FINANCIAL RATIOS

(2018)

Prepared by:
Banluta, Angel May
Leaño, Iris Maika
Lucin, Jelly
Mangubat, Cherry Mae
Paracuelles, Queen Ancel Anne
 SM INVESTMENT
CORPORATION
SM Investments Corporation (SMIC) is the largest publicly listed
company in the Philippines that is invested in market leading
businesses in retail, banking and property. It also invests in
ventures that can capture high growth opportunities in the
emerging Philippine economy
SM Founder Henry Sy was a big dreamer, a visionary leader
and a man with a strong sense of purpose who helped
transform the business landscape and left an indelible
mark on the lives of many people.

Even at a young age, Mr. Sy was resilient – sailing

penniless and hungry from China to follow in his father’s
trading footsteps. He persisted and carved his own place
in the business scene in the aftermath of the second World
War and vividly dreamed of creating a better world than
what his family lived through.

That dream took shape as he keenly watched people

going to the stores. He envisioned selling a pair of shoes to
every Filipino from all walks of life. Working hard and fast, he
put up his first shoe store, Shoemart, in 1958 in downtown
Manila. The retail industry was vibrant and soon he
expanded his stores to other sites to accommodate more
demand.
FINANCIAL STATEMENT
 SM INVESTMENTS CORPORATION ANDSUBSIDIARIES

Consolidated Balance Sheets

(Amounts in Thousands)

December 31

2018 2017

ASSETS

Current Assets
Cash and cash equivalents (Notes 7 and 28) P79,313,215 P74,318,190
Time deposits (Notes 8 and 28) 25,842,829 13,237,886
Financial assets (Notes 9 and 28) 639,316 1,347,926
Receivables and contract assets (Notes 10, 28 and 29) 33,755,192 32,352,574
Merchandise inventories - at cost (Note 22) 31,836,333 27,778,741
Other current assets (Notes 11 and 28) 70,338,577 63,478,186
Total Current Assets 241,725,462 212,513,503

Noncurrent Assets
Financial assets (Notes 9 and 28) 26,702,764 25,590,162
Investments in associate companies and joint ventures (Note 12) 259,795,077 242,114,427
Time deposits (Notes 8, 28 and 29) 2,392,622 26,688,721
Property and equipment (Note13) 23,201,667 21,339,407
Investment properties (Note14) 309,264,274 289,018,265
Land and development(Note 15) 53,928,447 40,180,145
Intangibles (Note16) 25,470,696 25,591,232
Deferred tax assets (Note 26) 2,726,155 2,489,814
Other noncurrent assets (Notes 16 and 28) 115,435,107 74,555,033
Total NoncurrentAssets 818,916,809 747,567,206
P1,060,642,271 P960,080,709

LIABILITIES ANDEQUITY

Current Liabilities
Bank loans (Notes 17, 21 and 28) P18,885,465 P24,172,965
Accounts payable and other current liabilities (Notes 18 and 28) 124,777,719 106,561,455
Income tax payable 3,641,379 1,883,871
Current portion of long-term debt (Notes 19, 21, 28 and 29) 61,480,887 40,297,133
Dividends payable (Note28) 3,906,476 2,939,590
Total Current Liabilities 212,691,926 175,855,014

Noncurrent Liabilities
Long-term debt - net of current portion (Notes 19, 21, 28 and 29) 305,555,356 292,555,868
Deferred tax liabilities (Note26) 8,810,862 8,029,579
Tenants’ deposits and others (Notes 25, 27, 28 and 29) 41,294,115 29,828,024
Total NoncurrentLiabilities 355,660,333 330,413,471
Total Liabilities 568,352,259 506,268,485

Equity Attributable to Owners of the Parent

Capital stock (Note20) 12,045,829 12,045,829
Additional paid-in capital 75,815,520 76,439,288
Equity adjustments from common control transactions (Note 20) (5,424,455) (5,424,455)
Cost of Parent common shares held by subsidiaries (25,386) (25,386)
Cumulative translation adjustment 2,077,017 1,402,623
Net unrealized gain on financial assets (Notes 9 and 12) 11,748,980 15,324,123
Re-measurement loss on Notes
See accompanying defined benefit asset/obligation
to Consolidated (Note 25)
Financial Statements. (2,063,358) (701,255)
Retained earnings (Note20):
Appropriated 37,000,000 37,000,000
Unappropriated 222,213,054 192,071,968
Total Equity Attributable to Owners of the Parent 353,387,201 328,132,735
Non-controlling Interests 138,902,811 125,679,489
Total Equity 492,290,012 453,812,224
P1,060,642,271 P960,080,709

