Ayala Corporation

Submitted by: Wonderpets

Dela Cruz, Juan
Doe, John
Doe, Jane
Annie, Vershia
Bejerano, Hector
Gutierrez, Jennica
BSAT - A301

Date : March 6, 2019

Financial Statement Analysis Objectives
1. To assess past performance.

Past performance is a good indicator of future performance. Investors or creditors

are interested in the trend of past sales, cost of good sold, operating expenses, net
income, cash flows and return on investment. These trends offer a means for judging
management's past performance and are possible indicators of future performance.

2. To assess current position.

Financial statement analysis shows the current position of the firm in terms of the
types of assets owned by a business firm and the different liabilities due against the
enterprise.

3. To predict profitability and growth aspects.

Financial statement analysis helps in assessing and predicting the earning
prospects and growth rates in earning which are used by investors while comparing
investment alternatives and other users in judging earning potential of business
enterprise.

4. To predict bankruptcy and failure.

Financial statement analysis is an important tool in assessing and predicting

bankruptcy and probability of business failure. The quantity of research is also a
function of the availability of data: for public firms which went bankrupt or did not,
numerous accounting ratios that might indicate danger can be calculated, and
numerous other potential explanatory variables are also available. Consequently,
the area is well-suited for testing of increasingly sophisticated, data-intensive
forecasting approaches.

5. To assess the operational efficiency.

Financial statement analysis helps to assess the operational efficiency of the
management of a company. The actual performance of the firm which are revealed
in the financial statements can be compared with some standards set earlier and
the deviation of any between standards and actual performance can be used as the
indicator of efficiency of the management.
Company Background

Ayala Corp. (PSE:AC) is the holding company of one of the oldest and largest business
groups in the Philippines. Driven by the goal to accelerate the future for every Filipino,
Ayala continues to transform industry challenges into opportunities, innovate
businesses to address the evolving needs of the people, and improve lives by aligning
business goals with the developmental needs of the communities it serves.

Presently, Ayala has established leadership positions in real estate, financial services,
telecommunications, water infrastructure, electronics manufacturing, and automotive
distributorship and dealership. Targeting sectors with astounding gaps in capacity,
accessibility, quality and affordability, yet are essential to the country’s economic and
social progress, Ayala’s new pursuits are in the power generation, transport
infrastructure, health and education spaces.
Organizational Chart
 AYALA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME STATEMENT
(Amounts in Thousands)

INCOME
Sale of goods (Note 31)
Rendering of services (Notes 13 and 31)
Share of profit of associates and joint ventures (Note 12)
Interest income (Note 31)
Other income (Note 23)

COST AND EXPENSES

Costs of sales (Notes 8 and 31)
Costs of rendering services (Notes 23 and 31)
General and administrative (Notes 23, 27 and 31)
Interest and other financing charges (Notes 20, 23 and 31)
Other charges (Note 23)

Income Before Tax

PROVISION FOR (BENEFIT FROM)

INCOME TAX (Note 25)
Current
Deferred

Net Income
 AYALA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in Thousands)

Asset
Current Asset
Cash and cash equivalents (Notes 5, 31, 32 and 33)
Short-term investments (Notes 6, 31, 32 and 33)
Accounts and notes receivable (Notes 7, 31, 32 and 33)
Inventories (Note 8)
Other current assets (Notes 9 and 32)

Total Current Assets

Noncurrent Assets
Noncurrent accounts and notes receivable (Notes 7, 32 and 33)
Investments in bonds and other securities (Notes 10, 31, 32 and 33)
Land and improvements (Note 11)
Investments in associates and joint ventures (Note 12)
Investment properties (Note 13)
Property, plant and equipment (Note 14)
Service concession assets (Note 15)
Intangible assets (Note 16)
Deferred tax assets - net (Note 25)
Pension and other noncurrent assets (Note 17)

Total Noncurrent Assets

Total Assets

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and accrued expenses (Notes 18, 31, 32 and 33)
Short-term debt (Notes 20, 31, 32 and 33)
Income Tax Payable
Current portion of:
Long-term debt (Notes 20, 31, 32 and 33)
Service concession obligation (Notes 15, 32 and 33)
Other current liabilities (Notes 19, 32 and 33)

Total Current Liabilities

Noncurrent Liabilities
 Long-term debt - net of current portion (Notes 20, 31, 32 and 33)
Service concession obligation - net of current portion (Notes 15, 32 and 33)
Deferred tax liabilities - net (Note 25)
Pension liabilities (Note 27)
Other noncurrent liabilities (Notes 21, 32 and 33)

Total Noncurrent Liabilities

Total Liabilities

Equity
Equity attributable to owners of the parent
Paid-in capital (Note 22)
Share-based payments (Note 28)
Remeasurement gains (losses) on defined benefit plans (Note 27)
Net unrealized gain (loss) on available-for-sale financial assets (Note 10)
Cumulative translation adjustments
Equity reserve (Notes 2 and 24)
Equity conversion option (Note 20)
Retained earnings (Note 22)
Treasury stock (Note 22)

Non-controlling interests
Total Equity

Total Liabilities and Equity

ND SUBSIDIARIES
OF INCOME STATEMENT
ousands)

2016 2015 2014

137,307,163.00 118,285,566.00 105,140,825.00

61,901,736.00 55,749,425.00 51,275,623.00
18,153,893.00 15,038,015.00 13,185,147.00
6,776,936.00 7,296,799.00 5,493,715.00
13,146,061.00 11,296,937.00 9,180,254.00
237,285,789.00 207,666,742.00 184,275,564.00

105,752,969.00 89,487,870.00 77,773,560.00

35,597,431.00 33,573,245.00 34,495,682.00
19,412,193.00 18,052,241.00 15,831,000.00
14,258,189.00 13,276,414.00 11,933,781.00
8,325,424.00 5,970,474.00 3,829,020.00
183,346,206.00 160,360,244.00 143,863,043.00

