ACCOUNTANCY, BUSINESS AND MANAGEMENT (ABM)

SM INVESTMENTS CORPORATION

In Partial Fulfilment of the Requirements in Fundamentals of

Accountancy, Business and Management (FABM) 2

ANDOYO, KYLE
BORJA, IRENE
DOMIGUEZ, PRINCE BENJAMIN
DUALIN, NIKKI JEAN
MOANAG, JICJIC
PAGKILATAN, CYRIL TROY
SITOY, LADY ROSE
VALERIANO, ROLDAN
(Students)

MS. NIÑA JEANNE BALASE

(Subject Teacher)

November 2023
 CHAPTER 1

INTRODUCTION

This chapter provides a background of the industry they belong, background

of the company, and research question or hypothesis.

Conglomerate Industry

Conglomerate is a corporation that combines multiple unrelated businesses.

In a conglomerate, one company owns a controlling share in several smaller
companies, that operate separately and independently. A conglomerate is a
business organization consisting of two or more corporations that operate in wholly
unrelated or closely linked industries, part of the same corporate group, and are
usually a large, multinational firm with numerous industries (Kenton, 2021). This sort
of business usually has a parent company that owns and controls a number of
subsidiaries that are legally autonomous but financially and strategically dependent
on the parent company. Conglomerates usually have significant worldwide presence
such as SM Investments Corporation. This is a business conglomerate involved in
property development and mall operations. Shopping Mall Development, Retail, Real
Estate Development, Hotels and Conventions, and Financial Services are its
business segments.

Company’s Background

SM Investments Corporation (SMIC) is the Philippines' largest conglomerate

in terms of market value. The company was founded by Henry Sy, Sr. on January
15, 1960 and is headquartered in Pasay, Philippines. In 1958, Sy’s first company,
Shoemart (SM), started in Carriedo, Manila. He originally concentrated on
purchasing big quantities of shoes from the United States. His company grew when
he converted his shoe store into a department store.

At this point, Sy established his second company, SM Department Store Inc.,

and began selling stocks to department stores. In 1978, Sy began purchasing
supermarkets along the northern end of EDSA in Quezon City. By the time he
completed his first mall, SM City North EDSA in 1994, his companies were listed in
the Philippine Stock Exchange, SM Prime Holdings Inc. By 2005, the SM
Investments Corporation had been established.
 SM Investments Corporation is a holding firm that specializes in property
development and mall operations. Shopping Mall Development, Retail, Real Estate
Development, Hotels and Conventions, and Financial Services are its business
segments. The Shopping Mall Development segment constructs, operates and
maintains shopping centers. The Shopping Mall Development division builds,
operates, and maintains shopping centers. The Retail segment offers merchandise
such as dry goods, clothing, and food. The Real Estate Development category
entails the renovation of residential, commercial, entertainment, and tourism areas.
The Hotels and Conventions section manages hotels and resorts. The Financial
Services segment includes asset management and capital investments.

SM Investments' subsidiaries are now among the biggest player in their

sectors. SM Retail is the Philippines largest retailer, operating department stores and
supermarkets throughout the country. BDO Unibank is the Philippines' largest lender
by assets, with over 800 branches. SM Prime Holdings became the country's biggest
real estate company by market value when the Sy family consolidated property
assets under SM Prime, which used to be a mall builder and operator. SM
Investments also holds stakes in China Banking, gaming and entertainment business
Belle, Atlas

Mining, and office lessor The Net Group.

Formerly ShoeMart

Type Public Corporation

Traded as PSE-SM

Industry Filipino Conglomerate

Founded Carriedo, Manila

1958; 65

Founder Henry Tan Chi Sieng Sy Sr.

Headquarters 10th Floor, One E-Com Center,

Harbor Drive Mall Of Asia

Complex, CBP-IA Pasay City,

Philippines

Area Served Philippines

Key People Jose Sio (Chairman Emiritus)

Amando Tetangco (Chairman of

the Board

Teresita Sy-Coson (Vice

Chairperson of the Board)

Frederick Dy Buncio

(President and CEO)

Subsidiaries SM Prime Holdings

SM Retail

SM Land

Banco De Oro and Others

SWOT Analysis

SWOT represents SM Investments Corp.’s Strength, weaknesses,

opportunities, and threats faced internally and externally.

