AGAPE-PAREDES-POL - Evaluation of Financial Performance of San Jose Weter District

St.
Paul University Surigao

St. Paul University System
Surigao City, Philippines
EVALUATION OF FINANCIAL PERFORMANCE

OF SAN JOSE WATER DISTRICT
A Thesis Presented to
The Faculty of the College of Business and Technology
Saint Paul University Surigao
Surigao City
In Partial Fulfilment of the Requirements for the Degree

BACHELOR OF SCIENCE IN ACCOUNTANCY
By
Agape, Rissamae
Paredes, Jessie Bae
Pol, Jay Clark
June 2022
St. Paul University Surigao
Evaluation of Financial Performance of San Jose Water District ii
ACKNOWLEDGMENT
The researchers hereby express their gratitude to the following individuals for the
contribution of ideas and support to the realization of this study.
The Almighty God, for giving them the wisdom and perseverance to conduct and
complete this study.
Belle Jessa Mae T. Angob, CPA, the researchers’ adviser for her insights in guiding
and shaping the study through expertise in the field of accounting.
Dr. Erlita C. Guerra, MBA, MPA the researchers’ instructor for her encouragement,
expertise, advice, and patience in helping out the researchers and for the time and guidance
she showed in completing this work.
San Jose Water District, for their kind consideration and generosity of their time and
participation in providing the needed information for the fulfillment of the study.
To the beloved parents and family who showed their inspiring words of love and
financial support. Thank you to everyone, and may God bless us all.
Evaluation of Financial Performance of San Jose Water District iii
ABSTRACT
This study analyzed the audited financial statements of San Jose Water District with
main office located at San Jose, Dinagat Islands. The results and findings served as the basis
for recommendation to improve the financial management performance of San Jose Water
District. In addition, quantitative analysis was used in this study. The participants of the study
were the manager who is directly involved in the daily operations and the accountant for the
preparation of financial statements of San Jose Water District. The data gathered are SJWD's
audited financial statements that include the statements of financial position, financial
performance, and changes in equity for the fiscal years ended 2018, 2019, 2020 and 2021. The
data were analyzed and interpreted using the horizontal analysis of financial statements,
vertical analysis and financial ratios specifically efficiency ratios and profitability ratio. The
San Jose Water District may use the finding of the study to serve as a basis to improve the
financial management performance of the company.
Keywords: Financial Statement Analysis, Horizontal Analysis, vertical Analysis, Efficiencies
Ratios and Profitability Ratios.

Evaluation of Financial Performance of San Jose Water District
TABLE OF CONTENTS
TITLE PAGE i
ACKNOWLEDGEMENT ii
ABSTRACT iii
TABLE OF CONTENTS iv
LIST OF TABLES v
CHAPTER
1 THE PROBLEM AND ITS BACKGROUND 1
Introduction 1
Conceptual Framework of the Study 4
Statement of the Problem 8
Assumption 9
Significance of the Study 10
Scope and Limitation of the Study 11
Definition of Terms 11
2 REVIEW OF RELATED LITERATURE 16

Synthesis of the Review 41
3 METHOD 42
Research Design 42
Participants 42
Research Instrument 43
Data Gathering Procedure 43
Ethical Consideration 43
Data Analysis 44
4 RESULTS AND DISCUSSION 46
5 SUMMARY, CONCLUSION AND RECOMMENDATION 67
Summary 67
Findings 68
Conclusion 70
Recommendations 71
REFERENCES 73
APPENDICES
A Letter to Conduct the study 78

B Letter to the Participants 79
C Audited Financial Statements 80
D Computation of Comparative Financial Analysis 88
E Computation of Financial Ratios 100
F Basis for Categorization 103
CURRICULUM VITAE 107

LIST OF TABLES, FIGIURES AND GRAPHS
LIST OF TABLES
1 Comparative Statement of Financial Position of 46

San Jose Water District 2018-2019
4 Comparative Statement of Financial Performance of 54
7 Efficiency Ratios 61
8 Profitability Ratios 63
LIST OF FIGURE
1 Schematic Diagram of the Study 5

CHAPTER 1
THE PROBLEM AND ITS BACKGROUND

Water is necessary for life since it serves so many roles, but because it is practically
everywhere, we can't be sure which ones are safe and readily available for public health.
Water districts are in charge of supplying, operating, and maintaining water supply systems
in one or more cities or municipalities, in order to respond to our valued way of life, which
is dependent on clean water. According to Natahan Sosa (2021), “Water districts are
responsible for providing and maintaining clean water to residents of a geographical
location. The water district board decisions are highly critical to ensure the reliable supply
of clean water safe for public health and can be accessed by everyone.”
The Water District is a government-owned and controlled corporation (GOCC)
attached by Local Water Districts composed of the Local Water Utilities Administration
(LWUA), Civil Service Commission (CSC), Department of Budget and Management
(DBM) and the Philippine Association of Water Districts (PAWD). It was established
on May 25, 1973, by Presidential Decree No. 198 (Provincial Water Utilities Act of 1973)
and LWUA.
The mandates of the several government agencies that carry out the majority of the
country's water resources programs and initiatives contain the primary components of
water resources management in the Philippines. There are over thirty of these agencies and
departments, each of which focuses on a different aspect of water resource development.