53,939,583.00 47,306,498.00 40,412,521.00

11,357,136.00 8,847,768.00 7,964,375.00

(850,162.00) 163,676.00 173,543.00
10,506,974.00 9,011,444.00 8,137,918.00

43,432,609.00 38,295,054.00 32,274,603.00

ND SUBSIDIARIES
OF FINANCIAL POSITION
ousands)

2016 2015 2014

60,223,324.00 82,154,542.00 90,769,525.00

1,008,705.00 2,052,288.00 1,102,703.00
116,841,963.00 82,595,788.00 72,710,512.00
76,752,875.00 68,430,908.00 54,962,164.00
33,638,483.00 27,617,032.00 35,156,558.00

288,465,350.00 262,850,558.00 254,701,462.00

36,484,347.00 41,793,499.00 32,006,450.00

4,565,079.00 3,737,816.00 3,432,215.00
101,049,171.00 92,894,879.00 79,959,887.00
180,313,743.00 162,711,420.00 152,764,854.00
110,916,644.00 83,669,492.00 71,324,245.00
64,074,471.00 39,644,489.00 27,953,145.00
82,422,249.00 78,828,840.00 74,836,633.00
9,716,403.00 3,909,603.00 4,183,464.00
12,414,647.00 9,742,797.00 8,055,020.00
21,282,399.00 14,291,330.00 16,830,401.00

623,239,153.00 531,224,165.00 471,346,314.00

911,704,503.00 794,074,723.00 726,047,776.00

164,600,578.00 145,597,876.00 126,101,836.00

30,858,137.00 24,387,515.00 21,084,269.00
2,270,315.00 1,943,217.00 1,340,269.00

19,792,669.00 28,153,532.00 10,761,443.00

754,519.00 1,255,644.00 1,019,515.00
17,522,984.00 4,629,680.00 9,452,281.00

235,799,202.00 205,967,464.00 169,759,613.00

 245,203,145.00 210,799,647.00 226,999,015.00
6,822,862.00 7,538,374.00 7,859,153.00
9,543,754.00 6,440,505.00 6,742,633.00
2,469,140.00 2,545,978.00 2,179,966.00
40,870,522.00 32,238,772.00 25,640,911.00

304,909,423.00 259,563,276.00 269,421,678.00

540,708,625.00 465,530,740.00 439,181,291.00

74,379,760.00 73,919,322.00 73,571,505.00

495,759.00 568,847.00 377,376.00
(1,548,192.00) (1,249,716.00) (1,005,572.00)
(466,676.00) (554,297.00) (7,211.00)
1,414,550.00 288,683.00 (603,765.00)
12,211,275.00 12,402,311.00 7,478,259.00
1,113,745.00 1,113,745.00 1,113,745.00
145,622,311.00 124,468,464.00 107,039,814.00
(2,300,000.00) (2,300,000.00) (2,300,000.00)
230,922,532.00 208,657,359.00 185,664,151.00
140,073,346.00 119,886,624.00 101,202,334.00
370,995,878.00 328,543,983.00 286,866,485.00

911,704,503.00 794,074,723.00 726,047,776.00

 FINANCIAL RATIO

ANALYSIS OF LIQUIDITY/SHORT TERM SOLVENCY

A. Current Ratio
2014 254,701,462.00
= 1.50 times
169,759,613.00

2015 262,850,558.00
= 1.28 times
205,967,464.00

2016 288,465,350.00
= 1.22 times
235,799,202.00

B. Acid Test Ratio

2014 164,582,740.00
= 0.97 times
169,759,613.00

2015 166,802,618.00
= 0.81 times
205,967,464.00

2016 178,073,992.00
= 0.76 times
235,799,202.00

C. Cash Flow Liquidity Ratio

2014 131,080,706.00
= 0.77 times
169,759,613.00

2015 102,792,204.00
= 0.50 times
205,967,464.00

2016 96,449,332.00
= 0.41 times
235,799,202.00
 ANALYSIS OF LEVERAGE: DEBT FINANCING AND COVERAGE
A. Acounts Receivable Turnover
2014 105,140,825.00
= 1.45 times
72,710,512.00

2015 118,285,566.00
= 1.52 times
77,653,150.00

2016 137,307,163.00
= 1.38 times
99,718,875.50

B Average Collection Period

2014 365
= 252 days
1.45

2015 365
= 240 days
1.52

2016 365
= 265 days
1.38

C. Inventory Turnover
2014 77,773,560.00
= 1.42 times
54,962,164.00

2015 89,487,870.00
= 1.45 times
61,696,536.00

2016 105,752,969.00
= 1.46 times
72,591,891.50

D. Average Sale Period

2014 365
= 258 days
1.42

2015 365
= 252 days
1.45

2016 365
= 251 days
1.46
E. Fixed Asset Turnover
2014 105,140,825.00
= 0.97 times
107,913,032.00

2015 118,285,566.00
= 0.98 times
120,226,200.00

2016 137,307,163.00
= 0.92 times
148,831,505.00

F. Total Asset Turnover

2014 105,140,825.00
= 0.14 times
726,047,776.00

2015 118,285,566.00
= 0.16 times
760,061,249.50

2016 137,307,163.00
= 0.16 times
852,889,613.00

ANALYSIS OF LEVERAGE: DEBT FINANCING AND COVERAGE

A. Debt Ratio
2014 439,181,291.00
= 60.49%
726,047,776.00

2015 465,530,740.00
= 58.63%
794,074,723.00

2016 540,708,625.00
= 59.31%
911,704,503.00

B. Debt to Equity Ratio

2014 439,181,291.00
= 153.10%
286,866,485.00

2015 465,530,740.00
= 141.70%
328,543,983.00

2016 540,708,625.00
= 145.75%
370,995,878.00
C. Times Interest Earned
2014 18,642,970.00
= 1.56 times
11,933,781.00

