Financial Analysis 4n552b

Republic of the Philippines SOUTHERN LEYTE STATE UNIVERSITY – SAN JUAN San Juan, Southern Leyte, Philippines

Name of Student : Course : School Year : Instructor:

Riza Mae B. Fortuna MM504 Financial Planning and Control Second Semester, 2015 – 2016 Mr. Cerenio Adriatico

Abstract The main objectives of this study is to apply the lesson of Altman ZScore in learning two year performance of business and to compare both companies capability of increasing return of investment using the DuPont Analysis. In this study both giant conglomerates with its origin in the Philippines – SMC and JG Summit is the focus of study from 2012 up to 2013. During these years, the business operations of JG Summit and San Miguel Corporation as both conglomerate corporations are stable - opposite to exhibit failing of bankrupt operation with a comparable rate in the succeeding year. San Miguel Corporation has higher liquid assets in relation to their size of the company performs sales turnover almost double to that of JG Summit clearly explaining the SMC’s revenue generating ability of a company’s assets is reliable compared to JG Summit. They conduct comparable profitability that reflects the company's age and earning power; including its operating efficiency apart from tax and leveraging factors and in adding market dimension that can show up security price fluctuation as a possible red flag and sales turnover SMC is also effective in leveraging their assets with high profit margin compared to JG Summit though the two conglomerates both perform comparable measure of products and services delivered.

Introduction Conglomerates is the main focus of classifying these two performing companies namely San Miguel Corporation being the parent company and JG summit, being the parent company. These two plays great influence with the way we live in the Philippines and even Asia for their variant of products and services. The one speaks for generation SMC include foods, beverage, packaging and properties; while JG Summit is still in its spanning pathway with information technology, telecommunications, airlines, foods, property, petrochemicals, banking and other businesses. San Miguel Corporation

Aside from food, beverage and packaging company, San Miguel Corporation or SMC, the Parent Company is authorized to invest corporate funds and/or engage in the power generation/transmission, water and other utilities, mining and infrastructure business. Established in 1890 as a singleproduct brewery, the Group today has over 100 facilities in the Philippines, Southeast Asia and China. In 2008, the Group s for about 2.03 % of the country’s gross national product and 2.24% of the country’s gross domestic product. The Group’s extensive product portfolio includes beer, hard liquor, and non-carbonated non-alcoholic beverages, processed and packaged food products, meat, poultry, dairy products and a number of packaging products. The Group’s flagship product, San Miguel Beer, is among the world's largest selling beers and among the top three brands in Southeast Asia. From its original cerveza, the Group now owns a wide range of popular beverage brands and products that extends from beer to hard liquor, bottled water, powdered juice and juice drinks. Below is a list of the beverage subsidiaries:  San Miguel Brewery Inc.  San Miguel Brewing International Ltd. and subsidiaries – including:  San Miguel Brewery Hong Kong Limited and subsidiaries including  San Miguel Guangdong Brewery Limited  Guangzhou San Miguel Brewery Co. Ltd.  San Miguel (Baoding) Brewery Co. Ltd  San Miguel Brewery Vietnam Ltd  PT Delta Djakarta Tbk  San Miguel Beer (Thailand) Ltd.  Ginebra San Miguel, Inc. and subsidiaries – including:  Distileria Bago, Inc.  Ginebra San Miguel International Limited (BVI)  San Miguel (Thailand) Co. Ltd.  San Miguel (Guangdong) Foods & Beverages Co. Ltd.  San Miguel (Vietnam) Co Ltd.  PT San Miguel Marketing Indonesia  PT San Miguel Indonesia Foods & Beverages  San Miguel (Malaysia) Sdn Bhd Beverages San Miguel Brewery Inc. (SMB) has five breweries in the Philippines strategically located in Luzon, Visayas and Mindanao. The international beer group operates one brewery each in Indonesia, Vietnam, Thailand, and two breweries in China. Apart from beer, the Group also produces hard liquor through its majority-owned subsidiary, Ginebra San Miguel, Inc. (GSMI). GSMI is not only the leader in the domestic hard liquor