Annual Report 2018 79

 SUMMARY OF
BALANCE SHEET

• ASSET
Current Asset ₱ 241,725.462
Non-Current Asset ₱ 818,916,809
Total Asset ₱ 1,060,642,271

• LIABILITIES and OWNER’S EQUITY

Current Liability ₱ 212,691,926
Non-Current Liability ₱ 355,660,333
Total Liability ₱ 568,352,259
Total Equity ₱ 492,290,012
Total Liabilities and Owner’s Equity
₱ 1,060,642,271
SM @ 60 Years

SM INVESTMENTS CORPORATION ANDSUBSIDIARIES

Consolidated Statements of Income

(Amounts in Thousands Except Per Share Data)

Years Ended December31

2018 2017 2016

REVENUE
Sales:
Merchandise P323,740,170 P288,532,163 P269,272,716

Real estate 35,967,663 29,567,021 25,131,499

Rent (Notes 14, 21 and27) 47,555,061 42,067,892 37,196,104
Equity in net earnings of associate companies and joint ventures (Note 12) 19,164,345 16,640,597 14,979,645
Cinema ticket sales, amusement and others 7,286,654 6,578,362 6,528,516
Management and service fees (Note 21) 6,379,831 5,820,571 5,051,305
Dividend income (Note21) 421,914 495,582 167,884
Gain on sale of financial assets - net (Note 9) 1,337 110,234 6,517
Others 9,271,192 8,135,798 6,920,537
449,788,167 397,948,220 365,254,723

COST AND EXPENSES

Cost of sales:
Merchandise (Note22) 238,902,107 214,494,703 202,479,890

Real estate (Note15) 17,852,270 15,260,313 13,196,518

Selling, general and administrative expenses (Note 23) 106,419,078 92,342,430 82,362,504
363,173,455 322,097,446 298,038,912

OTHER INCOME (CHARGES)

Interest expense (Notes 21 and 24) (16,575,009) (15,580,819) (12,028,879)

Interest income (Notes 21 and 24) 3,754,141 4,003,501 3,725,517

Gain on disposal of investment and properties - net 64,034 22,702 559,041
Gain on fair value changes on derivatives - net (Note 29) 454,941 296,334 15,232
Foreign exchange gain (loss) - net (Note 28) (182,483) 698,742 (170,130)
(12,484,376) (10,559,540) (7,899,219)

INCOME BEFORE INCOMETAX 74,130,336 65,291,234 59,316,592

PROVISION FOR (BENEFIT FROM) INCOME TAX (Note 26)

Current 15,115,326 13,616,519 11,636,884

Deferred 460,442 156,198 (78,620)

15,575,768 13,772,717 11,558,264

NET INCOME P58,554,568 P51,518,517 P47,758,328

Attributable to
Owners of the Parent (Note 30) P37,078,325 P32,923,455 P31,204,304

Non-controlling interests 21,476,243 18,595,062 16,554,024

P58,554,568 P51,518,517 P47,758,328

Basic/Diluted Earnings Per Common Share Attributable

to Owners of the Parent(Note 30) P30.78 P27.33 P25.90

80 SM Investments Corporation
SM INVESTMENTS CORPORATION ANDSUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Amounts in Thousands)

Years Ended December31

2018 2017 2016
NETINCOME P58,554,568 P51,518,517 P47,758,328
OTHER COMPREHENSIVE INCOME (LOSS)
Items that will be reclassified to profit or loss
in subsequent periods
Net unrealized gain (loss) on financial assets – 4,973,426 (1,021,689)
Share in unrealized gain (loss) on financial assets
of associates (Note12) (3,502,992) 354,028 (1,396,835)
Cumulative translation adjustment 329,125 (22,405) 549,896
Income tax relating to items to be reclassified to profit
or loss in subsequentperiods – (147,803) 373,597
(3,173,867) 5,157,246 (1,495,031)
Items not to be reclassified to profit or loss in subsequent periods
Re-measurement loss on defined benefit obligation (Note 25) (2,080,805) (416,283) (417,238)
Net unrealized loss on financial assets (520,230) – –
Income tax relating to items not to be reclassified to profit
or loss in subsequentperiods (84,499) 124,884 125,171
(2,685,534) (291,399) (292,067)

TOTAL COMPREHENSIVE INCOME P52,695,167 P56,384,364 P45,971,230

Attributable to
Owners of the Parent P31,112,015 P36,916,903 P29,205,704
Non-controlling interests 21,583,152 19,467,461 16,765,526
P52,695,167 P56,384,364 P45,971,230

See accompanying Notes to Consolidated Financial Statements.

