Financial Statement Analysis Formula

Vertical Analysis (Balance Sheet)
Vertical Analysis (Income Statement)
Horizontal Analysis (Balance Sheet) *Percent*
Horizontal Analysis (Balance Sheet *Amount*
Current Ratio
Acid Test Ratio
Accounts Receivable Turnover
Total Asset Turnover
Quick Asset
Average Accounts
Receivable
Average Inventory
Average Total Assets
Solvency Ratio
Debt Ratio
Equity Ratio
Times Interest Earned Ratio
Balance Sheet Line Item / Total Assets x 100
Income Statement Item / Total Sales or Revenue
x 100
(Amount in Comparison year – Amount in Base
Year) / Amount in Base Year x 100
Amount in Comparison Year – Amount in Base
Year
Current Assets/Current Liabilities
Quick Assets*/Current Liabilities
Net Sales/ Average Accounts
Receivable
Net Sales/Average Total Assets
Current Assets – Inventories – Prepayments –
Assets under PFRS 5
(Accounts Receivable prior year + Accounts
Receivable current year) / 2
(Inventory prior year + Inventory current year) /
2
(Total Assets prior year + Total Assets current
year) / 2
Total Liabilities/Total Assets
Short Term + Long-term Liabilities/
Total Assets
Total Equity/Total Assets
Net Income before Interest and Income
Taxes/ Interest and other financing charges

The real estate division of Ayala Corporation was Ayala Land, Inc. until 1988, when it totally broke away.
In July 1991, Ayala Land went public by putting its primary and secondary shares up for sale on the
Makati and Manila Stock Exchanges. For this company, I used the data from 2016-2018.

For the vertical analysis in the financial position, I computed percentage by dividing Balance Sheet Line
Items / Total Assets x 100. For the financial performance, its Income Statement Items / Total Revenue x
100.

For the horizontal analysis in the financial position and performance, I computed amount by just
subtracting the comparison year from the base year. As for the percentage, its (Amount in Comparison
year – Amount in Base Year) / Amount in Base Year x 100.
As we can see above, the assets as of December 31, 2018, and 2017, respectively, consist of 3.59% and
3.66% in cash and cash equivalents and short-term investments. We can see that the balances of cash
and cash equivalents, short-term investments, and all three have increased from Php 20,904,330 to
Php23,996,570 on 2018. The increase is driven primarily by higher collections from affiliates, buy-backs
of shares, investment returns in market segments, new and additional securities, loan payments, and
stock dividends. From what it seemed to have formed a pattern on the three consecutive years, we can
notice that majority of the current assets have increase in 2017 from 2016, but decreased again on
2018.

As for the noncurrent assets, we can notice a dramatic fallback as to its totality. Specifically, the
noncurrent accounts and notes receivable declined from Php 35,133,216 during 2016, rose to Php
44,522,898 in 2017, but fell again dramatically to Php 3,367,890 in 2018. As for the investment in
associates and joint ventures, these accounts comprise 4.66%, 4.67%, and 3.50% of the total noncurrent
assets for the year 2016, 2017, and 2018, respectively.

Current liabilities for the last three years: The graph shows that from the years 2016 to 2028, only
liabilities under accounts payable, short-term debt, and deposits and other current liabilities have
undergone significant changes. The remaining portion appears steady and close- particularly from the
years 2017 to 2019.

Noncurrent liabilities: As of December 31, 2016, 2017, and 2028, the proportion of long-term debt to
total liabilities was 24.30%, 26.17%, and 22.34%, respectively. The proceeds from and bonds issuance
are what caused a rise from Php 130, 369, 877 in 2016 to Php 150, 168,631 in 2017. For the deferred tax
liabilities, there has been a considerable rise from Php 3,543,791 in 2017 to Php 5,894,705 in 2018. As of
December 31, 2016, 2017, and 2018, this account represented less than 1% of the total liabilities.

Financial Ratios

Profitability: In 2016, 2017, and 2018 the gross profit margin was 19.60%, 19.79%, and 19.98%,
respectively. This ratio evaluates Ayala Land, Inc.'s effectiveness in terms of operations and product
pricing. The profit has remained consistent throughout a three-year span.

Liquidity: In 2016, 2017, and 2018 the current ratio was 1.12, 1.30, and 1.26, respectively. The current
ratio gauges Ayala Land's capacity to cover short-term debt due in a year or during its operational cycle.
There was an upward trend from 2016 to 2018, which can be attributed to rising of current assets.

Solvency: Solvency ratios gauge a company's capacity to service its debt without eroding shareholders'
equity. Solvency ratios for Ayala Land are 0.68, 0.67, and 0.67, respectively. Little to no adjustments
have been made in the ratios for debt, equity, and times interest earned.