market, but also the world’s largest gin producer by volume and the fourth largest spirits company. The Group's food operations includes the production and marketing of fresh, ready-to cook and processed chicken, pork and beef, milk, butter, cheese, margarine, ice cream, flour, pancake mix, snack foods, coffee, cooking oil and animal and aquatic feeds. Through the partnerships it has forged with major international companies, the Group has gained access to the latest technologies and expertise, thereby enhancing the Group’s status as a world-class organization. Below is a list of food subsidiaries:  San Miguel Foods and Beverage International Limited and subsidiaries, including  San Miguel Pure Foods Investment (BVI) Limited including subsidiary,  San Miguel Pure Foods (Vn) Co. Ltd.  San Miguel Pure Foods Company, Inc. and subsidiaries – including:  San Miguel Foods, Inc.  San Miguel Mills, Inc.  The Purefoods-Hormel Company, Inc.  Magnolia, Inc. and subsidiary  Sugarland Corporation  San Miguel Super Coffeemix Co., Inc.  P.T. San Miguel Purefoods Indonesia Ltd.  RealSnacks Mfg. Corp.  Monterey Foods Corporation  Star Dari, Inc. Great Food Solutions (GFS)is the food service unit of SMPFC that caters to hotels, restaurants and institutional s for their meat, poultry, dairy and flour-based requirements, as well as provides food solutions/ recipes and menus. GFS also handles Smokey’s franchising operations and operates an Mig Café restaurant and Outbox food-to-go stall / cart. San Miguel Foods, Inc. (SMFI) is a 100%-owned subsidiary of SMPFC and operates the integrated Poultry and Feeds business and the San Miguel Food Shop franchising operations. (a) Poultry business– engage in integrated poultry operations and sell live birds, frozen and fresh chilled birds and cut-ups. The business supplies the chicken meat requirements of Purefoods-Hormel Company, Inc. for the manufacturing of its chicken-based value-added products. (b) Feeds business – manufactures and sells different types of feeds to commercial growers. Internal requirements of SMFI’s Poultry Business and Montery Foods Corporation are likewise being served by the Feeds business.

(c) San Miguel Food Shop –engages in franchising operations, established primarily to showcase San Miguel Group’s food and beverage products and to further enhance consumer awareness. There are fourteen (14) outlets operating as of December 31, 2008. San Miguel Mills, Inc. (SMMI)is a 100%-owned subsidiary of SMPFC and engages in the manufacture and distribution of flour, premixes, related cereal-based branded products like snack foods and instant noodles. The Purefoods-Hormel Company, Inc (PF-Hormel), is a 60%-40% t venture between SMPFC and Hormel Netherlands B.V., which produces and markets fresh processed meats (hotdogs, hams, bacons, cold cuts and gourmet meat) and canned meat products (corned beef, luncheon meat, Vienna sausage, pork and beans, liver spread and meat loaf). PF-Hormel also distributes value added-pork, beef and poultry products such as chicken, cordon bleu, beef burger, budget patty, longganisa lines and ready-to-eat meat products. The San Miguel Packaging Group (Packaging Group) is a total packaging solutions business servicing many of the region's leading food, pharmaceutical, chemical, beverages, and personal care manufacturers. With clients inthe Asia-Pacific, Middle East, Africa and U.S. markets, the Packaging Group is involved in the production and marketing of the following packaging products, among others, glass containers, glass molds, polyethylene terephthalate (PET) bottles and performs, PET recycling, plastic closures, corrugated cartons, woven polypropylene/Kraft sacks and paperboard, pallets, flexible packaging, plastic crates, plastic floorings, plastic films, plastic trays, plastic pails and tubs, crate and plastic pallet leasing, metal closures and two-piece aluminum cans, woven products, industrial laminates and radiant barriers. Below is a list of domestic and international packaging subsidiaries:  San Miguel Yamamura Packaging Corporation (formerly San Miguel Packaging Specialists, Inc.) and subsidiary,  San Miguel Yamamura Fuso Molds Corporation (SYFMC)  San Miguel Yamamura Packaging International Limited (SMYPIL) (formerly San Miguel  Packaging International Limited [SMPL])and subsidiaries including  San Miguel Yamamura Haiphong Glass [Co., Ltd. (SMYHG),  San Miguel Yamamura Phu Tho Packaging Company, Ltd.  Zhaoqing San Miguel Yamamura Glass Co., Ltd.,  Foshan San Miguel Yamamura Packaging Company, Ltd.  PT San Miguel Sampoerna Packaging Industries Ltd.  San Miguel Yamamura Packaging & Printing Sdn. Bhd.,  San Miguel Yamamura Woven Products Sdn. Bhd.,  Packaging Research Center Sdn. Bhd.  San Miguel Yamamura Plastic Films Sdn. Bhd.