Evaluation of Financial Performance of San Jose Water District 2
As a result, several entities are responsible for water supply, irrigation, hydropower,
flood control, pollution, watershed management, and other issues.
The Local Water Utilities Administration aims to provide and developed water
supply systems in the provinces and cities located outside Manila. As of 2021, there are 532
water districts all over the Philippines that accommodating 23% to 25% of households
nationwide. Last year they provide a water supply system amounting to P639M for the
resettlement of those water districts that have been affected by Typhoon Yolanda, based on
the Manila Bulletin interview with Lapus who is the Acting Administrator of
LWUA. Lapus also added that the Local Water Utilities Administration need more fund to
expand their service as they are targeting to have more water districts nationwide to cater the
needs of every Filipino to access safe water, especially during these times where we are
experiencing this pandemic (Alexandria San Juan. 'The LWUA is seeking additional
finances to carry out its mandate.' 8 February 2021, Manila Bulletin).
Background of the Study
Through better water resource management, the Dinagat Islands' San Jose water
district is one of many that provide potable water for drinking, residential usage, food
production, and sanitation. San Jose Water District is located at Wilson, San Jose, Dinagat
Islands, it serves 9 barangays within San Jose and as of now, the San Jose Water District are
accommodating 2,913 service connection within the Municipality. It was created on June
30, 1997, under Sangguniang Bayan Resolution No. 74 of 1997. As of 2020, the district has
8 permanent, 7 casual and 13 JO personnel. San Jose Water District was categorized as
Category D filed with the Local Water Utilities Administration under Conditional Certificate
of Conformance (CCC) No. 578 on July 8, 1998. (LWUA).
In addition, the study of Velasco et al. (2020) stated that water systems in a hilly
location or municipality are more expensive than those flat areas because it required more
additional cost to pump water from the lower to the higher or to the hilly area. This is costly
because it necessitated the purchase of massive equipment, as well as the cost of maintenance
and electricity. As a result, these costs have an impact on an area's water system.
Studying the financial performance of the entity may reveal certain gaps that need to
be solved out and by cautiously reviewing the financial performance of the entity can clear
a path for possible modifications for the enhancement of the entity’s overall performance
that also sought to answer the question “Can San Jose Water District Financial Status provide
sufficient water supply for current and future generation especially that we are currently
facing economic problem due to pandemic?’’.
Thus, the researchers were prompted to conduct the study to understand the financial
standing of the entity as well as seeing the future aspect for the basis of providing
recommendations to improve the financial management of the San Jose Water District
in Dinagat Islands.
CONCEPTUAL FRAMEWORK OF THE STUDY
This study was anchored to the study of Velasco (2021) which claims that there is an
overlap in investment among various entities in which due to lack of coordination there are
water supply utilities that operate in same areas that results in inefficient used if funding’s
and redundant investment. Moreover, the study of George Butler (2021) also claims that the
pandemic slows down investments in the water sector area. Additionally, the study of Dong,
Chen, &Wan (2018) explain that financial performance is a measure of a company's financial
stability and health. It is also a measure of a company's ability to create money from its
assets, as well as its credibility and ability to pay off obligations. Lastly, Financial
Performance is also a key indicator of the credibility of an organization that led decide on
risk-taking analysis.
Figure 1. The table below shows the schematic diagram of the study on Evaluation
of Financial Performance of San Jose Water District in Dinagat Islands. The first box
contains the Audited Financial Statements for the year 2018-2021 of San Jose Water District
in Dinagat Islands.
FINANCIAL FINANCIAL
STATEMENTS ANALYSIS TOOLS
FOR THE YEAR TO EVALUATE
END FINANCIAL
STATEMENTS
2018-2021
• VERTICAL
ANALYSIS
• STATEMENT • HORIZONTA PROPOSED
OF L ANALYSIS RECOMMENDATI
FINANCIAL • EFFICIENCY ON TO IMPROVE
POSITION RATIO FINANCIAL
• STATEMENT • Asset turnover PERFORMANCE
OF ratio OF SAN JOSE
FINANCIAL • Receivable WATER
DISTRICT
PERFORMA turnover ratio
NCE • Average
• STATEMENT Collection
OF Period
CHANGES IN • PROFITABIL
EQUITY ITY RATIO
• Gross Profit
Margin
• Return on Asset
• Return on
Equity
FIGURE 1. SCHEMATIC DIAGRAM OF THE STUDY

The second box shows the financial analysis tools to help evaluate the financial
performance of San Jose Water District.
Financial Statements. These are records that show financial data about a company,
such as sales, expenses, profit, and loss (Cameron, 2021). These financial statements are the
primary instrument used by investors to decide whether or not to invest in a firm.
Statement of Financial Position. It investigates a company's financial situation. It
assesses the state of a company's assets, liabilities, and equity. As based to the equation of
accounting, Asset should equal to Liabilities plus Equity.
Statement of Financial Performance. It generates company's income and expenses
that shows how well its profitability. It shows the company's progress over time, with sales
revenue at the very top.
Statement of Changes in Equity. It's a financial statement that shows how much
money was spent on shareholder equity over the course of a fiscal year.
Financial analysis tools. These tools are used to know the performance of an
organization and based on that Analysis Company’s create strategies to improve their
financial stability (Kumari, 2020).
Vertical Analysis. In financial statements, this is used to display the size of various
accounts in relation to one another.

Horizontal Analysis. The financial ratios of a corporation are compared over time so
that it will aids the documentation of the company's history and as well as development.
Efficiency Ratios. Used to assess a company's ability in term profit from its assets
and liabilities. The ratios are used to compare expenses to revenues, indicating how much
profitor income a firm may create from the money it spends to conduct its operations.
Asset turnover Ratio. It is a tool used to assess how companies utilized their assets to
maximize sales. And when a company’s that effectively utilizes its asset gets a high rate of
turnover.
Receivable turnover ratio. This metric assesses the company's ability to collect
receivables from customers. It also assesses the credit management of a company over a
period of time.
Average Collection Period. It is the average number of days that elapses between the
time a sale (on credit) is made and the time the buyer submits payment or the company
receives payment from the buyer.
Profitability Ratios. It's a metric that assesses a company's ability to come up with
new ideas. It will generate revenue from its operations over time. It determines how
profitable a company is by exploiting or managing its assets to generate profits and bring
value to its shareholders or owners’ resources that already exist.

