Financial Statement Analysis Report of

FINANCIAL STATEMENT ANALYSIS REPORT of
GLOBE TELECOMMUNICATION
For the Years 2017 & 2018
Objectives:
 This paper aims to study the financial performance of Globe Telecom Inc. from 2017 –
2018.
 This paper aims to analyze the financial performance of Globe Telecom Inc. for the years
2017 and 2018, in terms of ratio analysis. Specifically, this paper aims to answer the
following questions:
1. Did the company perform well, in terms of managing corporate finance, during
2017 and 2018?
2. Is the company projected to perform well the next financial year? and
3. Based on ratio analysis and projections, is it good to invest in the company?
FINANCIAL STATEMENT ANALYSIS REPORT of
GLOBE TELECOM INC.
For the Years 2017 & 2018
Globe Telecom Inc.

FINANCIAL STATEMENTS
Assets
Fiscal year is January-December. All values PHP
Millions. 2018 2017
Cash & Short Term Investments 23,290 11,237
Cash Only 23,226 11,222
Short-Term Investments 63 15
Total Accounts Receivable 24,782 29,066
Accounts Receivables, Net 21,113 27,304
Accounts Receivables, Gross 35,183 36,436
Bad Debt/Doubtful Accounts (14,071) (9,132)
Other Receivables 3,669 1,761
Inventories 14,314 14,910
Finished Goods 4,479 2,940
Raw Materials 357 288
Progress Payments & Other 9,478 11,682
Other Current Assets 2,666 2,302
Prepaid Expenses 2,209 1,887

Millions. 2018 2017
Miscellaneous Current Assets 457 415
Total Current Assets 65,052 57,515
Net Property, Plant & Equipment 169,394 162,603
Property, Plant & Equipment – Gross 400,797 370,870
Buildings 57,423 53,508
Land & Improvements 2,277 2,278
Machinery & Equipment 271,697 246,755
Construction in Progress 23,988 23,843
Transportation Equipment 2,975 2,917
Other Property, Plant & Equipment 42,437 41,569
Accumulated Depreciation 231,403 208,267
Buildings 27,490 24,799
Land & Improvements 2 -
Construction in Progress 588 535
Other Property, Plant & Equipment 29,286 27,497
Total Investments and Advances 38,196 37,716
LT Investment - Affiliate Companies 34,427 35,603
Other Long-Term Investments 3,769 2,113

Millions. 2018 2017
Long-Term Note Receivable 1,042 847
Intangible Assets 13,698 14,884
Net Goodwill 1,140 1,283
Net Other Intangibles 12,558 13,601
Other Assets 10,041 1,441
Deferred Charges 8,472 -
Tangible Other Assets 1,570 1,441
Total Assets 299,498 277,766
Liabilities & Shareholders' Equity

All values PHP Millions. 2018 2017
ST Debt & Current Portion LT Debt 16,758 8,373
Short Term Debt - -
Current Portion of Long Term Debt 16,758 8,373
Accounts Payable 5,596 10,241
Income Tax Payable 1,609 1,181
Other Current Liabilities 61,503 59,662
Dividends Payable 260 262
Accrued Payroll 3,456 -

Miscellaneous Current Liabilities 57,787 59,400
Total Current Liabilities 85,466 79,457
Long-Term Debt 131,524 123,250
Long-Term Debt excl. Capitalized Leases 131,524 123,250
Non-Convertible Debt 131,524 123,250
Capitalized Lease Obligations - -
Provision for Risks & Charges 3,983 4,522
Deferred Taxes 1,843 (13)
Deferred Taxes – Credit 3,918 2,749
Deferred Taxes – Debit 2,075 2,762
Other Liabilities 1,463 1,231
Other Liabilities (excl. Deferred Income) 1,410 1,231
Deferred Income 54 -
Total Liabilities 226,355 211,209
1,793 1,793
Non-Redeemable Preferred Stock 1,793 1,793
Common Equity (Total) 71,327 64,722
Common Stock Par/Carry Value 6,653 6,646
Additional Paid-In Capital/Capital Surplus 36,528 36,319
Retained Earnings 27,167 21,708

Cumulative Translation Adjustment/Unrealized For.

