Table of Contents

SAN MIGUEL CORPORATION (Balance Sheet) 1

SAN MIGUEL CORPORATION (Income Statement) 2

HORIZONTAL ANALYSIS 3

Balance Sheet 3

Income Statement 4

VERTICAL ANALYSIS 5

Balance Sheet 5

Income Statement 6

RATIO ANALYSIS 7

Liquidity Ratio 7

Efficiency Ratio 7

Solvency/Leverage/Debt Ratio 8

Profitability Ratio 8

SAN MIGUEL CORPORATION - FINANCIAL STATEMENT INTERPRETATION 10

Horizontal Analysis 11

Vertical Analysis 13

Liquidity Ratio 15

Efficiency Ratio 15

Solvency/Leverage/Debt Ratio 16

Profitability Ratio 16

Recommendations 17

i
 SAN MIGUEL CORPORATION
SEPARATE STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2021 AND 2020
(In Millions)

2021 2020
ASSETS
Current Assets
Cash and cash equivalents ₱ 96,509 ₱ 135,816
Receivables - net 91,323 88,562
Prepaid expenses and other current
assets 5,655 5,411
Total Current Assets 193,487 229,789
Noncurrent Assets
Investment and advances - net 730,333 680,565
Property, plant and equipment - net 1,250 1,162
Right-of-use assets - net 444 519
Investment Property - net 779 790
Deferred tax assets - net 2,005 4,102
Other noncurrent assets - net 13,465 7,538
Total Noncurrent Assets 748,276 694,676
₱ 941,763 ₱ 924,465

LIABILITIES AND EQUITY

Current Liabilities
Loans Payable ₱ 51,450 ₱ 23,950
Accounts Payable and accrued
expenses 11,200 11,131
Income and other taxes payable 750 707
Subscriptions payable 1,444 2,710
Dividends payable 2,879 3,291
Current maturities of long-term debt -
net of debt issue costs 16,833 159
Total Current Liabilities 84,556 41,948
Noncurrent Liabilities
Long-term debt - net of current
maturities and debt issue costs 280,767 261,223
Other noncurrent liabilities 1479 2,414
Total Noncurrent Liabilities 282,246 263,637
366,802 305,585
Equity
Capital stock - common 16,443 16,443
Capital stock - preferred 10,187 10,187
Additional paid-in capital 177,719 177,719
Capital securities 33,031 33,031
Equity reserves 1,663 1,052
Retained earnings 480,281 490,594
Treasury stock -144,363 - 110,146
Total Equity 574,961 618,880
₱ 941,763 ₱ 924,465

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 SAN MIGUEL CORPORATION
SEPARATE STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Millions, Excepts Per Share Data)

2021 2020
REVENUES
Dividend Income ₱ 14,173 ₱ 13,000
Sale of services 3,210 4,436
Interest income 1,875 3,229
Rent income 355 171
Gain (loss) on derivatives - net 65 - 1,752
Gain on sale of investments and others 144 4,666
20,362 23,750
EXPENSES
Cost and expenses 4,000 5,270
Interest expense and other finacing charges 10,755 12,618
Loss (gain) on foreign exchange - net 2,390 - 1,912
17,145 15,976
INCOME BEFORE INCOME TAX 3,217 7,774
INCOME TAX EXPENSE 2,023 816
NET INCOME ₱ 1,194 ₱ 6,958
Basic/Diluted Loss Per Common Share -₱ 2.93 -₱ 0.01

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 SAN MIGUEL CORPORATION
SEPARATE STATEMENTS OF FINANCIAL POSITION
HORIZONTAL ANALYSIS
DECEMBER 31, 2021 AND 2020
(In Millions)
Percentage
2021 2020 Variance (%)
ASSETS
Current Assets
Cash and cash equivalents ₱ 96,509 ₱ 135,816 -39,307 -28.94%
Receivables - net 91,323 88,562 2,761 3.12%
Prepaid expenses and other current 5,655 5,411 244 4.51%
Total Current Assets 193,487 229,789 -36,302 -15.80%
Noncurrent Assets
Investment and advances - net 730,333 680,565 49,768 7.31%
Property, plant and equipment - net 1,250 1,162 88 7.57%
Right-of-use assets - net 444 519 -75 -14.45%
Investment Property - net 779 790 -11 -1.39%
Deferred tax assets - net 2,005 4,102 -2,097 -51.12%
Other noncurrent assets - net 13,465 7,538 5,927 78.63%
Total Noncurrent Assets 748,276 694,676 53,600 7.72%
₱ 941,763 ₱ 924,465 17,298 1.87%

