managerial accounting term paper sta. lucia land, inc

8/13/2019 Managerial Accounting Term Paper Sta. Lucia Land, Inc.

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Term Paper

Financial Statements Analysis onSTA. LUCIA LAND, INC.

Managerial Accounting


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I. COMMENTS ON THE RESULTS OF ANALYSIS

Sta. Lucia Land, Inc. (SLI) was incorporated in the Republic of the Philippines and registered

with the Philippine Securities and Exchange Coission (SEC) on !eceber ", #$$" under the nae

%ipporah &ining and Industrial Corporation to engage in ining. 'n ugust #, #$$", the

Registrant*s rticles of Incorporation was aended to+ (i) change the corporate nae to %ipporah

Realt -oldings, Inc. (%R-I) (b) transpose the original priar purpose to secondar purpose fro

being a ining fir to a real estate copan, the priar purpose of which is to ac/uire b purchase,

lease, donation, or otherwise, and to own, use, ipro0e, de0elop and hold for in0estent or otherwise,

real estate of all 1inds, ipro0e, anage or otherwise dispose of buildings, houses, apartents and

other structures of whate0er 1ind, together with their appurtenances. In 2334, a5orit of the shares of

%R-I was ac/uired b Sta. Lucia Realt 6 !e0elopent, Inc. (SLR!I) through a propert7share

swap and changed its copan nae to Sta. Lucia Land, Inc. upon board appro0al.#

8he following section discusses analses ade on the Copan*s financial stateents,

deri0ed fro its 23#2 nnual Report, using analtical tools such as 9ertical nalsis, -ori:ontal

nalsis, 8rend nalsis and selected ratios.

VERTICAL ANALYSIS

a) ;alance Sheet (;S) < the bul1 of assets cae fro ac/uisition of 0arious lands for

de0elopent declared under real estate in0entories, which coprise 4.=#> of total assets

(23##723#2 a0erage), and de0elopent of parcels of land held as in0estent propert a1ing

up 24.44> of the total assets. Significant changes in proportion of indi0idual accounts fro

23## to 23#2 were noted in entries under+

#) Recei0ables, wherein in 23##, it onl coprise 2.=> of the total assets, and

increased b ?.@= percentage points in 23#2. 8his could be due to increased real

estate sales dri0en b new pro5ects sold.

1Sta. Lucia Land, Inc. 23#2 nnual Report

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2) 8otal liabilities, in which its proportion to total assets of 2.#@> fro 23## increased

to 24.?>. 8his could be attributed to the Copan*s focus on continued

constructions of pro5ects and ac/uisitions of 0arious lands for future expansions.

?) 8otal e/uit, which, as a result of the increase in proportion of total liabilities

conse/uentl decreased total e/uit*s proportion to total assets b ?.2=> in 23#2.

b) Stateent of Coparati0e Incoe (S'CI) < 8he bul1 of the re0enues is generated fro real

estate sales which coprised 42.> and "."=> of the total re0enues in 23#2 and 23##,

respecti0el. 8he Copan showed great perforance in its real estate business. Significant

changes in proportion to total re0enues were obser0ed in entries under+

#) Real estate sales, which grew b 4.4" percentage points. 8his could be explained b

the copan*s increased efforts in further ipro0ing real estate sales operations.

2) Cost and expenses, particularl costs of real estate, which increased b ##.=

percentage points fro 23## to 23#2. 8his increase is corresponding to the

copan*s expanding operations.

HORIZONTAL ANALYSIS

a) -ori:ontal analsis ;S < 8otal assets generall grew b $.?> fro P#.= billion in 23## to

P#".2 billion in 23#2, with current assets and noncurrent assets recording increases of #2.?#>

and >, respecti0el. 8he increase was greatl influenced b the significant growth of #4>

under Recei0ables, caused b the continued sales of infused and ongoing pro5ects.

&eanwhile, the significant increase in Recei0ables was offset b decreases incurred under

Cash, and Aoncurrent installent contracts recei0ables ites.

8otal liabilities also increased b 2>, necessitated b the continued constructions of pro5ects

and ac/uisitions of 0arious lands for future expansions. -owe0er, while total liabilities

incurred greater increase in relati0e ters than total assets, in absolute ters, the growth in

liabilities onl translates to about P="4 illion, while the positi0e difference in 23## and

23#2 assets aounted to P#. billion.

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8otal e/uit also grew b ."#>, or P@23 illion, brought about b the 33> increase in

retained earnings attributed to the copan*s profitable operations, gains on in0estent

properties, and re0enues fro real estate business operations.

b) -ori:ontal analsis S'CI < SLI*s declared total coprehensi0e incoe decreased b ">,

fro P@@@ illion in 23##, to onl P@23 illion generated in 23#2. Aet incoe also declined

fro P?@$ illion in 23## to P?#2 illion in 23#2. 8he decline in incoe was due to

decrease in rental incoe, increase in ad0ertising and prootions and additional anpower

costs of the copan to copete in the real estate ar1et.