44 16
Exch. Gain
Unrealized Gain/Loss Marketable Securities 294 142
Other Appropriated Reserves 640 (109)
Total Shareholders' Equity 73,119 66,515
Accumulated Minority Interest 24 43
Total Equity 73,144 66,558
Liabilities & Shareholders' Equity 299,498 277,766
Globe Telecom Inc.

Comparative Income Statement
For the years ended December 31, 2017, and 2018

Millions. 2018 2017
Sales/Revenue 151,173 135,281

Millions. 2018 2017
Cost of Goods Sold (COGS) incl. D&A 54,875 48,496
COGS excluding D&A 24,323 20,866
Depreciation & Amortization Expense 30,552 27,630
Depreciation 25,036 22,954
Amortization of Intangibles 5,516 4,676
Gross Income 96,298 86,785
Gross Profit Margin - -
SG&A Expense 58,065 58,736
Other SG&A 58,065 58,736
Other Operating Expense 3,601 2,355
EBIT 34,632 25,694
Unusual Expense 781 (758)
Non Operating Income/Expense 591 785
Non-Operating Interest Income 391 140
Equity in Affiliates (Pretax) (1,250) (846)
Interest Expense 5,970 4,989
Gross Interest Expense 6,817 5,723
Interest Capitalized 847 734
Pretax Income 27,613 21,542
Pretax Margin - -
Millions. 2018 2017
Income Tax 8,987 6,457
Income Tax - Current Domestic 7,260 6,005
Income Tax - Deferred Domestic 1,727 452
Equity in Affiliates - -
Consolidated Net Income 18,626 15,084
Minority Interest Expense (15) 18
Net Income 18,641 15,066
Net Margin - -
Net Income After Extraordinaries 18,641 15,066
Preferred Dividends 562 554
Net Income Available to Common 18,079 14,512
EPS (Basic) 135.91 109.22
Basic Shares Outstanding 133 133
EPS (Diluted) 135.40 109.01
Diluted Shares Outstanding 134 133
EBITDA 65,184 53,324
EBITDA Margin - -
EBIT 34,632 25,694

VERTICAL ANALYSIS
Assets
Fiscal year is January-December. All Common Common
values PHP Millions. 2018 size 2017 size
Cash & Short Term Investments 23,290 11,237

7.77% 4.05%
Cash Only 23,226 11,222

7.75% 4.04%
Short-Term Investments 63 15
0.02% 0%
Total Accounts Receivable 24,782 29,066

9.18% 1.05%
Accounts Receivables, Net 21,113 27,304

7.05% 0.98%
Accounts Receivables, Gross 35,183 36,436

11.75% 1.31%
Bad Debt/Doubtful Accounts (14,071) (9,132)

4.7% 3.29%
Other Receivables 3,669 1,761

1.23% 0.06%
Inventories 14,314 14,910

4.78% 5.37%
Finished Goods 4,479 2,940

1.5% 1.06%
Raw Materials 357 288

0.12% .10%
Progress Payments & Other 9,478 11,682

3.16% 4.21%
Other Current Assets 2,666 2,302

0.89% 0.83%
Prepaid Expenses 2,209 1,887

0.74% 0.68%
Miscellaneous Current Assets 457 415

0.15% 0.15%
Total Current Assets 65,052 57,515

21.72% 20.71%
Net Property, Plant & Equipment 169,394 162,603

56.56% 57.82%
Property, Plant & Equipment –

400,797 370,870
Gross 133.82% 133.52%
Buildings 57,423 53,508

19.17% 19.26%
Land & Improvements 2,277 2,278

0.76% 0.82%

90.72% 88.84%
Construction in Progress 23,988 23,843

8% 8.58%
0.99%
1.05%
Other Property, Plant & 14.17%

42,437 41,569
Equipment 14.97%
Accumulated Depreciation 231,403 208,267

77.26% 74.98%
Buildings 27,490 24,799

9.18% 8.92%
Land & Improvements 2 -

- -

57.45% 55.25%
Construction in Progress 588 535

0.19% 0.19%

0.66% 0..71%
Other Property, Plant &

29,286 27,497
Equipment 9.77% 9.9%
Total Investments and Advances 38,196 37,716

12.75% 13.58%
LT Investment - Affiliate
34,427 35,603
Companies 11.49% 12.82%
Other Long-Term Investments 3,769 2,113