Strength of SM Investment Corp.’s

 With more than 45 outlets, SM is the leading retailer in the Philippines.

 Around 180 outlets countrywide

 CSR initiatives are carried out by SM Foundation, Inc.

 SM Prime Holdings PSE: SMPH, SM Development PSE: SMDC, and so forth

are subsidiaries.

 Toy World International Inc. is a division of SM.

Weaknesses of SM Investment Corp.’s

 Not found in many nations

 Absence of online shopping and shipping

Opportunities of SM Investment Corp.’s

 Customers' disposable money is rising.

 Reaching out to global markets, particularly those in developing nations
 Purchasing smaller chains of retail
 Increased awareness through marketing and client-focused offerings

Threats of SM Investment Corp.’s

 Various FDI policies by nation

 CRM is not implemented very well.
 The state of labor union relations is not good.
PESTEL Analysis

The PESTEL analysis of SM Entertainment will assist the organization in

effectively making strategic decisions by keeping the external environment's
elements and trends in mind. The most significant elements of the external
environment that have an impact on the company will be considered in SM
Entertainment's PESTEL analysis. Also, by recognizing market trends and
behaviors, PESTEL Analysis of Patagonia Gold Plc will prepare the company to
seize future growth chances.

The PESTEL Analysis for SM Entertainment is explained in the sections that

follow. The political, economic, social, technical, environmental, and legal external
variables will be examined in the SM Entertainment PESTEL Analysis. It is crucial to
remember that the SM Entertainment PESTEL Analysis will be tailored to the
individual market, and the factors' effects on a business vary depending on the
market shifts.

SM Entertainment's PESTEL analysis will assist the organization in making

informed strategic decisions by helping it to keep external trends and environmental
factors in mind. The most significant elements of the external environment that have
an impact on the company will be considered in SM Entertainment's PESTEL
analysis. Also, by recognizing market trends and behaviors, PESTEL Analysis of
Patagonia Gold Plc will prepare the company to seize future growth opportunities.

The PESTEL Analysis for SM Entertainment is explained in the sections that

follow. The political, economic, social, technological, environmental, and legal
external factors will be examined in the SM Entertainment PESTEL Analysis. Note
that the SM Entertainment PESTEL Analysis will be specific to the market, and that
the factors' implications will vary for a business when the market shifts.

Political

1.1. Stability of government

  The robust political framework and establishments facilitate the expansion
and advancement of SM Entertainment.
 Stability in the government also enables companies like SM Entertainment to
grow both domestically and globally.
 Because of their political strength and stability, trade relations with other
nations enable companies like SM Entertainment to easily and smoothly
maintain their offshore business affiliations.
 Stability in the government also draws investors for enterprises like SM
Entertainment, which boosts the country's reputation abroad and spurs
infrastructural expansion.
 Stability in the government can also draw resources for the industry's overall
development, which will enhance player performance and competitive
positioning overall.

1.2. Policy on taxes

 Tax laws that are favorable make it easy for companies like SM Entertainment
to grow.
 By reducing its operating expenses, SM Entertainment will be able to
preserve its competitiveness thanks to government subsidies and
advantageous tax rates.
 In turn, operating expenses will not be transferred to customers, giving them
access to competitive and advantageous pricing.
 Encouraging tax laws that foster company expansion will enable companies
like SM Entertainment to grow, generating additional economic value for the
nation.

1.3. Regulation of competition

 It is crucial that political and governmental organizations keep an eye on

industry competition.
 This will guarantee that businesses are utilizing business tactics and
strategies in addition to fair play for their products.
 In addition to helping the government monitor, limit, and control imports to
support the expansion and growth of local businesses, competition regulation
  Regulation of competition is crucial to preserving the rights and interests of
related stakeholders as well as to safeguarding all groups and stakeholders.

