Let’s look at the financial health of RLC in the year 2020 as compared to the previous year.

RATIO DESCRIPTION REMARKS

GROSS PROFIT MARGIN - measures how BAD
Total Revenue/Sales x 100 efficiently a company
uses its materials and Decreased by 6%
Cost of Goods
labor to produce and - While there was a 2B increase in the real estate sales, gross revenue went down by
sell products
profitably
6% in 2020. Attributable mainly in the big drop in Amusement Income from 2.1B in
- it shows how 2019 to 200M in 2020
efficiently a company - On account of the community quarantines and restricted travel, the RLC’s hotels and
can produce and sell
its products
resorts segment continues to be adversely affected due to significant decrease in
- A higher ratio is number of guests, reduced room rates, limited operations – so all of which have
usually preferred, as significantly impacted the revenues of RLC
this would indicate
that the company is
selling inventory for a
higher profit.
Ideal:
NET PROFIT MARGIN - assess if a company's BAD
Net Income x 100 management is
generating enough Decreased by 8%
Total Revenue/Sales
profit from its sales
and whether
operating costs
- A higher profit
margin is always
desirable since it
means the company
generates more
profits from its sales.
Ideal:
CURRENT RATIO - The current ratio is a GOOD
_Current assets_ liquidity ratio that
measures a Increased by 12%
Current liabilities
company's ability to - On the contrary, the global pandemic made no significant impact on the current
pay short-term
obligations or those
ratio of RLC.
due within one year - The lower current liabilities (which was mainly caused by lower income tax payable
- The current for 2020 from 1B to 100M) can be sufficiently covered by RLC’s current assets which
ratio measures a
company's ability to
consists of interests earned from cash in banks and short-term investments, rental
pay current, or short- receivables, among others
term, liabilities (debts
 and payables) with its
current, or short-
term, assets, such as
cash, inventory,
and receivables
without relying on
the sale of inventory
or on obtaining
additional financing.
- A current ratio that is
in line with the
industry average or
slightly higher is
generally considered
acceptable. A current
ratio that is lower
than the industry
average may indicate
a higher risk of
distress or default.
Similarly, if a
company has a very
high current ratio
compared to its peer
group, it indicates
that management
may not be using its
assets efficiently.
Ideal:
ACID TEST - liquidity ratio that GOOD
Current assets – Inventory measures how
sufficient a Increased by 21%
Current liabilities
company’s short- - Looking at RLC liquidity ratio, we have sufficient short-term assets to cover our
term assets are to
cover its current
current liabilities
liabilities. In other
words, the acid-test
ratio is a measure of
how well a company
can satisfy its short-
term (current)
financial obligations.
- The higher the ratio,
the better the
company’s liquidity
and overall financial
 health
- However, it’s
important to note
that an extremely
high quick ratio (for
example, a ratio of
10) is not considered
favorable, as it may
indicate that the
company has excess
cash that is not being
wisely put to use
growing its business.
Ideal:
AVERAGE COLLECTION - is a measure of how BAD
PERIOD many days it takes a
firm, on average, to Increased by 133.88 days
Accounts receivable
(Ave. sales / 365)
collects its - It can be recalled that as part of the govt measures to mitigate the economic effects
receivables.
- It indicates the
of the global pandemic, Bayanihan I and 2 provided for, among others, a 30 and 60-
efficiency of the day grace period, respectively, for all loans without incurring interest, penalties and
collection process other charges. The financial reliefs extended by RLC to its borrowers/debtors may
and the lower it is the
shorter the cash cycle
have contributed to the increase in the average collection period of its accounts
of the business is, receivables.
which has a positive
impact on its
profitability.
Ideal:
INVENTORY TURNOVER - measures how BAD
Cost of Goods Sold efficiently inventory is
managed. Decreased by 7%
Inventory
- higher turnover rates - RLC Inventories composed of real estate inventories sold in normal operating cycles
reduce storage and
other holding costs
(which excludes land held for future development and investment properties)
- Low turnover implies - Group experienced limited selling activities that resulted to lower sales in 2020 ergo a
that a company’s decrease in the movement of its inventory
sales are poor, it is
carrying too much
inventory, or
experiencing poor
inventory
management. Unsold
inventory can face
significant risks from
fluctuating market
 prices and
obsolescence.
Ideal:
RETURN ON COMMON - return that common BAD
EQUITY (ROCE) equity investors
receive on their Decreased by 4%
investment. - Result of lower net income
- used by some
investors to assess
the likelihood and
size of dividends that
the company may pay
out in the future.
- A high ROCE indicates
the company is
generating high
profits from its equity
investments, thus
making dividend
payouts more likely.
Ideal:
RETURN ON TOTAL ASSETS - indicator of how BAD
(ROTA) effectively a company
is using its assets to Decreased by 2%
Net Income
Total Assets
generate earnings - result of lower net income but higher assets as there was limited movement on
- used to determine
which companies are
RLCs assets in 2020
reporting the most
efficient use of their
assets as compared
with their earnings.
Ideal:
GROSS INCOME - Gross income is the BAD
total amount you
earn Decreased by 17%
NET INCOME - net income is your BAD
actual business profit
after expenses and Decreased by 39%
allowable deductions
are taken out.

Overall, RLC’s resilient diversified portfolio gave it a Net Income of Php5.26 billion for 2020 which is 39% lower than the previous years
but we are very positive that with RLC’s several projects in the pipeline, we will have better financial performance in the coming years.