365
)
Inventory 28,456,368 134,863,797 155,442,289 77,536,576 37,749,478 Cost of Goods Sold 2,348,073,422 1,944,724,778 1,734,728,854 1,314,304,215 865,966,271
Total (in days) 4.42 25.31 32.71 21.53 15.91
B. Inventory Turnover
Cost of Goods Sold
Inventory
Cost of Goods Sold 2,348,073,422 1,944,724,778 1,734,728,854 1,314,304,215 865,966,271 Inventory 28,456,368 134,863,797 155,442,289 77,536,576 37,749,478
Total (times) 82.51 14.42 11.16 16.95 22.94
C. Average Collection Period
Receivables
(
Total Sales
365
)
Receivables 715,241,065 900,652,472 715,816,762 352,329,640 296,969,099 Total Sales 2,926,429,244 2,329,946,985 2,253,760,239 1,585,011,759 1,017,682,209 Total (in days) 89.21 141.09 115.93 81.14 106.51
Table 3.5 shows the different leverage ratios of the company. The significant increase in the company’s debt-to-equity and debt-to-asset ratio shows that the company is taking risks. In addition, it could be considered as a risk for investors since the company had a substantial drop in 2012 with only a slight recovery in 2013 based on its profitability performance (in terms of net income from years 2009 to 2013 and generating sales for the past five years). In addition, the increase of debt and other financing needs of the company can be attributed to adding new investments and expansion that the company is undertaking.
TABLE 3.6. Activity Ratios for Years 2009 to 2013 (in PHP)
Table 3.6 shows the different activity ratios for years 2009 to 2013. The company’s inventory turnover is relatively low particularly in years 2009 to 2013, which is a good indicator because inventory is moving fast to be sold during the year’s business operations. In addition, the company’s receivable turnover is significantly high, making the company’s collection period much longer, generating lower cash collection during the year.
The following are the Strengths and Weaknesses of ANI and its significant weights. The ratings on the factors are identified as a major weakness (Rating: 1); minor weakness (Rating: 2); a minor strength (Rating: 3); or a major strength (Rating: 4).
STRENGTHS
S1. The sole company in the Philippines consumer staples industry adopting “farm-to- plate” business model.
Rating 3: ANI is the sole company in the Philippine consumer staples industry adopting a “farm-to-plate” business model. They have the Farming Group, the Export Group, the Distribution Group, the Foreign Trading Group and the Retail Group that completes its strategy of integrating its portfolio of services in line with its vision of becoming a global leader in providing nutrition from farm to plate. This factor adds to the competitive advantage of ANI in terms of maximizing its products through its subsidiaries.
S2. Complete and strategic integration of operations.
Rating 3: ANI relies on its now fully integrated operations as a strategic advantage over its competitors in the industry whether local or foreign. Utilizing a zero-waste approach in its operations. The foregoing operation of ANI significantly accelerates its drive to control supply chain and thereby ensure supply and product quality, and also reduce the risks in developing their own farms. This factor adds to the competitive advantage of ANI in terms of maximizing its production through its subsidiaries.
S3. Greenergy Holdings, Inc.’s acquisition of 26% of AgriNurture, Inc.’s stock.
Rating 4: Greenergy’s idea in buying ANI was to diversify the portfolio of ANI to other ‘green’ or agricultural projects. ANI has diversified into various agro-commercial businesses,
specifically focusing on the export trading of fresh Philippine carabao mango, cavendish banana and pineapple. With Greenergy in the picture, ANI can expand and enhance its operation through operating with more technological resources.
S4. International and Domestic Accreditations.
Rating 3: Having various accreditation locally and internationally, ANI establish a reputation in which their products will be trusted when it comes to producing good export quality products that can make consumers and distributors.
S5. Strong strategic partnerships in the industry
Rating 3: AgriNurture Inc.’s core business has a significant and direct impact on the livelihood of Filipino farmers and households, in addition to contributing directly to agricultural development and food security. In the process, the Company has forged numerous strategic alliances with government agencies, business organizations, universities, NGOs, and local and international media that were built over years of integrity and trust.
S6. AgriNurture Inc. expands banana farm in Indonesia
Rating 4: ANI has already acquired 3,000 hectares of which is allotted for the production of 40 metric tons per hectare of Cavendish banana. The company has been focusing on expanding its plantation as the company expects high growth to continue in markets outside the Philippines. With AgriNurture’s expansion, the company may boost its productivity and increase its income through increase in export sales. These networks and alliances may provide ANI the capability to mobilize resources promptly and at a bigger scale when market opportunities arise.
WEAKNESSES
W1. Diversified business model leads to the mismanagement of some subsidiaries.
Rating 2: AgriNurture may face uncertainties with their operations due to operational risk involving inadequate or failure internal processes and systems of the parent company as well as its subsidiaries.
W2. Incapability of dividend declaration
Rating 2: Declaring dividends show that a company is stable. Investors look at a consistent dividend payout as a sign of the company's stability. When a company has been able to pay the same dividend over a long period of time, it gives investors more confidence when investing in that company. As a result, ANI’s incapability of declaring dividends may result to various negative effects to the investors and stakeholders.
W3. Continual leasehold of farmlands for agricultural production
Rating 1: With ANI’s lease holding various land in producing agricultural products, may create an impact to its investors. It may also create unnecessary expenses that ANI can save if they start purchasing their own land.
W4. Excessive costs of production
Rating 1: ANI has been unnecessarily spending expenses in which they can save by reducing it and invest in other commodities like buying new and high technological products which can boost productivity and lessen salary expenses.
Strengths & Weaknesses Weight Rating Weighted Score S1.Distinctive “farm-to-plate” business model in the
local market. 11% 3 0.30
S2. Complete and strategic integration of operations. 8% 3 0.24 S3. Greenergy Holdings, Inc.’s acquisition of 26% of
AgriNurture, Inc.’s stock. 6% 4 0.24 S4.International and Domestic Accreditations. 7% 3 0.21 S5. Strong strategic partnerships in the industry 9% 3 0.27 S6. Expansion of banana farm in Indonesia 10% 4 0.40 W1. Diversified business model leads to the
mismanagement of some subsidiaries 4% 2 0.08 W2. Incapability of dividend declaration 4% 2 0.08 W3. Continual leasehold of lands for agricultural
production 10% 1 0.10
W5. Excessive cost of sales and services. 18% 2 0.36 W6. Excessive operating expenses. 13% 2 0.26
TOTAL 100% 2.54
TABLE 3.4. The Internal Factor Evaluation Matrix
b. Strategic Issues Based on Internal Factors
The internal factors stated above are based from its Annual Reports and some articles over the internet and the newspaper. It is evident that ANI uses its resources effectively and efficiently when it comes to its “farm-to-plate” business model. As the Philippine agricultural sector opens it into a more accessible market through ASEAN integration and increasing exports, ANI has been aggressively improving its product by penetrating different products in their export market.
Chapter IV