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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 SMCs revenue generating ability of a
companys 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 accounts for about 2.03 % of
the countrys gross national product and 2.24% of the countrys gross
domestic product.
The Groups 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 Groups 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 worlds 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 Groups 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 accounts for their meat, poultry, dairy
and flour-based requirements, as well as provides food solutions/ recipes and
menus. GFS also handles Smokeys franchising operations and operates an
Mig Caf 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 SMFIs 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 Groups 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% joint 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 Groups 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 mergers 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 Summits 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 youll 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. URCs Agro-Industrial Group (AIG) are
consolidated under the Robina Agri Partners name, which combines the
strengths, experience and expertise of Universal Corn Products (UCP),
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 countrys poultry and livestock
industries. Robina Agri Partners also provides consumer products namely
premium meats, chicken, and eggs.
URCs 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 Summits 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, Nestl Pure Life, Natures
Harvest Fab
Noodles:
Payless
Joint 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 (UCP):
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 countrys 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 countrys 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 Summits 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:RLCs 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
DIGITELs 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, DIGITELs 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 downloadable 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
Cellulars 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 users 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
Summits 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 its 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 Summits 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 countrys 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 countrys 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 account 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 Summits aim to make life better for
the Filipino, Robinsons Savings Bank stands ready to secure your familys
financial growth.
Method
The Altman's Z-Score Model (1968)
This model is developed by Altman in 1968 ids also called Altmans 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 Altmans 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
companys 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
companys 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 SMCs revenue generating ability of a
companys 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.