Gross Profit Margin. It determines how efficient a company’s production by
comparing net sales to the cost of goods sold. The gross profit margin also demonstrates how
well the company manages its resources during the manufacturing process.
Return on Asset. It measures the percentage of return earn of the company coming
from the used of their Assets. It also demonstrates how management managed their
purchased assets in order to generate income or profit.
Return on Equity. It assesses how a company uses its profits in relation to its shareholders'
equity.
Statement of the Problem
This study focused on the Evaluation of Financial Performance of San Jose Water
District. The findings of the study will serve as the basis for the improvement of the financial
performance of San Jose Water District in Dinagat Islands.
Specifically, this study aims to answer the following questions:
1. What are the financial statements of San Jose Water District in terms of:
1.1. Statement of Financial Position?
1.2. Statement of Financial Performance?
1.3. Statement of Changes in Equity?
2. What is the Financial performance of San Jose Water District in terms of:
2.1. Vertical Analysis

2.2. Horizontal Analysis
2.3. Efficiency Ratio
2.3.1. Asset turnover ratio
2.3.2. Receivable turnover ratio
2.3.3. Average Collection Period
2.4. Profitability Ratio
2.4.1. Gross Profit Margin
2.4.2. Return on Asset
2.4.3. Return on Equity
3. Based on the result of the study what recommendation may be proposed to San Jose
Water District improve their Financial Performance?
Assumption
It is assumed that the Financial Statements of San Jose Water District accurately
reflect the entity's financial performance and that the company will continue to operate in
the foreseeable future. It is also assumed that the ratios used are appropriate for evaluating
the company's performance. The study's findings would assist them in making an economic
decision regarding additional water supply in the area.