 Mindanao Corrugated Fibreboard, Inc.  San Miguel Rengo Packaging Corporation  San Miguel Yamamura Asia Corporation Properties San Miguel Properties, Inc. (SMPI) was created in 1990 as an independent developer. It is the Group’s primary property subsidiary, currently owned 99.68% by SMC. SMPI was created by a merger of San Miguel Properties Philippines, Inc. and publicly-listed Monterey Farms Corporation on January 30, 1998, where Monterey Farms Corporation emerged as the surviving entity. Upon the merger’s effectivity, Monterey Farms Corporation changed its name to San Miguel Properties, Inc. On December 9, 2002, SMPI merged with another subsidiary, HOC Realty, Inc. (“HRI”), with SMPI as the surviving entity. SMPI is presently engaged primarily in the development, sale and lease of real properties. It is the corporate real estate arm of the Group. SMPI also has a significant interest in Bank of Commerce (“BOC”), which has been serving the Philippine banking community for over 15 years. Other subsidiaries include the following:  SMC Shipping and Lighterage Corporation  Challenger Aero Air Corp.  San Miguel Distribution Co., Inc.  Anchor Insurance Brokerage Corporation  SMC Stock Transfer Service Corporation  ArchEn Technologies Inc.  SMITS, Inc. and subsidiary  SM Bulk Water Company Inc.  San Miguel Energy Corporation  Iconic Beverages, Inc.  Brewery Properties, Inc.  Pacific Central Properties, Inc.  Seaside Industrial Estate, Inc.  Philippine Breweries Corporation  San Miguel Holdings Corp (formerly San Miguel Logistics Asia Corporation) and subsidiaries  San Miguel Kuok Food Security, Inc. JG Summit Holdings, Inc. (JGS) JG Summit Holdings, Inc. (JGS) is one of the largest and most diverse conglomerates in the Philippines today, with business interests spanning food manufacturing, property, financial services, telecommunications, air transportation, and petrochemicals. JG Summit’s businesses are leaders in

