FINAL PRODUCT

STRATEGIC BUSINESS ANALYSIS

DE LA SALLE ARANETA UNIVERSITY

Essay
Rubrics: A total of 10 points each. 7 points for content; 3 points for construction

a. What is benchmarking? How is it important for a firm to have a benchmark when analyzing its financial
statements?
b. Current ratio is usually used to assess the firm’s overall liquidity however, what circumstances would
the quick ratio be preferred over it?
c. Explain why balance sheet accounts are generally “averaged” and income statement figures are just
lifted from the income statement when using them as factors in a particular financial statement ratio?

Problems
Please use the Financial Statement of Pilipinas Shell Petroleum Corporation for the year ended December 31,
2018 (pdf).

Instructions:
a. Create an excel file computing the following:
a. Horizontal analysis (Sheet 1)
i. Balance sheet
ii. Income Statement
b. Vertical analysis (Sheet 2)
i. Balance sheet
ii. Income Statement
c. Compute for the following financial ratios for year 2018 (Sheet 3)
i. LIQUIDITY RATIOS
1. Current Ratio
2. Quick Ratio
ii. LEVERAGE RATIOS
1. Debt Ratio
2. Equity Ratio
3. Debt to Equity Ratio
iii. ACTIVITY RATIOS
1. Asset Turnover Ratio (ATO)
2. Accounts Receivable Turnover Ratio (ARTO)
3. Inventory Turnover Ratio (ITO)
4. Accounts Payable Turnover Ratio (APTO)
5. Days’ Sales Outstanding (DSO)
6. Days’ Sales in Inventory (DSI)
7. Days’ Payable Outstanding (DPO)
8. Normal Operating Cycle (NOC)
iv. PROFITABILITY RATIOS
1. Return on Sales (ROS)
2. Return on Assets (ROA)
3. Return on Equity (ROE)

b. Analysis (Sheet 4)
a. Interpret the result of the horizontal analysis i.e. note any significant items
b. Interpret the result of the vertical analysis i.e. note any significant items
c. Interpret the result of the financial ratios per category of ratios
 i. LIQUIDITY RATIOS
ii. LEVERAGE RATIOS
iii. ACTIVITY RATIOS
iv. PROFITABILITY RATIOS