1.4. Exchange groups

 Businesses such as SM Entertainment can benefit from trade agreements

and trade blocs that have been established and ratified by their respective
countries of origin.
 Trade blocs can help companies like SM Entertainment by bringing down the
cost of resources, lowering the cost of conducting business, and increasing
the pool of skilled workers.
 Companies like SM Entertainment can use trade blocks to make their goods
and services easily available to customers via a variety of channels and
distribution partners so they can buy and gain from it.
 Under trade blocs, strong industrial ties could be created and maintained
between nations and across borders, allowing businesses like SM
Entertainment to gain access to cutting-edge expertise, know-how, and
technology.

Economic

2.1. Rate of inflation

 For businesses such as SM Entertainment to thrive, the economy must have

a moderate rate of inflation.
 Additionally, a moderate rate of inflation will support business expansion and
have a positive impact on consumer confidence and spending patterns.
 The economy will benefit as a result, and disposable income will rise overall.
 Reduced disposable income from a higher inflation rate could result in less
overall expansion, which could be detrimental to businesses and companies
as well as lower consumer confidence.
 A lower rate of inflation will result in a significant increase in disposable
income, which could boost competition, particularly through pricing strategies
that could spark unethical price wars that unfairly benefit from the consumer.
2.2. Rate of interest

 Businesses and corporations like SM Entertainment will find it easier to obtain

bank loans with a moderate interest rate.
 Growth and development would be the goals of this business loan.
 Large-scale industry infrastructure development and construction would also
benefit from business loans.
 People would be able to take out personal loans if interest rates were
moderate.
 Lower to moderate interest rates on personal loans will encourage consumers
to make more purchases and change their consumption habits. This would
therefore increase sales, consumption, and market share for companies such
as SM Entertainment.

2.3. Trends in consumer spending

 Trends in consumer spending are crucial to the success of businesses like

Patagonia Gold Plc.
 Increased spending patterns by consumers are desirable since they result in
more people buying and using the goods that SM Entertainment sells.
 Increased overall consumption patterns and the health of the economy are
dependent on higher purchasing power, which is reflected in higher consumer
spending.
 Marketing tactics and product quality can have a positive impact on these
rising consumer trends.
 Furthermore, other economic indicators like the interest rate, inflation rate,
and trends in unemployment also have an impact on these trends.

2.4. Trends in unemployment

  Reduced disposable income in the economy as a whole due to higher
unemployment trends will have an immediate impact on the performance of
businesses like Patagonia Gold Plc.
 Increased unemployment rates may also be a sign of a skills and knowledge
gap in the workforce, which would hurt consumers by driving up the cost of
goods. When labor is imported from outside for work-related purposes, the
higher prices are linked to the increased cost of doing business.

Social

3.1. Characteristics

 For SM Entertainment, a larger percentage of the younger population is

advantageous because it will expand the company's customer base.
 Furthermore, a younger population will provide SM Entertainment with human
resources and workers who are better educated and skilled, broadening and
deepening the talent pool.
 A middle class that is moderate to upper class is crucial for SM Entertainment
because they are its present customers and supporters.
 This group represents SM Entertainment as brand ambassadors and inspires
the next generation to follow suit and become devoted consumers.

3.2. Instruction

 There are several reasons why a greater level of education in the populace is
desirable and will help SM Entertainment.
 Higher education increases the number of gifted, experienced, and informed
people in SM Entertainment's talent pool.
 Additionally, a higher level of education makes people more conscious of their
consumption habits and purchases.
 They will therefore concentrate on encouraging consumption, which will
provide SM Entertainment with an edge due to its distinct competitive
positioning and placement.
 Customers that are more aware will also value quality and be aware of the
promises and fulfillment of the product. The foundation for future purchases
will be this comparison.
  Once more, SM Entertainment will benefit from their emphasis on quality.

3.3. Family composition and size

 The size and composition of the family influence how frequently and what kind
of purchases are made.
 It's also critical to comprehend consumption trends.
 Targeting the current market, SM Entertainment primarily deals with nuclear
families consisting of two older children and occasionally a younger child.
 Though they take into account their children's requests and suggestions, the
parents are the primary decision makers.
 Marketing, recommendations and evaluations from store managers, as well
as input from friends and family, all have an impact on these parents as the
decision-makers.
 Because of this, SM Entertainment uses push and pull techniques to increase
its appeal.