Significance of the study
It is expected that this study will be significant to San Jose Water District regarding
the evaluation of their financial performance. Specifically, it will be beneficial to the
following:
San Jose Water District. Evaluation of Financial Performance will help to highlight
certain areas about their strengths and weaknesses as well as providing facts concerning the
overall performance of the entity.
Managers. This study will assist managers in coming up with ideas on how to
improve their ways of managing the business and having better decision-making processes
through the use of the entity's financial performance evaluation.
Accounting and Business Students. This study will help the accountant and business
students to deepen their understanding of financial statements and how will it reveal the
overall performance of the entity and how the evaluation of the financial performance of the
business can help entities to improve well and can be critical when applied to real-world
settings.
Community. The study's findings will inform the community about how well the
business performs its services and how much the entity contributed to the well-being of their
community.
Future Researchers. This study will help researchers intending to make further
research regarding the evaluation of the financial performance of an entity in terms of the
beneficial factors that the study offers.
Scope and Limitation of the Study
The study focused on the evaluation of the financial performance of the entity as a
measure to see certain gaps of their overall financial management performance using vertical
analysis, efficiency ratio, and profitability ratio on San Jose Water District in Dinagat
IsLands. The study covered 4 years covering 2018 to 2021 financial statements of San Jose
Dinagat Islands. Wherefore, the participants of the study were the persons directly involved
in the daily operations and activities being made of San Jose Water District, the manager,
and the accountant. This study conducted will be conducted this academic year 2021-2022.
DEFINITION OF TERMS
The following terms are defined included in the study.
Analysis of Financial Statement. It is the process of analyzing the financial statements
of a commercial firm in order to make decisions. An enterprise's general health can be
assessed by external stakeholders as well as the overall performance of the economy and the
value of the industrial agency.
Asset Turnover. It's a metric that assesses how well a corporation uses its assets to
create revenue. The asset turnover ratio is calculated by multiplying a company's net sales
by its total or average assets. When compared to competitors with a lower ratio, a company
with a high asset turnover ratio performs more effectively.
Average Collection Period. It refers to the time it takes, on average, for the business
to receive payments that are owed to it by customers or clients. Average collection times
must be maintained to ensure that a company has adequate cash to pay its short-term
financial obligations.
Balance Sheet. Show’s firm's financial situation at a specific point in time. It serves
as a record and might be considered a static image. A financial position of an income
statement as of a certain date, comprising Total assets matching Total liabilities + Owners
equity.
Changes in Equity. During a reporting period, the statement of changes in equity
reconciles the beginning and ending amounts of a statement of financial position. It isn't
considered a necessary part of the monthly financial statements, hence it's the most likely of
all the financial statements to be missed. In any case, it is included as a normal component
in annual financial statements.
Efficiency Ratios. Short-term or cutting-edge performance is measured, as well as the
company's cap potential to employ its property in generating revenue.
Financial Performance. Financial overall performance is the achievement of a
company's economic overall performance over a long period of time, encompassing the
acquisition and allocation of capital as assessed by capital adequacy, liquidity, solvency,
efficiency, leverage, and profitability. It's also the company's maximum ability to control
and alter its own data.
Financial Statements. It is a written record of a business's financial position. They
are one of the most important components of commercial enterprise data, as well as the
primary method of communicating financial information about a company to third parties.
Gross Profit Margin. A company's profitability is determined by the gross profit
margin, which is defined as gross profit margin is the percentage of revenue. The amount
left after deducting the cost of goods sold (COGS) or direct costs of generating profits from
revenue is referred to as gross profit.
Income statement. The profit and loss statement is a summary of a company's
revenues and expenses for a given period, ending with net income or loss for that period, and
it shows the company's financial performance over time.
Profitability ratios are a straightforward and quick method of determining an
organization's earnings potential. The Debt-to-Equity Ratio is shown here. It is a monetary
ratio that expresses the proportion of an entity's fairness and debt used to finance its assets.
Receivable Turnover Ratio. The debtor's turnover ratio, also referred as the
receivable accounts turnover ratio, is an efficiency ratio used to measure how a company
collects money and, as a consequence, how it maintains its assets. The accounts receivable
turnover ratio computes the number of times a company's average accounts receivable is
collected over a given time period.
Return On Assets. The return on assets (ROA) metric compares a company's
profitability to the total value of its assets. This ratio compares a company's earnings (net
income) to the capital invested in assets to determine how well it is performing. The better
the return on investment, the more productive and successful management.
Return on Equity. (ROE) is a figure that indicates a company's annual return (net
income) divided by the total value of its shareholders' equity (e.g., 12 percent). Divide the
firm's dividend growth rate by its earnings retention rate (1 – dividend payout ratio) to get
the return on investment (ROI). Return on Equity is a two-part ratio in that it compares net
income or profit to shareholders' equity and is calculated using the income statement and the
balance sheet. The overall return on equity capital measures a company's ability to profit
from its equity investments. To put it another way, it determines how much money any
company generates.
The Water District. A water district is a charitable organization that manages and
operates a water supply system in one or more provincial cities or municipalities. It was
established on a local option basis as a government-owned and controlled corporation
(GOCC), similar to LWUA.
Vertical analysis. Refers to a comparability study of financial statements in which each
line item is represented as a percentage of the premise item. The items on the income
statement are expressed as a percentage of total revenue, whereas the items on the balance
sheet are expressed as a percentage of total assets or liabilities. Each cash outflow and inflow
are shown as a percentage of the total cash inflows in the vertical analysis of the cash flow
statement.
CHAPTER 2
REVIEW OF RELATED LITERATURE
This study covers the review of the related literature and studies which have direct
bearing with the present study. This includes books, articles, and internet research materials.
Financial Statements
Multi-purpose financial statements are prepared and presented in accordance with
International Accounting Standards to meet the information needs of public users and to
enable management to make better decisions (IAS). Investors, market analysts, and creditors
use financial statements to assess a company's financial condition, or should we say, their
financial competence to create money and have earnings potential. The statement of financial
position (balance sheet), statement of performance (income statement), statement of changes
in equity, and statement of changes in equity are the four most important financial statement
reports.
Investors, creditors, and analysts can utilize financial data contained in a
corporation's financial statements to evaluate the firm's financial performance. A large
portion of the data in a financial report is mandated by law or accounting rules. Senior
managers may use your company's financial records to highlight past accomplishments as
well as future aspirations. Management can communicate with interested outside parties,
such as investors, the news media, and industry experts, about its successes in operating the
firm by issuing financial statements (Way, 2019). Additionally, the financial accounts of a
firm give crucial information regarding its financial health. These financial statements are
based on day-to- day bookkeeping that monitors cash in and out of the company. The
information contained in the financial statements provides benchmarks and feedback that
enable the firm to make modest modifications while also determining its general direction.
According to Gartenstein (2016), financial statements are helpful in making expansion and
funding decisions, it also help with marketing decisions by providing data on which aspects
of a company's operations yield the best return on investment.
Financial accounts contain important data that should be used in making decisions.
The level of confidence of owners in using financial statements for decision making is
inversely related to the frequency of preparation and directly related to the level of sales.
Furthermore, the data revealed that the owner's use of financial judgments when making
decisions is indirectly related to the level of education, and that making declarations is
externally and directly related to the owner's ease of interpreting financial statements
(Carraher, 2018).
Furthermore, financial statement analysis is defined as the process of analyzing a
company's performance in relation to its industry and economic environment in order to
make a decision or recommendation. Financial analysis frequently addresses decisions and
recommendations concerning the provision of capital to companies, specifically whether to
invest in the company's debt or equity securities (Robinson, 2020). Along with Murphy's
(2020) study, financial statements are written records that reflect a company's business
activities and financial performance. Government agencies, accountants and corporations,
among other things, often review annual financial statements to ensure accuracy and for tax,
financing or investment purposes.
Statement of financial position
A balance sheet shows the financial health of a company at a specific point in time.
It is made up of assets, liabilities, and equity, with the assets equalling the total obligation
and equity. Cash on hand, money in the bank, and money owing to are all examples of assets.
The liabilities section lists the debts owed by the company, such as overdue loan principal,
unpaid wages, and unpaid invoices. Equity on a balance sheet is the most important piece of
information as it indicates the net worth of the company, or its value after deducting debt
from total assets. The balance sheet is often referred to as the balance sheet. They are annual
financial statements that present a company's assets and liabilities and the difference between
their totals at the end of a fiscal year.
Basic accounting concepts and rules, such as cost, matching, and complete
disclosure, must be included in the statement of financial status. As a result, when the
statement of financial condition is created using the accrual method of accounting, it is more
relevant (Averkamp, 2021). As well, a balance sheet is a representation of a company's
financial health that shows its assets, liabilities, and owner's equity. All professions,
including business owners, entrepreneurs, workers, and investors, need to understand a
company's financial health. Every detail you need to know about the company's general
health will be supplied by evaluating the information included inside the financial
statements, and you'll be able to transform insights obtained from data into actions that
benefit the firm (Stobierski, 2020).
The balance sheet is one of the five basic financial statements used by accountants
and business owners. A Financial Status Statement or a Statement of Financial Position is
another name for it. Growth, value, dividends, quality, liquidity, and firms with sustainable
competitive advantages are all things that investors seek for. Examining a firm's balance
statement is one method these investors employ when selecting a company. This is because
the entity's financial situation has an impact on everything it does and can accomplish (Pinay,
2021).
A balance sheet is a detailed list of a company's assets, liabilities (or money owed to
the company), and the value of its shareholders' equity (or net worth) at a particular point in
time. Assets are any valuable items owned by the company, liabilities are debts owed to
outside creditors or other parties, and shareholder's equity is the amount owed to the
company's owners (Barned, 2021). Additionally, the balance sheet contains a lot of important
information, some of which are more important to concentrate on in order to gain a general
understanding of a company's solvency and business dealings (Ross, 2021).
Statement of financial performance
The Profit and Loss Statement, commonly known as the Income Statement, is a
financial statement that shows how much money has been made and how much money has
been, summarizes a company's financial performance in terms of net profit or loss over a
given time period (Ali, 2020). The income statement, also known as a statement of financial
performance, is a summary of an entity's revenues, costs, and net income. It displays the
firm's bottom line to determine how lucrative it is, as well as the present financial state of
your company, how cash is spent, and where unneeded costs are located, hence, top
management can use a statement of financial performance to identify significant revenue and
cost factors that impact the company’s bottom line, or net income. The financial performance
statement also aids management in determining which business segments or items are worth
investing more money in and which should be discontinued. You can make the greatest
option for your firm based on facts acquired from the statement of financial performance if
you're investing a lot of money in a product that traditionally costs more to manufacture than
it generates profit (Bloom, 2019).
An income statement is a useful tool for determining the primary factors that affect
a company's profitability. Because it is created considerably more often than any other
statement, it provides you with immediate updates. The income statement shows a
company's expenses, income, gains, and losses, which may be used to compute the net profit
or loss for a certain period of time using a mathematical formula. This data assists you in
making timely choices to keep your company on a sound financial foundation (Krishnan,
2021).
A company's financial performance is critical to its long-term existence. Academics,
practitioners and regulators see financial analysis in retail stores (in this case, supermarkets)
as a critical tool in detecting and preventing bankruptcies (Ngarari, 2020).
Financial performance is a subjective assessment of a company's ability to generate revenue
from assets generated in its primary business method. The term is also used to describe a
company's overall financial health over time (Scott, 2021).
Statement of changes in equity
A financial statement that reconciles a company's stock's opening and closing
balances is the Statement of Changes in Equity. It's a financial statement that details
shareholder equity transactions over the course of a fiscal year. Changes in retained earnings,
other reserves, and share capital, such as new share issuance and dividend payments, are
tracked in this report. Changes in equity are a statement that shows the capital investment by
stockholders as well as the company's retained earnings. A statement of stockholders' equity,
like the balance sheet, is a statement that is presented as of a specific date (Borad, 2021).
The primary purpose of the statement of changes in equity is to provide information on all
changes in the equity account that occurred during an accounting period that would not
otherwise be available in the financial statements. As a result, it assists shareholders and
investors in making more educated investment decisions. It also assists analysts and other
financial statement readers in comprehending the factors that contributed to the change in
equity capital (Thakur, 2021).

