Tuesday, December 11, 2012

Comparing Cosmetique Asia Silka Papaya's Gross Profits with Johnson and Johnson, Unilever, and Colgate Palmolive

(In the third part of this series on Cosmetique Asia Silka Papaya's Tax Evasion, we revealed how the company padded its Cost of Sales in order to shrink its Net Income and thereby evade paying the right taxes. Today, we will be showing how peculiarly tiny Cosmetique Asia Silka Papaya's Gross Profits are.  We will be comparing Cosmetique Asia Silka Papaya's Gross Profits with those of Johnson and Johnson, Unilever, and Colgate Palmolive.)

In 2011, Cosmetique Asia Silka Papaya's Cost of Sales nearly doubled from P469,298,415 in 2010 to P833,597,551! It's Net Sales was at P994,928,845 and its Gross Profit was at P161,331,294, making its Gross Profit Rate OF JUST 16%!

In year 2008, 2009, and 2010, Cosmetic Asia Silka Papaya declared gross profit rates of around 25%.

Looking at the company's figures alone, one might be fooled into thinking that nothing screwy is happening with its financial statement.

But comparing it with the Gross Profits of other companies, one will see the glaring disparity that marks Cosmetique Asia Silka Papaya's financial statement as the odd man out. -- a sure tip off that the figures are being manipulated and set arbitrarily with the objective of shrinking its taxable income.

One example is Johnson and Johnson whose Gross Income Rate was at 44% in 2009 and 50% in 2009.

Unilever's Gross Income Rate was at 55% in 2010 and 47% in 2011.

Colgate Palmolive's Gross Income Rate was at 55% in 2008, 56% in 2009, 59% in 2010, and 56% in 2011.

These companies establish somewhat of a norm which is at 40% or 50% Gross Profit, compared to Cosmetic Asia Silka Papaya which has a Gross Profit rate of 25% to 16% at its lowest.

Looking at its unusually rapid and consistent Net Sales Growth at 90 percent per year, its unusually high Cost of Sales, and its peculiarly low Gross Profits, Cosmetique Asia Silka Papaya has all the signs of doctoring its financial figures to evade taxes by fooling the BIR into thinking its income is really small.

In the next post, we will show just how Cosmetic Asia Silka Papaya ends of OWING the Bureau of Internal Revenue as much as P1.5 Billion in unpaid taxes.)

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