Borras&ang&yepez Acccob2 Reflection1

ACCCOB2 PORTFOLIO
Reflection paper presented to the Accounting Department
In partial fulfillment of the course requirement in ACCCOB2
Borras, Josh Gabriel Romasanta
Ang, Lia Patrice U.
Yepez, Maxin V.
K37A
Presentation of Financial Statements
It is clear that the prior year of operation was included in all of the company's financial
statements so that the user could compare the figures with ease. The purpose of this is to make
it simple to assess the performance of the business so that users of financial statements can
make wise decisions, through the computation of their own financial ratios, that will help them
keep the firm profitable and stable or decide whether to invest in it or not.
According to the balance sheet of Cityland Development Corporation the total assets of
the previous year, which is 2021 compared to the year 2022, experienced a 1,385,256,559
Pesos increase. This is composed of 59.01% current assets and 40.99% non-current assets.
While total liabilities also increased by 292,104,181 with 81.59% current liabilities and 18.41%
non-current liabilities. Although there is a significant rise in current liabilities, the current assets
still appear to be higher though review of operations is recommended. In addition, the total
equity of shareholders increased by 1,110,020,749, thus it can be concluded that Cityland
Development Corporation is functioning though equity financing as the total equity and liabilities
are composed of 80.45% equity.
Cash and Cash Equivalents
Cityland Development Corporation can pay the current liabilities with its current assets
since as stated in the Financial Ratios the current ratio is 3.7, which is greater than 1. While
according to the quick ratio the cash and cash equivalents are still enough to cover the current
liabilities. Moreover, it is revealed that assets are financed more by debt rather than equity since
the debt ratio is equal to 80%, and since there are no changes from the previous year the
company shows no sign of changing to equity financing. In relation debt to equity ratio shows
to still have less than 1 hence an expected interest expense increase. This is supported by the
interest coverage which shows that the company can meet the interest obligation 523 times by
2022. Finally, The gross profit margin shows that 53% is the company’s gross profit, with a high
return of 919% from assets and 11% return from stockholder’s investments.
Notes Receivables
Written promises to pay a certain sum of money at a later time are known as notes
receivable. It can be short-term or long-term and is supported by an interest-bearing document.
In comparison to 2021, the amount of current notes receivable grew by 14.37% in 2022,
reaching P1,031,000,000.
One might become aware of the increase's advantages and disadvantages by analyzing
it. Given the growth in interest revenue of 41.20% from 21.26 million in 2021 to 30.02 million in
2022, this would be an advantage since it has increased the revenues of the business. This may
be the result of higher interest rates at the end of 2022, which rose from 2.71% and 1.43% on
December 31, 2021, to 5.30% and 2.71%. However, when notes receivables increase, there is a
greater risk of bad debts, which will have a detrimental effect on the business's financial status
by causing a loss.
Other Receivables
Upon analyzing the other receivables section, several noteworthy observations have
been made. One notable observation is the increase in Rent receivable from P18,465,478 in
2021 to P22,219,351 in 2022. This indicates that there is a potential growth in relation to its
real estate and rental properties. Similarly, the accrued interest has increased from P9,433,232
to P14,176,879. This indicates that the interest-earning assets of Cityland Development
Corporation have been performing well, however it is still important to monitor and ensure the
collection of accrued interest, as failure to do so in a timely manner may impact the cash flow
and profitability of the company. On the other hand, retention amount has increased from
P2,562,089 to P2,952,088. Retention refers to a portion of payment withheld by a customer or
client from a service provider or contractor until certain conditions or obligations are fulfilled. An
increase in this raises concerns about the effectiveness of payment collection and obligation
fulfillments of the company. The increase must be addressed as it is crucial in minimizing the
risk of bad debts and maintaining a healthy cash flow.
Another finding is that there was a substantial decrease in due from related parties,
from P10,238,056 to P39,290. With this significant decline, it is important that the company
investigates the underlying reasons, as there are several factors that could have caused this.
The biggest concern is possibly the collectability of these amounts as related parties may not
have been paying their obligations as expected, which raises more issues on the financial
stability and relationships between the company and its parties. Additionally, as there is an
absence of provisions for the ECL, with provisions for ECL necessary to account for potential
losses, the absence of the provisions show a possible weakness in the company’s risk
assessment and provisioning process. It is important to have an ECL as this is crucial for
accurate financial reporting and serves as a safeguard to ensure that companies account for
and set aside funds to cover the potential default or impairment of their receivables or financial
assets.
APPENDIX
Statement of Financial Position

Statement of Income
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Note 6 – Notes Receivable
Note 7 – Other Receivables

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ACCCOB2 PORTFOLIO

Reflection paper presented to the Accounting Department

In partial fulfillment of the course requirement in ACCCOB2

Borras, Josh Gabriel Romasanta

Ang, Lia Patrice U.

Cash and Cash Equivalents

Statement of Financial Position

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