POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

College of Political Science and Public Administration

GRADUATE STUDIES

Philippine Reclamation Authority (PRA) computed financial leverages and liquidity ratios for the Year
2018-2019

Presented to DR. Ricardo L. Dizon, Associate Professor II

In Partial Fulfillment of the Requirements for the Subject of MPA 626: Government Accounting
and Auditing

Prepared by:

Angeline Merino
Joyce Ann Tan
Ricardo Alvarado
Romeo Pancho
Raymond Gamboa
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Political Science and Public Administration
GRADUATE STUDIES
PHILIPPINE RECLAMATION AUTHORITY
STATEMENTS OF FINANCIAL POSITION December 31, 2019 and 2018
(In Philippine Peso)

Note 2019, 2018 (As restated)

ASSETS
Current Assets
Cash and Cash Equivalent 5 3,487,696,156.00 1,151,673,192.00
Short-Term investment 6 6,283,857,513.00 7,612,697,023.00
Total trade and other Receivables. Net 7 4,180,313,566.00 2,940,672,367.00
Inventories 8 892,996,729.00 892,022,693.00
Other current assets 9 73,086,521.00 80,414,426.00
Total Current Assets 14,917,950,485.00 12,677,479,701.00

Non-Current Asset
Investment Inventory 10 9,353,756,185.00 9,353,756,185.00
Serviced concessions asset, net 11 8,925,677,401.00 8,300,757,755.00
Other financial assets 12 4,225,680.00 4,225,680.00
Property and equipment, net 13 93,781,571.00 101,433,479.00
Other non-current assets 14 763,453,654.00 938,217,295.00

Total non-current assets 19,140,894,491.00 18,698,390,394.00

34,058,844,976.00 31,375,870,095.00

LIABILITIES AND EQUITY

Current liabilities
Trade and other payable 15 1,344,057,564.00 1,330,149,742.00
Dividend payable 16 740,963,856.00 721,201,548.00
Inter-agency payable 17 18,327,092.00 8,537,615.00
Trust liabilities-current 18 6,389,680.00 8,138,964.00
Income tax payable 19 84,761,901.00 -
Other Current Payable 20 22,460,657.00 21,590,611.00
Total current liabilities 2,216,960,750.00 2,089,618,480.00

Non-Current Liabilities
Deferred service concession revenue 21 8,488,800,312.00 7,845,546,387.00
deferred credits 22 549,654,585.00 145,861,631.00
Deferred tax liabilities 31 1,225,818,117.00 218,298,598.00
Trust Liabilities 23 135,521,662.00 -
Total non-current assets 10,399,794,676.00 8,209,706,616.00

Total Liabilities 24 12,616,755,426.00 10,299,325,096.00

 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Political Science and Public Administration
GRADUATE STUDIES

Equity 21,422,089,550.00 21,076,544,999.00

34,038,844,976.00 31,375,870,095.00
PHILIPPINE RECLAMATION AUTHORITY
STATEMENTS OF FINANCIAL POSITION December 31, 2019 and 2018
(In Philippine Peso)

Note 2019, 2018 (As restated)

ASSETS
Current Assets
Cash and Cash Equavalent 5 3,487,696,156.00 1,151,673,192.00
Short-Term investment 6 6,283,857,513.00 7,612,697,023.00
Total trade and other Receivables. Net 7 4,180,313,566.00 2,940,672,367.00
Inventories 8 892,996,729.00 892,022,693.00
Other current assets 9 73,086,521.00 80,414,426.00

Total Current Assets 14,917,950,485.00 12,677,479,701.00

Non Current Asset

Investment Inventory 10 9,353,756,185.00 9,353,756,185.00
Sefviced comcession asset, net 11 8,925,677,401.00 8,300,757,755.00
Other financial assets 12 4,225,680.00 4,225,680.00
Property and equipement, net 13 93,781,571.00 101,433,479.00
Other non-current assets 14 763,453,654.00 938,217,295.00
Total non-current assets 19,140,894,491.00 18,698,390,394.00

34,058,844,976.00 31,375,870,095.00

LIABILITIES AND EQUITY

Current liabilities
Trade and other payable 15 1,344,057,564.00 1,330,149,742.00
Dividend payable 16 740,963,856.00 721,201,548.00
Inter-agency payable 17 18,327,092.00 8,537,615.00
Trust liabilities-current 18 6,389,680.00 8,138,964.00
Income tax payable 19 84,761,901.00 -
Other Current Payable 20 22,460,657.00 21,590,611.00
Total current liabilities 2,216,960,750.00 2,089,618,480.00

Non-Current Liabilities
Deferred service concession revenue 21 8,488,800,312.00 7,845,546,387.00
deferref credits 22 549,654,585.00 145,861,631.00
Deferred tax liabilities 31 1,225,818,117.00 218,298,598.00
Trust Liabilities 23 135,521,662.00 -

Total non-current assets 10,399,794,676.00 8,209,706,616.00

 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Political Science and Public Administration
GRADUATE STUDIES

Total Liabilities 24 12,616,755,426.00 10,299,325,096.00

Equity 21,422,089,550.00 21,076,544,999.00

34,038,844,976.00 31,375,870,095.00

PHILIPPINE RECLAMATION AUTHORITY

STATEMENTS OF COMPREHENSIVE INCOME December 31, 2019 and 2018
(In Philippine Peso)

