 5,353,289 5,353,289
Retained earnings 609,181 114,103
Other comprehensive income (loss) (36,961) 32,350
7,012,591 6,586,824
Shares held by subsidiaries (2,610,013) (2,610,013)
Non-controlling interests 48,988 56,060
Total Equity 4,451,566 4,032,871
11,316,232 10,707,062
 MAX'S GROUP, INC.
Doing business under the names and styles of Pancake House;
Maple; Dencio's; Kabisera ng Dencio's; and Singkit
(FORMERLY MAX'S GROUP, INC.) AND SUBSIDIARIES
Comparative Balance Sheet - Common Size Percentage
(Amounts in Thousands)

2015 2014
ASSETS
Current Assets
Cash 7.23% 8.93%
Trade and other receivables 4.93% 6.33%
Inventories 4.45% 3.40%
Prepaid expenses and other current assets 3.28% 3.39%
Total Current Assets 20.17% 22.06%
Noncurrent Assets
Property and equipment 22.06% 16.36%
Intangible Assets 46.06% 45.76%
Investment properties - 3.98%
Net retirement plan assets 3.44% 4.32%
Net deferred income tax assets 1.68% 1.84%
Security deposits on lease contracts 3.31% 2.99%
Other noncurrent assets 2.83% 2.70%
Total Noncurrent Assets 80.59% 77.94%
TOTAL ASSETS 100.00% 100.00%

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables 17.22% 20.47%
Loans payable 14.70% 19.48%
Current portion of long-term debt 4.09% 0.69%
Current portion of mortgage payable 0.03% 0.08%
Income tax payable 0.46% 0.35%
Total Current Liabilities 36.49% 41.06%
Noncurrent Liabilities
Long-term debt 13.99% 11.33%
Mortgage payable 0.01% -
Net retirement liabilities 1.24% 0.95%
Accrued rent payable 0.30% 0.30%
Net deferred income tax liabilities 8.57% 8.49%
Provision for share in equity in net losses of a joint venture 0.03% 0.06%
Other noncurrent liabilities 0.03% 0.09%
 Total Noncurrent Liabilities 24.17% 21.27%
Total Liabilities 60.66% 62.33%
Equity
Capital stock 9.61% 10.15%
Additional paid-in capital 47.31% 50.00%
Retained earnings 5.38% 1.07%
Other comprehensive income (loss) -0.33% 0.30%

Shares held by subsidiaries -23.06% -24.38%

Non-controlling interests 0.43% 0.52%
Total Equity 39.34% 37.67%
100% 100%
 MAX'S GROUP, INC.
Doing business under the names and styles of Pancake House;
Maple; Dencio's; Kabisera ng Dencio's; and Singkit
(FORMERLY MAX'S GROUP, INC.) AND SUBSIDIARIES
Comparative Balance Sheet - Trend Percentage
(Amounts in Thousands)

2015 2014
ASSETS
Current Assets
Cash 85.51% 100.00%
Trade and other receivables 79.24% 100.00%
Inventories 133.06% 100.00%
Prepaid expenses and other current assets 98.32% 100.00%
Total Current Assets 93.02% 100.00%
Noncurrent Assets
Property and equipment 137.21% 100.00%
Intangible Assets 102.38% 100.00%
Investment properties - 100.00%
Net retirement plan assets 84.33% 100.00%
Net deferred income tax assets 96.51% 100.00%
Security deposits on lease contracts 116.83% 100.00%
Other noncurrent assets 110.85% 100.00%
Total Noncurrent Assets 104.17% 100.00%
TOTAL ASSETS 101.71% 100.00%