At the end of a reporting period, the balance of stockholder's equity is reported on
the company's balance sheet, or statement of financial condition. As in the case of a stock
issuance of common and preferred shares at a set price, a business can arrange the exact
amount of growth in shareholder equity. This contrasts from an increase in stockholders'
equity that may occur as a consequence of net income; while the business intends to profit
from operations, actual net income is only known after the fiscal year has concluded
(Helstrom, 2017).
It is a global commitment to promote health equity or the absence of preventable and
unjust gaps in health outcomes. Systematic reviews are a valuable source of evidence for
health care decision makers, but they have proven insufficient to assess the impact of
interventions on health equity (Tugwell, 2016).
The statement of equity indicates the company's retained earnings (profit that is kept or
retained within the company rather than paid to owners or shareholders) at the beginning and
conclusion of a reporting period. It provides customers with information about a firm's
financial health by demonstrating whether the company can meet its continuing financial
and operating commitments without requiring extra money from its shareholders (Wong,
2021).
Statement of cash flows
A cash flow statement is a financial statement that shows all of a company's cash
inflows from current operations as well as outside investment sources. It also includes all
cash outflows from business and investment operations over a given time period.
Investors and analysts may see a picture of all the transactions that take place in a company's
financial records, and each transaction adds to its success. The cash flow statement is
considered the most intuitive of all financial statements because it captures the cash
generated by the business in three basic ways: operations, investments, and finance. These
three components together make up the net cash flow (Mansa, 2020).
Statements of cash flows are essential because they indicate the business's liquidity,
which means that knowing exactly how much operational cash flow the company has given
them the freedom to spend it when it's most required. Statements of cash flows are also
essential since they indicate how the company's assets, liabilities, and equity have changed
over time in the form of cash outflows, cash inflows, and cash retained (Johnson, 2021).
Additionally, Cash Flow (CF) is the increase or decrease in the amount of money owned by
a company, institution, or individual. In finance, the phrase refers to the amount of cash
(money) earned or consumed over a specific period of time. There are several different
varieties of CF, each with its own set of business and financial uses (Corporate Finance
Institute, 2021).
A cash flow statement depicts the amount of money that enters and exits your
business over time. The cash flow statement, also known as a cash flow statement, includes
cash flow from operations, investing activities, financing activities such as bank loans, and
revenue earned but not yet received (Blakely, 2021).