2015 21,986,811.00
= 1.66 times
13,276,414.00

2016 26,148,699.00
= 1.83 times
14,258,189.00

D. Fixed Charge Coverage

2014 50,487,438.00
= 2.17 times
23,212,741.00

2015 30,683,944.00
= 1.21 times
25,374,984.00

2016 46,197,588.00
= 1.83 times
25,238,474.00

OPERATING EFFICIENCY AND PROFITABILITY

A. Gross Profit Margin
2014 40,412,521.00
= 38.44%
105,140,825.00

2015 47,306,498.00
= 39.99%
118,285,566.00

2016 53,939,583.00
= 39.28%
137,307,163.00

B. Operating Profit Margin

2014 55,361,608.00
= 52.65%
105,140,825.00

2015 34,703,862.00
= 29.34%
118,285,566.00

2016 52,364,520.00
= 38.14%
137,307,163.00
C. Net Profit Margin
2014 32,274,603.00
= 30.70%
105,140,825.00

2015 38,295,054.00
= 32.38%
118,285,566.00

2016 43,432,609.00
= 31.63%
137,307,163.00

D. Cash Flow Margin

2014 39,208,478.00
= 37.29%
105,140,825.00

2015 18,585,374.00
= 15.71%
118,285,566.00

2016 35,217,303.00
= 25.65%
137,307,163.00

E. Return on Investment on Assets

2014 32,274,603.00
= 4.45%
726,047,776.00

2015 38,295,054.00
= 5.04%
760,061,249.50

2016 43,432,609.00
= 5.09%
852,889,613.00

E. Return on Investment on Equity

2014 32,274,603.00
= 11.25%
286,866,485.00

2015 38,295,054.00
= 12.45%
307,705,234.00

2016 43,432,609.00
= 12.42%
349,769,930.50
 TREND ANALYSIS
Financial Position

2016 2015 2014 2016 2015 2014

Asset
Current Asset
Cash and cash equivalents (Notes 5, 31, 32 and 33) 60,223,324.00 82,154,542.00 90,769,525.00 66.35 90.51 100
Short-term investments (Notes 6, 31, 32 and 33) 1,008,705.00 2,052,288.00 1,102,703.00 91.48 186.11 100
Accounts and notes receivable (Notes 7, 31, 32 and 33) 116,841,963.00 82,595,788.00 72,710,512.00 160.69 113.60 100
Inventories (Note 8) 76,752,875.00 68,430,908.00 54,962,164.00 139.65 124.51 100
Other current assets (Notes 9 and 32) 33,638,483.00 27,617,032.00 35,156,558.00 95.68 78.55 100

Total Current Assets 288,465,350.00 262,850,558.00 254,701,462.00 113.26 103.20 100

Noncurrent Assets
Noncurrent accounts and notes receivable (Notes 7, 32 and 33) 36,484,347.00 41,793,499.00 32,006,450.00 113.99 130.58 100
Investments in bonds and other securities (Notes 10, 31, 32 and 33) 4,565,079.00 3,737,816.00 3,432,215.00 133.01 108.90 100
Land and improvements (Note 11) 101,049,171.00 92,894,879.00 79,959,887.00 126.37 116.18 100
Investments in associates and joint ventures (Note 12) 180,313,743.00 162,711,420.00 152,764,854.00 118.03 106.51 100
Investment properties (Note 13) 110,916,644.00 83,669,492.00 71,324,245.00 155.51 117.31 100
Property, plant and equipment (Note 14) 64,074,471.00 39,644,489.00 27,953,145.00 229.22 141.82 100
Service concession assets (Note 15) 82,422,249.00 78,828,840.00 74,836,633.00 110.14 105.33 100
Intangible assets (Note 16) 9,716,403.00 3,909,603.00 4,183,464.00 232.26 93.45 100
Deferred tax assets - net (Note 25) 12,414,647.00 9,742,797.00 8,055,020.00 154.12 120.95 100
Pension and other noncurrent assets (Note 17) 21,282,399.00 14,291,330.00 16,830,401.00 126.45 84.91 100

Total Noncurrent Assets 623,239,153.00 531,224,165.00 471,346,314.00 132.23 112.70 100

Total Assets 911,704,503.00 794,074,723.00 726,047,776.00 125.57 109.37 100

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and accrued expenses (Notes 18, 31, 32 and 33) 164,600,578.00 145,597,876.00 126,101,836.00 130.53 115.46 100
Short-term debt (Notes 20, 31, 32 and 33) 30,858,137.00 24,387,515.00 21,084,269.00 146.36 115.67 100
Income Tax Payable 2,270,315.00 1,943,217.00 1,340,269.00 169.39 144.99 100
Current portion of:
Long-term debt (Notes 20, 31, 32 and 33) 19,792,669.00 28,153,532.00 10,761,443.00 183.92 261.61 100
Service concession obligation (Notes 15, 32 and 33) 754,519.00 1,255,644.00 1,019,515.00 74.01 123.16 100
Other current liabilities (Notes 19, 32 and 33) 17,522,984.00 4,629,680.00 9,452,281.00 185.38 48.98 100

Total Current Liabilities 235,799,202.00 205,967,464.00 169,759,613.00 138.90 121.33 100

Noncurrent Liabilities
Long-term debt - net of current portion (Notes 20, 31, 32 and 33) 245,203,145.00 210,799,647.00 226,999,015.00 108.02 92.86 100
Service concession obligation - net of current portion (Notes 15, 32 and 33) 6,822,862.00 7,538,374.00 7,859,153.00 86.81 95.92 100
Deferred tax liabilities - net (Note 25) 9,543,754.00 6,440,505.00 6,742,633.00 141.54 95.52 100
Pension liabilities (Note 27) 2,469,140.00 2,545,978.00 2,179,966.00 113.27 116.79 100
Other noncurrent liabilities (Notes 21, 32 and 33) 40,870,522.00 32,238,772.00 25,640,911.00 159.40 125.73 100

Total Noncurrent Liabilities 304,909,423.00 259,563,276.00 269,421,678.00 113.17 96.34 100

