CREATIVE ACCENTS CORPORATION
Report on profit performance and financial position By: Badayos, Gemarie Diana, Rodel James Galiste, Yuki Merida, Christian Lee Villaflor, Edilou
12/31/2014
Financial Position Accounts
Creative Accents (In Pesos)
Current assets
218,700
Creative Accents % 77.1
Industry Average % 74.4
Difference in %
Property, plant, & equipment, net(PPE) Intangibles
52,650
18.6
20.0
(1.4)
10,800
3.8
0.6
3.2
2.7
Other non-current assets(NCA) Total assets
1,350
.5
5.0
(4.5)
283,500
100.0
100.0
-
Current liabilities
110,700
39.0
45.6
(6.6)
Long-term liabilities
61,200
21.6
19.0
2.6
Stockholders’ equity Total liabilities & stockholder’s equity
111,600 283,500
39.4 100.0
35.4 100.0
4.0 -
NOTES: -
Financial Position Comparison 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00%
Creative Accents Industry
20.00% 10.00% 0.00%
ASSETS Cur r ent Assets
The company’s current assets are higher than the industry due to high short-term receivables by the company. However, the company has some recent issues with the collectibility of such. Write-off of said accounts receivable may be p ossible in the future.
Propert y, Plant and E quipment
Amount of PPE of the company is lower than the industry’s which expresses the lack of physical storage areas of the company. This is a factor for a high cost of inventory and tends to lead to a higher cost of goods sold as compared to industry average.
I ntangi ble Assets
Creative Accents is a leading innovator in manufa cturing women’s clothes which provides them for a lot of patent rights in the industry. The company also has incurred some goodwill due to its good business relationships with its clients. The company has recently been awarded as one of The 10 Most Innovative Companies in the Philippines (2013).
Other Non-Cu r rent A ssets
The industry’s average is substantially higher than the company’s percentage. The company incurs low investment to its subsidiary which allows them to directly sell their product to the market. The company also has a low amount of non-current receivables as their main operations are substantially supported by short-term accounts, and as shown in the Current Assets of the Financial Position
LIABILITIES Curr ent Li abil iti es
The company has relatively low current liabilities as compared to the market due to recent decrease in short-term financing for their operations. Debt restructuring has also been done to other liabilities of the company which transferred a substantial amount to Long-term Liabilities.
L ong-term L iabili ties
One factor for this to be higher than industry’s average is the recent restructuring of debt as explained above in the Current Liabilities section. Another is due to the compan y incurring some debt approaching year end to finance expansion of physical storage areas to reduce inventory costs.
Shareholder’s Equity The company has a higher percentage on this area than industry due to a need to finance their research and development to provide inno vation in their products which can be trace to the Intangible Assets of the company.
Financial Performance
Creative Accents (In Pesos) Net sales Cost of goods sold Gross profit Operating expenses Operating income Other expenses Net income before tax Income tax Net income
Industry Average % 100.0 60.0
Difference in %
43,065,000 (27,561,600)
Creative Accents % 100.0 64.0
15,503,400 (9,043,650)
36.0 21.0
40.0 26.6
(4.0) (5.6)
6,459,750 430,650 6,029,100
15.0 1.0 14.0
13.4 .4 13.0
1.6 0.6 1.0
(2,110,185) 3,918,915
4.9 9.1
2.0 11.0
2.9 (1.9)
4.0
NOTES:
Financial Performance Comparison 45.00% 40.00% 35.00% 30.00% 25.00% Creative Accents
20.00%
Industry 15.00% 10.00% 5.00% 0.00% Gross Profit
Operating Expense
Operating Income
Income Tax
Net Income
Gross Prof it
Gross profit for the company is lower than industry due to high cost of goods sold and the latter is due to a high cost of inventory due to the lack of physical storage areas as explained above in the financial position section under Property, Plant, and Equipment of this report.
Operati ng Expenses
This section is lower than industry average due to good relationships with clients especially in terms of transporting goods. Also, the subsidiary of the company that allows them to directly sell their product has contributed a lot to lower this section. Lastly, good logistics planning of the company despite lack of physical storage areas has lowered this section.
Oper ating I ncome
Operating Income for the company is higher than industry’s average due to the benefi t of low operating expense for the company relative to the industry.
Oth er Expenses
The company incurs a higher other operating expenses as compared to the industry due to maximum utilization of manufacturing plants and resulted to a higher utility cost. The company also incurs a high but efficient cost of advertising for their products and also is a reason for their good brand name in the market.
I ncome Tax
The company incurs a high income tax than the industry average due to a higher operating income and also with the extensive effort of management to faithfully pay taxes. This has led to the company being awarded as one of The 50 Most Transparent Companies of the Philippines (2013).
Net I ncome
Net income is lower than industry’s average mainly due to the high tax payment of the company. However this does not affect the company much as they are confident with their stable position in the market and their good relationship with their clients. Net income is projected to grow for subsequent years with the efforts of management to lower inventory cost which posed a concern for the company.
EXECUTIVE SUMMARY INRODUCTION
As the company has ended its yearly operations, certain accounts had to be assessed for the benefit of the general public and for those directly related with the operations of the company. Creative Accents Corporation is the leading innovator of women’s clothes in the market. Recently the company has become recipient of certain awards which boosted market recognition of its brand and continually strengthened its relation with its clients — The 10 Most Innovative Companies of the Philippines and the 50 Most Transparent Companies of the Philippines. As such is just a manifestation of the company’s commitment to excellence and thus presents thei r Statement of Financial Position and Statement of Financial Performance for the year-ended December 31, 2013.
OBJECTIVE
This report aims to compare Company Financial Statement’s average with Industry’s average to determine whether the company has been doing well relative to its Industry and the reasons for such.
SITUATION
The company has been strong with its position in the market as represented in the ASSETS section of the report. However, the company is hurt with high cost of inventory which led to a high cost of Cost of Goods Sold. The company has also incurred a low operating cost represented by its good planning in logistics. The company though suffered from high payment of income tax but this is only due to transparent measures conducted by management.
CONCLUSION
Presented in the report are the reasons for the company’s deviations from industry’s average. From those deviations though, we have determined that the company is amenable to any revisions to better their operations. With the analysis that we have provided for the Statement of Financial Position and Statement of Financial Performance of the company, it is just right to put confidence to it as the company maintains its strong presence in the industry that they are in.