their respective industries, proof of more than 50 years of valuable business experience. Universal Robina Corporation (URC) is one of the leading panAsian food and beverage companies, and is also a major player in agroindustrial & commodity businesses in the Philippines. The Branded Consumer Food Group (BCFG) is home to brands like Chippy and C2, which have grown to represent the simple pleasures, fun and camaraderie of Philippine life; now, these distinctly Filipino brands are available to the rest of the world as well. URC has manufacturing facilities in strategic countries throughout Asia, making Jack ‘n Jill snacks the first ever Filipino-owned snack brands to be produced and sold widely throughout the region. Chances are you’ll find familiar Jack ‘n Jill brands like Cloud 9, Chooey Choco, Nips, Magic Flakes, Dynamite and Roller Coaster in neighborhood stores throughout Hong Kong, Singapore, Thailand, Malaysia, Vietnam, Indonesia and China. These URC products are also being enjoyed in other parts of the world, with exports to the Middle East, North America, Europe, Korea, Japan and Australia. URC’s Agro-Industrial Group (AIG) are consolidated under the Robina Agri Partners name, which combines the strengths, experience and expertise of Universal Corn Products (U), Robichem Laboratories, and the Robina Farms poultry and hog divisions, into one team. RAP provides high quality feeds, veterinary medicines, live animals - Hogs and Chicken - to the country’s poultry and livestock industries. Robina Agri Partners also provides consumer products namely meats, chicken, and eggs. URC’s Commodity Foods Group (CFG) are engaged in flour milling, pasta production and distribution under the URC Flour Division, as well as sugar milling and refining under the URC Sugar Division. URC is also engaged in the manufacturing of product packaging through URC Packaging.Universal Robina Corporation is committed to bringing Filipino taste and culture worldwide, in line with JG Summit’s vision to make life better, not only for Filipinos, but for the rest of the world. Branded Consumer Food Group (Bcfg) Snacks: • Jack ‘n Jill Chiz Curls, Jack ‘n Jill Chippy, Jack ‘n Jill Nova, Jack ‘n Jill Piattos, Granny Goose Kornets Candies: • Jack ‘n Jill Maxx, Jack ‘n Jill XO, Jack ‘n Jill Dynamite Chocolates: • Jack ‘n Jill Cloud 9, Jack ‘n Jill Nips Biscuits: • Jack ‘n Jill Magic Flakes, Jack ‘n Jill Cream-O, Jack ‘n Jill Dewberry, Jack ‘n Jill Pretzels Bakery: • Jack ‘n Jill Quake Beverage: • Great Taste, Blend 45, Refresh, C2 Green Tea, Rush, Hidden Spring, Nestlé Pure Life, Nature’s Harvest Fab Noodles: • Payless t Ventures: • Nissin, Hunts

Donut Division: • Hot Loops URC Packaging: • manufactures and sells bi-axially oriented polypropylene (BOPP) films primarily used in the packaging industry AGRO-INDUSTRIAL GROUP (AIG) Universal Corn Products (U): • Robina Farms: • Robichem: •

produces and distributes animal feeds for fish, hogs and poultry breeds and grows hogs, broiler chicks and layer chicks manufactures animal health products

COMMODITY FOODS GROUP URC Flour Division: • produces and distributes hard flour, soft flour and specialty flour. It also manufactures and sells pasta products URC Sugar Milling Corporation: • provides sugar cane milling and refining services, trades raw sugar and sells refined sugar and molasses Robinsons Land Corporation (RLC), one of the Philippines’ leading real estate companies, is involved in the development and operation of shopping malls and hotels, and is also one of the country’s most reputable developers of mixed-use properties, office buildings, residential condominiums, as well as land and residential housing developments, including socialized housing projects located in key cities and other urban areas nationwide. Robinsons Galleria Complex is the country’s first ever mixed-use facility that creatively combined a mall, hotels, offices and condominium residences within one development. As one of the first projects of RLC, its success set the tone for the development of other mixed-use endeavors. This continuous effort to provide consumers with world-class facilities and services has earned RLC one of the top slots in the Philippine real estate industry. To date, RLC has 24 shopping malls, 26 residential projects, 6 office buildings, 33 housing developments, and various hotels such as Holiday Inn Galleria Manila, Crowne Plaza Galleria Manila, Cebu Midtown Hotel, and Summit Ridge Tagaytay Hotel. Each and every project of Robinsons Land Corporation has led to the rise of thriving, harmonious communities, in line with JG Summit’s vision to make life better for the Filipino nation. Commercial Centers:To date, RLC has 24 shopping malls including flagships Robinsons Galleria and Robinsons Place Manila. Recently opened are Robinsons Malls in Tagaytay, Pulilan, Cabanatuan and Davao. Soon to open are Robinsons Malls in General Santos,, Laoag, Cebu, Dumaguete, and Tacloban.

