Financial Analysis

Topics: Balance sheet, Revenue, Generally Accepted Accounting Principles Pages: 5 (1317 words) Published: March 19, 2013
Financial Ratio Analysis
* Profitability
For the year 2010, Splash Corporation experienced a significant increase in its Operating Profit Margin, Return on Sales, Return on Equity, and Return on Assets because of High Net Income during the year. It is brought about by the large amount of Sales from Direct Selling business and better sales-mix. For the year 2011, the Company’s profitability has declined because of the increase in the cost of raw materials and increased spending on advertising and promotions. * Leverage

The Company’s leverage for the year 2010 improved because there was just a lesser increase in liabilities than the decrease in assets. But in 2011, there is a decline in the leverage because the company has capital expenditures on plant facility expansion and IT application and infrastructure enhancements during this year. * Asset Utilization

For the year 2010 and 2011, the company became more efficient in managing its assets due to its significant improvement in the selling of its inventories and collection of receivables. * Liquidity

The company’s liquidity for the two years has a declining trend due to the decrease in assets and increase in liabilities. This is because the company is financing the on-going expansion of the business.

The Splash Group is composed of wholly-owned Philippine companies with business interests in personal care manufacturing and marketing, international distribution, and recently, health and wellness products development and marketing. Splash carries the brands Extraderm, Maxi-Peel, and Skin White. It also carries one of the fastest growing skin care brands in the Philippines – Biolink. Splash has grown into a multi-billion peso company, with two of its core products, exfoliant and skin whiteners, dominating their segments with market shares of 86% and 41%, respectively, based on an AC Nielsen Philippine Retail Index Report dated June 2007. The Company is ranked sixth in the Philippine personal care industry, the only Filipino owned company in the top 10. The Group primarily sells its major products to supermarkets and drugstore, top wholesalers, large convenience stores, and regional distributors. In 2009, the company created a new revenue stream by going into the direct selling business and reach into its undeserved market. With the launch of the direct selling business, the company increased its distribution through the independent dealers. Splash Corporation is willing for expansion and improvements and yet effective on its operations. The company is efficient in managing its assets such as inventory and cash. The decline on the measures on some financial accounts is due to the on- going expansion which the firm is financing now. Splash Corporation at present is expanding its operations on plant facility expansion and IT application and infrastructure enhancements. Also, financing for its direct selling operation is worth taking the risk as it generates greater return for the company. Recommendation

The researchers therefore recommend to the investors of Splash Corporation to continue keep its investment with the company because it has a capability to give the higher benefits to its shareholders. The company is also attractive to its potential investors, since Splash Corporation is a company with good reputation. Because of its business strategies, it remains to be a market leader in the Philippine personal care industry. It is a fast growing market that can compete globally with all its competitors, locally or globally. It is not possible that the Splash Corporation may be the next Unilever. It is proposed for the aggressive investors to buy shares to Splash Corporation. Core Values of Splash Corporation

Faith in the Almighty
Ethical Governance
Personal Integrity
Sense of Belonging
Social Responsibility
Customer Orientation
Productivity & Excellence
Pioneering and Innovative

Corporate Cause
We shall uplift the pride...
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