A cash flow statement is one of the most important planning tools you have. It depicts
your expected cash flow over a given time period, such as the next month or quarter. It does
not depict income, but rather the movement of cash as it enters and exits your business (A.,
2021).
Furthermore, cash flow statement is also one of the indicators to know how well a
company be able to generate cash to pay for the company’s liabilities and fund its operating
expenses (Gulec et al., 2019).
Financial analysis tools
Financial analysis tools are several methods for reviewing and analysing a company's
financial statements for goals such as planning, investment, and performance. According to
their usage and requirements, common size statements (vertical analysis), comparative
financial statements (comparison of financial statements), ratio analysis (quadratic analysis),
and ratio analysis (quadratic analysis) are some of the most widely used financial instruments
(quadratic analysis).
Financial analyser is one of the most effective methods for assuring a decent return
on investment. These financial analysis tools are quite useful in appraising the market and
investing in such a way that the profits from the investments are maximized.
A variety of analytical techniques and sometimes rules of thumb are available to
generate quantitative answers when a financial issue arises or when a student, analyst, or
business executive wants to understand the financial implications and economic trade-offs
involved in decisions about business investment, operations, or financing. Having a best tool
from a wide range of possibilities is an essential research process element (Thakur, 2021).
Traditional financial statement analysis tools are ratios. Profits, liquidity, financial
leverage, and efficiency are the four characteristics of a company's financial situation and
performance that ratio analysis analyses. Financial statements are critical instruments for
assessing a business's success. To assess a company's financial situation and make judgments
about improvements, management use a variety of strategies. (Woodruff, 2018)
Vertical analysis
Vertical analysis is used to describe changes in the relative size of each item in the
various accounts of the financial statements. It's a management tool that helps businesses
analyse how the relative size of different accounts has changed over time. It's also useful for
comparing the financial statements of two companies to the industry average. A percentage
should be expressed in any item on the financial statement. Every quantity belonging to
assert is resisted to be a percentage of total assert in the vertical analysis of the balance sheet,
whereas every amount belonging to liability is resisted to be a percentage of total liabilities
in the vertical analysis of liabilities in the balance sheet. According to a vertical analysis of
an income statement, each income statement number is represented as a percentage of sales.
A method of estimating the quantity and/or proportion of a financial statement item
in relation to the total is called vertical analysis. Proportional component analysis is a
technique for calculating the proportional component of each financial statement item in
relation to the base. Only one or only one accounting period is employed in the mathematical
technique. This approach of financial statement analysis is effective for calculating the
proportion of each item in various financial statement segments. It will also function as a
policy guide for allocating management resources (Aduana, 2016).
Each sum in the income statement is recalculated as a percentage of sales using
vertical analysis. This study will inform the business if the cost of products sold or any other
expense appears to be unusually high in comparison to sales. These comparisons can be used
by the company's management and accounting teams to determine what's causing the
problems and take appropriate action (s) (Boyd, 2016).
The vertical analysis has been performed by looking at financial statements from a
specific period in which each item in the income statement is expressed as a percentage of
another item. The findings of the research will substantially assist and other interested parties
in making economic resource allocation and use decisions (Dela Cruz, 2019). Vertical
analysis can also be used to determine whether or not a business is operating in accordance
with its nature. Accounting, which is critical to a company's profitability, liquidity, and
solvency, is expected to get more resources (Aduana, 2015).
Horizontal analysis
Horizontal analysis is a method of using historical data to interpret changes in
financial statements spanning two or more accounting periods. And the difference in
percentage between the value of the same line item in the following accounting period and
the value of the baseline accounting period. Horizontal analysis is the examination of
financial data from two different time periods. To assess the changes from one period to the
next, revenue and cost accounts are evaluated. Usually, these changes are stated as a
percentage (Woodruff, 2018).
Horizontal analysis compares the totals on a line-by-line basis (comparing each line
item from the base to the specified accounting period). Analysts and investors will be able
to pinpoint the variables that generate long-term growth. This also makes growth patterns
and trends, such as seasonality, more visible. This method can also be used to compare
relative changes amongst product lines in order to produce more accurate future projections.
The comparability restriction requires that your financial statements and documentation be
compared to those of similar companies in the same industry. Horizontal analysis improves
and strengthens financial reporting limits. (Murphy, 2021)
In dealing with the company records, the horizontal analysis takes a historical
perspective. This is accomplished by doing a thorough examination of the financial records
over a certain time period with the goal of determining the most important periodical trend
in the reports and the company will do an examination of the behaviour (Dela Cruz, 2019)
Efficiency ratios
The ability of a corporation to generate revenue from its assets and liabilities is
measured using efficiency ratios. A highly efficient organization requires less cash and debt
to stay in business since its net asset investment has decreased. Efficiency ratios connect a
group of assets to sales or the cost of goods supplied in the case of assets. The major
efficiency ratio compares payables to total supplier purchases in the case of liabilities.
Efficiency ratios are commonly used to evaluate a company's management. When an asset-
related ratio is high, it indicates that the management team is efficient in using as few assets
as possible in relation to sales. A low liability-related ratio, on the other hand, indicates
management effectiveness because payables are stretched (Bragg, S, 2021).
Efficiency ratios are a type of metric that is used to evaluate a company's ability to
generate revenue by making efficient use of its resources, such as capital and assets. The
ratios are used to compare expenses to revenues, showing how much income or profit a
company can generate from the money it spends to run its business. Because different
efficiency ratios focus on different areas of operations, such as how well a firm manages its
assets, cash flow, and inventories, financial analysts can use a range of efficiency ratios to
create a holistic picture of a company's overall operational efficiency (Corporate Finance
Institute, 2020). After examining the numbers, compare efficiency ratios to industry
peers to discover how the company compares. Overall, there is a substantial correlation
between efficiency and profitability ratios. When businesses utilize their resources
wisely, they can become lucrative. As a result, if the efficiency ratios have improved
over time, the company may have been more profitable (Vipond, 2020).
The more successfully a company is managed and administered, the more likely
it is for its owners and shareholders to achieve optimum long-term profitability.

Management, as well as external investors and creditors interested in the company's
operations and profitability, use these ratios to help improve the company (Shaun,
2020).
Asset turnover ratio
It is the ratio of a company's net sales to its total average assets over time; it helps
determine whether the company generates enough revenue to justify keeping a large number
of assets on its balance sheet. It is a calculation of revenue generated by a corporation based
on its total assets. And this revenue figure would be equal to the income statement's sales
figure. The higher the figure, the greater the organization's asset efficiency.
(Mukhopadhyay,2021).
By comparing net sales to average total assets, the asset turnover ratio assesses a
company's capacity to produce revenue from its assets. Simply, the ability of a corporation
to create revenue from its assets is reflected by this ratio. The total asset turnover ratio shows
how many sales are generated per peso of firm assets by calculating net sales as a percentage
of assets.
A larger ratio is always preferable because it reflects how effectively a company
generates revenue from its assets. Higher turnover ratios indicate that the company is
maximizing its resources. Lower ratios indicate that the organization isn't making the most
of its resources and, more than likely, is dealing with management or production issues. The
total asset turnover ratio (TATR) is a basic efficiency metric that assesses how effectively a
company utilizes all of its resources. Creditors and investors are informed about a company's
operations, or how its assets are used to manufacture and sell things (Shaun, 2020).
Because the asset turnover ratio measures a company's efficiency in managing its
resources to generate income, higher turnover ratios are clearly preferred to signify a better
state of affairs. Creditors and investors can use this ratio to learn about the company's internal
management. A low asset turnover ratio is nearly always a sign of excess production, bad
inventory management, or poor collecting methods. As a result, businesses must keep a close
eye on their asset turnover ratio. This ratio helps the company figure out how productive it
is and how much money it makes from its asset investment (Borad, 2020).
Account receivable turnover
The accounts receivable turnover ratio is a business accounting metric that
determines how long it takes to collect outstanding debt over the course of an accounting
period to determine how successfully a company manages the credit it extends to its
customers.
It's a metric to focus on it because it measures how well a company handles
collections. Cash flow might be reduced to a trickle if consumers do not pay as planned and
expected. The accounts receivable turnover ratio is a financial ratio that is used in financial
statement analysis. It is an efficiency ratio that is especially an activity financial ratio. It
assesses how effectively and rapidly a company converts its account receivables into cash
over the course of a financial year (Beaver, 2021).

