Short - term Liquidity and Solvency Ratios

2017 2016 Max’s

Current Ratio 1.13 1.08 0.59

Quick Ratio 0.75 0.95 0.38
Working Capital 142,417,266 167,010,428 1,882,667
Working Capital to Total Asset 0.02 0.02 0.15
Cash flow Liquidity Ratio 1.09 0.64 0.31

Current Ratio

1.20

1.00

0.80

0.60

0.40

0.20

0.00
Current Ratio

2017 2016 Competitor

Current ratio shows that it increases from 1.08 during 2016 to 1.13 on 2017 that may
indicate a good result. It implies that Shakey’s can more easily make current debt
payment during the current year. As for the competitor, Shakey’s shows a higher current
ratio which indicates the higher ability to pay off its short – term liabilities without having
to sell off long – term, revenue generating assets.
 Quick Ratio

2017 2016 Competitor

1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
Quick Ratio

Quick Ratio shows that it decreases from 0.95 of 2016 to 0.75 on 2017 which implies a
bad result. It indicates that Shakey’s is more able to pay its current liabilities, by having
assets that are readily convertible into cash, last year than it is for the current year. As for
the competitor, Shakey’s has a higher quick ratio which shows its capability to pay its
current obligations.

Working Capital

Competitor

2016

2017

Working Capital

During the year, SPAVI, Inc. maintained its positive working capital. However, the
working capital decreases from P167, 010, 428 of 2016 to p142, 417, 266 of 2017. This may
indicate that SPAVI, Inc. is struggling to maintain or grow sales, is paying bills too quickly,
or is collecting receivables too slowly. As for the competitor, SPAVI, Inc. result is better,
since the competitor’s result is negative and may indicate that they are struggling on
paying off their short – term liabilities immediately.

Working Capital To Total Assets

Competitor
Working Capital to Total
Asset 2016
2017

0.20 0.15 0.10 0.05 0.00 0.05

The working capital to total assets shows an equal ratio for the past two years, which
may indicate Shakey’s ability to match it account payable obligation on time. As for the
competitor, Shakey’s shows a much higher result. It could be assumed that Shakey’s
realizes revenue from sales much quicker than it makes payments for its current
obligations.

Cash Flow Liquidity Ratio

1.20

1.00

0.80

0.60

0.40

0.20

0.00
Cash flow Liquidity Ratio

2017 2016 Competitor

 Cash flow liquidity ratio shows that it increases from 0.64 of 2016 to 1.09 of 2017. This
may indicate that Shakey’s can easily cover its short – term debt with its cash and other
liquid assets. As for the competitor, Shakey’s results shows a higher ratio that indicates
how well it can handle its short – term debt.

Asset Liquidity and Management Efficiency

2017 2016 Max’s

Accounts Receivable Turnover 13.91 12.34 12.54

Average Collection Period 25.89 29.19 28.71
Inventory Turnover 15.97 29.72 17.45
Average Conversion Period 22.55 12.11 20.63
Working Capital Turnover 45.47 26.89 7.06
Current Asset Turnover 3.49 3.11 4.57
Operating Cycle 48.44 41.30 49.34
Free Cash Flow 802,914,250 8,905,002,147 1,736,257,000
Investment/Asset Turnover 0.76 0.99 1.02
Fixed Asset Turnover 5.52 8.89 4.35
Capital Intensity Ratio 1.35 1.64 1.01

Accounts receivable turnover

14.50

14.00

13.50

13.00

12.50

12.00

11.50
Accounts Receivable Turnover

2017 2016 Competitor

Accounts receivable turnover shows that it increase from 12.34 of 2016 to 13.91 of
2017, which implies a more favorable result. Higher ratios mean that Shakey’s are
collecting their receivables more frequently throughout the year. As to the
competitor, Shakey’s has a higher accounts receivable turnover for the 2017, that
indicates that Shakey’s credit sales are more likely to be collected than Max’s.

Average Collection Period

30.00

29.00

28.00
2017
27.00
2016

26.00 Competitor

25.00

24.00
Average Collection Period

Average Collection Period shows that during 2017, Shakey’s collected its accounts
in 26 days on average, an improvement over the 29 –day collection period in 2016. As to
the competitor, Max’s average collection period is 29 days. In general, a lower average
collection period is more favorable than a higher average collection period. A low
average collection period of Shakey’s during 2017, indicates that Shakey’s is collecting
payments faster, as compared to Max’s that is not so effective in collecting outstanding
receivables.