3.4. Consciousness of Health

 A growing segment of the populace is embracing wellness and health trends.

 The trend toward health and wellness has also influenced patterns and
decisions related to consumption.
 SM Entertainment has incorporated health-related elements into its marketing
and has added health-related features to its products based on behavioral
analysis and consumer research.
 The growing awareness of health issues has also prompted SM
Entertainment to collaborate with organizations and launch corporate social
responsibility programs that prioritize mental and emotional as well as
physical health and wellbeing.
Technological

4.1. Technological framework

 The nation has a robust technological infrastructure.

 The speed at which technology is developing and advancing is rapid.
 Businesses such as SM Entertainment are increasingly adopting
technological innovations and upgrades in order to boost productivity and
affectivity.
 Every industry is experiencing a high rate of innovation, which gives
businesses like SM Entertainment the ability to be both progressive and
competitive.
 Enhancements to the technology infrastructure also aid in drawing foreign
direct investment, which promotes growth and progress.

4.2. Internet usage growth

 Every consumer market in the nation has a high rate of internet penetration.
 Due to its widespread use, people use the internet for both their personal and
professional lives.
 For internet access, almost everyone has a smartphone, and most people
also have access to PCs and laptops.
 An educated and progressive populace is reflected in the increased internet
penetration, which is advantageous for SM Entertainment.
 In order to reach consumers and use marketing and promotional strategies
that allow for direct consumer interaction and feedback gathering, SM
Entertainment has also taken advantage of the high internet penetration rate.

4.3. Using social media

 The proportion of youth and middle-aged people in the population is higher.

 These demographic groups utilize social media extensively as a means of
communication
 Businesses such as SM Entertainment are increasingly utilizing social media
to collect consumer information and data.
 Additionally, SM Entertainment uses its official social media platforms to
engage with customers, solicit their opinions, and announce promotions.
  Companies such as SM Entertainment have also begun to use social media
for hiring, illustrating how the business community's attitudes toward social
media are evolving.

4.4. R&D expenditure

 The nation's technological R&D is heavily funded by both domestic and

foreign sources.
 The large investment supports the advancement of industries by providing
them with new, more adaptable, and efficient methods for conducting
business and other business operations.
 An increased rate of innovation has also been made possible by the
increased investment and associated research.
 Companies benefit from innovation and development when the industry as a
whole grows and their industry gains a competitive advantage in the global
market.
 Individual players' adaptations, such as those made by SM Entertainment,
also help businesses develop a strong competitive advantage.

Environmental

5.1. Reusing

 Recycling and environmental sustainability are receiving more attention.

 Customers are growing more conscious and demanding methods for products
to be disposed of that are recyclable.
 Additionally, consumers are requesting more and more recycled goods to be
consumed.
 SM Entertainment has established dedicated websites for the disposal of
recyclable items.
  Like many other participants, SM Entertainment is also launching a new line
of recycled goods for the benefit of customers.

5.2. Waste handling

 The nation has strict laws governing the control and management of waste.
 To ensure compliance, conduct oversight, and steer clear of future issues, SM
Entertainment ought to affiliate with and register with waste management
organizations and authorities.
 SM Entertainment already has a designated and controlled waste
management and environmentally friendly disposal process in place in order
to maintain environmental sustainability.

5.3. Usage of green products

 The rise in the green lifestyle has coincided with a greater awareness of
environmental sustainability.
 Customers in the nation and throughout all markets are favoring more and
more green goods and services—that is, goods and services that are
manufactured and promoted in an environmentally responsible and
sustainable manner.
 To appeal to customers, businesses are also jumping on the green product
bandwagon and launching eco-friendly items.
 SM Entertainment frequently participates in green corporate social
responsibility initiatives.
 In addition, SM Entertainment has unveiled a line of green products that are
variations of its current offerings. The company intends to gradually increase
the green product line's weight in order to strengthen its position in
environmental sustainability.