The debtor turnover ratio, also known as the accounts receivable turnover ratio, is an
efficiency ratio that assesses how efficiently a corporation receives money and uses its assets.
The accounts receivable turnover ratio computes how frequently a company's average
accounts receivable is collected over a specified time period. This metric measures how well
a company collects client credit sales (Corporate Finance Institute, 2020).
A higher receivables turnover ratio is preferred because it demonstrates a company's
ability to efficiently recover receivables. Higher ratios indicate that more receivables are
recovered over the course of the year. For instance, a two-to-one ratio illustrates that the
company's usual receivables are collected twice a year. To say it another way, this company
receives money from customers every six months in this manner. Increased efficiency is also
beneficial. In terms of cash flow, this is advantageous. If a company can receive more money
from customers, it will be more successful. It will be able to pay bills and fulfil other
obligations more swiftly.
The quality of credit sales and receivables can also be determined using account
receivable turnover. Credit sales from a company with a higher ratio are more likely to be
collected than credit sales from a company with a lower ratio. Because receivables are
frequently used as loan collateral, their quality is critical. 2020 (Shaun).
The accounts receivable turnover ratio is used to measure the number of times
receivables “turn over” during a year’s time and tracks the efficiency of a firm’s accounts
receivable collections. Comparing a company’s accounts receivable turnover ratio from one
year to the next shows how the company’s collection efforts perform over time. Net annual
sales could be substituted for net annual credit sales, but such a substitution could
dramatically alter the ratio. However, if a company has very few cash sales, then it may be
easier to use the net annual sales figure as long as it is used consistently. Extending credit
should be done until the marginal advantage (or profit) of doing so is zero. The cost of
providing extra credit and the benefit of extending additional credit are equal at the point
where the marginal benefit is zero. This point should be calculated taking into account the
opportunity costs of other investment options accessible to the organization. In economic
words, a credit and collection policy's marginal cost should not exceed the policy's marginal
revenue (really, the marginal rise in the contribution margin) (Hock et al, 2020).
Average Collection Period
The average series duration is the amount of time that passes before a business starts.
The business collects its money owing to it. In other terms, it refers to a period of time it
usually takes a company enterprise a long time to collect bills it owes from consumers or
clients. The standard series lengths must be regulated to ensure that a company has enough
coins on hand to meet its short-term financial obligations.
The Average Collection Period is a reliable indicator of a company's liquidity in
relation to its debt’s receivable, or the money owed to it by customers, as well as its credit
practices. A short average series length suggests good credit coverage and strong control of
debt obligations (Vipond, 2020).

Conversely, a lengthy ACP suggests that the company should tighten its credit
protection and improve control over receivables owed in order to meet its short-term
obligations. To calculate the common formula for series length, we split owed receivables
in full using credit-income instances for 365 days (Shaun, 2020).
To be more specific, the average collection time is a calculation of the average
number of days between the date a transaction is made (on credit) and the date the buyer
makes payment or the firm receives payment from the buyer (Powell, 2022).
When applying this average collection period ratio calculation, the number of days might be
a year (365), a nominal accounting year (360), or any other period, as long as the two data
points—average accounts receivable and net credit sales—span the same number of days
(Carlson, 2020).
Profitability Ratio
One of the most often used instruments of financial ratio analysis is profitability
ratios. They're utilized to calculate the company's bottom line for its executives and its return
on equity for its shareholders. Measures of profitability are crucial to both managers and
shareholders of businesses. In order to drive the firm in the right direction, management
needs to have a metric of profitability. If a company's stock has been purchased by outside
investors, the company's management must demonstrate profitability to those equity
investors.
At the end of each quarter or year, this demonstrates a company's total efficiency in
utilizing its assets and performance. Margin ratios and return ratios are the two types of
profitability ratios available. At various levels of measurement, margin ratios demonstrate
the firm's ability to convert sales dollars into profits. The ability of a corporation to gauge its
overall efficiency in creating returns for its shareholders is represented by ratios that
demonstrate returns (Carlson, 2020). Profitability ratios depict a company's overall
performance in the use of its assets as well as its overall performance through time. Margin
ratios and go back ratios are the two forms of profitability ratios. Ratios that show margins
represent a company's ability to convert income into profit across a wide variety of sizes,
while ratios that show return represent a company's ability to grade its overall success in
providing returns for its shareholders (Carlson, 2020).
Moreover, each organization is maximum involved with its profitability. One of the
maximums regularly used gears of economic ratio evaluation is profitability ratios. They are
used to decide the business enterprise's backside line for its managers and its go back on
fairness to its buyers. Profitability measures are essential to business enterprise managers
and owners. Management ought to have a degree of profitability to influence the enterprise
with inside the proper direction. If an enterprise has out of doors buyers who've bought
inventory with inside the business enterprise, the business enterprise control ought to display
profitability to the one’s fairness buyers (Carlson, 2020).

