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Long-Term Planning
GROUP 1
Albarico| Aran| Erjas| Itum| Loredo| Sarmiento
DISCUSSION POINTS
IV. The DuPont IDENTITY
I. COMPANY BACKGROUND
❑ 2GO Group Inc. (2GO) V. FINANCIAL MODELS
❑ Chelsea Holdings Logistics Inc. (CLC) ❑ Investment in new assets
❑ Harbor Star Shipping Services Inc. (TUGS ) ❑ Degree of financial leverage
❑ Cash paid to shareholders
II. FINANCIAL STATEMENTS ANALYSIS ❑ Liquidity requirements
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I. COMPANY BACKGROUND
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⊡ Started business in 1949 as ⊡ 2GO is an integrated transport
William Lines, Inc. solutions provider
⊡ Consolidated with Carlos A. ⊡ flagship brand for three main
Gothong Lines Inc., and Aboitiz business units - 2GO Freight,
Shipping Corporation in 1959 to 2GO Travel, and 2GO Supply
form Willian, Gothong, & Aboitiz Chain
Inc. (WG&A) ⊡ currently, 2GO has four direct
⊡ Changed name to Aboitiz subsidiaries
Transport System Corporation in ⊡ total fleet of 26 passenger &
2004 freight vessels, 22 port of calls,
⊡ Securities and Exchange and 18,135 containers
Commission approved name
change to 2GO Group Inc. in
2012
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⊡ Holding company for shipping and ⊡ regarded as the biggest shipping
logistics business of the Udenna and logistics company in the
Group of Companies Philippines, operating in major ports
⊡ Established in August 2016 after the across the country
acquisition of Chelsea Shipping ⊡ services offered include Maritime
Corporation (CSC) from Phoenix Transport Services, Maritime
Petroleum Philippines Auxiliary Services, Port Services,
⊡ Acquired Davao Gulf Marine Logistics and Forwarding, and
Services Inc., in December 2016 Courier Services
⊡ Expanded business to acquire ⊡ total fleet of 88 vessels including 30
Starlite Ferries Inc., and Worklink passenger vessels, 11 fast crafts,
Services Inc in 2017 16 cargo ships, 12 tankers, 14
⊡ debuted in the Philippine Stock tugboats, and 4 barges. They also
Exchange via an IPO in 2017, have a floating dock
raising approximately Php 5.8M
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⊡ Began in 1998 with only one tugboat ⊡ widest coverage of turboat services in
in the fleet the country, exclusive harbor assist
⊡ obtained an Integrated provider of the Manila International
Management System Certification Container Terminal
from Det Norske Veritas in 2009 ⊡ internationally recognized as a ship
⊡ the only domestic tugboat company salvor in 2012 and has the largest
with a triple certification for ISO 9001 private inventory of salvage and oil
for quality; ISO 14001 for spill equipment deployed in Manila,
environment; and OHSAS 18001 for Batangas, Cagayan de Oro, Cebu,
occupational health and safety Davao, and General Santos
⊡ expanded services to include ⊡ common shares were listed in the
lighterage to cater logistical needs for Philippine Stock Exchange in 2013
the mining and cement industries ⊡ fleet size of 42 watercraft, comprising
in 2012 of tugboats, barges, and specialized
vessels
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II. FINANCIAL STATEMENTS
ANALYSIS
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❑ Common Size Analysis is a tool used to analyze financial
statements, by expressing each line item as a percentage
of the base amount
❑ Allows investors to identify drastic changes in a company’s
financial statements over a two to three year period
❑ Also an excellent tool to compare companies of different
sizes within the same industry
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❑ Two types of commons size analysis - Balance Sheet
and Income Statement
❑ Balance Sheet Common Size Analysis uses a
company’s total assets as the base value. This shows how
a firm’s capital structure compares to its rivals.
❑ Income Statements Common Size Analysis uses a
company’s total sales and revenues as the base value. It
is used to show revenue health and make predictions for
future revenue
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2017 - 2017 - 2016 - 2016 -
2018 2018 2017 2017
ASSETS
Current Assets
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⊡ Analysis/application to
companies
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III. RATIO ANALYSIS
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❑ Financial Ratios are ways of comparing and
investigating the relationships between
different pieces of financial information.
