Barillo, Jessa Joy M.

BS in Accountancy
Financial Management – Activity
05/12/2022

Compare the financial performance of PLDT and Globe in terms of their, profitability, management skill,
liquidity and financial risk. As mentioned you may use at least 2 ratios for each (profitability,
management skill, liquidity and financial risk).

I. PROFITABILITY
 Return on Assets = Net Income (or EBIT)/Total Assets

PLDT GLOBE
2019 = 16,036 / 525, 027 = 0.031 2018 = 18,625,943/ 299,498,109 = 0.062
2020 = 19,000 / 547,433 = 0.036 2019 = 22,283,757 / 304,290,737 = 0.073

 Return on Equity = Net Income/Equity

PLDT GLOBE
2019 = 16,036 / 116,290 = 0.138 2018= 18,625,943 / 73,143,507 = 0.255
2020 = 19,900 / 118,651 = 0.168 2019 = 22,283,757/ 81,246,997 = 0.274

II. MANAGEMENT SKILL

 Total Asset Turnover = Sales / Total Assets

PLDT GLOBE
2019 = 124,436 / 525,027 = 0.237 2018 = 151,172,806 / 299,498,109 = 0.505
2020 = 133,222 / 547,433 = 0.2433 2019 = 166,660,337/ 304,290,737 = 0.548

III. LIQUIDITY
 Current ratio = Current Assets / Current Liabilities

PLDT GLOBE
2019 = 75,577/ 204,448 = 0.369 2018 = 73,523,383/ 85,465,654 = 0.86
2020 = 82,760/ 199,062 = 0.4157 2019 = 61,739,472/ 84,577,181 = 0.729

IV. FINANCIAL RISK

 Debt Ratio = Debt / Assets

PLDT GLOBE
2019 = 408,737 / 525,027 = 0.778 2018 = 226,354,602 / 299,498,109 = 0.755
 2020 = 428,782 / 547,433 = 0.783 2019 = 223,043,740 / 304,290,737 = 0.7329

Finally, which firm is doing well in terms of profitability, management skill, liquidity, and financial risk. If
we will invest, which of the firm should we put our money?

According to the financial statements and ratios, Globe's financial management is very stable, whereas
PLDT's is inconsistent and despite PLDT's several advantages, such as available resources, this analysis
shows that Globe controls its finances better than PLDT. If we were to invest, Globe is the better option
since Globe has been consistent with the proportion of sales and expenses and continues to beat the
competition in terms of return on equity. This may imply that Investors are generally interested in
buying Globe's stock at a significantly higher price than its book value.