Note 2019 2018

REVENUE

Business Income 25 4,057,936,422.00 592,271,412.00

Service Income 26 299,053,218.00 8,590,446.00

Miscellaeous Income 27 2,434,735.00 4,256,932.00

4,359,424,375.00 605,118,790.00
COST OF SALES - (9,424,297.00)

GROSS INCOME 4,359,424,375.00 595,694,493.00

OPERATING EXPENSES

Personal Services 164,788,791.00 150,812,511.00

Maintenance and Other Operating Expenses 2,766,382,132.00 435,078,645.00

INCOME FROM OPERATION 1,428,253,452.00 9,803,337.00

OTHER INCOME (EXPENSES)

Interest income on savings and short-term
investment 321,450,284.00 230,511,965.00

loss from changes in fair value of financial instrument - (1,203,736.00)

Financial Expenses (7,207,981.00) (7,017,240.00)

314,242,303.00 222,290,989.00

NET INCOME BEFORE TAX 1,742,495,755.00 232,094,326.00

INCOME TAX (EXPENSE) BENEFIT (1,146,056,401.00) 34,815,501.00
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Political Science and Public Administration
GRADUATE STUDIES

NET INCOME/TOTAL COMPREHENSIVE INCOME 596,439,354.00 266,909,827.00

In reference to the balance sheet and income statement of the Philippine Reclamation Authority
(PRA) for the year 2018-2019, the following are the computed financial leverages and liquidity
ratios:

1. Current Ratio = Current Assets/Current Liabilities

2018
Php 12,677,479,701/ Php 2,089,618,480= 6.06

2019
Php 14,917,950,485/Php 2,216,960,750 = 6.73

 Philippine Reclamation Authority (PRA) with a current ratio greater than three indicates that the
government agency is not using its current assets efficiently or is not managing its working capital
properly. As seen the current ratio of the PRA is too high on both years, in which case the agency
may be inefficiently using its current assets or its short-term financing facilities. This ratio provides
information on the ability of the agency to meet its short-term financial obligations out of
unrestricted current assets.

2. Inventory turnover = Average inventory/Cost of goods sold

Not applicable, since PRA is involved in a wide-range of projects and delivery of services
related to land development, urban renewal and infrastructure projects as well as financing and
construction of buildings, particularly for other government agencies.

3. Debt to asset Ratio = Total liabilities / Total assets

2018
Php 10,299,325,096/ Php 31,375,870,095 = .33 (33%)

2019
Php 12,616,755,426/Php 34,058,844,976= .37 (37%)

 A ratio below 1, indicates that a greater portion of a company's assets is funded by equity. This
means that the PRA with a DTA of less than 1 shows that it has more assets than liabilities and could
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Political Science and Public Administration
GRADUATE STUDIES

pay off its obligations. Agencies unable to service their own debt may be forced to sell off assets or
be abolished.

4. Working Capital = Current Assets-Current Liabilities

2018
Php 12,677,479,701 - Php 2,089,618,480 = Php 10,587,861,221

2019
Php 14,917,950,485 - Php 2,216,960,750 = Php 12,700,989,735

 In 2018, the PRA have current assets of Php 12,677,479,701 and Current liabilities amounting to
Php 2,089,618,480 therefore the working capital would be Php 10,587,861,221 and then in 2019
their working capital has increased because their total assets have increased although their current
liabilities slightly increased. PRA has substantial positive working capital; therefore, it should have
the potential to create and implement more programs. As GOCCs have a 90% retained funds they
have a higher income – the higher the income the better the financial status and there are more
programs that could be implemented and pursued.

5. Return on Assets = Net Income and Interest Expense/Assets

2018
Php 266,909,827 + / Php 31,375,870,095 =.008 (8%)

2019
Php 596,439,354 + / Php 34,058,844,976 =.017 (1.7%)

 Low percentage return on assets may indicate an inefficient use of agency’s facilities, or machinery.
Typically, different industries have different Return on Assets. Industries that are capital-intensive
and require a high value of fixed assets for operations, will generally have a lower ROA like for
instance is the PRA, their large asset base has increased the denominator of the formula.

6. Quick Ratio = Current Assets – Inventory/Current Liabilities

2018
(Php 12,677,479,701– Php 892,022,693)/ Php 2,089,618,480= 5.64

2011
(Php 14,917,950,485 – Php 892,996,729)/ Php 2,216,960,750= 6.32
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
College of Political Science and Public Administration
GRADUATE STUDIES

 Quick ratios are frequently defined as measures of a company's ability to pay current debt liabilities
without relying on inventory sales. The quick ratio is more conservative than the current ratio
because it excludes inventories, which can be difficult to liquidate at times. In this case, the PRA
with a quick ratio greater than one can be instantly cleared of its current liabilities although a quick
ratio that is too high means that some of the money/funds is not being put to work or programs.

Reference.

Tanaka, Y. (2013). Audited Financial Statement. Retrieved July 15, 2021, from Pea.gov.ph

website: https://www.pea.gov.ph/22-good-governance-conditions-mc-2013-05/303-
audited-financial-

statement?tmpl=component&print=1&fbclid=IwAR3U6ERe4mqCctEXXOAYRfxCN9Td

J11sP3w9T1YzxHHGFk7_0VfgLlO_pl8