AXIE : FINANCIAL OPPORTUNITY OR NOT?

We received a question, from our friend,

Dauphin:
“Sir, may itatanong lang ako na
medyo unrelated sa topic natin; Pero
ano opinion niyo sa mga tao na
naglalaro ng Axie?

Natatandaan ko kasi sir, parang

nasabi niyo na hindi gaanong worth it
lalo na't hindi mo naman mailalagay
sa resume HAHAHAHAHA” Vincent Dauphin, ABM 11 – Mater Dei
Academy
AXIE :
A Financial Statement Analysis :
FINANCIAL Measurement Tool
OPPORTUNI
TY OR NOT?

LIQUIDITY SOLVENCY STABILITY

PROFITABILITY
 LIQUIDITY
 Liquidity is defined as the ability to convert assets into cash with ease at a fair price. An asset
can be categorized as high liquidity or low liquidity, depending upon its capability to be
converted into cash easily. When an asset is considered as having high liquidity, it implies that
the asset is in demand and many sellers wish to buy the asset. Therefore, an organization that
has high liquidity can easily pay debts. On the other hand, low liquidity of an asset can mean
that only a few buyers are willing to purchase the asset therefore may affect its market value.
Therefore, it contains a substantial risk of failing to make ends meet when it comes to debts.
Considering the liquidity of an asset is essential in financial management to ensure that assets
can be easily converted into cash to supply the needs of an entity. 

Fill this with your own definition of the highlighted word in this slide.
 SOLVENCY
 Solvency is the ability of a company to meet its long-term debts and financial obligations. The
solvency of a company can be measured by its assets exceeding the total number of its
liabilities. It evaluates the capability of an organization to pay debts when it arrives at its due
date. An organization that has more liabilities than assets is considered insolvent and may
encounter shortly a state of bankruptcy if it is unable to resolve its liabilities. Determining the
solvency of a business entity is crucial in business finance as it can determine the long-term
financial health of an entity. 

Fill this with your own definition of the highlighted word in this slide.
 STABILITY
 Stability, in the context of finance, refers to the capacity of an organization to continue its
position and maintain consistent earnings, while withstanding the volatility and fluctuations of
its environment over time. Maintaining financial stability is of utmost necessity for an
organization to entice investors in funding the growth of the business. Furthermore, it enables
an entity to operate efficiently over a period of time without heavily relying on external sources
of funds. A stable business allows more opportunities for growth and expansion becoming an
avenue for great business decisions. 

Fill this with your own definition of the highlighted word in this slide.
 PROFITABILITY
 Profitability is the ability of an entity to generate profit or financial gain in relation to its
expenses. It is one of the first things an investor will analyze when deciding upon investing in a
company. The profitability of a company is impertinent as it is one of the main drivers of the
financial health of a business. Profitability indicates the percentage or the amount of money
that is generated and can be used by the organization to produce growth, stability, and achieve
solvency. Achieving a high level of profitability is one of the main goals of an entity as it can
determine the long-term health of a company. 

Fill this with your own definition of the highlighted word in this slide.
Can you apply the following terms on AXIE or
even on financial sources of similar nature?
No. AXIE infinity is an online game that contains Non-Fungible Tokens or digital assets called an
“Axie” used to trade and generate Small Love Potions that can be later converted into
cryptocurrency. Cryptocurrencies and NFTs are a fairly new concept developed and therefore
strict regulations are not yet established on the way digital assets are accounted for. The nature
of cryptocurrencies is unstable in that their value is derived from their volatile and fluctuating
market. As with such an environment, cryptocurrencies are currently not duly accounted for in
financial statements. Therefore, AXIE and other financial sources of similar nature cannot be
fully substantiated by a financial statement analysis because its assets cannot be accurately
accounted for with its changing value. The purpose of a financial statement analysis is to
evaluate an entity’s value through its balance sheet, income statement, and statement of cash
flows. Thus, if an asset cannot be represented in the financial statements, then the terms
included in a financial statement analysis cannot be applied.