LIABILITIES AND EQUITY

Current Liabilities
Loans Payable ₱ 51,450 ₱ 23,950 27,500 114.82%
Accounts Payable and accrued 11,200 11,131 69 0.62%
Income and other taxes payable 750 707 43 6.08%
Subscriptions payable 1,444 2,710 -1,266 -46.72%
Dividends payable 2,879 3,291 -412 -12.52%
Current maturities of long-term debt - 16,833 159 16,674 10486.79%
Total Current Liabilities 84,556 41,948 42,608 101.57%
Noncurrent Liabilities
Long-term debt - net of current 280,767 261,223 19,544 7.48%
Other noncurrent liabilities 1479 2,414 -935 -38.73%
Total Noncurrent Liabilities 282,246 263,637 18,609 7.06%
366,802 305,585 61,217 20.03%
Equity
Capital stock - common 16,443 16,443 0 0.00%
Capital stock - preferred 10,187 10,187 0 0.00%
Additional paid-in capital 177,719 177,719 0 0.00%
Capital securities 33,031 33,031 0 0.00%
Equity reserves 1,663 1,052 611 58.08%
Retained earnings 480,281 490,594 -10,313 -2.10%
Treasury stock -144,363 - 110,146 -34,217 31.07%
Total Equity 574,961 618,880 -43,919 -7.10%
₱ 941,763 ₱ 924,465 17,298 1.87%

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 SAN MIGUEL CORPORATION
SEPARATE STATEMENTS OF INCOME
HORIZONTAL ANALYSIS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Millions, Excepts Per Share Data)
Percentage
2021 2020 Variance (%)
REVENUES
Dividend Income ₱ 14,173 ₱ 13,000 1,173.00 9.02%
Sale of services 3,210 4,436 - 1,226.00 -27.64%
Interest income 1,875 3,229 - 1,354.00 -41.93%
Rent income 355 171 184.00 107.60%
Gain (loss) on derivatives - net 65 - 1,752 1,817.00 -103.71%
Gain on sale of investments and others 144 4,666 - 4,522.00 -96.91%
20,362 23,750 - 3,388.00 -14.27%
EXPENSES
Cost and expenses 4,000 5,270 - 1,270.00 -24.10%
Interest expense and other finacing charges 10,755 12,618 - 1,863.00 -14.76%
Loss (gain) on foreign exchange - net 2,390 - 1,912 4,302.00 -225.00%
17,145 15,976 1,169.00 7.32%
INCOME BEFORE INCOME TAX 3,217 7,774 - 4,557.00 -58.62%
INCOME TAX EXPENSE 2,023 816 1,207.00 147.92%
NET INCOME ₱ 1,194 ₱ 6,958 - 5,764.00 -82.84%
Basic/Diluted Loss Per Common Share -₱ 2.93 -₱ 0.01

4
 SAN MIGUEL CORPORATION
SEPARATE STATEMENTS OF FINANCIAL POSITION
VERTICAL ANALYSIS
DECEMBER 31, 2021 AND 2020
(In Millions)
Percentage Percentage
2021 (%) 2020 (%)
ASSETS
Current Assets
Cash and cash equivalents ₱ 96,509 10.25% ₱ 135,816 14.69%
Receivables - net 91,323 9.70% 88,562 9.58%
Prepaid expenses and other current 5,655 0.60% 5,411 0.59%
Total Current Assets 193,487 20.55% 229,789 24.86%
Noncurrent Assets
Investment and advances - net 730,333 77.55% 680,565 73.62%
Property, plant and equipment - net 1,250 0.13% 1,162 0.13%
Right-of-use assets - net 444 0.05% 519 0.06%
Investment Property - net 779 0.08% 790 0.09%
Deferred tax assets - net 2,005 0.21% 4,102 0.44%
Other noncurrent assets - net 13,465 1.43% 7,538 0.82%
Total Noncurrent Assets 748,276 79.45% 694,676 75.14%
₱ 941,763 100.00% ₱ 924,465 100.00%