'0erall re0enue increased b 2.?"> in 23#2. Significant increases which contributed to

re0enue growth are+ (i) ?$.2$> increase in real estate sales, which is due to increased

ad0ertising and prootion acti0ities especiall to the copan*s new pro5ects (ii) =#.=>

increase in di0idend incoe, resulted fro the Copan*s in0estents in 0arious securities

and (iii) #[email protected]@> increase in other operational incoe such as penalties and surcharges,

processing fees, and incoe related to defaults of 0arious buers and cancelled sales. 8hese

increases, howe0er, were offset b the decreases in rental incoe (".=@> decrease) due to

lower occupanc rate of Sta. Lucia East Brand &all in Cainta, Ri:al, and interest incoe

(##.#= decrease) due to the recognition of da # loss of non7interest bearing recei0ables.

&eanwhile, cost and expenses also increased b a greater aount (P#@ illion) or @.44>.

8his resulted fro increased real estate sales, which has corresponding costs of sales < such

as ad0ertising, which conse/uentl increased b 4?.4#>. Significant growth in coissions

(@.2$>), salaries and wages (4"."?>) and other adinistrati0e costs consistent with the

continued growth and de0elopent of the copan were also obser0ed.

TREND ANALYSIS

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a) ;S < all ites under total assets recorded an increasing trend fro 23## to 23#2, except for

cash entries, which decreased following the re/uireent of an additional portfolio of pro5ect

de0elopents and expenditures during the ear, and noncurrent installent contracts

recei0ables, which slowed down the increase of total assets to onl #3$.?>. &eanwhile,

total liabilities ha0e grown faster than assets, recording a rate of increase of #2.#=.>. 8his

could be attributed to the Copan*s focus on continued constructions of pro5ects and

ac/uisitions of 0arious lands for future expansions.

b) S'CI < all ites under total re0enue are fast increasing fro 23## to 23#2, except for rental

incoe, which was stunted b the decrease in occupanc rate of Sta. Lucia East Brand &all

in Cainta, Ri:al, and interest incoe due to da # loss of non7interest bearing recei0ables.

Entries under other incoe grew the fastest, at [email protected]@> rate, attributed to the increase in

other operational incoe such as penalties and surcharges, processing fees, and incoe

related to defaults of 0arious buers and cancelled sales.

&eanwhile, cost and expenses grew faster than re0enue at a rate of #@.44>. 8he copan

recogni:ed that to be able increase its re0enue (in the long run), it has to spend ore first on

ipro0ing its operations.

RATIOS

a) Current ratio < the copan*s current ratio in 23## and 23#2 are 2.4@ and 2.@?, respecti0el,

eaning, in e0er P# current short7ter debt, there is an a0ailable P2.4@ and P2.@? current

assets. 8hese ratios, pegged outside the rule of thub two to one ratio could ean that there is

an excess in cash or too uch in0entor. 23#2 le0el is lower than 23##, which could ean

that, the copan has recogni:ed the need to spendD ore < as anifested in the continuous

construction pro5ects and ac/uisition of properties, as well as spending in adinistrati0e and

operating expenses, geared at increasing re0enues.

b) !ebt7e/uit ratio < the Copan*s relati0e proportions of debt and e/uit on a copan*s

balance sheet resulted to 3.?2 for 23## and 3.?= for 23#2. 8hese ratios are considered

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relati0el low7ris1, with the copan ha0ing low aount of debt, and is thus exposed to less

ris1, in ters of interest rate increases or credit rating.

c) Return on e/uit ratio < the Copan*s effecti0eness to use e/uit funds for 23## and 23#2 is

?> for both ears. hile this ratio indicates low returns on in0estents, it should be noted

that real estate re/uires intensi0e capital infusion for infrastructure before generating re0enue.

It would not be fair to conclude that a higher return on ratio is a better in0estent than the

lower one. It reall depends on the tpe of businessFindustr a copan is in.

d) Return on in0estent 7 the Copan*s efficienc in using its assets to generate profit for

23## and 23#2 is 2> for both ears. 8his percentageFratio is low, and a indicate that it has

a poor capacit of con0erting assetsFin0estents into profit.

FISCAL FITNESS ANALYSIS

e) Gor 23##, the Copan*s %7score is 2."=. Gor 23#2, its %7score is 2.=. 8he copan*s %7

score for both ears fall within the gra area. ccordingl, it should exercise caution.