Total Liabilities 540,708,625.00 465,530,740.00 439,181,291.00 123.12 106.00 100

Equity
Equity attributable to owners of the parent
Paid-in capital (Note 22) 74,379,760.00 73,919,322.00 73,571,505.00 101.10 100.47 100
Share-based payments (Note 28) 495,759.00 568,847.00 377,376.00 131.37 150.74 100
Remeasurement gains (losses) on defined benefit plans (Note 27) (1,548,192.00) (1,249,716.00) (1,005,572.00) 153.96 124.28 100
Net unrealized gain (loss) on available-for-sale financial assets (Note 10) (466,676.00) (554,297.00) (7,211.00) 6471.72 7686.83 100
Cumulative translation adjustments 1,414,550.00 288,683.00 (603,765.00) -234.29 -47.81 100
Equity reserve (Notes 2 and 24) 12,211,275.00 12,402,311.00 7,478,259.00 163.29 165.84 100
Equity conversion option (Note 20) 1,113,745.00 1,113,745.00 1,113,745.00 100.00 100.00 100
Retained earnings (Note 22) 145,622,311.00 124,468,464.00 107,039,814.00 136.04 116.28 100
Treasury stock (Note 22) (2,300,000.00) (2,300,000.00) (2,300,000.00) 100.00 100.00 100
230,922,532.00 208,657,359.00 185,664,151.00 124.38 112.38 100
Non-controlling interests 140,073,346.00 119,886,624.00 101,202,334.00 138.41 118.46 100
Total Equity 370,995,878.00 328,543,983.00 286,866,485.00 129.33 114.53 100

Total Liabilities and Equity 911,704,503.00 794,074,723.00 726,047,776.00 125.57 109.37 100
 Income Statement

2016 2015 2014 2016 2015 2014

INCOME
Sale of goods (Note 31) 137,307,163.00 118,285,566.00 105,140,825.00 130.59 112.50 100
Rendering of services (Notes 13 and 31) 61,901,736.00 55,749,425.00 51,275,623.00 120.72 108.73 100
Share of profit of associates and joint ventures (Note 12) 18,153,893.00 15,038,015.00 13,185,147.00 137.68 114.05 100
Interest income (Note 31) 6,776,936.00 7,296,799.00 5,493,715.00 123.36 132.82 100
Other income (Note 23) 13,146,061.00 11,296,937.00 9,180,254.00 143.20 123.06 100
237,285,789.00 207,666,742.00 184,275,564.00 128.77 112.69 100

COST AND EXPENSES

Costs of sales (Notes 8 and 31) 105,752,969.00 89,487,870.00 77,773,560.00 135.98 115.06 100
Costs of rendering services (Notes 23 and 31) 35,597,431.00 33,573,245.00 34,495,682.00 103.19 97.33 100
General and administrative (Notes 23, 27 and 31) 19,412,193.00 18,052,241.00 15,831,000.00 122.62 114.03 100
Interest and other financing charges (Notes 20, 23 and 31) 14,258,189.00 13,276,414.00 11,933,781.00 119.48 111.25 100
Other charges (Note 23) 8,325,424.00 5,970,474.00 3,829,020.00 217.43 155.93 100
183,346,206.00 160,360,244.00 143,863,043.00 127.44 111.47 100

Income Before Tax 53,939,583.00 47,306,498.00 40,412,521.00 133.47 1.17 100

PROVISION FOR (BENEFIT FROM)

INCOME TAX (Note 25)
Current 11,357,136.00 8,847,768.00 7,964,375.00 142.60 111.09 100
Deferred (850,162.00) 163,676.00 173,543.00 -489.89 94.31 100
10,506,974.00 9,011,444.00 8,137,918.00 129.11 110.73 100

Net Income 43,432,609.00 38,295,054.00 32,274,603.00 134.57 118.65 100

 HORIZONTAL ANALYSIS (2015-2014)
Financial Statement

Increase
2015 2014 Percentage
(Decrease)
ASSET
Current Asset
Cash and cash equivalents (Notes 5, 31, 32 and 33) 82,154,542.00 90,769,525.00 (8,614,983.00) -9%
Short-term investments (Notes 6, 31, 32 and 33) 2,052,288.00 1,102,703.00 949,585.00 86%
Accounts and notes receivable (Notes 7, 31, 32 and 33) 82,595,788.00 72,710,512.00 9,885,276.00 14%
Inventories (Note 8) 68,430,908.00 54,962,164.00 13,468,744.00 25%
Other current assets (Notes 9 and 32) 27,617,032.00 35,156,558.00 (7,539,526.00) -21%

Total Current Assets 262,850,558.00 254,701,462.00 8,149,096.00 3%

Noncurrent Assets
Noncurrent accounts and notes receivable (Notes 7, 32 and 33) 41,793,499.00 32,006,450.00 9,787,049.00 31%
Investments in bonds and other securities (Notes 10, 31, 32 and 33) 3,737,816.00 3,432,215.00 305,601.00 9%
Land and improvements (Note 11) 92,894,879.00 79,959,887.00 12,934,992.00 16%
Investments in associates and joint ventures (Note 12) 162,711,420.00 152,764,854.00 9,946,566.00 7%
Investment properties (Note 13) 83,669,492.00 71,324,245.00 12,345,247.00 17%
Property, plant and equipment (Note 14) 39,644,489.00 27,953,145.00 11,691,344.00 42%
Service concession assets (Note 15) 78,828,840.00 74,836,633.00 3,992,207.00 5%
Intangible assets (Note 16) 3,909,603.00 4,183,464.00 (273,861.00) -7%
Deferred tax assets - net (Note 25) 9,742,797.00 8,055,020.00 1,687,777.00 21%
Pension and other noncurrent assets (Note 17) 14,291,330.00 16,830,401.00 (2,539,071.00) -15%

