NAME: JOSEPH JAY TRINIDAD

PROGRAM: MASTER IN BUSINESS ADMINISTRATION

SECTION: MBA – L

SUBJECT: FINANCIAL MANAGEMENT

SCHOOL: PHILIPPINE CHRISTIAN UNIVERSITY -MANILA DATE: DECEMBER 9, 2023

ASSIGNMENT: Content Analysis on San Miguel Corporation's 2021 Annual Report

PROFITABILITY FORMULA 2021 2020 COMMENTS

Return on Ordinary 3.9% increase in ROSF significe a
Shareholders' 7.2% 3.3% higher profit generated in 2021
Funds
1.9% increase in ROCE influenced by
Return on Capital
4.4% 2.5% a high operating profit during the
Employed
said period
1.9% increase in operating profit
Operating profit
7.0% 5.2% margin as increased and getting
margin
back to 2019 status.
SMC maintained the gross profit
Gross profit margin 20.7% 20.6% margin regardless of the challenges
faced during the pandemic.

EFFICIENCY FORMULA 2021 2020 COMMENTS

Average inventories in 1 year have increase 4
inventories 69 65 days. However, considering
turnover period profitability, 4 days is justifiable.
Average Highly favorable trade receivables in
settlement period 2021 with less than 16 days. A well-
55 72
for trade managed credit standing
receivables
less 25 days in average settlement
Average
period this shows that SMC is a
settlement period 85 110
good company to offer and supply
for trade payables
goods.
Sales revenue to
Low sales revenue to capital
capital 0.62 0.48
employee ratio but with minimal
employed ratio
improvement from 2020.
significant increase in sales revenue
Sales revenue per per employee up to 5M Php which
20,633,862 15,943,873
employee signifies a well-performing
company.

LIQUIDITY FORMULA 2021 2020 COMMENTS

The current ratio is well maintained
Current ratio 1.36 1.60 and stands at an ideal level for all its
subsidiaries.
Similar to the current ratio, the acid
Acid test ratio 1.09 1.36 test ratio behaved at an ideal level
 FINANCIAL FORMULA 2021 2020 COMMENTS
GEARING
Minimal changes i.e. less 1% in the
Gearing ratio 55% 56% level of gearing over the year
Slight increase in the interest cover
Interest cover ratio but it shows it managed its
1.34 0.72
ratio operating profit and interest
payable

INVESTMENT FORMULA 2021 2020 COMMENTS

With almost half decrease in
Dividend payout dividend payout ratio in 2021 vs
23.6% 44.0%
ratio 2020 this is due to low sales
achieved in 2020
The cover ratio was declared twice
Dividend cover
425% 227% the value vs in 2020. Since it is only
ratio
reciprocated of the payout ratio.
No significant movement from year
Dividend Yield 1.2% 1.2% 2020-2021 dividend yield
Significant growth in earnings per
Earnings per share shows a good lift in business
47.81 14.95
share performance from the 2020
pandemic.
The ratio showed that the P/E is 2.4
price/earnings
247% 794% times and significantly lower than in
(P/E) ratio
2020.

SWOT ANALYSIS

1. STRENGTHS
- SMC has a good strategic plan and tactics for growing the profitability of the company.
- SMC Liquidity ratio behaves at the ideal level which serves as a safety factor for its investors.
- The 2021 financial status quo became attractive to its investors due to its upcoming projects in infrastructure, food, and
services.

2. WEAKNESSES
- Gross margin is maintained not growing which is at 20% only while some companies can raise to 30-40%.
- 90-day payment terms seem implemented to most of its suppliers in which the suppliers may suffer to generate cash.
- SMC is exposed to interest rate changes primarily due to long-term borrowings and investment securities.

SYNTHESIS

1. SMC (San Miguel Corporation) must manage its capital structure and make changes in response to changes in economic
conditions. That is by adjusting dividend payments to shareholders, paying off existing debts, return capital to
shareholders, or issuing new shares to maintain or adjust the capital structure.

2. SMC must conduct a regular internal control review to monitor credit granting and credit risk management.

3. San Miguel Corporation should enter into commodity derivative transactions on behalf of its subsidiaries in order to reduce
costs by optimizing purchasing synergies within the Group and managing common material inventory levels.