Maynilad and Manila Water Financial Analysis

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i. BRIEF BACKGROUND

Manila Water Company Inc. is a Philippines-based company engaged in the engaged in providing water, sewerage and sanitation services. It serves a total estimated population of over six million people in the East Zone, which encompasses 23 cities and municipalities that include business districts and residential areas in the eastern part of Metro Manila and the adjacent Rizal Province. The Company also manages and operates the sewerage system that covers a portion of its service area, as well as provides sanitation services to its customers in the East Zone. The Companies subsidiaries include Manila Water Total Solutions, Corporation, Northern Waterworks & Rivers of Cebu, Inc., AAA Water Corporation and others. In 2011, the Company acquired 100% ownership of Clark Water Corporation.[i]

Maynilad Water Services, Inc. is the water and wastewater services provider for the 17 cities and municipalities that comprise the West Zone of the greater Metro Manila area.In 1997, the company was granted a 25-year exclusive concession by the Philippine Government, through the Metropolitan Waterworks and Sewerage System (MWSS), to operate, maintain and invest in the water and sewerage system in Caloocan, Las Piñas, Malabon, Manila, Muntinlupa, Navotas, Pasay, Parañaque, Valenzuela, parts of Quezon City, a part of Makati, Cavite City, and the municipalities of Rosario, Imus, Noveleta, Bacoor, and Kawit in Cavite.[ii]

ii. EXECUTIVE SUMMARY
This comparative study between Maynilad and Manila Water is an overview of both performance and to not directly compare them in terms of profitability as both cater to different consumers in terms of geographical location and socio-economic classes. Based on the numbers presented and computed, Manila Water is more liquid has the higher ability to pay its short term obligations. In terms of efficiency in utilizing its assets to revenue, both have been efficient based on the terms set which is 60 days for Maynilad and 30 days for Manila. Profitability Ratio indicates assesses a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time.[1] Maynilad provides higher return to its shareholders than Manila Water since Maynilad's operations are funded mostly through debt than from stockholders' investments which is evident on its balance sheet on Interest bearing loans. In terms of sales generation, Manila Water is also efficient in sales generation as both companies doesn’t handle so much inventory. By this, Manila water presents a more stable income for the past 3 years but Maynilad continues to grow by 16% from 2009-2011. Maynilad has higher ROA than Manila Water from 2009-2011. As stated in our ratio analysis, both companies have increased their assets but in terms of efficient utilization of assets, Maynilad has better percentage of 11% for 2011 compared to 9%. As seen in both of their Statement of Financial Position, Maynilad has Maynilad relies more in financing while Manila Water relies with their stockholders with a ration of 78% and 63% respectively. iii. BALANCE SHEET

Maynilad Water Services, Inc. - Vertical Analysis
|  |(Amount in Thousands) |AMOUNT |% |  |AMO|% | | | | | | |UNT| | |ASS|  |  | |  |  | | |ETS| | | | | | |

OPERATING REVENUE |  |  | |  |  | |  |  | |  |Water Services |8,575,507 |80.76% | |9,904,395 |82.20% | | 11,152,074 |80.99% | |  |Sewer Services |1,623,595 |15.29% |...
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