LIABILITIES AND EQUITY

Current Liabilities
Loans Payable ₱ 51,450 5.46% ₱ 23,950 2.59%
Accounts Payable and accrued 11,200 1.19% 11,131 1.20%
Income and other taxes payable 750 0.08% 707 0.08%
Subscriptions payable 1,444 0.15% 2,710 0.29%
Dividends payable 2,879 0.31% 3,291 0.36%
Current maturities of long-term debt - 16,833 1.79% 159 0.02%
Total Current Liabilities 84,556 8.98% 41,948 4.54%
Noncurrent Liabilities
Long-term debt - net of current 280,767 29.81% 261,223 28.26%
Other noncurrent liabilities 1479 0.16% 2,414 0.26%
Total Noncurrent Liabilities 282,246 29.97% 263,637 28.52%
366,802 38.95% 305,585 33.06%
Equity
Capital stock - common 16,443 1.75% 16,443 1.78%
Capital stock - preferred 10,187 1.08% 10,187 1.10%
Additional paid-in capital 177,719 18.87% 177,719 19.22%
Capital securities 33,031 3.51% 33,031 3.57%
Equity reserves 1,663 0.18% 1,052 0.11%
Retained earnings 480,281 51.00% 490,594 53.07%
Treasury stock -144,363 15.33% - 110,146 11.91%
Total Equity 574,961 61.05% 618,880 66.94%
₱ 941,763 100.00% ₱ 924,465 100.00%

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 SAN MIGUEL CORPORATION
SEPARATE STATEMENTS OF INCOME
VERTICAL ANALYSIS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(In Millions, Excepts Per Share Data)
Percentage Percentage
2021 (%) 2020 (%)
REVENUES
Dividend Income ₱ 14,173 143.67% ₱ 13,000 54.74%
Sale of services 3,210 15.76% 4,436 18.68%
Interest income 1,875 9.21% 3,229 13.60%
Rent income 355 1.74% 171 0.72%
Gain (loss) on derivatives - net 65 0.32% - 1,752 7.38%
Gain on sale of investments and others 144 0.71% 4,666 19.65%
20,362 100.00% 23,750 100.00%
EXPENSES
Cost and expenses 4,000 19.64% 5,270 22.19%
Interest expense and other finacing charges 10,755 52.82% 12,618 53.13%
Loss (gain) on foreign exchange - net 2,390 11.74% - 1,912 8.05%
17,145 84.20% 15,976 67.27%
INCOME BEFORE INCOME TAX 3,217 15.80% 7,774 32.73%
INCOME TAX EXPENSE 2,023 9.94% 816 3.44%
NET INCOME ₱ 1,194 5.86% ₱ 6,958 29.30%
Basic/Diluted Loss Per Common Share -₱ 2.93 -₱ 0.01

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 SAN MIGUEL CORPORATION
LIQUIDITY RATIO
DECEMBER 31, 2021 AND 2020

CURRENT RATIO FOR YEAR 2020 AND 2021

FORMULA 2021 2020

193,487 229.789
CURRENT ASSETS = =
= 84,556 41,948
CURRENT LIABILITIES
= 2.29 = 5.48

QUICK RATIO FOR YEAR 2020 AND 2021

FORMULA 2021 2020

= =
193,487−5,655 229.789−5,411
=
84,556 41,948
CURRENT ASSETS −(PREPAID EXPENSE + INVENTORY ) 187,832 224,378
CURRENT LIABILITIES = =
84,556 41,948
= 2.22 = 5.35

SAN MIGUEL CORPORATION

EFFICIENCY RATIO
DECEMBER 31, 2021 AND 2020

ACCOUNTS RECEIVABLE TURNOVER FOR YEAR 2020 AND 2021

FORMULA 2020 & 2021

20,362
= 91,323+88,562
( )
2
REVENUE 20,362
= ACCOUNT RECEIVABLES = ( 179,885 )
( ) 2
2
20,362
= 89,942.5
= 0.23

AVERAGE COLLECTION PERIOD FOR YEAR 2020 AND 2021

FORMULA 2020 & 2021

365
NO . OF BUSINESS DAYS =
= 0.23
ACCOUNTS RECEIVABLE TURNOVER
= 1,587 days

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 SAN MIGUEL CORPORATION
SOLVENCY/LEVERAGE/DEBT RATIO
DECEMBER 31, 2021 AND 2020