Inventory Turnover

The inventory turnover of SPAVI, Inc. decreases from 29.72 of 2016 to 15.97 of 2017.
This shows the company does not overspend by buying too much inventory and wastes
resources by storing non-saleable inventory. It also shows that the company can
effectively sell the inventory it buys. As for the competitor, the results shows that Max’s is
efficient on controlling their inventories than SPAVI, Inc.
 29.72

17.45
15.97

INVENTORY TURNOVER

2017 2016 Competitor

Average Conversion Period

25.00

20.00

15.00
2017
2016
10.00
Competitor

5.00

0.00
Average Conversion Period

The average conversion period of SPAVI, Inc. increases from 12.11 of 2016 to 22.55 of
2017 which may not be a good sign. This indicates that there might be an overstocking
and obsolesced of the products. This could also means that if an inventory takes long
time to end up into sales, it may affect the cash conversion cycle. As compared to the
competitor, Max’s conversion period is lower than the SPAVI, Inc. which shows that Max’s
has less risk of overstocking than SPAVI, Inc.

Working Capital Turnover

 7.06

Working Capital Turnover 26.89

45.47

10.00 0.00 10.00 20.00 30.00 40.00 50.00

Competitor 2016 2017

SPAVI, Inc. maintained its working capital turnover of 0.02 during the two
year period, and this implies that SPAVI, Inc. is not efficient enough in utilizing its
working capital. However, as for the competitor, SPAVI, Inc. is more efficient in
utilizing working capital since the competitor gave a result of (0.15), which may
indicates that the competitor is investing too many accounts receivable and
inventory to support its sales
 Current Asset Turnover

5.00
4.50
4.00
3.50
3.00
2017
2.50
2016
2.00
Competitor
1.50
1.00
0.50
0.00
Current Asset Turnover

The current asset turnover shows that it increases from 3.11of 2016 to 3.49 of 2017. The
increasing trend of this ratio is a good sign because this means that the company is
working on the consistent improvement of its policies in inventory, accounts receivable,
cash and other current assets management. In fact, increasing current asset turnover
leads to the decrease of the financial resources amount, needed for the company's
operations maintenance. . As to its competitor, the Max’s company is generating more
revenue for every use of the current asset than the Shakey’s company.

Operating Cycle

50.00

48.00

46.00

44.00

42.00

40.00

38.00

36.00
Operating Cycle

2017 2016 Competitor

 The operating cycle shows that it increases from 41.30 of 2016 to 48.44 of 2017
where it indicates that the Shakey’s company wanted to lessen the bad debt of the
entity so that the profitability of the entity increases or we can assume that the entity
change the credit policy, payment terms or the fulfillment of the obligation. As to its
competitor, Shakey’s company is more conservative than Max’s company.

Free Cash Flow

10,000,000,000

8,000,000,000

6,000,000,000

4,000,000,000

2,000,000,000

0
Free Cash Flow

2017 2016 Competitor

The free cash flow shows that it decreases from 8,905,002,147 from 2016 to 802,914,250
of 2017. The more the free cash flow rises, the more the entity the company is but the
decrease of it is not a bad indicator, this could be a sign that the Shakey’s company
made a significant investment which could bring an additional value to the entity. As to
its competitor, the Max’s company may seem efficiently using its free cash to generate
more revenue than Shakey’s company.
 Investment/Asset Turnover

2017 2016 Competitor

1.20
0.99 1.02
1.00

0.80 0.76

0.60

0.40

0.20

0.00
Investment/Asset Turnover

The asset turnover ratio shows that it decreases from .99 of 2016 to .76 of 2017
which is a normal effect when the Shakey’s company make a significant purchases like
acquisition of fixed assets that can be shown in the increase of it in the balance sheet. In
this purchase the entity have a possible larger growth than to its competitor. So we can
assume that the value of the Shakey’s company would be higher than the Max’s
company.
 Fixed Asset Turnover

10.00
8.89
9.00
8.00
7.00
6.00 5.52
5.00 4.35
4.00
3.00
2.00
1.00
0.00
Fixed Asset Turnover

2017 2016 Competitor

The fixed asset turnover show that it decrease from 8.89 of 2016 to 5.52 of 2017 which
is an indicative that the Shakey’s company may not efficiently managing its fixed-asset
investment to utilize a greater revenue to every fixed asset usage. As to its competitor,
the Shakey’s company is more cost effective in utilizing its usage than to its competitor.