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables 88.93% 100.00%
Loans payable 79.76% 100.00%
Current portion of long-term debt 628.00% 100.00%
Current portion of mortgage payable 38.76% 100.00%
Income tax payable 135.72% 100.00%
Total Current Liabilities 93.93% 100.00%
Noncurrent Liabilities
Long-term debt 130.54% 100.00%
Mortgage payable 100.00%
Net retirement liabilities 138.06% 100.00%
Accrued rent payable 91.04% 100.00%
Net deferred income tax liabilities 106.63% 100.00%
Provision for share in equity in net losses of a joint venture 52.63% 100.00%
Other noncurrent liabilities 33.33% 100.00%
Total Noncurrent Liabilities 120.09% 100.00%
Total Liabilities 102.85% 100.00%
Equity
Capital stock 100.00% 100.00%
Additional paid-in capital 100.00% 100.00%
Retained earnings 533.89% 100.00%
Other comprehensive income (loss) -114.25% 100.00%
106.46% 100.00%
Shares held by subsidiaries 100.00% 100.00%
Non-controlling interests 87.38% 100.00%
Total Equity 110.38% 100.00%
 MAX'S GROUP INC.
Doing business under the names and styles of Pancale House;
Maple; Dencios's; Kabisera ng Dencio's; and Singkit
(FORMERLY MAX'S GROUP, INC.) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR DECEMBER 31, 2015 AND 2014
[Amounts in Thousands, except for earnings (loss) per share]
2015 2014
REVENUES
Restaurant sales 8,594,137 4,268,917
Commissary sales 1,281,603 518,043
Franchise, royalty and continuing license fees 497,507 184,500
10,373,247 4,971,460
COST OF SALES 7,563,158 3,946,491
GROSS PROFIT 2,810,089 1,024,969
GENERAL AND ADMINISTRATIVE EXPENSES (1,694,022) (712,683)
SALES AND MARKETING EXPENSES (324,369) (203,221)
FINANCE COSTS (99,953) (64,753)
SHARE IN EQUITY IN NET LOSSES OF JOINT
VENTURES - -
OTHER INCOME - Net 79,442 62,592
INCOME BEFORE CORPORATE REORGANIZATION
COSTS 771,187 106,904
CORPORATE REOGRANIZATION COSTS - (177,412)
INCOME (LOSS) BEFORE INCOME TAX 771,187 (70,508)
PROVISION FOR (BENEFIT FROM) INCOME TAX
Current 253,905 54,356
Deferred 15,894 (58,660)
269,799 (4,304)
NET INCOME (LOSS) 501,388 (66,204)
 MAX'S GROP INC.
Doing business under the names and styles of Pancale House;
Maple; Dencios's; Kabisera ng Dencio's; and Singkit
(FORMERLY MAX'S GROUP, INC.) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR DECEMBER 31, 2015 AND 2014
Comparative Balance Sheet - Common Size Percentage
[Amounts in Thousands, except for earnings (loss) per share]
2015 2014
REVENUES
Restaurant sales
Commissary sales
Franchise, royalty and continuing license fees
100.00% 100.00%
COST OF SALES 72.91% 79.38%
GROSS PROFIT 27.09% 20.62%
GENERAL AND ADMINISTRATIVE EXPENSES -16.33% -14.34%
SALES AND MARKETING EXPENSES -3.13% -4.09%
FINANCE COSTS -0.96% -1.30%
SHARE IN EQUITY IN NET LOSSES OF JOINT
VENTURES - -
OTHER INCOME - Net 0.77% 1.26%
INCOME BEFORE CORPORATE REORGANIZATION
COSTS 7.43% 2.15%
CORPORATE REOGRANIZATION COSTS - -3.57%
INCOME (LOSS) BEFORE INCOME TAX 7.43% -1.42%
PROVISION FOR (BENEFIT FROM) INCOME TAX
Current 2.45% 1.09%
Deferred 0.15% -1.18%
2.60% -0.09%
NET INCOME (LOSS) 4.83% -1.33%
 MAX'S GROP INC.
Doing business under the names and styles of Pancale House;
Maple; Dencios's; Kabisera ng Dencio's; and Singkit
(FORMERLY MAX'S GROUP, INC.) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR DECEMBER 31, 2015 AND 2014
Comparative Balance Sheet - Trend Percentage
[Amounts in Thousands, except for earnings (loss) per share]
2015 2014
REVENUES
Restaurant sales 201.32% 100.00%
Commissary sales 247.39% 100.00%
Franchise, royalty and continuing license fees 269.65% 100.00%
208.66% 100.00%
COST OF SALES 191.64% 100.00%
GROSS PROFIT 274.16% 100.00%
GENERAL AND ADMINISTRATIVE EXPENSES 237.70% 100.00%
SALES AND MARKETING EXPENSES 159.61% 100.00%
FINANCE COSTS 154.36% 100.00%
SHARE IN EQUITY IN NET LOSSES OF JOINT
VENTURES
OTHER INCOME - Net 126.92% 100.00%
INCOME BEFORE CORPORATE REORGANIZATION
COSTS 721.38% 100.00%
CORPORATE REOGRANIZATION COSTS
INCOME (LOSS) BEFORE INCOME TAX -1093.76% 100.00%
PROVISION FOR (BENEFIT FROM) INCOME TAX
Current 467.11% 100.00%
Deferred -27.10% 100.00%
-6268.56% 100.00%
NET INCOME (LOSS) -757.34% 100.00%
 San Beda College – Manila
College of Arts and Sciences
Department of Financial Management

MAX’S GROUP

A Financial Analysis Paper Submitted

to the College of Arts and Sciences
San Beda College – Manila

In Partial Fulfillment of the Requirement of the Course

Managerial Accounting
ACCF02

Submitted by:
Bonifacio, Jan Myka B.

2BFM

Submitted to:
Prof. George Ong, CPA