DEBT RATIO FOR YEAR 2020 AND 2021

FORMULA 2021 2020

366,802 305,585
TOTAL LIABILITIES = =
= 941,763 924,465
TOTAL ASSETS
= 0.39 or 39% = 0.33 or 33%
DEBT-TO-EQUITY RATIO FOR YEAR 2020 AND 2021
FORMULA 2021 2020

366,802
TOTAL LIABILITIES = 305,585
= 574,961 =
TOTAL EQUITY 618,880
= 0.64 or 64% = 0.49 or 49%
TIMES INTEREST EARNED RATIO FOR YEAR 2020 AND 2021
FORMULA 2021 2020

13,972 20,392
NET PROFIT BEFORE INTEREST = =
= 10755 12,618
INTEREST EXPENSE
= 1.30 = 1.62

SAN MIGUEL CORPORATION

PROFITABILITY RATIO
DECEMBER 31, 2021 AND 2020

RETURN ON EQUITY (ROE) FOR YEAR 2020 AND 2021

FORMULA 2020 & 2021

8
 1,194
∗100
= 574,961+ 618880
( )
2
1,194
NET INCOME ∗100
= = 1,193,841
AVERAGE TOTAL EQUITY ( )
2
1,194
= 596,920.50 ∗100
= 0.0020 or 0.20%

RETURN ON ASSETS (ROA) FOR YEAR 2020 AND 2021

FORMULA 2020 & 2021

1,194
∗100
= 941,763+924,465
( )
2
1,194
NET INCOME ∗100
= = 1,866,228
AVERAGE TOTAL ASSETS ( )
2
1,194
= 933,114 ∗100
= 0.0013 or 0.13%
GROSS PROFIT RATE FOR YEAR 2020 AND 2021
FORMULA 2021 2020

18,480
16,362 = ∗100
GROSS PROFIT = ∗100 23,750
= 20,362
REVENUE = 0.7781 or
= 0.8036 or 80.36%
77.81%
OPERATING RATIO FOR YEAR 2020 AND 2021
FORMULA 2021 2020

15 ,976
17,145 = ∗100
COST OF SALES + EXPENSES = ∗100 23,750
= 20,362
REVENUE = 0.6727 or
= 0.8420 or 84.20%
67.27%
NET PROFIT MARGIN FOR YEAR 2020 AND 2021
FORMULA 2021 2020

9
 6,958
1,194 = ∗100
NET INCOME = ∗100 23,750
= 20,362
REVENUE = 0.2930 or
= 0.0586 or 5.86%
29.30%

Horizontal Analysis
 Balance Sheet
 The decrease of 28.94% on their cash and cash equivalents implies that the
company couldn’t maximize their cash generation using their other current
assets, that leads to a 3.12% increase on net receivables and 4.51% increase on
their prepaid expenses and other current assets. Despite the said improvement,
the decrease on cash made a huge effect on the 15.80% decrease on their total
current assets.
 The company shows significance on making investments and it resulted to a
7.31% increase on investment and advances, also a 7.57% increase has been
made on property, plant and equipment which also affected the 78.63%
increase on the other noncurrent assets that made a huge impact for the
minimal 7.72% raise on their total non-current assets. However, their right-of-
use assets has lowered for about 14.45% that stirs the 1.39% decrease on
investment property, which then eventually resulted to a 51.12% decrease on
their deferred tax.
 As observed, San Miguel Corporation put more attention on their noncurrent
assets that's why even with much effort to produce investments, the company
lacks on improving their cash generation. However, since they are putting
enough efforts in their investment, they are still able to garner a 1.87%
increase on their total assets.
 Their growth in loans payable by 114.82% demonstrates that they are
emphasizing loans and borrowing rather than using equity in their operations.
Being a large operating company, they frequently borrow money from others
because it enables investments in sales that increase profit. Additionally, it is
much better than using their equity because loans do not grant an ownership

