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    The document analyzes the financial ratios of Puregold Price Club Inc. for 2017 and 2016. It shows that the company's receivable turnover, inventory turnover, and equity ratio increased from 2016 to 2017, while its payable turnover, debt ratio, and times interest earned ratio decreased in that period. The document also discusses these changes, noting that the company's collection period shortened, inventory risks reduced, and financial security strengthened, but that it also pays suppliers slower and has less interest coverage in 2017 compared to 2016.

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    24KAU

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    Rygiem Dela Cruz
    67 views7 pages
    The document analyzes the financial ratios of Puregold Price Club Inc. for 2017 and 2016. It shows that the company's receivable turnover, inventory turnover, and equity ratio increased from 2016 to 2017, while its payable turnover, debt ratio, and times interest earned ratio decreased in that period. The document also discusses these changes, noting that the company's collection period shortened, inventory risks reduced, and financial security strengthened, but that it also pays suppliers slower and has less interest coverage in 2017 compared to 2016.

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    The document analyzes the financial ratios of Puregold Price Club Inc. for 2017 and 2016. It shows that the company's receivable turnover, inventory turnover, and equity ratio increased from 2016 to 2017, while its payable turnover, debt ratio, and times interest earned ratio decreased in that period. The document also discusses these changes, noting that the company's collection period shortened, inventory risks reduced, and financial security strengthened, but that it also pays suppliers slower and has less interest coverage in 2017 compared to 2016.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    67 views7 pages

    24KAU

    Uploaded by

    Rygiem Dela Cruz
    The document analyzes the financial ratios of Puregold Price Club Inc. for 2017 and 2016. It shows that the company's receivable turnover, inventory turnover, and equity ratio increased from 2016 to 2017, while its payable turnover, debt ratio, and times interest earned ratio decreased in that period. The document also discusses these changes, noting that the company's collection period shortened, inventory risks reduced, and financial security strengthened, but that it also pays suppliers slower and has less interest coverage in 2017 compared to 2016.

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    © All Rights Reserved
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    of 7

    PUREGOLD PRICE CLUB INC.

    1
    PUREGOLD PRICE CLUB INC.
    FINANCIAL RATIO ANALYSIS

    Prepared by:
    Bacsal, Gerimy B.

    Dula, Dave R.

    Patiu, Marifie A.

    Quiambao, Alyssa

    Santos, Abegail C.
    PUREGOLD PRICE CLUB INC. 2

    Table of Contents

    ABOUT THE COMPANY 2

    Puregold Price Club Inc. …………………………………………………… 2

    FINANCIAL STATEMENT ANALYSIS 3

    Consolidated Financial Statements …………………………………………

    Financial Ratio Analysis …………………………………………………….

    Discussion

    REFERENCES
    PUREGOLD PRICE CLUB INC. 3

    ABOUT THE COMPANY

    PUREGOLD PRICE CLUB INC.

    Puregold Price Club, Inc. (PGOLD) was incorporated on September 8, 1998 as a company
    involved in the business of trading goods such as consumer products on a wholesale and retail
    basis. The Company opened its first store in Mandaluyong City in December 1998. PGOLD's
    loyalty program, "Tindahan ni Aling Puring", was launched in 2004.

    The Company conducts its operations through several retail formats and store brands.
    Hypermarkets, through "Puregold Price Club", offer a variety of food and non-food products and
    generally cater to both retail customers and resellers such as members of the Company's loyalty
    program. Supermarkets, through "Puregold Junior", operate as a neighborhood store which offers
    a higher proportion of food to non-food products vis-a-vis the Company's hypermarkets.
    Discounters, through "Puregold Extra", operate in a small store format that offers a more limited
    number of goods. Meanwhile, S&R Membership Shopping adopts a warehouse club concept
    where most of the products offered are in club packs. Majority of the merchandise are imported
    brand names mostly sourced from the US.

    Among others, PGOLD also owns Estenso Equities, Inc., which is the holding company for two
    companies, namely, Ayagold Retailers, Inc. and San Roque Supermarkets. PPCI Subic, Inc. is
    operating one Puregold branch in Subic Bay, Olongapo City. In 2018, PGOLD incorporated
    Purepadala, Inc. mainly to operate the remittance operation of the Company.