1.26% 0.76%
Long-Term Note Receivable 1,042 847

0.35% 0.3%
Intangible Assets 13,698 14,884

4.57% 5.36%
Net Goodwill 1,140 1,283

0.38% 0.46%
Net Other Intangibles 12,558 13,601

4.19% 4.9%
Other Assets 10,041 1,441

3.52% 0.52%
Deferred Charges 8,472 -

2.83% -
Tangible Other Assets 1,570 1,441

0.52% 0.52%
Total Assets 299,498 277,766
Liabilities & Shareholders' Equity

Common Common
All values PHP Millions. 2018 size 2017 size
ST Debt & Current Portion LT Debt 16,758 8,373

5.54% 3.01%
Short Term Debt - -

- -
Current Portion of Long Term Debt 16,758 8,373

5.54%
Accounts Payable 5,596 10,241

1.87% 3.69%
Income Tax Payable 1,609 1,181

0.54% 0.43%
Other Current Liabilities 61,503 59,662

20.54% 21.48%
Dividends Payable 260 262

0.09% 0.09%
Accrued Payroll 3,456 -

1.15% -
Miscellaneous Current Liabilities 57,787 59,400

19.29% 21.38%
Total Current Liabilities 85,466 79,457

28.54% 28.6%
Long-Term Debt 131,524 123,250

43.92% 44.37%
Common Common
Long-Term Debt excl. Capitalized

131,524 123,250
Leases
Non-Convertible Debt 131,524 123,250
Capitalized Lease Obligations - -
Provision for Risks & Charges 3,983 4,522

1.33% 1.63%
Deferred Taxes 1,843 (13)

0.62% 0%
Deferred Taxes – Credit 3,918 2,749

1.31% 0.99%
Deferred Taxes – Debit 2,075 2,762

0.69% 0.99%
Other Liabilities 1,463 1,231

0.49% 0.44%
Other Liabilities (excl. Deferred

1,410 1,231
Income) 0.47%
Deferred Income 54 -
0.01% -
Total Liabilities 226,355 211,209

75.58% 76.03%
Preferred Stock (Carrying Value) 1,793 1,793

0.6% 0.65%
Non-Redeemable Preferred Stock 1,793 1,793
Common Equity (Total) 71,327 64,722

23.82% 23.31%
Common Stock Par/Carry Value 6,653 6,646

2.22% 2.39%
Additional Paid-In Capital/Capital

36,528 36,319
Surplus 12.2% 13.07%
Common Common
Retained Earnings 27,167 21,708

9.1% 7.82%
Cumulative Translation
Adjustment/Unrealized For. Exch. 44 0.01% 16 0%
Gain
Unrealized Gain/Loss Marketable

294 142
Securities 0.1% 0.05%
Other Appropriated Reserves 640 (109)

0.21% 0.04%
Total Shareholders' Equity 73,119 66,515

24.41% 23.95%
Accumulated Minority Interest 24 43

0% 0.02%
Total Equity 73,144 66,558

24.41% 24%
Liabilities & Shareholders' Equity 299,498 277,766
On a balance sheet we might say that current assets are 21.72% (2018) and 20.71%
(2017) of total assets—total assets being the base amount.
The biggest part of the assets are the net property, plant and equipment which comprise
56.56% (2018) and 57.82% (2017) of the total assets. Net property, plant and equipment
decreases maybe because the company has stored enough equipment that they don’t have to buy
the same equipment for the next year. The total non-current assets have decreased from 9.18% to
1.05% of the total assets. Trade receivables and inventory are somewhat balance with around 2%
apart from each other. It shows that the receivables are 7.05% and cash with 4.78%.
When it comes in financing assets, liabilities are the main sources of assets since the debt
ratio increases from 23.95% to 24.41%. Therefore, they are always debt financing. There is a
loss in retained earnings or deficit. Globe Telecom Inc. is choosing to finance its growth through
issuing additional debt. rather than through retention of earnings.
Sales/Revenue 151,173 135,281
Cost of Goods Sold (COGS) incl.