Office Buildings:RLC has six office buildings which currently house multinational companies and business process outsourcing companies: Robinsons Cybergate Centers 1, 2 and 3, Robinsons Summit Center, Robinsons-Equitable Tower, and Galleria Corporate Center. Soon to open is Robinsons Cybergate Plaza. Residential Buildings and Upscale Housing Projects: RLC has in its portfolio 26 residential condominiums including: Robinsons Place Residences, Adriatico Residences, Galleria Regency, East of Galleria, One Gateway Place, Gateway Garden Heights, Gateway Garden Ridge, Fifth Avenue Place, McKinley Park Residences, The Fort Residences, The Trion Towers, Woodsville Viverde Mansions, Otis 888 Residences, Bloomfields, AmiSa Residences, Sonata Private Residences, and Magnolia Residences.Homes and Subdivisions:RLC has 33 economic and affordable residential subdivisions all over the country, including: Robinsons Homes East, Robinsons Homes East Commercial Arcade, Centennial Place, Robinsons Highlands, Highlands Peak, San Lorenzo Homes, Bloomfields Tagaytay, Bloomfields Davao, Aspen Heights, Blue Coast Residences, Escalades, Wellington Courtyard, and St. Bernice Estates. Hotels:RLC’s hotels group includes Summit Ridge Hotel and Cebu Midtown Hotel as well as two properties managed by the InterContinental Hotels Group, Holiday Inn Galleria Manila and Crowne Plaza Galleria Manila. JG Summit is the largest individual shareholder in United Industrial Corporation Limited (UIC), a Singapore listed company, which develops and invests property including commercial office, commercial retail and residential properties. It is the major real estate developer in Singapore. Property investments in China (Beijing, Chengdu and Hong Kong) and information technology service are the other business interests of UIC. DIGITEL makes it all possible for families and friends to stay connected, with just a phone call, a text message, an email message, or a videoconference. Reliability, accessibility and resiliency translate into DIGITEL’s operations 24/7. Through BIDA -- now known as DIGITEL DSL PLUS and DIGITEL BUSINESS DSL -- DIGITEL was first to offer Landline and Asymmetric Digital Subscriber Line (ADSL) bundles Luzon-wide. Seeing the opportunities and synergies offered by wireless mobility, and with the manon-the-go in mind, DIGITEL’s “wireless landline”, a wireless high-speed internet-ready landline, is an ideal solution for deployment in unserved and underserved areas, bringing the much needed economic development to the countryside. Sun Cellular offers the latest in GSM technology, providing voice services (local, national, and international calling), messaging services (short text or multi-media messaging), outbound and inbound international roaming, broadband wireless technology, and value-added services such as Mobile Internet, and up-to-date able contents like ringtones, dialtunes, picture messages, and logos.

Sun Cellular continues to offer the most economical and customer-friendly products and services to its subscribers by focusing on strategic areas of development. Today, Sun subscribers believe that the main benefit of Sun Cellular’s unlimited services is the strong ties built with family and friends by keeping connected 24/7. Sun Cellular has indeed succeeded in strengthening the Filipino culture of kinship by creating a new and affordable communication. The pioneer in 24/7 Call & Text Unlimited, Sun Cellular is now making headway in the broadband space with Sun Broadband Wireless. With its advanced 3.5G HSPA (High-Speed Packet Access) technology and allIP network, Sun Broadband Wireless offers mobile broadband Internet access anytime, anywhere in Metro Manila with speeds of up to 3Mbps. Buoyed by its unlimited postpaid plans and competitive prepaid rate offerings, on top of its metro-wide coverage and superior speeds, Sun Broadband Wireless has built the momentum to take the broadband market by storm. A wide variety of postpaid and prepaid products and services have also been introduced to provide subscribers with best value choices tailored to fit each ’s specific needs and wants. And in effect, Sun Cellular has created a paradigm shift in the telecommunications industry with these products. In addition to the traditional telco industry distribution outlets, customers nationwide have access to Sun Cellular products and services through over 100 company-owned retail outlets, via Sun Shops nationwide and Sun Shop Express presence in DIGITEL Customer Centers in Luzon. With its extensive infrastructure and innovative services, DIGITEL stands ready to meet the increasing needs of human connectivity in the 21st century, true to JG Summit’s vision to make a better life available to the Filipino. Cebu Pacific (CEB) is the leading domestic airline in the Philippines and one of the fastest growing low-cost carriers in the world. It has a unique lowfare, great-value strategy that has allowed travelers to enjoy affordable flights to various local and international destinations. It offers industry affordable budget fares through year-round all-inclusive fares, which makes use of a tiered-pricing system. This unique product provides ultra-low fares through advanced bookings, making air travel a truly viable option for the Filipino, because Cebu Pacific believes that it’s time every Juan flies. More than this, CEB allows everyone to experience many firsts in the industry, innovations such as the global trend of e-ticketing and internet booking through www.cebupacificair.com. Presently, CEB operates the youngest fleet in the Philippines, and one of the youngest in Asia, flying the Airbus A320 family (10 A319 and 11 A320). In addition, CEB has taken delivery of eight ATR72-500 aircraft, which will service destinations with airports that have runway length and strength limitations. Aside from having the most domestic destinations, and operating the most domestic flights daily, CEB continues to expand its international network, with flights to 14 destinations in 11 countries across Asia. Truly, Cebu Pacific Air works at making more dreams of flight a reality, true to JG Summit’s vision to make a better life available to the Filipino.