    By the end of 2019, PGOLD was operating a total of 229 hypermarkets, 102 supermarkets, 28
    extras, 19 minimarts, 18 S&R warehouse clubs, and 38 S&R Quick Service Restaurants, for a
    total of 434 stores all over the country.
    PUREGOLD PRICE CLUB INC. 4

    FINACIAL RATIO ANALYSIS

    PUREGOLD PRICE CLUB INC.

    Ratio Analysis – Two- Year Comparison

    2017 2016

    Liquidity Ratios

    Current Ratio

    Quick or Acid-test Ratio

    Net Working Capital

    Cash Flow Liquidity Ratio

    Activity Ratios

    Trade Receivable Turnover 52.37 50.23

    Average Collection Period 6.87 7.17

    Inventory Turnover 6.08 5.70

    Payable Turnover 15.30 16.20

    Leverage Ratios

    Debt Ratio 0.33 or 33% 0.34 or 34%

    Equity Ratio 0.67 or 67% 0.66 or 66

    Debt to Equity Ratio 0.49 or 49% 0.51 or 51%

    Times Interest Earned Ratio 66.71 79.80

    Profitability Ratios

    Gross Profit Margin

    Operating Profit Margin

    Net Profit Margin

    Rate of Return on Assets

    DISCUSSION
    Discussing the company’s activity ratio, it is shown in the above table that the receivable
    turnover for Puregold Price Club Inc. in 2017 is 52.37 in comparison the previous year’s
    turnover of 50.23 which indicates that the company have been more succesful in collecting its
    outstanding receivables this year (2017). From this data, it was determined that from a collection
    period of every 7.17 days, it was reduced to 6.87— shorter time between sales and cash
    collection, which suggests that the entity is more efficient this year. In the same way, there’s also
    an increase in the inventory turnover of the company from 5.70 in year 2016 to 6.08 in year
    2017. This indicates that the company is facing a lower risk of detoriation, particulary of those
    items that are perishable or with a high risk of obsolescence compared to base year. Though
    there an increase in the inventory turnover, it is not much to be an indicator of strong sales nor of
    greater profitability. On the other hand, there is a decline in payable turnover of the company
    from 79.80 to 66.71 in 2017, which suggests that the business pays its creditors and supplier
    much slower in year 2017 than in year 2016. Therefore, it is crucial for the management to track
    this metric as if it continues, may induce trouble and lower lines of credit.

    As per the company’s ability to meet its long-term obligations, remain solvent, and avoid
    bankruptcy—in simple words, its leverage. There is a slight decline in the Puregold’s debt ratio
    and as a result a slight increase in its equity ratio. The debt to to total assets ratio for Puregold
    Price Club is 33%, 1% lower compaeed to the baseline of 0.34 or 34%, which indicates that the
    company should be able to withstand losses without harming creditor interests or the company
    could obtain additional finacing if desired. Consequently, the equity ratio of the company
    increased from 0.66 to 0.67, which imply that the company owns a majority of its asset base.
    Meanwhile, the debt to equity ratio of Puregold plummeted from 51% in year 2016 to 49% in
    2017—indicates a solid performance in this area of the company and suggests that there is both
    alower risk for creditors, and a strong, long term , financial security for the company. Examining
    the company’s ability to meet interest payments, the times interest earned ratio of Puregold Price
    Club Inc. dropped from 79.80 in the previous year to 66.71 in year 2017 showing that there is an
    insufficiency in the company’s interest coverage. In order to resolve this matter, the company
    may take into consideration the reduction of interest payments by evaluating financing
    alternatives and possibly, refinancing existing debt.

    FINANCIAL RATIO FORMULA


    PUREGOLD PRICE CLUB INC. 6

    FORMULA

    Liquidity Ratios

    Current Ratio

    Quick or Acid-test Ratio

    Net Working Capital

    Cash Flow Liquidity Ratio

    Activity Ratios

    Trade Receivable Turnover

    Average Collection Period

    Inventory Turnover

    Payable Turnover

    Leverage Ratios

    Debt Ratio

    Equity Ratio

    Debt to Equity Ratio

    Times Interest Earned Ratio

    Profitability Ratios

    Gross Profit Margin

    Operating Profit Margin

    Net Profit Margin

    Rate of Return on Assets

    REFERENCES

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