Current Assets Turnover

Defined: Current Asset Turnover Ratio shows the relationship between net sales and current assets. A
high current assets turnover ratio shows that a firm is capable to achieve maximum sales with minimum
investment in current assets.

SM Prime Holdings Inc.

The increase of 2.13 % in the current assets turnover ratio denotes a positive impact regarding
the company’s activity. Because of the growth from 2016 – 2017, it can be concluded that SMPHI is
more efficient in managing its current assets in generating sales for the latter year. The higher the ratio,
the better the company is performing in general because it implies that per peso of current assets that
SMPHI has, higher revenue is earned. To put simply, in 2017, SMPHI became more efficient in using its
current assets to produce higher returns.

Robinsons Land Corporation

Contrary to SMPHI’s result, a decrease of 6.45 % happened from the 2016 to 2017 operations of
RLC. This change denotes that there is a negative change in the company’s ability of generating its sales
through their current assets. This is an undesirable adjustment for RLC, which means that for 2017, each
peso of current asset that the company has, earned less than what it generated for 2016.

SMPHI vs RLC

For 2017, it can be concluded that SM Prime Holdings Inc. was more efficient in using its current
assets to generate sales than Robinsons Land Corporation. From the results of their operations, SMPHI
increased its capacity to deploy current assets to produce revenue, while RLC had a slight decline in the
said capacity. Generally, the company’s ability of properly utilizing their assets must be improved to earn
a higher turnover ratio, which in turn will provide the company an opportunity to earn higher return of
sales per current asset.
Assets Turnover

Defined: Asset Turnover Ratio is the ratio between the value of a company’s sales or revenues and the
value of its assets. The higher the ratio, the better is the company’s performance.

SM Prime Holdings Inc.

SMPHI performed better in 2017 than in 2016 as evidenced by the total assets turnover increase
of 5.88 %. This means that the company managed efficiently its total assets in earning revenues for
2017. The increase in this ratio implies a positive impact regarding the performance of the company, and
states an optimistic feedback regarding the management for the year 2017.

Industry Average

There has been an increase in the real estate industry’s total assets turnover for about 3.85 %.
This means that for the industry as a whole, a positive movement for the total assets turnover
happened. This increase signifies a favourable aggregate change for all real estate companies. But this
information does not put forth the limitation that all companies gained a positive change.

Robinsons Land Corporation

RLC’s total asset turnover ratio experienced a decline in 2017. From 0.18 in 2016 to 0.17 in 2017,
this 5.56 % negative change means that the company was less efficient in managing its resources in the
latter year. Factors for this negative change could be heavy investment activities or slow generation of
sales.

SMPHI vs RLC

SMPHI’s asset turnover ratio for 2017 is higher than RLCs. This could mean that a higher return
in terms of sales happens for every peso of asset of SMPHI. In terms of efficiency of total asset
utilization, SMPHI has a better performance than RLC though they have almost the same ratio.

SMPHI vs Industry Average

Though SMPHI had a favourable change in 2017, it still is less than that of the total industry’s
average. This could mean that the real estate industry as a whole manages their assets to sales ratio
more efficiently as compared to SMPHI individually. SMPHI may have contributed a significant impact in
determining a positive change in the industry’s average, but the performance of the industry as a whole
has been more effective with regards to this ratio.

RLC vs Industry Average

RLC’s total asset turnover ratio is less than that of the Industry’s Average. Therefore, the
industry of real estate performed better than RLC for 2017 in terms of managing the total assets to
generate sales. RLC’s performance may seem unfavourable since they managed their resources less
effective than what the average should be.
Plant Assets Turnover

Defined: In general, it is used by analysts to measure operating performance. This ratio specifically
measures a company’s ability to generate net sales from fixed-asset investments, namely property, plant
and equipment (PPEs) net of depreciation. A higher fixed asset turnover ratio indicates that a company
has more effectively utilized investment in fixed assets to generate revenue.

SM Prime Holdings Inc.

There was an increase of 6.90 % in fixed assets turnover during the years 2016 and 2017. This
indicates a beneficial impact to the company since this increase means that SMPHI managed to employ
the use of fixed assets and capital investments efficiently towards earning revenue. SMPHI’s favourable
turnover can put a good image on management’s way of managing their fixed assets.

Robinsons Land Corporation

A negative change that could be due to ineffective application of investments in fixed assets
happened in RLC between the years 2016 and 2017. This is unfavourable since a decline of 10.71 %
actually occurred. Capital investments should be properly managed in order to have a positive turnover.
Therefore, RLC must improve their style in managing and employing their fixed investments. The
declining ratio could indicate that their business has over invested in fixed and capital assets.

SMPHI vs RLC

Comparing SMPHI and RLC’s performance in terms of Plant Assets Turnover will yield the
conclusion that the former performed better than the latter. This means that SMPHI has utilized the
functions of their plant assets more effectively than RLCs. The higher ratio indicates that the company
has less investment tied up in fixed assets for each peso of sales revenue.
Capital Intensity Ratio

Defined: Capital Intensity Ratio is a measure of the amount of capital needed per peso of revenue. It is
calculated by dividing total assets of a company by its sales. A higher capital intensity ratio means that a
company needs more assets than a company with lower ratio to generate equal amount of sales.

SM Prime Holdings Inc.

The increase in capital intensity ratio for 2017 denotes a negative change for the company. A
higher ratio in this case means that the company needs to raise more assets to produce sales. It
specifically means that the amount of capital needed by SMPHI per peso of sales increased thereby
producing the after effect of the need to own more assets just to generate sales. Because of the
increase of 1.54 %, SMPHI became more capital intensive than it was in 2016.

Robinsons Land Corporation

Same with SMPHI, RLC became more capital intensive in 2017 than in 2016. Because RLC also
experienced an increase in this ratio, the company also has the need to own more assets just to
generate sales. RLC may have been more dependent on the use of machineries in 2017 that resulted to
having a rise in capital intensity.

SMPHI vs RLC

Though both companies have been capital intensive in 2017 according to their company’s
performance, RLC in comparison between companies still was more capital dependent. Therefore, in
order for RLC to produce higher sales and generate higher revenue, they may have the need to raise
their capitals and assets as well.
Operating Cycle (Days)

Defined: The operating cycle is the average period of time required for a business to make an initial
outlay of cash to produce goods, sell the goods and receive cash from customers in exchange for the
goods.

SM Prime Holdings Inc.

There has been a decrease in the number of days of operating cycle which means that it takes a
shorter period of time for cash to operate and be used in maintaining the operations. Therefore, this
negative change of decreasing the number of days denotes a beneficial impact to the company. Because
the operating cycle in 2017 is shortened, SMPHI may recover their investments faster than they can in
2016.

Robinsons Land Corporation

An increase in the number of operating cycle days happened in 2017. It may look positive for
such increase, but this bears a negative effect for the company. Since days have lengthened before they
can complete a cycle, cash is tied up for a longer period. This may also mean that it will take a longer
time to sell RLC’s inventories and convert these into cash.

SMPHI vs RLC

SMPHI has a shorter operating cycle than RLC in 2017. It means that SMPHI has been more
effective in managing, selling and converting their inventories into cash. Because SMPHI has a faster
cycle, they can be more liquid than RLC because the time they hold their cash for operations is shorter in
term than RLC can. RLC may have to speed up the sale of their inventories and reduce the time needed
to collect receivables in order to improve their operating cycle.