54,875 48,496
D&A 36.3% 35.85%
COGS excluding D&A 24,323 20,866

16.1% 15.43%
Depreciation & Amortization

30,552 27,630
Expense 20.21% 20.22%
Depreciation 25,036 22,954

16.56% 16.97%
Amortization of Intangibles 5,516 4,676

3.65% 3.46%
Gross Income 96,298 86,785

63.7% 64.22%
Gross Profit Margin - -

- -
SG&A Expense 58,065 34.41% 58,736 43.42%
Other SG&A 58,065 58,736

34.41% 43.42%
Other Operating Expense 3,601 2,355

2.38% 1.74%
EBIT 34,632 25,694

22.73% 19%
Unusual Expense 781 (758)

0.52% 0.56%
Non Operating Income/Expense 591 0.4% 785 0.58%
Non-Operating Interest Income 391 140

0.3% 0.10%
Equity in Affiliates (Pretax) (1,250) (846)

0.83% 0.63%
Interest Expense 5,970 4,989

3.95% 3.69%
Gross Interest Expense 6,817 5,723

4.51% 4.23%
Interest Capitalized 847 734

0.56% 0.54%
Pretax Income 27,613 21,542

18.27% 15.92%
Pretax Margin - -
- -
Income Tax 8,987 6,457

5.94% 4.77%
Income Tax - Current Domestic 7,260 6,005

4.8% 4.44%
Income Tax - Deferred Domestic 1,727 452

1.14% 0.33%
Equity in Affiliates - -
- -
Consolidated Net Income 18,626 12.32% 15,084 11.15%
Minority Interest Expense (15) 18

0% 0.01%
Net Income 18,641 15,066

12.33% 11.14%
Net Margin - -
- -
Net Income After Extraordinaries 18,641 15,066

12.33% 11.14%
Preferred Dividends 562 554

0.37% 0.41%
Net Income Available to Common 18,079 14,512

11.96% 10.73%
EPS (Basic) 135.91 109.22

0.09% 0.08%
Basic Shares Outstanding 133 133

0.09% 0.1%
EPS (Diluted) 135.40 109.01

0.09% 0.81%
Diluted Shares Outstanding 134 133

0.09% 0.1%
EBITDA 65,184 53,324

43.12% 39.42%
EBITDA Margin - -
- -
EBIT 34,632 25,694

22.73% 18.99%
The table above shows that cost of goods including the depreciation and amortization has
increased from 15.43%(2017) to 16.1%(2018). And as a result we can see that the sales or revenue has
increased from Php 135,281.00(2017) to php 151,173(2018). The operating expense increases from
1.74% to 2.38%. This results have reflected to the income tax which also increased from 4.77% to 5.94%.
RATIO ANALYSIS
A financial ratio, also known as an accounting ratio, is the magnitude of two numerical values
obtained from a company's financial statements. Many standard ratios are used in accounting to
try to determine a corporation's or other organization's overall financial condition.
Ratio analysis examines line-item data from financial accounts to uncover information about a
company's profitability, liquidity, operational efficiency, and solvency. Ratio analysis can be
used to track a company's performance over time and compare it to other companies in the same
industry or sector.
Liquidity ratios are used to measure the Max Group’s ability to meet its short-term obligations as
they mature.
Typically, it is used to answer the question “how quickly” can convert its assets to cash without
incurring any loss in value to meet short term obligations.
The classical and the most commonly used financial ratios in order to establish short-term liquidity
are listed below.
FORMULA
RATIO NUMERATOR DENOMINATOR PURPOSE or USE
Current Ratio Current Assets Current Liabilities Measures short-term debt-paying
ability
Quick ratio Quick Assets Current Liabilities Measures immediate short-term
liquidity.
Receivables Net credit sales Average net receivables Measures liquidity of
turnover receivables.
Inventory Cost of goods sold Inventory turnover Measures liquidity of inventory
turnover
APPLICATION:
FORMULA
RATIO NUMERATOR DENOMINATOR 2018 2017
Current Ratio Current Assets Current Liabilities 0.76 0.72
Quick ratio Quick Assets Current Liabilities 0.59 0.54
Receivable Net credit sales Average net 6.10 4.65