JG Summit Petrochemical Corporation (JGSPC) is the pre-eminent worldclass manufacturer and supplier of polyolefin products in the Philippines. It started commercial operations in 1998, and is the first and only integrated Polyethylene and Polypropylene resin manufacturer in the country, producing the Evalene® brand of High Density Polyethylene (HDPE), Linear Low Density Polyethylene (LLDPE) and Polypropylene (PP). The JGSPC plant is located in Brgy. Simlong, Batangas, 125 km south of Manila, and is built on a 100hectare PEZA-accredited complex. The plant is highly integrated, having its own 50 MW Power Plant, a jetty for receiving raw materials and demineralized water treatment facility. JGSPC is committed to produce high quality resins. It uses the industry-renowned Dow technology in the manufacture of PP and Univation technology for PE. Evalene® products are manufactured under strict compliance of the ISO 9001:2000 Quality Management certified standards. Its Environmental Management System is also certified based on ISO 14001:2004 standard. JG Summit Petrochemical Corporation provides a solid building block for the country’s economy and future, as it has created more jobs for Filipinos, and saved dollars for the local industry – true to the nation-building efforts of JG Summit Holdings, Inc. Robinsons Savings Bank has become an attractive alternative in the banking industry as one of the country’s largest thrift banks, with its 46 and continuously expanding branch network nationwide. Robinsons Bank offers a broad range of deposit and loans products, trust investments, foreign exchange, and securities to retail customers, suppliers, as well as individuals with small to medium-scale businesses. It has also established itself as a banking innovator, introducing the breakthrough E-Wallet service, a unique ATM cash advance facility, which comes with its payroll services, and its Cardless Banking facility, that allows clients to do bank transactions via mobile, ATM and Internet. RobinsonsBankalso has one of the lowest nonperforming loan ratios in the business, which serves as a further source of assurance for its customers. True to JG Summit’s aim to make life better for the Filipino, Robinsons Savings Bank stands ready to secure your family’s financial growth. Method The Altman's Z-Score Model (1968) This model is developed by Altman in 1968 ids also called Altman’s ZScore Method. It is a multivariate formula to measure financial health of companies towards bankruptcy within two years. The five factors considered as common business ratios are; earnings before interest and tax (debit)/total assets ratio, sales/total assets ratio, market value of equity/market value of total liabilities, working capital/total asset ratio and retained earnings/total assets (Edward, 1968).