Total Noncurrent Assets 531,224,165.00 471,346,314.00 59,877,851.00 13%

Total Assets 794,074,723.00 726,047,776.00 68,026,947.00 9%

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and accrued expenses (Notes 18, 31, 32 and 33) 145,597,876.00 126,101,836.00 19,496,040.00 15%
Short-term debt (Notes 20, 31, 32 and 33) 24,387,515.00 21,084,269.00 3,303,246.00 16%
Income tax payable 1,943,217.00 1,340,269.00 602,948.00 45%
Current portion of:
Long-term debt (Notes 20, 31, 32 and 33) 28,153,532.00 10,761,443.00 17,392,089.00 162%
Service concession obligation (Notes 15, 32 and 33) 1,255,644.00 1,019,515.00 236,129.00 23%
Other current liabilities (Notes 19, 32 and 33) 4,629,680.00 9,452,281.00 (4,822,601.00) -51%

Total Current Liabilities 205,967,464.00 169,759,613.00 36,207,851.00 21%

Noncurrent Liabilities
Long-term debt - net of current portion (Notes 20, 31, 32 and 33) 210,799,647.00 226,999,015.00 (16,199,368.00) -7%
Service concession obligation - net of current portion (Notes 15, 32 and 33) 7,538,374.00 7,859,153.00 (320,779.00) -4%
Deferred tax liabilities - net (Note 25) 6,440,505.00 6,742,633.00 (302,128.00) -4%
Pension liabilities (Note 27) 2,545,978.00 2,179,966.00 366,012.00 17%
Other noncurrent liabilities (Notes 21, 32 and 33) 32,238,772.00 25,640,911.00 6,597,861.00 26%

Total Noncurrent Liabilities 259,563,276.00 269,421,678.00 (9,858,402.00) -4%

Total Liabilities 465,530,740.00 439,181,291.00 26,349,449.00 6%

Equity
Equity attributable to owners of the parent
Paid-in capital (Note 22) 73,919,322.00 73,571,505.00 347,817.00 0%
Share-based payments (Note 28) 568,847.00 377,376.00 191,471.00 51%
Remeasurement gains (losses) on defined benefit plans (Note 27) (1,249,716.00) (1,005,572.00) (244,144.00) 24%
Net unrealized gain (loss) on available-for-sale financial assets (Note 10) (554,297.00) (7,211.00) (547,086.00) 7587%
Cumulative translation adjustments 288,683.00 (603,765.00) 892,448.00 -148%
Equity reserve (Note 2) 12,402,311.00 7,478,259.00 4,924,052.00 66%
Equity conversion option (Note 20) 1,113,745.00 1,113,745.00 - 0%
Retained earnings (Note 22) 124,468,464.00 107,039,814.00 17,428,650.00 16%
Treasury stock (Note 22) (2,300,000.00) (2,300,000.00) - 0%
208,657,359.00 185,664,151.00 22,993,208.00 12%
Non-controlling interests 119,886,624.00 101,202,334.00 18,684,290.00 18%
Total Equity 328,543,983.00 286,866,485.00 41,677,498.00 15%

Total Liabilities and Equity 794,074,723.00 726,047,776.00 68,026,947.00 9%

 Income Statement
Increase
2015 2014 Percentage
(Decrease)
INCOME
Sale of goods (Note 31) 118,285,566.00 105,140,825.00 13,144,741.00 13%
Rendering of services (Notes 13 and 31) 55,749,425.00 51,275,623.00 4,473,802.00 9%
Share of profit of associates and joint ventures (Note 12) 15,038,015.00 13,185,147.00 1,852,868.00 14%
Interest income (Note 31) 7,296,799.00 5,493,715.00 1,803,084.00 33%
Other income (Note 23) 11,296,937.00 9,180,254.00 2,116,683.00 23%
207,666,742.00 184,275,564.00 23,391,178.00 13%

COST AND EXPENSES

Costs of sales (Notes 8 and 31) 89,487,870.00 77,773,560.00 11,714,310.00 15%
Costs of rendering services (Notes 23 and 31) 33,573,245.00 34,495,682.00 (922,437.00) -3%
General and administrative (Notes 23, 27 and 31) 18,052,241.00 15,831,000.00 2,221,241.00 14%
Interest and other financing charges (Notes 20, 23 and 31) 13,276,414.00 11,933,781.00 1,342,633.00 11%
Other charges (Note 23) 5,970,474.00 3,829,020.00 2,141,454.00 56%
160,360,244.00 143,863,043.00 16,497,201.00 11%

Income Before Tax 47,306,498.00 40,412,521.00 6,893,977.00 17%

PROVISION FOR (BENEFIT FROM)

INCOME TAX (Note 25)
Current 8,847,768.00 7,964,375.00 883,393.00 11%
Deferred 163,676.00 173,543.00 (9,867.00) -6%
9,011,444.00 8,137,918.00 873,526.00 11%

Net Income 38,295,054.00 32,274,603.00 6,020,451.00 19%

 HORIZONTAL ANALYSIS (2016-2015)
Financial Statement

Increase
2016 2015 Percentage
(Decrease)
ASSET
Current Asset
Cash and cash equivalents (Notes 5, 31, 32 and 33) 60,223,324.00 82,154,542.00 (21,931,218.00) -27%
Short-term investments (Notes 6, 31, 32 and 33) 1,008,705.00 2,052,288.00 (1,043,583.00) -51%
Accounts and notes receivable (Notes 7, 31, 32 and 33) 116,841,963.00 82,595,788.00 34,246,175.00 41%
Inventories (Note 8) 76,752,875.00 68,430,908.00 8,321,967.00 12%
Other current assets (Notes 9 and 32) 33,638,483.00 27,617,032.00 6,021,451.00 22%

