Republic of the Philippines

BILIRAN PROVINCE STATE UNIVERSITY

ISO 9001:2015 CERTIFIED
SCHOOL OF ARTS AND SCIENCES

FINAL EXAMINALTION
FINANCIAL ANAYLSIS AND REPORTING
NAME: INOT, MICHI Yr&SeC.: BSBA FM 3C

FINANCIAL PERFORMANCE OF XYZ LENDING INVESTOR

AS OF APRIL 31, 2021

EFFICIENCY

DELINQUENT RATE 23%

GROWTH IN MEMBER'S CONTRIBUTION 1.00%

COST PER VALUE OF BUSINESS 15%

ADMINISTRATIVE EFFECIENCY 3.0%

140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00%

ADMINISTRATIVE
COST PER VALUE
GROWTH
OF IN MEMBER'S
DELINQUENT RATE
EFFECIENCY BUSINESS CONTRIBUTION
Sales 3.00% 15% 1.00% 1.2

Efficiency ratios are also called as the activity ratios. These ratios determine the efficiency of a
business by using its liabilities and assets to boost sales and optimize profits. Inventory
turnover and turnover ratios are examples of efficiency ratios.

a.1.Administrative efficiency

FORMULA: administrative cost/average total asset

COMPUTATION 2021: 833,271.76 / 27,616,849.75=

Result 3.0%(AO4/30/21)

By this it measures how efficiently a company converts the revenue it generates into operating

profit. And therefore, the company return on total asset of 1% during the period

To improve efficiency ratio the lending investors must target Increase revenue always because

it is the easiest way to achieve and maintain good efficiency ratio.

 XYZ can increase revenue in a variety of ways. One option is to raise your prices, which

you can do at any time. However, there is a limit to what the Market will sustain and your product

or service is only worth what someone will pay for it. Another strategy to boost revenue is to

make sure you're providing the best possible service to your customers. This allows you to serve

customers more quickly, and time is money. You can serve more customers with the same

resources if you are more efficient.

The simplest method is to keep your spending as low as possible. What part of the

company is the most inefficient? Your most precious resource, your staff, is most likely your

largest expense. The time of your employees is frequently your most expensive asset. Rather

than attempting to save costs, the greatest approach would be to ensure that their time is well

spent and that they are as productive as possible.

a.2.Cost per value of business

FORMULA: administrative cost + financing cost/ total volume of business=
COMPUTATION 2021: 852,900.51/ 5,683,500.00

AO 4/30/21 result:.15%

Cost per value of a business method is to look at the impact that varying levels

of cost and volume have on operating profit.

There are several cost-reducing measures that the XYZ lending can adopt to

increase its bottom line. Negotiating new contracts, looking at alternative

suppliers and having a sound inventory management system are some of the

key costs-reduction measures you can take today. Businesses can also use

the internet to consolidate administrative costs.

a.3. Growth in member's contribution

FORMULA: paid-up capital end-paid up beg/paid-up capital beg=
110,413.30
11,228,956.14-11,118,542.84

11,118,542.84

result :1.0%

The purpose of this computation is to measure the ability of the cooperative to encourage
members to increase their capital contribution.

XYZ Lending can accumulate growth in member contribution by many ways like EXPAND
lending system this will continue to promote development of sound and efficient lending
system in order to increase the supply of finance.
 a.4.Delinquency Rate

FORMULA: Past due loans

Total outstanding loans

COMPUTATION 2021: 4,775,473.35

20,825,904.00
result:23%

The purpose of this computation is to measure the adequacy of allowance for expected losses
on loans.
The result shows that the company has high rate of delinquent loans to be collected.
There are several ways to reduce delinquency rate. The common problem today is that we
adopted electronic payment which is given as a failed payment transaction. People take
advantage of it as an excuse not to pay their dues due to different circumstances using electronic
payment but good communication is the key. We can send bills out promptly before due so that
we can give our customer time to process payments and remind them with notices ahead of time
and late payment notices when necessary. So that even a little percent we reduce delinquency
rate by this. Having a high rate of delinquency will result to credit risk which means that the
company will experience potential loss if their member does not pay their bill.

STABILITY

89%

LIQUIDITY
241%

0% 50% 100% 150% 200% 250%

LIQUIDITY
SOLVENCY 89%
LIQUIDITY 241%

SOLVENCY LIQUIDITY

The solvency ratio helps us assess a company’s ability to meet its long-term financial
obligations.
To calculate the ratio, divide a company’s after tax net income – and add back depreciation–
by the sum of its liabilities (short-term and long-term).
A high solvency ratio shows that a company can remain financially stable in the long-term.

b.1.Liquidity
FORMULA: current assets/current liabilities=
COMPUTATION2021: 23,302,006.34
9,653,319.56
result:241%
This calculation is used to assess the cooperative's ability to meet its short-term obligations

when they become due.

XYZ can maintain or improve their liquidity by transferring funds into higher interest rate

accounts when they're not needed. Paying off liabilities quickly improves the liquidity ratio, as

well as cutting back on short-term overhead expenses such as rent, labor, and marketing.