Capital Intensity Ratio

2017 2016 Competitor

1.80 1.64
1.60
1.35
1.40
1.20 1.01
1.00
0.80
0.60
0.40
0.20
0.00
Capital Intensity Ratio
 The capital intensity ratio shows that it decrease from 1.64 of 2016 to 1.34 of 2017,
the result is because the Shakey’s company have more usage of assets. As we can see
the entity invest more on fixed asset of this current years. As to its competitor, the Shakey’s
company is less capital intensive in terms of labor than the Max’s company.

Long-term Financial Position or Stability/Leverage

2017 12016 Max’s

Debt Ratio 0.56 0.64 0.58

Equity Ratio 0.44 0.36 0.42
Debt-equity Ratio 1.29 1.79 1.37
Fixed Assets-Long Term Liabilities 0.38 0.25 1.11
Fixed Assets-Total Equity 0.39 0.30 0.58
Fixed Assets-Total Assets 0.17 0.11 0.25
Book Value Per Share 2.60 3.90 8.25
Times Interest Earned 6.77 8.29 7.13

Debt Ratio

2.00
1.80
1.60
1.40
1.20 2017
1.00
2016
0.80
competitor
0.60
0.40
0.20
0.00
Debt-equity Ratio

The result of Shakey’s debt ratio shows that it decreases from 0.64 to 0.56 and it may
indicate a good result, since a lower debt ratio implies a more stable business. As for the
competitor, Shakey’s shows a lower ratio which means it is more stable with the potential
of longevity because of a possibility of lower overall debt.
 Equity Ratio

0.44
0.42
0.36
2017
2016
Competitor

Equity Ratio

Equity ratio shows that it increases from 0.36 to 0.44 on 2017. It implies that Shakey’s
has minimized the use of debt to fund its assets requirement. As for the competitor,
shakeys’s equity ratio is higher than Max’s, which may indicate that shakey;s is more
sustainabke and less risky to lend future loans.

Debt-Equity Ratio
 2.00
1.80
1.60
1.40
1.20
2017
1.00
2016
0.80
competitor
0.60
0.40
0.20
0.00
Debt-equity Ratio

Debt-Equity Ratio of Shakey’s decreases from 1.79 to 1.29 in the year 2017 which
indicates that there is a decrease in use of debt financing and an increase in equity,
implying that it is more financially stable compared from its previous operations . As for
the competitor, a ratio of 1.37, as compared is at its average, not too high, not too low,
having a minimal decrease in debt.

Fixed Assets-Long Term Liabilities

1.20

1.00

0.80

0.60

0.40

0.20

0.00
Fixed Assets-Long Term Liabilities

2017 2016 Competitor

An increase of .13 indicates that the fixed asset for 2017 increases its capability to
finance its long term Liabilities but is still unable to cover all of its long term debts. As for
the competitor, Max’s having a 1.11 ratio indicating that it is able to finance all of its long
term debts using only its fixed asset.
 Fixed Assets-Total Equity

2017 2016 Competitor

0.58

0.39
0.30

Fixed Assets-Total Equity

Showing a result of .09 increase in 2017, the portion of capital used in investing fixed
asset has also increased. As for the competitor, Max’s has greater use of capital for
investing fixed asset than Shakey’s showing that more than half of its equity was invested
on its fixed assets.

Fixed Assets-Total Assets

0.30

0.25

0.20
2017
0.15
2016
0.10 Competitor

0.05

0.00
Fixed Assets-Total Assets

As per result, it is concluded that there is an increase in investing fixed asset for the
year 2017 having a 6% increase, from 11% to 17%.As for the competitor, a quarter of the
total assets was fixed asset indicating that Max’s has a greater investment than Shakey’s
in terms of fixed asset.
 Book Value Per Share

9.00 Competitor,
8.25
8.00
7.00
6.00
5.00
2016, 3.90
4.00
3.00 2017, 2.60

2.00
1.00
0.00
Book Value Per Share

Evaluating the results you could calculate a decrease in book value from 3.90 to 2.60.
This was caused by an increase in number of outstanding shares from 861,602,113 to
1,531,321,053. As for the competitor, it has a greater return in case of liquidation than
Shakey’s having a book value per share of 8.25.