Total Current Assets 288,465,350.00 262,850,558.00 25,614,792.00 10%

Noncurrent Assets
Noncurrent accounts and notes receivable (Notes 7, 32 and 33) 36,484,347.00 41,793,499.00 (5,309,152.00) -13%
Investments in bonds and other securities (Notes 10, 31, 32 and 33) 4,565,079.00 3,737,816.00 827,263.00 22%
Land and improvements (Note 11) 101,049,171.00 92,894,879.00 8,154,292.00 9%
Investments in associates and joint ventures (Note 12) 180,313,743.00 162,711,420.00 17,602,323.00 11%
Investment properties (Note 13) 110,916,644.00 83,669,492.00 27,247,152.00 33%
Property, plant and equipment (Note 14) 64,074,471.00 39,644,489.00 24,429,982.00 62%
Service concession assets (Note 15) 82,422,249.00 78,828,840.00 3,593,409.00 5%
Intangible assets (Note 16) 9,716,403.00 3,909,603.00 5,806,800.00 149%
Deferred tax assets - net (Note 25) 12,414,647.00 9,742,797.00 2,671,850.00 27%
Pension and other noncurrent assets (Note 17) 21,282,399.00 14,291,330.00 6,991,069.00 49%

Total Noncurrent Assets 623,239,153.00 531,224,165.00 92,014,988.00 17%

Total Assets 911,704,503.00 794,074,723.00 117,629,780.00 15%

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and accrued expenses (Notes 18, 31, 32 and 33) 164,600,578.00 145,597,876.00 19,002,702.00 13%
Short-term debt (Notes 20, 31, 32 and 33) 30,858,137.00 24,387,515.00 6,470,622.00 27%
Income Tax Payable 2,270,315.00 1,943,217.00 327,098.00 17%
Current portion of:
Long-term debt (Notes 20, 31, 32 and 33) 19,792,669.00 28,153,532.00 (8,360,863.00) -30%
Service concession obligation (Notes 15, 32 and 33) 754,519.00 1,255,644.00 (501,125.00) -40%
Other current liabilities (Notes 19, 32 and 33) 17,522,984.00 4,629,680.00 12,893,304.00 278%

Total Current Liabilities 235,799,202.00 205,967,464.00 29,831,738.00 14%

Noncurrent Liabilities
Long-term debt - net of current portion (Notes 20, 31, 32 and 33) 245,203,145.00 210,799,647.00 34,403,498.00 16%
Service concession obligation - net of current portion (Notes 15, 32 and 33) 6,822,862.00 7,538,374.00 (715,512.00) -9%
Deferred tax liabilities - net (Note 25) 9,543,754.00 6,440,505.00 3,103,249.00 48%
Pension liabilities (Note 27) 2,469,140.00 2,545,978.00 (76,838.00) -3%
Other noncurrent liabilities (Notes 21, 32 and 33) 40,870,522.00 32,238,772.00 8,631,750.00 27%

Total Noncurrent Liabilities 304,909,423.00 259,563,276.00 45,346,147.00 17%

Total Liabilities 540,708,625.00 465,530,740.00 75,177,885.00 16%

Equity
Equity attributable to owners of the parent
Paid-in capital (Note 22) 74,379,760.00 73,919,322.00 460,438.00 1%
Share-based payments (Note 28) 495,759.00 568,847.00 (73,088.00) -13%
Remeasurement gains (losses) on defined benefit plans (Note 27) (1,548,192.00) (1,249,716.00) (298,476.00) 24%
Net unrealized gain (loss) on available-for-sale financial assets (Note 10) (466,676.00) (554,297.00) 87,621.00 -16%
Cumulative translation adjustments 1,414,550.00 288,683.00 1,125,867.00 390%
Equity reserve (Notes 2 and 24) 12,211,275.00 12,402,311.00 (191,036.00) -2%
Equity conversion option (Note 20) 1,113,745.00 1,113,745.00 - 0%
Retained earnings (Note 22) 145,622,311.00 124,468,464.00 21,153,847.00 17%
Treasury stock (Note 22) (2,300,000.00) (2,300,000.00) - 0%
230,922,532.00 208,657,359.00 22,265,173.00 11%
Non-controlling interests 140,073,346.00 119,886,624.00 20,186,722.00 17%
Total Equity 370,995,878.00 328,543,983.00 42,451,895.00 13%

Total Liabilities and Equity 911,704,503.00 794,074,723.00 117,629,780.00 15%

 Income Statement
Increase
2016 2015 Percentage
(Decrease)
INCOME
Sale of goods (Note 31) 137,307,163.00 118,285,566.00 19,021,597.00 16%
Rendering of services (Notes 13 and 31) 61,901,736.00 55,749,425.00 6,152,311.00 11%
Share of profit of associates and joint ventures (Note 12) 18,153,893.00 15,038,015.00 3,115,878.00 21%
Interest income (Note 31) 6,776,936.00 7,296,799.00 (519,863.00) -7%
Other income (Note 23) 13,146,061.00 11,296,937.00 1,849,124.00 16%
237,285,789.00 207,666,742.00 29,619,047.00 14%

COST AND EXPENSES

Costs of sales (Notes 8 and 31) 105,752,969.00 89,487,870.00 16,265,099.00 18%
Costs of rendering services (Notes 23 and 31) 35,597,431.00 33,573,245.00 2,024,186.00 6%
General and administrative (Notes 23, 27 and 31) 19,412,193.00 18,052,241.00 1,359,952.00 8%
Interest and other financing charges (Notes 20, 23 and 31) 14,258,189.00 13,276,414.00 981,775.00 7%
Other charges (Note 23) 8,325,424.00 5,970,474.00 2,354,950.00 39%
183,346,206.00 160,360,244.00 22,985,962.00 14%

Income Before Tax 53,939,583.00 47,306,498.00 6,633,085.00 14%

PROVISION FOR (BENEFIT FROM)

INCOME TAX (Note 25)
Current 11,357,136.00 8,847,768.00 2,509,368.00 28%
Deferred (850,162.00) 163,676.00 (1,013,838.00) -619%
10,506,974.00 9,011,444.00 1,495,530.00 17%