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CATEGORIES OF FINANCIAL
RATIOS
❑ Short-term solvency or liquidity ratios
❑ Long-term solvency or financial leverage
ratios
❑ Asset management or turnover ratios
❑ Profitability ratios
❑ Market value ratios
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Computing
Liquidity Ratios
Measures the firm’s ability to pay its bills
over the short run without undue stress
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Computing
Liquidity Ratios
Company/Year
2018 2017 2016
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Computing
Liquidity Ratios
Company/Year
2018 2017 2016
18
Computing
Financial Leverage
Ratios
Measures the firm’s long-run ability to meet
its obligations
Company/Year
2018 2017 2016
19
Computing
Financial Leverage
Ratios
⊡ Times Interest Earned:
EBIT
Interest
Company/Year
2018 2017 2016
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Computing
Financial Leverage
Ratios
⊡ Cash Coverage:
EBIT + (Depreciation and Amortization)
Interest
Company/Year
2018 2017 2016
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Computing Asset
Management
Ratios or intensively, a
Measures how efficiently,
firm uses its assets to generate sales
⊡ Inventory Turnover:
Cost of Goods Sold
Inventory
Company/Year
2018 2017 2016
2GO
TUGS
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Computing Asset
Management
Ratios
⊡ Day’s Sales in Inventory:
365 Days
Inventory Turnover
Company/Year
2018 2017 2016
2GO
TUGS
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Computing Asset
Management
Ratios
⊡ Receivables Turnover:
Sales
Accounts Receivable
Company/Year
2018 2017 2016
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Computing Asset
Management
Ratios
⊡ Days’ Sales in Receivables: Analysis:
365 Days
Receivables Turnover ● C had the longest collection period
averaging 130 days over the 3-year
period
Company/Year
2018 2017 2016 ● sdsd
● 2GO and TUGS had the most
consistent average collection period
2GO 67.97 74.95 81.29
with the former averaging 75 days
and the latter 107 days
C 100.83 81.84 210.98
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Computing Asset
Management
Ratios
⊡ Total Assets Turnover: Analysis:
Sales
● 2GO had relatively the highest total
Total Assets asset turnover which is at least
$1.22 indicate that the Group is able
to generate sales effectively for
Company/Year
2018 2017 2016 every dollar ●
spentsdsd
in assets.
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Computing
Profitability Ratios
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Computing
Profitability Ratios
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Computing
Profitability Ratios
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Computing
Profitability Ratios
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Computing Market
Value Ratios
Evaluates the current share price of publicly
traded companies
⊡ Price-Earnings Ratio:
Analysis:
Price Per Share
Earnings Per Share ● Price-Earnings ratio suggests that
investors see C to have significant
Company/Year
prospects for future growth hitting a
2018 2017 2016 P/E ratio mark of 73.33 times.
● sdsd
2GO -148.31 54.50 172.00 ● TUGS showed a stable increasing
trend over the years which shows
C 73.33 - - the investor’s trust on the company’s
ability to further grow as loosely
TUGS 39.91 22.25 14.75 speaking, it can carry a PE multiple
of 40 in 2018.
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Computing Market
Value Ratios
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Computing Market
Value Ratios
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IV. The DuPont IDENTITY
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❑ General Concepts of the topic
35
⊡ Analysis/application to
companies
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V. FINANCIAL MODELS
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General Concepts of the topic
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⊡ Analysis/application to
companies
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VI. INTERNAL &
SUSTAINABLE FINANCING
AND GROWTH
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Internal Growth Rate
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Internal Growth Rate in
2018
2GO has the highest IGR among the three companies. It can achieve a 6% increase in
sales and assets without obtaining any external funding. However, the company’s
investors might not be satisfied with just 2.02% growth and may look for external
financing.
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Sustainable Growth Rate
❏ Maximum growth rate which a company can achieve keeping their
capital structure intact and can sustain it without any additional
debt requirement or equity infusion.
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Sustainable Growth Rate
2GO still has the highest SGR among the three companies. Since sustainable growth rate
allows for external financing but only in the proportion of its current capital mix, the
sustainable growth rate is higher than the internal growth rate.
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VII. SOME CAVEATS
REGARDING FINANCIAL
PLANNING MODELS
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➔ Financial planning models do not ➔ Financial planning models
always ask the right questions. sometimes do not produce
They tend to rely on accounting output that gives the user
and not financial relationships. meaningful clues about what
➔ The three basic elements tends strategies will lead to increase in
to get left name value
◆ cash flow size ➔ In conclusion, financial planning
◆ risk is an iterative process. Plans are
◆ timing created, examined, and modified
continuously.
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THANKS
!
Any questions?
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