10
 stake and do not erode the owners' equity position in the company. They
merely need to keep an eye on the interest rates on their loans.
 Since the increase in their accrued expenses and accounts payable was only
0.62%, it wasn't too bad for them. This increase indicates that they are not
concentrating on making purchases using credit, which is advantageous for
them because it implies that they are making purchases using cash rather than
credit, which will eventually result in a reduction in their responsibilities.
 The reduction of 12.52% in dividends payable demonstrates their ability to
pay some of their investors' dividends.
 Despite being a long-term debt, the CPLTD, or current maturities of long-term
debt, has increased by about 10,486.79%, which is bad for the company. A
business that has a sizable CPLTD and little cash is more likely to go into
default—that is, to stop making payments on schedule on its debts. Lenders
might opt not to extend more credit to the business as a result, and
shareholders might elect to sell their shares. They will still be able to pay off
this long-term debt using their large cash position, though, as we've seen from
their large cash levels.
 Their non-current liabilities' long-term debt has grown by 7.48%. Since they
do have a sizable cash position that may prevent them from going bankrupt or
suffering a loss, we could say that their situation is not too bad.
 Because their total assets only climbed by 1.87% while their total liabilities
increased by 20.03%, they should put more emphasis on their assets rather
than their liabilities.
 Nothing has changed in capital stock common and preferred, additional paid-
in capital, and capital securities,
 The company’s ability in overcoming its future losses has greatly improved
since its Equity Reserves increased by 58.08%.
 The Retained Earnings of the company have increased by 2.10% which means
that the company experiences overhead expenses.
 The treasury stock increased by 31.07% which can reduce the company’s
equity.
 The total Equity of the company has decreased by 7.10% which means that the
company experience losses.
 Income Statement
 The company can maintain growth and profitability in the future since its
Dividend Income has increased by 13.18%.
 The Sale of Services of the company has decreased by 27.64% which means
fewer sales were undertaken at minimal cost.
 Since the sales of the company decreased in 2021, this can be the reason why
the company’s Interest Income decreased by 41.93%.
 The Rent Income of the company has increased by 107.60% which is good for
the company since it can use to cover other expenses.
 The company has a loss on derivatives, it decreased by 103.71% which will
affect the liquidity of the company.

11
  The profitability of the company has decreased by 14.27% in 2021, it is
recommended to make more effort in improving their sales.
 All their running costs have fallen, indicating that they are using fewer
resources to run their business and increase profit. It is conceivable for them to
enhance their net income when their operational costs decline.
 After a year, they lost about 58.62% of their EBIT, which means that the
company generated less income sources that reflects the company's
incompetence. Due to it, a great 147.92% increase on their income tax expense
damages their 82.84% decrease on Net Income.

Vertical Analysis
 Balance Sheet
 Comparing the vertical analysis on their current asset’s accounts, we can infer
that the cash and equivalents (14.69%-10.25%) holds the highest percentage
among the current assets account titles, on the other hand net receivables
comes second from a 9.58% to 9.70%. It only shows that the company
prioritizes liquid assets, for it will be beneficial for them.
 Moving on to the non-current assets, the company still signifies that they are
indeed aiming for good investments, resulting to a dominating 73.62% to
77.55% investment and advances. Other noncurrent assets showed minimal
proportion to the total assets implicating that their total noncurrent assets are
much involved to their investments.
 Evaluating the percentages, cash and equivalents from current assets
dominated the current assets tally, while investments and advances was the
one leading the charts for noncurrent assets. Following and basing on the
statistics shown, it is a fact that their assets are currently tied with their
investment and advances. This would be good for a year or two, however the
company should also take some action to improve their noncurrent assets
utilization to boost their cash maximization.
 Loans payable climbed by 2.87% in 2021, indicating that the company
continued to borrow money to fund its activities.
 By 2021, accounts payable is 1.19% of the total assets while in 2020 it's
1.20% which shows that there was a decreasing that happened but it's just
minimal.
 The CPLTD for the year 2021 is 1.79%, but the CPLTD for the year 2020 is
0.02%, indicating an increase in their CPLTD for the next year.

