Our Annual Report – Good News and Learning Curves
Here is our 2016 annual report. Our customers would be delighted to know that we have a strong balance sheet and have enough capital to meet their demands.
2016 was a fruitful year for Mostaco Marketing. Revenues were up, we added 100+ new customers and we centralized our sales process. Before 2016, our sales process was a mess. Everything was done manually. Every new order is written to an order slip. When we subscribed to Zoho Books, everything fell into a place. There was a seamless process in entering sales orders, properly packing and dispatching our items and proper invoicing. We still use Quickbooks as our main accounting system and thanks to Zoho Books API every sales order is transferred into Quickbooks.
While there were a lot of good news, there were some learning curves as well for 2016. We introduced a CRM system but that never really catch on. Our sales executive did not use it properly and during the succeeding months, the CRM system was more a burden than an advantage. We ditched it after 4 months.
We also moved to our spanking new office. Our suppliers were happy to know that they do not need to carry their deliveries to the second floor. Ha!
We started 2016 with 1 Executive Secretary and 2 Sales Executives. Unfortunately, due to attrition the Executive Secretary and Sales Executive left and we promoted the remaining Sales Executive to Executive Secretary. There was a revolving door for Sales Executives and at least 7 filled out the position but all of them left. There is a new Sales Executive in tow for 2017 and here’s hoping she stays there for the whole year.
As a summary, here’s what we have accomplished for 2016.
- Compared to 2015, Revenues went up 118%, Gross Profit went up 148%, Net Profit went up 203%
- Cash in hand went down 31% because we made a conscious effort to reduce our Accounts Payables to a more manageable level and it ate up some of our cash in hand
- We added 2 vehicles upping our Fixed Assets by 62%. Our Total Assets are up 50% compared to 2015
Sales by Items and Financial Ratios
If you dig financial ratios, here is the comparison between 2015 and 2016. Further down, you can see the breakdown of our sales for 2015 and 2016. To understand the definitions of financial ratios, you can check out Investopedia.
|Net Working Capital Ratio||0.26||0.22|
|Asset Turnover Ratio||2016||2015|
|Average Collection Period (in Days)||39.08||13.47|
|Return on Assets||36%||18%|
|Return on Equity||86%||56%|
|Financial Leverage Ratio||2016||2015|
|Debt to equity ratio||0.36||0.58|
|Sales by Item Summary||2016 % of Sales||2015 % of Sales|
|Epson Ribbon Cartridges||1.0%||1.2%|
|Inks and Toners||0.1%||--|
- Current ratio and quick ratio are liquidity ratios that measure a company’s ability to pay current liabilities. A value above 1 is sufficient for the company to meet their short term and current liabilities. We are well above 1 for both current ratio and quick ratio.
- Our cash ratio decreased for 2016, which is not necessarily a bad thing. We used allowable cash to open up new customers, acquire new delivery vehicles and manage our accounts payables.
- Our average collection period increased for 2016. We can afford to give our customers at least 30 days of payment terms. Also worth noting is that our inventory turnover ratio increased in 2016. The inventory turnover ratio for 2016 means that our inventory sold out 46 times for the year. A high inventory turnover ratio implies strong sales for the year.
- Our profitability ratio numbers increased across the board for 2016.
- While Mostaco Marketing is still proudly booststrapped, our financial leverage ratios remain strong. Our interest coverage ratio of 18.42 means we can borrow up to 18 times more than our earnings to meet interest obligations.
- POS paper sales, especially thermal paper sales, went down as expected for 2016 due to BIR’s banning of thermal paper receipts. The good thing is that we were prepared for the change and focused our attention in marketing our journal papers in addition to our ERC ribbons. Our journal paper sales tripled in 2016. In addition, our office supplies sales also went up in 2016.
- Now that we are registered in PhilGEPS, we will be focusing our efforts in meeting the office supplies and office consumables needs of various government agencies. Check out our updated PhilGEPS awards in our blog sticky post.