UNIVERSITY OF ANTIQUE
FINANCIAL RATIO ANALYSIS
OF
AC Energy Philippines Incorporated
(ACEN)
An Output
in
Engineering Management
(ENMGT)
By
Dezerie A. Baladjay
BSCpE 1A
To
Engr. Nelly Mistio
June 18, 2024
AC Energy Philippines Incorporated (ACEN)
For the fiscal year ended: December 31, 2023
Currency: PESO
BALANCE SHEET
ASSETS
ITEMS Current Year (2023) Previous Year (2022)
Cash & Short-Term Investments 41.64B 34.67B
Cash Only 39.7B 34.63B
Total Accounts Receivable 28.13B 32.64B
Inventories 964.05M 925.97M
Total Current Assets 71.58B 70.02B
Total Assets 284.93B 232.87B
Net Fixed Assets 97.14B 62.93B
LIABILITIES & EQUITY
ITEMS
Short Term Debt 1.5B 2.9B
Accounts Payable 16.15B 3.7B
Income Tax Payable 241.67M 479.44M
Total Current Liabilities 20.04B 17.7B
Long Term Debt 84B 64.35B
Other Liabilities 5.55B 563.1M
Total Liabilities 111.71B 83.28B
Total Equity 173.38B 149.59B
Total Debt 85.5B 67.25B
INCOME STATEMENT
ITEMS Current Year (2023) Previous Year (2022)
Sales/ Revenue 36.18B 35B
Cost of Goods Sold 32.1B 34.44B
Depreciation 1.41B 2.02B
Gross Income 4.45B 552.15M
Net Income 7.4B 13.06B
FINANCIAL RATIO
Current Year (2023) Previous Year (2022)
Current Ratio 3.57 3.96
Acid -Test Ratio 3.52 3.90
Inventory Turnover 3.33 3.72
Fixed Asset Turnover 0.37 0.56
Debt to Total Assets Ratio 0.30 0.29
Profit Margin Ratio 0.20 0.37
Return on Asset Ratio 0.03 0.06
Return on Equity Ratio 0.04 0.09
INTERPRETATION
Now we have a summary of all 8 financial ratios for ACEN Incorporated. The first thing that jumps out is
the low liquidity of the company. We can look at the current and acid-test ratios and see that the liquidity is
having a decreasing percentage between 2022 and 2023. By looking at the acid-test ratio for both years, we
can see that this company has to sell inventory in order to pay off short-term debt.
Let’s move on to the efficiency ratios. We can see that the company’s credit and collections policies might
be a little restrictive by looking at the high cost of goods sold (COGS) and low inventories. Customers must
pay this company rapidly. The company may not be selling their products quickly enough. They’re tying up
cash, incurring holding costs, and at risk of deterioration.
The fixed asset turnover ratio measures the company’s ability to generate sales from its fixed assets or plant
and equipment. This ratio is very low for the year 2023. This means that ACEN Inc. has a lot of plant and
equipment that is unproductive. It is not being used efficiently to generate sales for the company. In addition,
the company has to service the plant and equipment, pay for breakdowns, and perhaps pay interest on loans
to buy it through long-term debt.
It seems that a very low fixed asset turnover ratio might be a major source of problems for ACEN Inc. The
company should sell some of this unproductive plant and equipment, keeping only what is absolutely
necessary to produce their product. As a result, analyzing the debt to total asset ratio is difficult. However, is
that the company is financed more with equity than it is with debt as the debt to total asset ratio for both
years is dropping.
This fact means that the return on equity profitability ratio will be lower than if the corporation was financed
more with debt than with equity. On the other hand, the risk of bankruptcy will also be lower. Unfortunately,
the corporation’s profit margin ratio between 2022 to 2023 has decreased by 17% because their sales are also
decreasing. Meanwhile, return on assets ratio is impacted negatively due to the low fixed asset turnover ratio
and, to some extent, by the inventory turnover ratio. Return on Equity is also decreasing from 2022 to 2023,
which means that the company may be trouble.