ACCCOB2 PORTFOLIO
Critique Paper #2 presented
to the Accountancy
Department
In partial fulfillment of
the course requirement in ACCCOB2
Term 3, AY 2024-2025
Leyban, Maria Ann Lorene V.
Telan, John Andrei S.
C40A
Investment in Equity/Debt Securities
In the 2024 audited financial statements of COL Financial Group. Inc, the company, presents its
investment in equity and debt securities primarily in two accounts. (1) Financial Assets at Fair
Value Through Profit or Loss (FVTPL) and Investment Securities at Amortized Cost. According
to the financial report, COL holds a modest amount of P1,547,619 in FVTPL instruments, which
likely represent equity securities or mutual fund investments that are actively traded or marked to
market. This value shows a slight increase from P1,360,765 in the previous year. The low
allocation implies that COL takes a cautious stance when it comes to market-sensitive
instruments, utilizing them more for short-term or liquidity positions than for aggressive equity
trading.
On the other hand, the majority of COL's investments, which total P392,290,753 in current assets
and P1,000,015,465 in noncurrent assets, are concentrated in Investment Securities at Amortized
Cost. COL intends to hold these investments until maturity in order to collect contractual cash
flows, as evidenced by its implementation of the amortized cost model. With P700,332,567
recorded in 2023 as opposed to P331,884,804 in 2022, the interest income from these assets
increased dramatically, which shows us their successful reinvestment tactics and advantageous
interest rate conditions.
Overall, COL’s treatment and classification of its investment securities are in alignment with the
Generally Accepted Accounting Principles (GAAP) and the PFRS. The relevant disclosures in
the notes to the financial statements provide sufficient detail on valuation, maturity, and
recognition methods. Additionally, there were no reported losses on the sale of investment
securities in 2023, unlike the previous year, indicating that they were more careful in executing
their investment strategies.
Inventories
COL Financial Group, Inc. does not report any inventories in its financial statements because
the company operates in the financial services industry, specifically as an online stockbroker,
where its core business involves facilitating securities trading, margin lending, and distributing
investment products rather than selling physical goods.
San Miguel Corporation’s Inventories
San Miguel Corporation’s (SMC) inventory balance for 2024 shows a notable increase, reflecting
strategic adjustments and potential implications for the company’s broad operational
performance. As of December 31, 2024, SMC’s total inventories reached PHP 178,355
million—an increase of PHP 16,369 million or 10% from the PHP 161,986 million reported in
2023. This significant rise is concentrated in the company’s core operational segments and
warrants a closer look at the possible causes and impacts.
The largest contributor to this inventory growth is the “Finished goods and goods in process
(including petroleum products),” which rose by PHP 12,276 million, from PHP 99,489 million in
2023 to PHP 111,765 million in 2024. For a conglomerate like SMC—heavily invested in food,
beverage, and fuel (Petron)—this build-up could reflect efforts to meet anticipated demand.
However, it might also signal operational challenges such as “softer export sales” for Petron,
resulting in slower inventory turnover and higher stock levels. Increases in finished goods in
other segments could indicate either ramped-up production or weaker market demand, both of
which affect turnover rates and carrying costs.
Additionally, “Materials and supplies (including coal)” rose by PHP 4,454 million, reaching PHP
60,800 million in 2024. This may suggest that SMC is strengthening its raw material reserves to
support future production across its manufacturing units (food, cement, and power), or
attempting to manage the impact of volatile commodity prices. While stockpiling raw materials
can reduce supply chain risk, it also ties up working capital and increases risks related to storage,
insurance, and obsolescence if projected demand doesn't materialize. A small decline in “Raw
land inventory and real estate projects” by PHP 361 million may reflect completed sales or
reduced development activity in that segment. Overall, the 10% increase in inventory highlights
the need to monitor efficiency—since a rise that outpaces sales growth may pressure cash flow
and raise holding costs, particularly under tough market conditions for certain business units.
APPENDICES
REFERENCES
Annual report. (n.d.).
[Link]
4d0
AI usage:
- Used Grammarly to check the grammar of our paper
- Asked ChatGPT to rate our essay (if it’s good or what areas to improve on)