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Research Design

            The
research used a Descriptive design to give the researchers all the applicable
information needed to break down, predict the financial performance of Bogo –
Medellin Milling Company, Incorporated, and to be able to set a fair market
value for a given inherent value of the company to the stakeholders in the
future.

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            The
researchers got the needed information from the secondary sources. These
sources were used to bond latest situation of the said industrial company. This
kind of research design supports in answering the question about how good the
industry acting in the economy.

The following methodology stated in the research
environment, research instruments, and research procedure.

Research
Environment

            This
part gives the location on where the research was conducted and contains the
map for the location of the office of the selected industrial company, Bogo –
Medellin Milling Company, Incorporated. The study was conducted in Barangay Luy
– a Medellin, Cebu and the figure below shows the map of Medellin Cebu.

Figure
1:
Location of Bogo-Medellin Milling Company, Inc.

(Source: https://www.google.com.ph/maps)

 

            The
researchers will meet and conduct their study. The gathering and calculation of
information would be done at School of Business and Economics Library of the
University of San Carlos – Downtown Campus. The school campus is surrounded by
different commercial institution, namely Cebu Educational Supply, 7/11
Convenience Store, Mini Stop, Bank of the Philippine Islands, Post – Bank,
Jollibee, Pink Dormitories, G7, U.S.D.A. Dormitory Hotel, Golden Valley Hotel,
Mr. J Resto Bar, Cloud 19 Internet Café, Bro’s Cafeteria, Cup and Saucer, San
Carlos Drug Store, Gentlemen Café, Alberto’s Pizza, Cebuana Lhuillier, ML
Kwarta Padala, Palawan Pawnshop, Jerome Pawnshop, LBC, and Review Center. The
School of Business and Economics Library will allow the researchers to access
the internet to accumulate significant information for their study, and serve
as a meeting place for the calculation of data.

 

Research
Respondents

            In
this study, the information is based on the data listed or published on PSE or
Philippine Stock Exchange Incorporated (pse.com.ph) and on PSE EDGE or
Philippine Stock Exchange Electronic Disclosure Generation Technology
(edge.pse.com.ph). The PSE Edge website is an entirely automated, up – to – the
– minute that eases the systematic processing, verifying, compliance,
dissemination, and analysis of publicizing reports acknowledge the exchange.
The system is supplied with a variation of features to assist institutionalize
the publicize reporting of Philippine Stock Exchange’s listed companies,
develop investor’s disclosure searching and scrutinize involvement, and
reinforce universal issuer clearness in the market.

Information that is not sourced over with PSE EDGE
or Philippine Stock Exchange Electronic Disclosure Generation Technology is
sourced from Google. Since they don’t have an official website.

Research
Procedure

            Gathering of Data

            All
information used in this research is secondary information on the financial
reports provided by the companies. Qualitative information is obtained
primarily through the Philippine Stock Exchange Electronic Disclosure
Generation Technology (edge.pse.com.ph).

            Information
for the financial reports for 2013 to 2017 is acquired through Philippine Stock
Exchange Electronic Disclosure Generation Technology, as they lend the official
report of the companies and other significant information which is helpful for
the valuation of Bogo – Medellin Milling Company, Incorporated.

            Treatment of Data

            After
accumulating significant information about the profiles and financial reports
of Bogo – Medellin Milling Company, Incorporated, the researchers concentrate
on assessing and translating the financial ratios.

            Using
the secondary information on the website, the researchers investigate and
assess the company’s performance through computing common financial ratios and
examine them by using the following formulas from the financial statements:

Liquidity Ratio

 

 

Activity Ratios

                       

             

 

 

Leverage Ratios

                       

 

 

 

Profitability
Ratios

                       

                       

          

 

Horizontal
Analysis  

                        where;

Components
  =          e.g.
Cash, Accounts receivable, Marketing Securities, and etc.

Total Cash     =          e.g.
Current Asset, Non-current Asset, and etc.

 

Vertical
Analysis

                        where;

Ct-1     =          amount
of the previous year

                        Ct        =          amount
of the recent year

 

Discounted Cash
Flow                     

                        Where;

                                    CF       =
         Cash Flow

r           =          Discounted
Rate (Weighted Average Cost of Capital)

 

Weighted Average
Cost of Capital

                        Where;

                                     

 

 

                        also;

                                    ri          =          Cost
of Debt

                                    rp         =          Cost
of Preferred Stock

                                    rr          =          Cost
of Retained Earnings

                                    rn         =          Cost
of new common stock

 

Free Cash Flow
for the Firm (FCFF)

 

Capital
Expenditure (CAPEX)

                       

 

Cost of Equity

 

The researchers used the formulas on the forecasted
financials to bring about the predicted price of the company’s stock. These formulas
consist of:

·        
Price to
earnings ratio

·        
Return on equity

·        
Operating margin
ratio

·        
Price to book
value

·        
EV/EBITDA

·        
Price to sales
ratio

 

After doing these computations, an ordinary
evaluation of the outcome of Discounted Cash Flow and Relative Valuation will
be used to present a valuation of the companies’ prices.

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