Net Income 43,432,609.00 38,295,054.00 5,137,555.00 13%

 COMMON SIZE FINANCIAL STATEMENTS
Financial Position

2016 2015 2014 2016 2015 2014

Asset
Current Asset
Cash and cash equivalents (Notes 5, 31, 32 and 33) 60,223,324.00 82,154,542.00 90,769,525.00 7% 10% 13%
Short-term investments (Notes 6, 31, 32 and 33) 1,008,705.00 2,052,288.00 1,102,703.00 0% 0% 0%
Accounts and notes receivable (Notes 7, 31, 32 and 33) 116,841,963.00 82,595,788.00 72,710,512.00 13% 10% 10%
Inventories (Note 8) 76,752,875.00 68,430,908.00 54,962,164.00 8% 9% 8%
Other current assets (Notes 9 and 32) 33,638,483.00 27,617,032.00 35,156,558.00 4% 3% 5%

Total Current Assets 288,465,350.00 262,850,558.00 254,701,462.00 32% 33% 35%

Noncurrent Assets
Noncurrent accounts and notes receivable (Notes 7, 32 and 33) 36,484,347.00 41,793,499.00 32,006,450.00 4% 5% 4%
Investments in bonds and other securities (Notes 10, 31, 32 and 33) 4,565,079.00 3,737,816.00 3,432,215.00 1% 0% 0%
Land and improvements (Note 11) 101,049,171.00 92,894,879.00 79,959,887.00 11% 12% 11%
Investments in associates and joint ventures (Note 12) 180,313,743.00 162,711,420.00 152,764,854.00 20% 20% 21%
Investment properties (Note 13) 110,916,644.00 83,669,492.00 71,324,245.00 12% 11% 10%
Property, plant and equipment (Note 14) 64,074,471.00 39,644,489.00 27,953,145.00 7% 5% 4%
Service concession assets (Note 15) 82,422,249.00 78,828,840.00 74,836,633.00 9% 10% 10%
Intangible assets (Note 16) 9,716,403.00 3,909,603.00 4,183,464.00 1% 0% 1%
Deferred tax assets - net (Note 25) 12,414,647.00 9,742,797.00 8,055,020.00 1% 1% 1%
Pension and other noncurrent assets (Note 17) 21,282,399.00 14,291,330.00 16,830,401.00 2% 2% 2%

Total Noncurrent Assets 623,239,153.00 531,224,165.00 471,346,314.00 68% 67% 65%

Total Assets 911,704,503.00 794,074,723.00 726,047,776.00 100% 100% 100%

LIABILITIES AND EQUITY

Current Liabilities
Accounts payable and accrued expenses (Notes 18, 31, 32 and 33) 164,600,578.00 145,597,876.00 126,101,836.00 18% 18% 17%
Short-term debt (Notes 20, 31, 32 and 33) 30,858,137.00 24,387,515.00 21,084,269.00 3% 3% 3%
Income Tax Payable 2,270,315.00 1,943,217.00 1,340,269.00 0% 0% 0%
Current portion of:
Long-term debt (Notes 20, 31, 32 and 33) 19,792,669.00 28,153,532.00 10,761,443.00 2% 4% 1%
Service concession obligation (Notes 15, 32 and 33) 754,519.00 1,255,644.00 1,019,515.00 0% 0% 0%
Other current liabilities (Notes 19, 32 and 33) 17,522,984.00 4,629,680.00 9,452,281.00 2% 1% 1%

Total Current Liabilities 235,799,202.00 205,967,464.00 169,759,613.00 26% 26% 23%

Noncurrent Liabilities
Long-term debt - net of current portion (Notes 20, 31, 32 and 33) 245,203,145.00 210,799,647.00 226,999,015.00 27% 27% 31%
Service concession obligation - net of current portion (Notes 15, 32 and 33) 6,822,862.00 7,538,374.00 7,859,153.00 1% 1% 1%
Deferred tax liabilities - net (Note 25) 9,543,754.00 6,440,505.00 6,742,633.00 1% 1% 1%
Pension liabilities (Note 27) 2,469,140.00 2,545,978.00 2,179,966.00 0% 0% 0%
Other noncurrent liabilities (Notes 21, 32 and 33) 40,870,522.00 32,238,772.00 25,640,911.00 4% 4% 4%

Total Noncurrent Liabilities 304,909,423.00 259,563,276.00 269,421,678.00 33% 33% 37%

Total Liabilities 540,708,625.00 465,530,740.00 439,181,291.00 59% 59% 60%

Equity
Equity attributable to owners of the parent
Paid-in capital (Note 22) 74,379,760.00 73,919,322.00 73,571,505.00 8% 9% 10%
Share-based payments (Note 28) 495,759.00 568,847.00 377,376.00 0% 0% 0%
Remeasurement gains (losses) on defined benefit plans (Note 27) (1,548,192.00) (1,249,716.00) (1,005,572.00) 0% 0% 0%
Net unrealized gain (loss) on available-for-sale financial assets (Note 10) (466,676.00) (554,297.00) (7,211.00) 0% 0% 0%
Cumulative translation adjustments 1,414,550.00 288,683.00 (603,765.00) 0% 0% 0%
Equity reserve (Notes 2 and 24) 12,211,275.00 12,402,311.00 7,478,259.00 1% 2% 1%
Equity conversion option (Note 20) 1,113,745.00 1,113,745.00 1,113,745.00 0% 0% 0%
Retained earnings (Note 22) 145,622,311.00 124,468,464.00 107,039,814.00 16% 16% 15%
Treasury stock (Note 22) (2,300,000.00) (2,300,000.00) (2,300,000.00) 0% 0% 0%
230,922,532.00 208,657,359.00 185,664,151.00 25% 26% 26%
Non-controlling interests 140,073,346.00 119,886,624.00 101,202,334.00 15% 15% 14%
Total Equity 370,995,878.00 328,543,983.00 286,866,485.00 41% 41% 40%

Total Liabilities and Equity 911,704,503.00 794,074,723.00 726,047,776.00 100% 100% 100%
 Income Statement

2016 2015 2014 2016 2015 2014

INCOME
Sale of goods (Note 31) 137,307,163.00 118,285,566.00 105,140,825.00 100% 100% 100%
Rendering of services (Notes 13 and 31) 61,901,736.00 55,749,425.00 51,275,623.00 45% 47% 49%
Share of profit of associates and joint ventures (Note 12) 18,153,893.00 15,038,015.00 13,185,147.00 13% 13% 13%
Interest income (Note 31) 6,776,936.00 7,296,799.00 5,493,715.00 5% 6% 5%
Other income (Note 23) 13,146,061.00 11,296,937.00 9,180,254.00 10% 10% 9%
237,285,789.00 207,666,742.00 184,275,564.00 173% 176% 175%