Annual Report 2018 81

 SUMMARY OF
BALANCE SHEET

Sales ₱ 359,707,833
Revenue ₱ 449,788,167
Cost and Expense ₱ 363, 173, 455
Income Before Tax ₱ 74,130,336
Net Income ₱ 58,554,568
Total Comprehensive Income
₱ 52,695,167
FINANCIAL RATIOS
 LIQUIDITY
1. Current ratio = Total Current Assets/ Total Current Liabilities

241,725,462 = ₱ 1.137 or
212,691,926 ₱1: ₱1

Significance: Tests the ability of a firm to meet its currently maturing

obligations though the use of current assets

= ₱ 1.137 or ₱1
2. Acid-test ratio = Total Liquid Assets/ Total Current Liabilities

241,725,462
212,691,926

Significance: A stringent test of a firm’s ability to pa a current liabilities

ASSET MANAGEMENT (ACTIVITY) RATIOS

3. Accounts Receivable Turnover = Net Credit Sales/ Average Accounts Receivable

313,743,419 = 313,743,419 = ₱ 4.08
74,318,190 + 79,313,215 76,815,703
2

Significance: Tests the efficiency of credit and collection policies. Evaluates the quality of
accounts receivables.

4. Average Collection Period = Accounts Receivable/ Average Daily Credit Sales

33,755,192 = ₱ 39.27
313,743,419

5. Inventory Turnover = Cost of Goods Sold/ Average Inventory

256,754,377 = 256,754,377 = ₱ 8.61
31,836,333 + 27,778,741 29,807,537
2

Significance: Measures the efficiency in managing inventory.

6. Working Capital Turnover = Net Sales/ Average Working Capital

359,707,833 = 359,707,833 = ₱ 1.38

241,725,462 + 212,513,503 227,119,483
2

Significance: Evaluates adequacy and effectiveness in the use of working capital.

7. Asset Turnover = Net Sales/ Average Total Assets

359,707,833 = 359,707,833 = ₱ 0.356

960,080,709 + 1,060,642,271 1, 010,361,490
2

Significance: Measures the efficiency of managing assets.

DEBT MANAGEMENT (SOLVENCY) RATIOS
8. Debt Ratio = Total Liabilities/ Total Asset
568,352,259 = ₱ 0.536
1,060,642,271

Significance: Shows portion of all assets that are financed by debt.

9. Equity Ratio = Total Owner’s Equity/ Total Assets

492,290,012 = ₱ 0.464
1,060,642,271

Significance: Shows proportion of assets provided by owners.

10. Debt to Equity Ratio = Total Liabilities/ Total Owner’s Equity

568,352,259 = ₱ 1.15
492,290,012

Significance: Measures the debt relative to amount of owner’s equity.

11. Book value per share = Total Ordinary (Common) Equity/ number of Ordinary Shares Outstanding
12,045,829 = ₱ 0.01
1,204,582,867

Significance: Measures revocable amount in case of liquidation assuming assets are realized at their
book value.

12. Times Interest Earned = EBIT/ Annual Interest Expense

74,130,336 = 4.47 times
16,575,009

Significance: Measures how many times interest expense is covered by operating profit.
 PROFITABILITY
13. Gross Margin = Gross Profit/ Net Sales

102,953,456
= 0.286 or 28.6%
359,707,833

Significance: Measures profitability after covering cost of product sold.

14. Operating profit margin = Operating Profit/ Net Sales

363,173,455 = 1.018 or 101.8%

359,707,833

Significance: Measure profit generated after covering operating expense.

15. Net Margin (Return on Sales) = Net Profit/ Net Sales

74,130,330 = 0.206 or 20.6%
359,707,833

Significance: Measures profit after covering all expenses.

16. Return on Assets = Net Operating Profit/ Average Total Assets

363,173,455 = 363,173,455
= 0.359 or 35.9%
1,060,642,271 + 960,080,709 1,010,361,490
2

Significance: Measures overall efficiency in generating profits through the use of assets.

17. Return on Equity = Net Income/ Shareholders’ Equity

58,554,568 = 0.1657 or 16.57%

353,387,201

Significance: Measures rate of return on resources provided owner/ stockholders.

 PROFITABILITY

18. Price/Earnings Ratio = Market Price per Share/Earnings per Share

250 = ₱ 8.12
₱ 30.78

Significance: Measures relationship between the price of ordinary (common) shares in the
open market and the profit earned on a per share basis.

19. Dividend Yield = Dividend per Share/ Market Value per Share

8.20
= 3.28%
250

Significance: Shows the rate earned by shareholders from dividends based on current price
of the stock.

20. Payout Ratio = Dividend per Share/ Earnings per Share

8.20 = 26.64%
30.78

Significance: Shows percentage of earnings paid to stockholders.