ACCCOB2 PORTFOLIO

Reflection Paper presented to the Accountancy Department

In Partial Fulfillment of the course requirement in ACCCOB2 K43

Pastrana, Arianne N.
ACCCOB2 K43
 Financial statements are the lifeblood of markets all over the world. Whether or not
they fit the Conceptual Framework—which is to say, whether or not faithfully
representative, have all material information, are comparable (among many other
standards!)—can make or break the willingness of investors and business partners to
engage with a certain business. This is why businesses, especially blue chip ones with a
grand reputation to protect, take the greatest amount of care when producing financial
statements—and DMCI Holdings, Inc. is no different.

The financial statements prepared by DMCI Holdings, Inc. in their annual release of
financial statements obviously desires to meet all the Conceptual Frameworks’ traits and
qualities sought after by firms, as much as any other company does. However, its financial
statements have a particular emphasis on the following three characteristics: faithful
representation, comparability, and understandability. Comparability is most obvious in the
financial statements of DMCI Holdings; notice that all the Financial Statements (Figures 1.1.
to 1.4.), they are done in consolidated forms and set as direct comparisons with the
previous year(s) of operation. This serves as another way to observe the growth of DMCI
Holdings, Inc. as well as the trajectory of performance—such as by looking at whether or
not its income is increasing—alongside the financial ratios also provided in the annual
report. This highly comparable way of presenting the financial statements is beneficial to
the company as well as the other stakeholders involved with the company, as it allows
these stakeholders to have a greater amount of autonomy and ease in analyzing the
company’s financial performance. Stakeholders have numerous interests that may not
always be immediately catered to by simple financial ratios or the presentation of a single
years’ worth of financial statements—some stakeholders may prefer to be involved with a
company that has steadily increasing dividends for its shareholders, for example. Thus,
increased autonomy always manages to aid the decision making process of these
stakeholders. This feature of comparability also augments the understandability of the
financial statements as a whole; let it first be noted that the financial statements are
presented very clearly, with each line of data being material and vastly different from
other lines of data, thereby lessening the total amount of data that is presented on the
financial statement; this allows for easier analysis by individuals. The provision of key
financial ratios by the company also aids in understandability. However, the concise nature
of presentation in no way hampers the faithful representation of financial data; each line of
data in the financial statements that is formed by the aggregate value of other accounts is
made known in the Notes to the Financial Statements. These are also faithfully represented;
the 91 pages worth of Notes detail not only the components of the financial statements, but
also the significant accounting policies followed by DMCI Holdings, Inc. An example can be
found on the 6th page of their annual report, which states that “the adoption of PFRS 9 has
fundamentally changed the Group’s accounting for impairment losses for financial assets
by replacing PAS 39’s incurred loss approach with a forward-looking expected credit loss
(ECL) approach (…) PFRS 9 requires the Group to recognize an allowance (...) not held at
FVPL in the scope of PFRS 15.” This thus means that stakeholders can better decide for
themselves how they would use and treat certain pieces of financial information after
recognizing how some of these have been arrived at.

The Cash and Cash Equivalents section in the financial statements of DMCI Holding, Inc. shows
excellent standardization and general good practice of accounting. DMCI Holdings, Inc. states in
its Notes on Cash and Cash Equivalents that it applied low credit risk simplification. This means
that the company applies its policy of determining estimated credit loss on a basis of twelve
months to any form of receivable that may be categorized as a cash equivalent. It is estimated
regularly to determine whether credit risk significantly increases and renders a cash equivalent
that can no longer be applicable to being a cash equivalent due to risk. Aside from this, DMCI
Holdings, Inc. also acknowledges all interest income that cash in the bank can garner. What this
means is that these Notes are recorded with the utmost faithful representation; moreover, it also
recognizes that the riskiness of cash equivalents may also become material information, and thus
is stated and assured to be recorded in the annual records. Thus, DMCI Holdings, Inc. is best
able to ensure its stakeholders that, firstly, its cash and cash equivalents truly are those that are
liquid enough to be able to pay off any liabilities, and secondly, that the ratios which involve
liquidity and the ability to pay off obligations (such as current ratio) are ensured to be as accurate
as possible. Thus, stakeholders will best be able to judge the credibility of these cash and cash
equivalents and subsequent ratios.
 The Receivables of the DMCI Holdings, Inc. are distinguished by maturity as to
whether they are current or noncurrent, are amortized, and any income garnered is
regarded as Finance income. The company upholds values of transparency, materiality, and
faithful representation given their policy of lessening receivables’ value with allowance for
receivable impairment and other recognized issues with how much they can collect.
Although it must be noted that the Receivables of DMCI Holdings, Inc. does not signify the
Accounts Receivable Turnover Ratio. This can discourage investors from investing as they
do not have knowledge to how much of these receivables have values that can be expected
to be regularly collected by DMCI Holdings, Inc.

In conclusion, the Financial Statements and accompanying Notes of DMCI Holdings,

Inc. are considered to be detailed and complete in nature. This is to be expected from a
company such as this since they are a public company listed in the Philippine Stock
Exchange and have investors who need proof to see that their investments in the
corporation are being used for its expansion and growth. There are only two criticisms that
can be said for the financial statements of the company. The first is with regards to the
timeliness of the release of the annual report to the public. The company had only released
the report at the end of the first quarter of 2019 when it was supposedly to release it
during the start of the first quarter. The timeliness of the annual report on 2018 operations
thus suffers, especially since the quarterly report published prior to the annual report only
covered the period ending in September 2018. This means that the majority of what makes
DMCI Holdings, Inc. financial statements so useful does not appear until later in the
following year. Moreover, DMCI Holdings, Inc. only shows eight financial ratios; the
presence of more financial ratios would have made the annual report more useful to all
stakeholders and keep with understandability and materiality. All in all, the annual report
for 2018 adheres to the Conceptual Framework in ways that befit the well-known company
of DMCI Holdings, Inc.
Appendix
Table 1.1. Consolidated Statements of Financial
Position

Table 1.2. Consolidated

Statements of Income
Table 1.3. Consolidated Statements of
Comprehensive Income
Table 1.4. Consolidated Statements of Changes in
Equity
 Table 1.5. Financial
Ratios

Table 1.6. Notes on Cash

and Cash Equivalents
Table 1.7. Statement of
Cash Flows
Table 1.8. Impairment Policy on Expected
Credit Loss

Table 1.9. Notes on Loans and Receivables