turnover receivables
Average
Collection
365 days Receivable turnover 58.84 days 78.49 days
Period
Inventory Cost of goods
turnover sold
Inventory 27.28 59.87
Days in
Inventory
365 days Inventory turnover 13.38 days 6.1 days
The table above shows that the debt paying ability of Globe Telecom Inc. has grown from its
previous year. It also shows that the immediate short-term liquidity also increased. From 4.65 to 6.10, it
also shows that the receivables have also increased and lastly the liquidity of inventory also shows that it
is also increasing.
This table shows that the profit of the company is increasing because its ability to pay its bills
and the items or cash to be received are increasing.
Activity and Profitability Ratios

Profitability ratios measure the income or operating success of a company for a given period of time.
Income, or the lack of it, affects the company’s ability to obtain debt and equity financing. It also
affects the company’s liquidity position and the company’s ability to grow.
Activity ratios measure how well the company employed its asset base in profit maximization. It
gives us a snapshot of how many times each asset-peso is converted to profit-peso.
FORMULA
Asset Net Sales Total Assets
Turnover
Measures how efficiently assets
Ratio
are used to generate sales.
Fixed Assets Net Sales Fixed Assets
Turnover
Gross Profit Gross Profit Sales Measures gross income generated
Margin by each dollar of sales
Net Profit Net Profit Sales Measures net income generated
Margin by each dollar of sales
Return on Net income Total Assets Measures overall profitability of
Asset assets.
Return on Net income Total Shareholder’s Measures profitability of owners’
Equity Equity investment
APPLICATION:
FORMULA
Asset
Turnover
Net Sales Total Assets .50 .49
Ratio
Fixed Assets Net Sales Fixed Assets .89 .80
Turnover
Gross Profit Gross Profit Sales 67% 67%
Margin
Net Profit Net Profit Sales 11.57% 11.57%
Margin
Return on Net income Total Assets 5.77% 4.81%
Asset
Return on Net income Total Shareholder’s 22.70% 11.19%
Equity Equity
The efficiency with which a corporation uses its assets to create sales is measured by
asset turnover. The final figure represents the amount of sales generated for every dollar invested
in assets. As a result, the greater the ratio, the more effective Globe Telecom Inc. has been in
using its resources, even though the ratio has somewhat fallen. In terms of profitability ratios,
Globe Telecom Inc. made a gross profit of 67 percent of sales in 2017 and 67 percent of sales in
2018. While each dollar of sales yielded 11.57 percent net profits. This shows that the company's
profit margins are low. As a result, the greater the ratio, the better. Although it has a positive
income, it is not a good sign that the company's profitability ratios are favorable.
This table demonstrates that the corporation has only produced a small amount of revenue from
its sales. In addition, some factors continue to have relevance in the net profit margin and return
equity does not change and does improve.
Solvency ratios measure the ability of a company to survive over a long period of time. Long-term
creditors and stockholders are particularly interested in a company’s ability to pay interest as it
comes due and to repay the face value of debt at maturity.
FORMULA
Debt to Total Liabilities Total Shareholders' Compare which of the liabilities
Equity Ratio Equity and equity has more weight
Debt Ratio Total Liabilities Total Assets Measures the percentage of total
assets provided by creditors
Times interest Income before Interest expense Measures ability to meet interest
earned income taxes payments as they come due.
APPLICATION:
FORMULA
Debt to Total Liabilities Total Shareholders' .76 .76
Equity Ratio Equity
Debt Ratio Total Liabilities Total Assets 76.56% 76.03%
Times interest Income before Interest expense 46 times 27 times