COST AND EXPENSES

Costs of sales (Notes 8 and 31) 105,752,969.00 89,487,870.00 77,773,560.00 77% 76% 74%
Costs of rendering services (Notes 23 and 31) 35,597,431.00 33,573,245.00 34,495,682.00 26% 28% 33%
General and administrative (Notes 23, 27 and 31) 19,412,193.00 18,052,241.00 15,831,000.00 14% 15% 15%
Interest and other financing charges (Notes 20, 23 and 31) 14,258,189.00 13,276,414.00 11,933,781.00 10% 11% 11%
Other charges (Note 23) 8,325,424.00 5,970,474.00 3,829,020.00 6% 5% 4%
183,346,206.00 160,360,244.00 143,863,043.00 134% 136% 137%

Income Before Tax 53,939,583.00 47,306,498.00 40,412,521.00 39% 40% 38%

PROVISION FOR (BENEFIT FROM)

INCOME TAX (Note 25)
Current 11,357,136.00 8,847,768.00 7,964,375.00 8% 7% 8%
Deferred (850,162.00) 163,676.00 173,543.00 -1% 0% 0%
10,506,974.00 9,011,444.00 8,137,918.00 8% 8% 8%

Net Income 43,432,609.00 38,295,054.00 32,274,603.00 32% 32% 31%

Summary and Conclusions

Analysis and interpreting financial statement is crucial for assessing the

company's performance. It helps the users to make a useful and wise decision.
It also shows every actions the company has made and it's effect towards
success or otherwise, failure. Learning on how to analyze these statements
will give the users more knowledge and understanding of how business
works. These helps us how to invest, spend, and take actions that are must
and necessary.

All 2014 information in our report are important. They became the first
basis in predicting every possibility that the company might be achieved or
not for the next coming years. Given are the relevant data to information and
error-free computations the company was able to get the financial percentage
and amount for the year 2014. Year 2014 has an enough assets and balanced
liabilities and equity so the business can still continue the run for next year. By
the past year performance assessment the group can say that it is a good start
for the year 2015 and to another years coming. Cost of goods sold, operating
expenses, cash flows and return on investment of asset and equity including
cash flow are all positive.

The current ratio of the corporation is still good as of now. Looking at the
financial position for the latest year which is year 2016, it can be obviously
seen that the total assets being owned by Ayala is higher than the total
liabilities it has to pay which also means that non-current assets is greater
than non-current liabilities, an indication that if the company will be
consistent in improving its performance in the near future it will have more
assets to be used for the run of the business than to the long-term liabilities it
will need to pay after such years. And additional to that, the current assets is
higher that the current liabilities which means that the company has a greater
ability to generate funds in paying all its current liabilities for the year. The
only thing that will make this analysis a slight different is the noticeable 2016
cash and cash equivalent being defeated by the 2016 accounts payable. The
company needs to adjust not the information but the performance rather to
make to comparability of cash and cash equivalent balance to the accounts
payable or vice versa to its current position for the next reporting period. Over
all basis Ayala is in the positive track for its current position.
 As stated all 2014 reports will be the basis for prediction by comparing it
to the next years analysis. Using one of the financial ratio of the corporation
which is the gross profit margin for 2014 it can be seen that it was higher than
2015 and 2016. But still the 2015 gross profit margin is higher than the 2016
which explains that there is a very light decrease for one year. The profitability
here might not be that stable but the growth prospect is not impossible, as we
can see the return on equity investment and asset became higher and higher
for the consecutive 3 years. Another relevant basis in predicting the
profitability and growth prospect of the corporation is by looking at the net
income of 3 consecutive years from 2014-2016 net income which indicates a
continuous growth for the earnings of the company connected to this is the 3
years earning per share respectively which also indicate a consistent increase.
This can be seen in the consolidated income statement of the company, above
of this are the information and computation on how they arrived with this
amounts. The growth and profitability of the company therefore is very
visible.

Of course for an ordinary business there is always a possibility of failure

and bankruptcy. If we will base on the analysis of leverage; Debt financing and
coverage, the debt ratio and debt on equity ratio of the company for the year
2014 to 2016 decreased, still the percentage for the current year which is
2016 is high if we will compare it to other company. Another alarming
information that we can notice in the financial analysis of the corporation is
the time interest earned for 2014,2015 and 2016 are all below 2.5 times.
Other analysis said that it should be a warning if the time interest earned of a
company is below 2.5 and a good sign if it is higher than 2.5 times. However it
is not totally stated that the creditors right of the corporation cannot be
protected already as long as it is not less than 1 times there is still a chance to
enhance the creditors interest for the firm. Lastly is the fixed charge coverage
analysis of the Ayala corporation for the year 2014-2016 it is noticeable that it
became lower and lower as years passed by which indicates a risk for the
company. As being said in the study lower fixed charge coverage is a risk and
the higher the fixed charge coverage the company has the healthier it is. So by
this information there is also a big possibility of bankruptcy and failure for the
Ayala group.
 On way to analyze the operational efficiency of the company that we
picked is by looking at the accounts receivable turnover (average collection
period), if we will study the three consecutive years of the corporation by
matching the accounts receivable turnover and average collection period year
2015 is the most favorable one for it has the highest turnover and lowest days
of collection which means that the firm can collect money as soon as possible
to generate funds and run the business. Sad to say for the year 2016 which is
the current year report as of the moment is not good as compare to the two
previous years for it has the highest days in collecting accounts receivable yet
lowest turnover. However it is not yet late for the improvement of the
operational efficiency of the corporation there are still a lot of basis, as of now
the company needs to construct new strategies, enhance advantages that it
has. Aim for same good outputs and less inputs.