II. STA. LUCIA LAND, INC. STATEMENTS OF FINANCIAL POSITION

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III. STA. LUCIA LAND, INC. STATEMENTS OF COMPREHENSIVE INCOME

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II. Sta. Lucia Land, Inc. Statements of Cash Flos

IV. STA. LUCIA LAND, INC. STATEMENTS OF CASH FLOWS

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V. STA. LUCIA LAND, INC. STATEMENTS OF FINANCIAL POSITION (Excel)

2!2 2!!

Current Assets

Ca"% *N#t" 4 and 06 65,-(,21( 7-,716,4--

Rci8a9&" *N#t" 5, 17 and 06 1,42,644,5-0 400,070,7-

Ra& "tat in8nt#:i" *N#t ( (,662,-(1,-67 (,1--,011,225

D;#"it" #n &and ;u:c%a" *N#t" 6 and 17 1,25-,6-6,267 1,25-,6-6,267

Ot%: cu::nt a""t" *N#t - 5-,((5,422 467,6-4,25

T#ta& Cu::nt A""t" !,"!2,#$,$" %,$&","%!,'$

Noncurrent Assets

N#ncu::nt in"ta&&!nt c#nt:act"

:ci8a9&" *N#t" 5 and 06

402,740,142 525,206,747

A8ai&a9&ui;!nt *N#t 11 7,52-,01( (,6(0,655Ot%: n#ncu::nt a""t" 1,702,-5 (,2(,1(-

T#ta& N#ncu::nt A""t" $,$2',!%,$#! $,&!!,&%(,2#2

T)TAL ASS*TS 16,026,-5,121 14,-47,1-7,66(

2!2 2!!

Current Lia+ilities

Acc#unt" and #t%: ;a=a9&" *N#t" 10 and

06

1,277,644,075 1,174,22,476

L#an" ;a=a9& *N#t" 14 and 06 0,55,0(,750 0,10,0-,044Cu"t#!:"? d;#"it" *N#t 12 0-1,-46,7(5 10(,7(5,51(

Inc#! ta+ ;a=a9& 2-,602,0-7

T#ta& Cu::nt Lia9i&it i" ',2&!,"#2,222 &,'#&,!(2,$'#

Noncurrent Lia+ilities

D$::d ta+ &ia9i&iti" < nt *N#t 04 000,156,115 102,56,(55

T#ta& N#ncu::nt Lia9i& it i" 222,!$#,!!$ !2&,$#,"$$

T)TAL LIAILITI*S 4,452,71-,22( 2,5-6,6-7,21

*-uity *N#t" 1 and 15

Ca;ita& "t#c@ 1,(76,45, 1,(76,45,

Additi#na& ;aiduit= !!,"(2,!##,"%' !!,2#2,$,#

T)TAL ASS*TS 16,026,-5,121 14,-47,1-7,66(

LIAILITI*S AND *UIT/Amount 0P1p

STA. LUCIA LAND, INC.

STAT*M*NTS )F FINANCIAL P)SITI)N

ASS*TSAmount 0P1p

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VI. STA.

LUCIA LAND, INC. STATEMENTS OF COMPREHENSIVE INCOME (Excel)

2!2 2!!

3*4*NU*

Ra& "tat "a&" *N#t 00 1,07-,6(2,2(2 720,2(2,005

Rnta& inc#! *N#t" 1, 17, 00 and 02 2-5,-46,62 414,001,267

Int:"t inc#! *N#t 16 65,474,554 (2,(41,2

Di8idnd inc#! *N#t 7 5,-60,44 2,002,77-

Ot%:" *N#t 1( 26,-(6,0(( 1(,7-2,676

1,(70,(52,011 1,441,542,5--

C)STS AND *5P*NS*S

C#"t" #$ :a& "tat *N#t" ( and 1- -0,270,274 4(7,(62,7(4

C#!!i""i#n" 12-,4-,-72 -7,(54,707

D;:ciati#n and a!#:tiBati#n *N#t" 1, 11

and 02 11,64,6(6 17,0-0,272

Int:"t +;n"" *N#t 1- 75,2-,605 67,51,60(

Ta+", &icn"" and $" 5-,0,66 62,(66,64

Ad8:t i"in 52,-71,24( 21,02,07-

Sa&a:i" and 'a" *N#t" 17 and 0 1-,0,-7 1,24,210

P:#$""i#na& $" 1(,(50,40 07,412,156

R;:"ntati#n 6,-4,160 (,241,706

Uti&iti" 5,1(6,066 4,7-4,(74

R;ai:" and !aintnanc 2,677,(46 4,6(,2-4

P:#8i"i#n $#: d#u9t$u& acc#unt" *N#t 5 166,050 AN4E RATEDI==ERENCE ;##,(2",171.00< !0,1"1,(22

0#",#$(,&'2 !,&(&,#''

managerial accounting term paper sta. lucia land, inc

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