Times Interest Earned

9.00
8.00
7.00
6.00
5.00 2017

4.00 2016

3.00 Competitor

2.00
1.00
0.00
Times Interest Earned
 From the data extracted 2016’s TIE was greater than 2017’s TIE, meaning Shakey’s was
more profitable in 2016 than 2017. As for the competitor, we can conclude that it was
operating just fine since it earns its interest better than Shakey’s in 2017.

Profitability and Return to Investors

2017 2016 Max’s

Gross Profit Margin 0.31 0.31 0.31

Operating Profit Margin 0.17 0.14 0.07
Net Profit Margin 0.11 0.13 0.06
Cash Flow Margin 0.14 0.16 0.07
Rate of Return on Asset 0.08 0.13 0.05
Rate of Return on Equity 0.21 0.31 0.12
Earnings per Share 0.50 0.88 0.80
Price-Earnings Ratio 27.04 15.28 19.78
Dividend Payout 0.20 0.20 0.16
Dividend Yield 0.01 0.01 0.01
Dividends per Share 0.10 0.18 0.13
Rate of Return on Average Current 0.45 0.45 0.24
Assets
Rate of Return per turnover of 0.13 0.14 0.05
Current Assets

Gross Profit Margin

0.35 Competitor,
2017, 0.31 2016, 0.31 0.31
0.30

0.25

0.20

0.15

0.10

0.05

0.00
Gross Profit Margin
 Gross Profit Margin does not change for the past two years, and as compared to
Max’s, they have the same ratio. The gross profit margin of Shakey’s for both 2017 and
2016 have been stable which is considered a positive sign, it indicates how Shakey’s
manage to control the profitability of it’s production process although there is no
increase for the recent year.

Operating Profit Margin

2017 2016 Competitor

0.17

0.14

0.07

Operating Profit Margin

Operating Profit Margin shows that it increase from 0.14 of 2016 to 0.17 of 2017,
which implies a more favorable result because it shows how Shakey’s is efficient in
controlling the costs and operating expenses associated with business operations. As to
the competitor Max’s has a much lower operating profit margin, although their sales is
increasing it could not control its increasing cost and expenses.
 Net profit margin

0.14 2016, 0.13

0.12 2017, 0.11

0.10

0.08 Competitor,
0.06
0.06

0.04

0.02

0.00
Net Profit Margin

Net profit margin of Shakey’s have fallen from 0.13 of 2016 to 0.11 of 2017, but as
compared to its’s competitor, Shakey’s is more profitable than Max’s. The decrease in
net profit margin of Shakey’s during 2017 is because of its higher financial leverage than
its 2016. If a company has higher financial leverage than another, the firm with more
debt financing may have a smaller net profit margin due to the higher interest
expenses. This will negatively affect net profit, lowering the net profit margin for the
company.

Cash Flow Margin

0.18
0.16
0.14
0.12
0.10 2017

0.08 2016

0.06 Competitor

0.04
0.02
0.00
Cash Flow Margin

Cash Flow Margin of Shakey’s have fallen from 0.16 of 2016 to 0.14 of 2017. But as
compared to its’s competitor, Shakey’s is much higher than Max’s. This could be an
indication that Shakey’s is better in converting earnings from sales into actual cash flow,
than Max’s. If you only looking at the Shakey’s sales during 2017, you may be inclined to
believe that it is running efficiently because it is producing a hefty 6,750,949,174 in sales.
However, the operating cash flow margin indicates the opposite. 88% of the Shakey’s
sales are used on various expenses, turning only 14% (972,375,588) of its generated sales
into cash.

Rate of Return on Asset

0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
Rate of Return on Asset

2017 2016 Competitor

Shakey’s performance decrease from 0.13 of 2016 to 0.08 of 2017. The lower rate in
2017, does not mean a bad sign, maybe because Shakey’s total assets during 2017 is
lower than 2016, and as you can see in the balance sheet during 2017, Shakey’s
acquired more noncurrent asset than 2016. The reason could be also due to change in
debt and equity during 2017, although there is an increase in equity, the debt is lower
than 2016 and this have an effect in the total assets since debt increases company
assets because it generates a large lump sum of cash or continuous cash inflow. As
compared to its competitor, Shakey’s is more efficient than Max’s in using its assets to
generate earnings.
 Rate of Return on Equity

0.35

0.30

0.25

0.20 2017
2016
0.15
Competitor
0.10

0.05

0.00
RATE OF RETURN ON EQUITY

Shakey’s rate of retun on equity decrease from 0.31 of 2016 to 0.21 of 2017. Although
there is a decrease during 2017, it does not mean that Shakey’s is not a healthy company
anymore, this result could be due to decrease in debt during 2017, as compared to 2016,
since debt have a signifant effect in computing R0E, a high level of debt can artificially
boost ROE, after all, the more debt a company has, the less shareholders' equity it has
(as a percentage of total assets), and the higher its ROE is. As compared to Max’s,
Shakey’s has a greater ROE, which signifies how good the Shakey’s in generating returns
on the investment it received from its shareholders.

