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CREATIVE ACCENTS CORPORATION

Report on profit
performance and financial
position


By:
Badayos, Gemarie
Diana, Rodel James
Galiste, Yuki
Merida, Christian Lee
Villaflor, Edilou


12/31/2014



Financial Position
Accounts Creative Accents
(In Pesos)
Creative
Accents
%
Industry
Average
%
Difference in
%
Current assets 218,700 77.1 74.4 2.7
Property, plant, &
equipment, net(PPE)
52,650 18.6 20.0 (1.4)
Intangibles 10,800 3.8 0.6 3.2
Other non-current
assets(NCA)
1,350 .5 5.0 (4.5)
Total assets 283,500 100.0 100.0 -
Current liabilities 110,700 39.0 45.6 (6.6)
Long-term liabilities 61,200 21.6 19.0 2.6
Stockholders equity 111,600 39.4 35.4 4.0
Total liabilities &
stockholders equity
283,500 100.0 100.0 -

NOTES:
-

0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
Financial Position Comparison
Creative Accents
Industry
ASSETS

Current Assets
The companys current assets are higher than the industry due to high short-term
receivables by the company. However, the company has some recent issues with the
collectibility of such. Write-off of said accounts receivable may be possible in the future.

Property, Plant and Equipment
Amount of PPE of the company is lower than the industrys which expresses the lack of
physical storage areas of the company. This is a factor for a high cost of inventory and
tends to lead to a higher cost of goods sold as compared to industry average.

I ntangible Assets
Creative Accents is a leading innovator in manufacturing womens clothes which
provides them for a lot of patent rights in the industry. The company also has incurred
some goodwill due to its good business relationships with its clients. The company has
recently been awarded as one of The 10 Most Innovative Companies in the Philippines
(2013).

Other Non-Current Assets
The industrys average is substantially higher than the companys percentage. The
company incurs low investment to its subsidiary which allows them to directly sell their
product to the market. The company also has a low amount of non-current receivables as
their main operations are substantially supported by short-term accounts, and as shown in
the Current Assets of the Financial Position


LIABILITIES

Current Liabilities
The company has relatively low current liabilities as compared to the market due to
recent decrease in short-term financing for their operations. Debt restructuring has also
been done to other liabilities of the company which transferred a substantial amount to
Long-term Liabilities.

Long-term Liabilities
One factor for this to be higher than industrys average is the recent restructuring of debt
as explained above in the Current Liabilities section. Another is due to the company
incurring some debt approaching year end to finance expansion of physical storage areas
to reduce inventory costs.

Shareholders Equity
The company has a higher percentage on this area than industry due to a need to finance
their research and development to provide innovation in their products which can be trace
to the Intangible Assets of the company.



Financial Performance
Creative Accents
(In Pesos)
Creative
Accents
%
Industry
Average
%
Difference in
%
Net sales 43,065,000 100.0 100.0 -
Cost of goods
sold
(27,561,600) 64.0 60.0 4.0
Gross profit 15,503,400 36.0 40.0 (4.0)
Operating
expenses
(9,043,650) 21.0 26.6 (5.6)
Operating income 6,459,750 15.0 13.4 1.6
Other expenses 430,650 1.0 .4 0.6
Net income
before tax
6,029,100 14.0 13.0 1.0
Income tax (2,110,185) 4.9 2.0 2.9
Net income 3,918,915 9.1 11.0 (1.9)

NOTES:



0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
Gross Profit Operating
Expense
Operating
Income
Income Tax Net Income
Financial Performance Comparison
Creative Accents
Industry
Gross Profit
Gross profit for the company is lower than industry due to high cost of goods sold and the latter is
due to a high cost of inventory due to the lack of physical storage areas as explained above in the
financial position section under Property, Plant, and Equipment of this report.
Operating Expenses
This section is lower than industry average due to good relationships with clients especially in
terms of transporting goods. Also, the subsidiary of the company that allows them to directly sell
their product has contributed a lot to lower this section. Lastly, good logistics planning of the
company despite lack of physical storage areas has lowered this section.
Operating I ncome
Operating Income for the company is higher than industrys average due to the benefit of low
operating expense for the company relative to the industry.
Other Expenses
The company incurs a higher other operating expenses as compared to the industry due to
maximum utilization of manufacturing plants and resulted to a higher utility cost. The company
also incurs a high but efficient cost of advertising for their products and also is a reason for their
good brand name in the market.
I ncome Tax
The company incurs a high income tax than the industry average due to a higher operating
income and also with the extensive effort of management to faithfully pay taxes. This has led to
the company being awarded as one of The 50 Most Transparent Companies of the Philippines
(2013).
Net I ncome
Net income is lower than industrys average mainly due to the high tax payment of the company.
However this does not affect the company much as they are confident with their stable position in
the market and their good relationship with their clients. Net income is projected to grow for
subsequent years with the efforts of management to lower inventory cost which posed a concern
for the company.





EXECUTIVE SUMMARY
INRODUCTION
As the company has ended its yearly operations, certain accounts had to be assessed for the benefit of the
general public and for those directly related with the operations of the company.
Creative Accents Corporation is the leading innovator of womens clothes in the market. Recently the
company has become recipient of certain awards which boosted market recognition of its brand and
continually strengthened its relation with its clientsThe 10 Most Innovative Companies of the
Philippines and the 50 Most Transparent Companies of the Philippines. As such is just a manifestation of
the companys commitment to excellence and thus presents their Statement of Financial Position and
Statement of Financial Performance for the year-ended December 31, 2013.

OBJECTIVE
This report aims to compare Company Financial Statements average with Industrys average to
determine whether the company has been doing well relative to its Industry and the reasons for such.

SITUATION
The company has been strong with its position in the market as represented in the ASSETS section of the
report. However, the company is hurt with high cost of inventory which led to a high cost of Cost of
Goods Sold. The company has also incurred a low operating cost represented by its good planning in
logistics. The company though suffered from high payment of income tax but this is only due to
transparent measures conducted by management.

CONCLUSION
Presented in the report are the reasons for the companys deviations from industrys average. From those
deviations though, we have determined that the company is amenable to any revisions to better their
operations. With the analysis that we have provided for the Statement of Financial Position and Statement
of Financial Performance of the company, it is just right to put confidence to it as the company maintains
its strong presence in the industry that they are in.