The Altman’s Z-score formula is given as: Z = 0.012X1 + 0.014 X2 + 0.033X3 + 0.006X4 + 0.010 X5 Where;

Working Capital ____________________ Total Assets Measures liquid assets in relation to the size of the company Retained Earnings X2 = ____________________ Total Assets Measures profitability that reflects the company's age and earning power Earnings before interest taxes X3 = ____________________ Total Assets Measures operating efficiency apart from tax and leveraging factors, it recognizes operating earnings as being important to long-term viability Market value equity X4 = ____________________ Book Value of total debt Adds market dimension that can show up security price fluctuation as a possible red flag Sales X5 = ____________________ Total Assets For sales turnover (It measures revenue generating ability of a company’s assets) X1 =

Z = Overall Index Table 1: Threshold Differentiating Financial Failure and Non-Financial Failure Company by using Altman Z-score. Financial Performance Altman Z Score Failure of Company <1.81 Non Failure of Company >2.99 Being a quantitative concern, this threshold table is basis to measure the financial performance is in accordance to Cowen and Hoffer (1982), Courtis (1978), Mohammed (1997), Ali (2008) and Edward (1968). The DuPont Analysis The Dupont analysis or Dupont model is a financial ratio based on the return on equity ratios used in analyzing a company's ability to increase their return for investors with these three (3) counterparts; namely (i) profit

margin, (ii) total asset turnover and (iii) financial leverage. Based on these three performances measures the model concludes that a company can raise its ROE by maintaining a high profit margin, increasing asset turnover, or leveraging assets more effectively.

The Dupont Model basic formula is given as follows:

Return on Equity (ROE) = Leverage Return on Equity =

Profit Margin x Total Asset Turnover x Financial Net Income Net Sales Net Sales Average Total Assets

Total Assets Total Equity

Results and Discussion Table 1.0 Altman Z scores of JG Summit and San Miguel Corporation Altman Z – test Factors

Liquid Assets in relation to the Size of the Company (X1 ) Profitability that reflects the company's age and earning power (X2 ) Operating efficiency apart from tax and leveraging factors (operating earnings as being important to long-term viability) (X3 ) Adds market dimension that can show up security price fluctuation as a possible red flag (X4 ) Sales turnover (It

Altman Coefficient

.012

JG Summit 2013 - 2012 Year 2 Year 1 39.67% 37.94%

SMC 2013 - 2012 Year 2 Year 1 20.32% 24.19%

.014

3.44%

5.86%

4.58%

3.20%

.033

12.19%

6.69%

4.65%

4.42%

.006

25.14%

13.87%

23.82%

18.08%

.010

31.83%

39.84%

63.90%

67.05%

measures revenue generating ability of a company’s assets) (X5 ) Overall Z index (Z = 0.012X1 + 0.014 X2 + 0.033X3 + 0.006X4 + 0.010 X5)

13.95 (3.73)

11.16 (3.34)

12.43 (3.53)

15.99 (3.998)

The threshold for financial failure, find it out that between 2013 – 2014, the business operation of JG Summit and San Miguel Corporation as both conglomerate corporations are stable or opposite to exhibit failing of bankrupt operation with a comparable rate in the succeeding year. This also mean that San Miguel Corporation with its more than 2 Century status has higher liquid assets in relation to their size of the company in comparison to JG Summit in its less than a quarter of existence compared to SMC. The sales turnover of SMC almost double to that of JG Summit that clearly explains the SMC’s revenue generating ability of a company’s assets. They conduct comparable profitability that reflects the company's age and earning power; including its operating efficiency apart from tax and leveraging factors and in adding market dimension that can show up security price fluctuation as a possible red flag and sales turnover Table 2.0 DuPont Analysis of JG Summit and San Miguel Corporation DuPont Ratios

Profit Margin Total Asset Turnover Financial Leverage Return on Equity (ROE)

JG Summit 2013 - 2012 Year 2 Year 1 65.73% 95.08% 6.51% 5.63% 200.09% 171.50% 0.09 0.09

SMC 2013 - 2012 Year 2 Year 1 105.70% 88.70% 4.89% 3.63% 319.89% 298.90% 0.17 0.10

The table above shows that SMC is effective in leveraging their assets with high profit margin compared to JG Summit though the two conglomerates both perform comparable measure of products and services delivered.