5.4. Investments in renewable energy

 The nation is gradually transitioning to using renewable energy for operations

and business processes across all of its industries.
 This is being done to lessen both the market's carbon impact and its
environmental footprint.
  Hydroplanes and solar energy are being used more frequently by SM
Entertainment and other members of the related industry for business
operations and operation management.
 To assist with production, SM Entertainment operates a small-scale company-
controlled hydro plant.

Legal

6.1. Laws pertaining to health and safety

 Strict rules are in place regarding the health and safety of employees at work.
 Reputable organizations and associations frequently follow up with companies
to inquire about the use of safety nets, drills, and other preventative measures
in the workplace.
 Employees' emotional and mental well-being are just as important to safety
and health as their physical well-being.
 The health and safety of its employees are extremely important to SM
Entertainment, and the company is always looking for ways to make it better.

6.2. Workplace regulations

 Regulations across the nation require businesses to create formal

employment contracts.
 These contracts, which cover every facet of employment, are approved by the
reputable governmental bodies.
 Employability contracts guarantee good communication and prevent
miscommunication or collusion between all parties.
 SM Entertainment complies with labor laws and informs its staff of these laws
when hiring new staff members.
 In order to keep staff members informed about employment laws and other
legal requirements, SM Entertainment's HR department also hosts workshops
and training sessions on a regular basis.
6.3. Law against discrimination

 The population of the nation and the market is diverse.

 There is a large immigrant population, and the nation's enterprises are
present in several offshore locations.
 As a result, SM Entertainment has always been at ease with having a diverse
workforce and has established internal policies to encourage diversity.
 The business complies with anti-discrimination laws in all of its operations,
including hiring and promoting employees.
 All staff members regularly participate in diversity workshops and trainings in
order to prevent biased and discriminatory behavior, which could have serious
consequences.
 Like other companies in the sector, SM Entertainment is an equal opportunity
employer.
 Additionally, SM Entertainment makes sure that the workplace is free of
discrimination and that there is no toxic culture.

Research Objectives

Determining the study’s liquidity, profitability, turnover assets, and long-term

solvency of a business and to contrast performance indicators or financial
statements over a specified SM’s Investments Corporation’s financial statements for
the year ending December 31, 2022, December 31, 2021, and December 31, 2020:

a. Balance Sheet

b. Income Statement

c. Statement of Changes in Equity

d. Statement of Cash Flow

 CHAPTER 2

METHODOLODY

This chapter explains various methodologies that were used in gathering data
and analysis which are relevant to the research. The methodologies will include
areas such as the horizontal analysis, ratio analysis and data gathering procedure.

One of the methods that we used was horizontal analysis, this method used in
analyzing financial statements that compares specific financial information from one
accounting period to information from other periods. Researchers used this method
to examine historical trends. To perform a horizontal analysis, researchers
subtracted the base year value from the comparison year value, divide the result by
the base year value, and multiply by 100. Another one was ratio analysis, this
method compares line-item data from a company's financial statements to elicit
information about profitability, liquidity, and solvency. Ratio analysis can show how a
company has changed over time. A liquidity ratio assesses a company's ability to
meet its short-term debt obligations. The current ratio, quick ratio, and cash ratio are
the three ratio was used in liquidity ratio. The solvency ratio assists researchers in
determining a company's ability to meet long-term financial obligations.

In order to get the financial statements of AC, researchers research about the
Financial Statement of Ayala Corp which is through ph.investing.com and
finance.yahoo.com where it shows the data of AC financial statements.
 CHAPTER 3

RESULTS

The findings of the researchers are interpreted in this chapter. The analysis of
financial statements of SM Investment Corp. including the company's balance sheet,
income statement, and cash flow are analyzed and interpreted on this chapter using
the horizontal analysis and ratio analysis.

a. Balance Sheet
b. Income Statement
c. Cash Flow
d. Changes in Equity
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https://www.companieshistory.com/sm-investments/

https://asia.nikkei.com/Companies/SM-Investments-Corp/

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