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Philippine Long Distance Telephone Company

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Philippine Long Distance Telephone Company (PLDT) was founded on November 28, 1928. It is the leading telecommunications service provider in the Philippines. Through its principal business groups – fixed line, wireless and others –PLDT offers a wide range of telecommunications services across the Philippine’s most extensive fiber optic backbone and fixed line and cellular networks. PLDT is listed on the Philippine stock exchange (PSE: TEL) and its American depositary shares are listed on the New York stock exchange (NYSE:PHI). PLDT has one of the largest market capitalizations among Philippine-listed companies. When PLDT was incorporated and given the franchise to establish and operate telephone services in the country on November 28, 1928, a typhoon had just ravaged Eastern Visayas, Bicol peninsula, and Samar.

The ability to communicate amongst loved ones and across the country became crucial. Sadly, phone networks then were like disconnected intercom systems and you could only call people within your own small city. Filipinos were disconnected from neighboring towns, disconnected from friends in the other island and, needless to say, disconnected from the rest of the world. It was under this scenario that the law was signed giving birth to PLDT. What the new law hoped to achieve was to interconnect these “intercom” systems into a seamless nationwide network that would facilitate communication and delivery of services to the people, as well as spur economic development in the countryside.

The first president of PLDT was Theodore Vail Halsey while Major J.E. Hamilton Stevenot, who represented the American firm general telephone and electronics corp. (GTE), was elected executive vice president and general manager. Under the American owners of PLDT, many small phone companies in the provinces were acquired by the company to help speed up the rollout and connection of these different phone systems all over the country. The management of PLDT was then set to lay the groundwork towards linking Filipinos to each other and, more importantly, to the world.

ANALYSIS:
-Based on the liquidity ratios of PLDT, the company was not able to reach the average and satisfactory figure of current and quick ratios, which is 2.0 but 1.0 is actually acceptable, for a company to be qualified as an efficient one.Comparing to the same industry, like GLOBE TELECOMMUNICATION, PLDT has a lower current and quick ratios as of 2013 with a difference of .09 for current ratio and .03 for quick ratio. It means that GLOBE TELECOMMUNICATION is more liquid than the PLDT. When it comes to the utilization of assets, there is acceleration in the operating cycle of the company.

PLDT was able to speed up its collection of their receivables and re-stocking of inventory from 73 days for 2011 to 63 days for 2012 down to 60 days for 2013. The debt management ratios of the company show the measurement of the extent of the leverage. Since the liabilities of the company are higher than its equity, the creditor will give a much higher interest rate to the PLDT compared to the normal interest rate of the creditors. In terms of profitability of the company, PLDT is generating net income in an increasing pattern by at most 1% per year. Its return on equity shows that the company is worth enough to invest because it has a high rate of about 24% last 2013. RECOMMENDATION:

Based on the analysis that we had about the profitability of PLDT, specifically to the return on equity, we recommend to the potential investors that PLDT is worth enough to put their investments for this company is having a high rate on its profitability based on its equity and it surpassed the standard rate which is 15%. The company is actually having 24% rate on return on equity as of December 31, 2013.

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