12
  When compared to previous year, the San Miguel Corporation's long-term
debt as a percentage of total assets climbed by around 1.55%. Their other non-
current liabilities, on the other hand, have fallen by 0.10%.
 Both of their current and non-current liabilities has increased for the year
2021. However, their current liabilities are quite smaller than their non-current
liabilities which shows that almost ¾ of their total liabilities as part of the total
assets is their non-current liabilities.
 Nothing has changed in the percentage of capital stock - common in the year
2020 to 2021 which is 1.78% of the total assets.
 Nothing has changed in the percentage of capital stock - preferred in the year
2020 to 2021 which is 1.10% of the total assets.
 Nothing has changed in the percentage of additional paid-in capital in the year
2020 to 2021 which is 19.22% of the total assets.
 Nothing has changed in the percentage of capital securities in the year 2020 to
2021 which is 3.57% of the total assets.
 There is 0.18% of the equity reserves in the year 2020 compared to 2021
which is 0.11%, which shows that 2020 has more ability to pay its future
expenses by using its equity reserves.
 The company’s Retained Earnings in the year 2021 have increased from 51%
to 53.07% which means it is a stronger sign of its financial health.
 There is a negative 15.33% of the Treasury Stock in the year 2020 while
negative 11.91% in 2021 which means there is an increase in the percentage of
treasury stock out of the total base amount specifically in total assets.
 In 2020, the Total Equity is 61.05% of the total assets while in 2021 is
66.94%, which means the total expenses of the company have decreased from
2020 to 2021.
 Income Statement
 The Dividend Income in 2021 is better than in 2020, their dividend income in
2021 has increased from 54.74% to 143.67% which suggests that the company
is confident in its future.
 The Sales of Services the company in 2020 is profitable than in 2021 which
means that more sales were undertaken at minimal cost in 2020.
 There is 13.60% of Interest Income in 2020 and 9.21% in the year 2021.
Compared to 2021, 2020 is better since in this year the sales of the company
are higher than in 2021.
 There is an improvement in the profitability of the company in 2021 since the
Rent Income increased from 0.72% to 1.74%.
 The derivatives of the company decreased in 2021, from 7.38% to 0.32%
which indicates that 2020 is more liquid than 2021.
 The profitability of the company has worsened since 2020 is better than 2021.
There is a 19.65% gain in sales in investment in 2020 while 0.71% in 2020.
 The company can maintain growth and profitability in the future since its
Dividend Income has increased by 13.18%.

13
  By 2021, cost and expenses are 19.64% of the total sales or revenues while in
2020 it's 22.19% which shows that there was a decreasing that happened.
 By 2021, interest expense and other financing charges is 52.82% of the total
sales or revenues while in 2020 it's 53.13% which shows that there was a
decreasing that happened but it's just minimal.
 The 67.27%-84.20% of operating expenses affects the 32.73%-15.80% of
income before income tax. Due to it, they are responsible for paying a 3.44%-
9.94% income tax expense, because of that 29.30%-5.86% emerged on their
net income. Judging from the figures, we can easily say that 2020 was the
better year for the company's efficacy than 2021. They couldn't lessen their
expenses which resulted to a bigger proportion that then decreases the amount
for their net income. They didn't gauge their opportunities and focused more
on spending their funds.

Liquidity Ratio
 Current Ratio
 According to their current ratio for the year 2020, 5:48:1, the San Miguel
Corporation is not just good but good because it demonstrates that they can
pay their upcoming short-term obligations during the year 2020.
 Their current ratio for 2021 is 2.29: 1, which is still excellent but not as high
as it was for the previous year. However, it demonstrates that they can still
fulfill their instantaneous liabilities for the year 2021.
 Quick Ratio
 Even though they reduced their prepaid expenses onto their assets last year
(2020), they were nevertheless able to fulfill their short-term obligations
without difficulty, as evidenced by their Quick Ratio (5.35: 1), which is close
to the amount of their Current Ratio.
 Their 2021's Quick Ratio is 2.22:1. This ratio is also still close to their current
ratio, demonstrating that even if they have reduced their prepaid expenses on
their assets, they can still easily fulfill their short-term obligations.
 Comparison of Ratios
 Their current and quick ratios for the years 2020 and 2021 appear to indicate
that their 2020 operating year was more successful than their 2021 operating
year. This demonstrates that their current assets have decreased while their
current liabilities have increased for the year 2021, which is bad for them
because as a big company, they must increase their assets while reducing their
liabilities to gain more profit. Utilizing their assets and liabilities is crucial to
them because it will help them to overcome their obligations. Overall, both
years’ current and quick ratios are favorable for the company when compared
to the 1:1 rule of thumb, however it still appears that 2020 is better than 2021.

14
Efficiency Ratio
 Accounts Receivable Turnover and Average Collection Period
 Upon solving we have found that they are able to collect the average accounts
receivable balance for about 0.23 times a month that's why a total of 1,587
days to collect their receivables occur. With these statistics, we can prove that
they are not exerting extra effort in the collection of Accounts Receivable.
This should influence them to put an immediate action to prevent this because
if this continues the corporation might face bankruptcy.