Earnings per Share

 0.90
0.80
0.70
0.60
2017
0.50
2016
0.40
Competitor
0.30
0.20
0.10
0.00
Earnings per Share

Shakey’s earnings per share fall from 0.88 of 2016 to 0.50 of 2017,this could be due to
an increase in the number of shares outstanding during 2017 than 2016, an increase in
the total number of shares means that each existing share represents a smaller
percentage of ownership. As the company's earnings are divided by the new, larger
number of shares to determine the company's earnings per share (EPS), the company's
EPS figure will drop. Fortunately, it is still a good sign because even though Shakey’s issue
a significant amount of additional stock during 2017, the market value per share of
Shakey’s is increasing from 11.26 of 2016 to 13.46 of 2017. As to the competitor, Max’s
(0.80) is greater than Shakey’s (0.50), this shows that Max’s is more profitable on a
shareholder basis.

Price-Earnings Ratio

27.04

19.78

15.28

PRICE-EARNINGS RATIO

2017 2016 Competitor

 The price/earnings ratio shows that there is an increase from 15.28 0f 2016 to 27.04 of
2017. This is because of the increase of the current market value of Shakey’s company
which is through the reinvestment of the entity of to the fixed assets or the payment of
the entity of its debt. And also the entity maintained a good performance for the year
so that the MV increased positively. As to its competitor, the Shakey’s company is more
reliable investment than the Max’s company.

Dividend Payout

0.20

0.15

0.10

0.05

0.00
Dividend Payout

2017 2016 Competitor

The dividend payout ratio shows that it remained constant because adopt a new
policy for the dividend declaration and there is a decrease in the EPS of the Shakey’s
company which the company assessed carefully so that the investor would not pull out.
It is because also on the reinvestment of the entity to which generate a long-term
benefit. As to its competitor, we can assume that the Shakey’ investor can generate
more return in the future than the Max’s company.
 Dividend Yield

0.01

0.01

0.01

0.00

0.00

0.00
Dividend Yield

2017 2016 Competitor

The dividend yield remain constant even though in there is a changes in the
dividend policy because the Shakey’s market value per share increase. The decrease
in the DPS has been balance by the increase of MV per share. We can assume that the
market value per share become higher because of the reinvestment of the entity which
increase the value share that can a future benefits in the entity. As compared to its
competitor, we can assume that the entity has more return on investment in the future
than the Max’s company.
 Dividends per Share

0.20

0.15

0.10

0.05

0.00
Dividends per Share

2017 2016 Competitor

The dividend per share shows that there is a decrease in dividend declared of
the Shakey’s company from .18 of 2016 to .10 of 2017. The lower the dividend per share
does not mean that the entity have a poor performance it could be that the entity
adopt for the new dividend policy in order to pay out debt which we see that the debt
of the entity for the current year has been reduced compared to the previous year or
the profit is been used in reinvesting in the new fixed asset. As compared to its
competitor, Shakey’s is more profitable in the eye of the investor even though the Max’s
declared a larger dividend.
 Rate of Return on Average Current Assets

0.50
2017, 0.45 2016, 0.45
0.45
0.40
0.35
0.30 Competitor,
0.24
0.25
0.20
0.15
0.10
0.05
0.00
Rate of Return on Average Current Assets

The rate of return on average current asset shows a constant ratio which seemingly
the Shakey’s company maintain a good performance in assessing it current asset for
increasing its net income that we see in the income statement even though the total
current asset decrease. As to its competitor, the Shakey’s company is more productive
than the Max’s company.

Rate of Return per turnover of Current Assets

0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
Rate of Return per turnover of Current Assets

2017 2016 Competitor

 The rate of return per turnover of current asset shows that there is decrease from
.14 of 2016 to .13 of 2017. This is because there is increase in current asset turnover which
indicate a good sign. The Shakey’ company is working in the consistent improvement of
the policies in managing its financial resources. As to its competitor, the Shakey’s
company more efficient in managing it resources than the Max’s Company.