earned income taxes
Because the debt-to-equity ratio is less than one in both years, debt has less weight than equity.
For both years, the ratio remained at.76, indicating that the company utilized less debt over those
two years of operation. Debt accounts for 76.56 percent of assets in 2018. Debt accounts for
76.03 percent of assets in 2017. Since debt ratios are larger than 50% in both years, debt is
bigger than equity. As a result, Globe Telecom Inc. always relies on debt funding. It also
indicates the company's inability to endure losses in some way. The higher the debt-to-total-
assets ratio, the more likely the corporation will be unable to satisfy its maturing commitments.
It's a sign that the business isn't in the black.
The corporation can pay the interest expense 46 times in 2018 and 27 times in 2017, as
shown in the table above. Consider how much money a large corporation makes. They can cover
the interest expense on average 27.5 times during the course of the period or accounting cycle. It
demonstrates that the corporation is able to satisfy its interest obligations with the money it
earns.
CONCLUSIONS AND RECOMMENDATIONS
In the light of the foregoing, the following conclusions are hereby made:
 Globe Telecom Inc. has been steadily increasing its sales during the years it has been in
business.
 The net income continues to rise, and it has been profitable for the past two years.
 The operational costs are really substantial.
 Positive ratios can be noticed, which is beneficial to the organization.
 It is preferable to have a larger ratio.
 The tables show that there have been good sales.
 The average sale period is at an all-time high, and it's just getting higher.
 Excellent marketing strategy.
 If current assets are converted into cash, they can cover current liabilities.
 The net income will not only be used to pay off liabilities, but it will also be used to cover
expenses and other items that are worth keeping.
We, as students, came up with the following recommendations for the Globe Telecom Inc. based
on the analysis that has been done.
 In terms of Gross Profit Margin, they have space for improvement rather than retention..
 Because it has been demonstrated that the company is now stable, it can now focus on
improving..
 Maintain effective communication among those in the ranks and rely on their agents as
much as possible for the development to continue.

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FINANCIAL STATEMENT ANALYSIS REPORT of

Globe Telecom Inc.

Cash & Short Term Investments 23,290 11,237

Cash Only 23,226 11,222

Total Accounts Receivable 24,782 29,066

Accounts Receivables, Net 21,113 27,304

Accounts Receivables, Gross 35,183 36,436

Bad Debt/Doubtful Accounts (14,071) (9,132)

Other Receivables 3,669 1,761

Inventories 14,314 14,910

Finished Goods 4,479 2,940

Raw Materials 357 288

Progress Payments & Other 9,478 11,682

Other Current Assets 2,666 2,302

Prepaid Expenses 2,209 1,887

Miscellaneous Current Assets 457 415

Total Current Assets 65,052 57,515

Net Property, Plant & Equipment 169,394 162,603

Property, Plant & Equipment – Gross 400,797 370,870

Buildings 57,423 53,508

Land & Improvements 2,277 2,278

Machinery & Equipment 271,697 246,755

Construction in Progress 23,988 23,843

Transportation Equipment 2,975 2,917

Other Property, Plant & Equipment 42,437 41,569

Accumulated Depreciation 231,403 208,267

Buildings 27,490 24,799

Land & Improvements 2 -

Machinery & Equipment 172,051 153,460

Construction in Progress 588 535

Transportation Equipment 1,985 1,976

Other Property, Plant & Equipment 29,286 27,497

Total Investments and Advances 38,196 37,716

LT Investment - Affiliate Companies 34,427 35,603

Other Long-Term Investments 3,769 2,113

Long-Term Note Receivable 1,042 847

Intangible Assets 13,698 14,884

Net Goodwill 1,140 1,283

Net Other Intangibles 12,558 13,601

Other Assets 10,041 1,441

Deferred Charges 8,472 -

Tangible Other Assets 1,570 1,441

Total Assets 299,498 277,766

Liabilities & Shareholders' Equity

ST Debt & Current Portion LT Debt 16,758 8,373

Short Term Debt - -

Current Portion of Long Term Debt 16,758 8,373

Accounts Payable 5,596 10,241

Income Tax Payable 1,609 1,181

Other Current Liabilities 61,503 59,662

Dividends Payable 260 262

Accrued Payroll 3,456 -

Miscellaneous Current Liabilities 57,787 59,400

Total Current Liabilities 85,466 79,457

Long-Term Debt 131,524 123,250

Long-Term Debt excl. Capitalized Leases 131,524 123,250

Non-Convertible Debt 131,524 123,250

Capitalized Lease Obligations - -

Provision for Risks & Charges 3,983 4,522

Deferred Taxes 1,843 (13)

Deferred Taxes – Credit 3,918 2,749

Deferred Taxes – Debit 2,075 2,762

Other Liabilities 1,463 1,231