Solvency/Leverage/Debt Ratio
 Debt Ratio
 The company showed a 33%-39% debt ratio from 2020 to 2021, this is a good
sign that the company resources are not tied with their debts, and it would be a
good credential for possible lenders, that is because according to
investopedia.com most investors look for a company that have a debt ratio of
40%. This means that the company is creditworthy for investors/lenders in
case of borrowing funds.
 Debt-to-equity Ratio
 Their resources provided by their creditors are at 49%-64% throughout those
two years. These might be a huge percentage but is still good, considering the
expenses they are intended to pay. This only means that despite a higher
percentage held by their creditors, they should really in improving their
leverage for the following years.
 Time Interest Earned Ratio
 A 1.62-to-1.30-time interest earned ratio is a bad indication of the company's
solvency because if an investor considers investing to a company like that they
are in a much higher risk for bankruptcy or default. The company should then
take precautionary measure in earning consistent revenue because it is the one
tied with the ratio, minimizing their expenses would also help in gaining a
higher time interest earned ratio.

Profitability Ratio
 Return on Equity (ROE)
 Their averaged return on equity (ROE) for the two years is 0.0020, or 0.20%,
which is the same as or not all that different from their ROE for 2021, which is

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 0.0021. This averaged ROE of theirs means that they made 0.0020 in net
income for each peso of shareholder equity held during the two years. Given
that they are a huge company, we presume that possessing this kind of ratio is
counts on their part. It's not good for the company, though, as the averaging of
the two years reveals that they are making too little money from their equity,
which will make it harder for them to draw in investors. To increase net
income for each year of their operations, they must effectively utilize the large
stockholder equity they now have.
 Return on Assets (ROA)
 It is clear from their averaged ROA for the two years, which is 0.0013 or
0.13%, that for each peso a stockholder invested in their asset, it generated
0.0013 net income for the two years. Furthermore, it appears to be unfavorable
to the company since a significant ROA should be between 5% and 20%,
which is ideal. San Miguel Corporation, whose average ROA is 0.0013, has
more assets that go into making its profits, which leads to a higher tendency
for debt since the cost of the assets must be financed. More debt is not
necessarily a bad thing, though, if management uses it wisely to produce
profits. Their dropping ROA can be a sign that they made bad capital
investment decisions and aren't making enough money to cover the cost of
buying their assets, therefore in the future, they will need to make better
investment decisions if they want to achieve the optimal ROA ratio.
 Gross Profit Margin
 Their GPM in 2020 was 0.78, whereas in 2021 it was 0.80, demonstrating that
2021 had a higher GPM than 2020. According to their GPM, they made 0.78
pesos in gross profit for the year 2020 and 0.80 pesos for the year 2021 for
every peso in sales. There's nothing more noticeable in their Gross Profit
Margin since it demonstrates that they have consistently generated profit
during all their years of business, including the most recent ones.
 Operating Profit Margin
 Regarding their OPM, last year's was 0.33, while this year's is 0.16, which
essentially demonstrates that 2020 is once again significantly better than 2021.
In contrast to their 2021 operation, which has barely 16 percent of revenues,
their OPM for the year 2020 reveals that they earn 30% of revenues from their
2020 operation, demonstrating that they are operating successfully in the year
2020. They must either find a solution to this problem or find a strategy to
increase their revenue because 2021 indicates that their operations are
beginning to wane a little.
 Net Profit Margin
 Their NPM for 2020 is 0.29, while their NPM for 2021 is 0.06. Again, the
2020 operation is better to the 2021 operation because it demonstrates that
they can still smoothly convert their sales into profit as opposed to the current
year, which has a very low NPM. Since it is obvious that their expenses are
excessive, they must make some cuts to resolve this issue.

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  Conclusion
 Overall, the profitability ratios indicate that their 2020 operating year will be
significantly superior to their 2021 operating year. This demonstrates that they
must do better in their next fiscal years to remain a good company that's
earning and gaining proficiently and effectively.

RECOMMENDATIONS

 Utilize the goods and funds offered by investment.

 Be more authoritative when it comes to collecting of Accounts Receivables.
 Turn some of their noncurrent assets to cash/or other liquid current assets to maintain a good cash
conversion cycle.
 Lessen their expenses to produce a more profitable net income.
 Replicate their income performance in 2020 while maintaining a good relationship with the investors.

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