Additional means for XYZ that can improve its liquidity by removing short-term debt from the

balance sheet. Short-term financing can also be used to acquire inventory or finance projects

according to the Bankruptcy Code.

b.2.Solvency
FORMULA:

Assets + APPL- ( liabilities – deposit + P/due deposit liabilities + share cap

COMPUTATION2021: 21,435,771.54
24,035,088.13
result:89%

The goal of this calculation is to determine how well the cooperative protects its members'

savings and share capital contributions in the event that the cooperative's assets and liabilities

are liquidated. The higher a company's solvency ratio, the more likely it is to meet its financial

oligations. Companies with lower scores are said to pose a higher risk to banks and creditors.

There are ways to improve your company's debt-to-equity ratio if it is too high. Increase

your sales and marketing efforts to earn more money from your customers. If you need a quick

financial fix, sell some of your assets or reduce your spending.

 TURN OVER RATIO
9.00%

8.00%

7.00%

6.00%

5.00%

4.00%
3%
3.00%

2.00%

1.00% 0.50%

0.00%
ASSET TURN OVER LOAN RECEIVABLE TURN
-1.00% OVER
-2.00%

C. 1 ASSET TURN OVER

FORMULA: Gross revenue
AverageTotalAsset

COMPUTATION2021: 1,422,908.24
27,616,849.75
result:0.5%

The goal of this computationistomeasure is to demonstrate how efficiently the cooperative

uses its assets to generate income.

The simplest way for XYZ to improve asset turnover ratio is to increase revenue. Although the

assets may be properly utilized, sales may be slow, resulting in a low asset turnover ratio.

More promotions and faster movement needed to boost the company's sales.

C.2 LOAN RECEIVABLE TURN OVER

FORMULA: Loan releases

Average loans receivable
COMPUTATION2021: 5,683,500.00
20,311,984.00
result:3%

Receivable turnover is a measure of how quickly a company collects credit-based sales. This

category includes sales for which cash payment was postponed until after the sale date. When

the proportion of receivables to sales is low, the turnover rate is high.

XYZ's turnover ratio could be improved by changing its collection process. A business could

also give its customers discounts for paying on time. Companies must understand their

receivables turnover because it is directly related to the amount of cash available to pay their

short-term liabilities.
 PROFITABILITY

RETURN ON MEMBERS SHARE

2.50%

RATE OF NET SURPLUS

40.06%

RETURN ON ASSETS
2.06%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%

RETURN ON MEMBERS
RETURN ON ASSETS RATE OF NET SURPLUS
SHARE
Column2
Column1
Series 1 2.06% 40.06% 2.50%

D.1 RETURN ON ASSET

FORMULA: Net surplus
Average total assets
COMPUTATION2021: 570,007.73
27,616,849.75
result:2.06

The goal of this calculation is to determine an asset's ability to generate income.

there are two ways any business can improve its performance: increase profits or decrease
total assets. First, Increasing profits the numerator of the ROTA calculation is EBIT. This
profitability metric indicates how much revenue remains as profit after accounting for all
expenses other than taxes and interest payments on debt. EBIT reflects a company's
operational profitability by excluding those contractual obligations for which a company is liable
regardless of revenue. Since EBIT accounts for all expenses except for taxes and debt
payments, there are a number of ways to increase this figure. Increasing production or selling
price will increase revenues, assuming that sales remain consistent. Finding cheaper sources
for the materials needed to produce goods for sale lowers the cost of goods sold (COGS),
leaving a greater portion of revenue to cover operational expenses. Examples of ways that
operational expenses can be reduced are by moving to a cheaper part of town, downsizing
facilities to the bare essentials or eliminating employees.
Second is decreasing Total Assets
The other option for XYZ increasing a ROTA is to decrease its total net assets. To calculate
net total assets, subtract expenses for depreciation and allowances for bad debt from a
company's total assets. There isn't much to be done about the depreciation of assets or the
possibility that debtors will default on payments, which leaves reducing the initial asset total.

Total assets include everything a company owns, including fixed assets such as equipment
and real estate, as well as liquid assets such as cash and marketable securities. In an effort to
try and raise its ROTA, a business will examine all of its holdings to determine which assets
aren't contributing to operational efficiency. Selling fixed assets such as vehicles or equipment
that aren't being used and then renting or leasing items as needed is an effective way to
reduce equipment costs.
D.2 RATE OF NET SURPLUS
FORMULA: Net surplus
Gross Income
COMPUTATION2021: 570,007.73
1,422,908.24
result:40.06%
The goal of this computation is to assess a cooperative's ability to generate surplus.

D.3 RETURN ON MEMBERS SHARE

FORMULA: Amount allocated for dividend

Averagepaidupcapital

COMPUTATION2021:279,304.00
11,173,749.49

result:2.50%

This computation is to measures the earning capacity of a member's share capital ( based on
inflation rate)

XYZ can improve or achieve healthier return on members share by using more financial

leverage, they can finance themselves with debt and capital. By increasing the amount of debt

capital relative to its equity capital, it can increase its return on equity. Second, Increase profit

margins. As profits are in the numerator of the return on equity ratio, increasing profits relative

to equity increases a company's return on equity. Increasing profits does not necessarily have

to come from selling more product. It can also come from increasing prices of each product sold,

lowering the cost of goods sold, reducing its overhead expenses, or a combination of each.

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