A financial analysis of a mission school in Sariaya, Quezon from 1989-1993

• Main Author: Reyes, Rafael A., FSC.
• Format: text
• Language: English
• Published: Animo Repository 1994
• Subjects: Education > Finance; Educational planning > Philippines > Quezon (Province); School management and organization > Philippines > Quezon (Province); Educational Administration and Supervision
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/1583
• Institution: De La Salle University

The purpose of this study is to analyze the balance sheets and the income and expense statements of St. Joseph's Academy in order to assess its financial performance from 1989 to 1993. The financial ratio analysis was used to analyze the financial statements of the school to determine whether the school performed effectively and efficiently in the following areas: asset utilization, liquidity, leverage, and profitability. By analyzing the ratios under these four categories, the following questions were answered: Is the school using its assets efficiently? Is the school able to pay its short-term obligations on time? How much debt does the school use to finance its operations? Is the school able to generate profits at the end of the school year? The study also made use of the DuPont method to analyze the financial ratios. Furthermore, the study got the average of the financial ratios of twelve schools from the Southern Tagalog region to determine the school industry average for the area. A comparison of the financial ratios of St. Joseph's and the school average was done to determine whether the former had a better financial performance than the latter. Finally, a financial ratio projection was done to see how these ratios will perform in the coming years. The study produced the following findings. First, the asset utilization analysis indicated a slight decrease in the total asset utilization in 1992 and 1993. There was also an indication that the school was not strict in the collection of its accounts receivable. This led to the presence of non performing assets. Second, the school improved its liquidity and was in a position to meet all of its short-term financial obligations. Third, the school continually relied on debts to finance its capital structure. Lastly, the school did not generate any profits during the period covered by this study because operating expenses were always larger than revenues. The DuPont analysis showed that the return on equity registered losses because of losses in the profit margin from 1989 to 1993. The comparison of St. Joseph's ratios with those of the school average showed that the former did better in the following areas: total asset turnover, fixed asset turnover, current ratio and the acid test ratio. Finally, the regression equation showed that time has a significant influence on the performance of the financial ratios. As a result of these findings, the study came up with the following conclusions. First, St. Joseph's was not able to improve its asset utilization due to the presence of non performing assets and the laxity in the collection of accounts receivable. Second, the school is liquid and has available cash to pay off its short-term debts. Third, the school is highly dependent on debts to finance its operations. Lastly, the school continued to incur losses due to its failure to control operating expenses. The school administration needs to look into the following areas in order to improve the financial performance of the school: to utilize non performing assets in income-generating alternatives to collect accounts receivables on time and to control operating expenses so as not to exceed revenues.