Profitability ratios compare earnings to a base of assets, sales, or capital. Increased
earnings help shareholders since they free up funds for dividend payments and may lead to
a rise in the stock price. Profits also provide as a cushion for debt repayment. As a result,
profitability ratios are used by investors, creditors, and others to assess management's
stewardship of the firm's assets (Hock et al, 2020).
Gross profit margin
The gross profit margin of a company is the most fundamental indicator of its
profitability: how much money is left after costs of producing goods and services and paying
people are deducted. A stable or expanding gross profit margin is generally desired by
businesspeople and investors; when this metric shrinks, the company is either investing in
its operations or has a problem. A company's gross profit margin, often known as gross
margin, is a measure of its profitability. The amount of income left in a given accounting
period after a company pays for labor and materials, also known as cost of goods sold, and
is referred to as gross profit margin (COGS).
The gross profit margin of a company, which is calculated as the gross profit as a
percentage of sales, is used to assess its profitability. The amount left after deducting the
cost of goods sold (COGS) or the direct cost of generating income from revenue is referred
to as gross profit. The cost of goods sold (COGS) is a measure of the direct cost of producing
a product or service (such as material and labor). It does not include secondary expenditures
such as distribution, marketing, and accounting. As a result, the gross profit margin is only
relevant for calculating direct operating costs as a percentage of sales. Other profit ratios,
such as the net profit margin, reflect various profit measurements (Carleton, 2021).
Thus, the gross margin ratio is a profitability metric that determines how profitable
it is for a company to market its stock. Better ratios are only more advantageous with
experience. Higher ratios show that the company is pushing its stock at a higher profit
margin. Excessive gross margin percentages indicate that a company may have additional
income to cover operating expenses such as payroll, utilities, and rent. This ratio also
measures the earnings from selling shares because it measures the earnings from selling
stock. The percentage of revenue that can be used to help fund various aspects of a business.
The gross margin ratio can also be used to determine the profitability of the company's
products and services. Finally, measuring gross margin ratio on a regular basis will assist
your company discover patterns and alert you to major changes before they become major
difficulties (Shaun, 2020).
Return on asset
It's a metric for determining how profitable a company's capital is. This profitability
ratio depicts the profit growth rate generated by a company's assets as a percentage of its
total assets. Return on assets (ROA) is a metric that measures how well a company generates
money from its assets. ROA is a metric that managers, analysts, and investors use to assess
a company's financial health.

The return on asset is a useful indicator for assessing a particular company's success.
When a corporation's return on assets (ROA) increases over time, it means the company is
extracting more profit from each dollar spent on assets. ROA is a best tool to use as a
technique to examine a single business over time. Graphing a company's return on asset
(ROA) quarter by quarter or year by year will help you determine how well it is functioning.
Longer-term changes may be signalled by upward or downward trends (Birken et al., 2021).
While comparing profits to revenue is a helpful operational figure, comparing earnings to
the resources required to achieve those raises concerns about the company's long-term
viability. Return on assets (ROA) is the most basic of all company value-for-money metrics
(ROA). The return on assets (ROA) metric compares a company's profitability to its total
assets and is a type of return on investment (ROI). To measure how well a company is
running, this ratio compares its profit (net income) to the capital it has invested in assets. To
measure how well a company is running, this ratio compares its profit (net income) to the
capital it has invested in assets. (Vipond, 2020).
The return on investment (ROI) figure informs investors about the profitability of a
company's investments. The higher the return on investment (ROI), the more money a
business can make with the same investment. It stands to reason that a higher ratio will entice
investors by implying that the company is better managing its assets to generate higher net
income. A positive ROA ratio frequently indicates a rising profit trend. Shaun (2020)
Return on equity
The return on equity (ROE) is a measurement of a company's ability to generate
income by combining equity (money invested by stockholders) with cumulative retained
earnings. To put it another way, the ability of a corporation to convert equity capital into net
profit is measured by its return on equity (ROE).
The return on equity (ROE) is a metric that assesses both profit and efficiency. A
growing ROE indicates that a corporation is generating more profits while using less capital.
It also shows how successfully a company's management manages shareholder funds. A high
return on investment (ROI) indicates that a company's management team is more efficient
when it comes to using investment capital to build the company (and is more likely to provide
better returns to investors). A low ROE, on the other hand, may suggest that a company is
mismanaged and is reinvesting earnings in ineffective assets (Lanlonde, 2021). Additionally,
it measures how successfully a company can make money and grow its business by using
money from shareholders. Unlike other return on investment ratios, ROE is a profitability
indicator assessed from the investor's perspective rather than the companies. To put it another
way, this ratio influences how well a product performs. Much of the money made is based
on the investors' investment in the company rather than the company's investment in assets
or anything else. A high return on equity ratio, on the other hand, is attractive to investors
since it indicates that the company is making good use of its investors' money (2020, Shaun)
Industry Indicators
As stated in the Presidential Decree No.198 of section 67, the authorized capital for
the Local Water Utilities Administration's is composed of two billion, five hundred million
pesos, divided into twelve million, five hundred thousand shares of stock with a par value of
two hundred pesos each, to be subscribed by the National Government and opened to private
investors and government financial institutions.
In addition, the manual for categorizing / re-categorizing local water districts has
been classified and provides a basic basis for defining the organizational structure, staff
structure and position categorization for each water district category. (i) The goals are to
categorize LWDs based on active service connections, assets, financial status, and employee
productivity; (ii) establish standards for defining the organizational structure, staffing
pattern, position classification, and remuneration level assignment of roles in a LWD based
on its category; and (iii) streamline the categorization process for easier implementation and
better regulatory oversight.
In accordance to the Revised Local Water District Manual on Categorization, Re-
Categorization and other Related Matter (LWD-MaCRO), LWDs are divided into four
categories: A, B, C, and D. In order to Categorized the LWDs it will undergo into two stages
process. The first stage is according to the number of active service connections and the
second stage is determine by a Point Rating Category.

Under the number of active service connection, LWDs will be classified as Category
A if it has at least 30,000 active service connection, Category B if it has at least 10,000,
Category C if it has at least 3,000 and Category D if it has a total number of Active service
connection not exceeding 3,000. In terms of the Point Rating Category, Gross Revenues,
Total Assets, Net Income before Interest and Depreciation, and Staff Productivity Index are
the factors that need to considered as it has an equivalent point that needed to determine
which Category does a LWDs will fall, the equivalent point rating for each factor is
calculated from the data on each LWD. The Point-Rating Category is determined by the total
number of points gained across all factors, for better illustration kindly refer to Appendices.
Lastly, whichever is lower between the Service Connection Category and Point Rating
Category will be the Final Category of the LWDs.
Re-categorization of local water districts, Local water district reclassification may be
possible as a result of the expansion of a LWD's physical and financial resources in recent
years. Such upgrades usually necessitate more financial resources. As a result, performance
evaluation is required even in its higher category to ensure the LWD's financial viability and
long-term sustainability. The goal is to provide a systematic and rational evaluation of a
LWD's request for recategorization; to determine whether the LWD would be able to meet
the budgetary requirements for upward categorization without jeopardizing its short-term
financial situation or long-term obligations to creditors. The local water districts must submit
an application to the LWUA and take this into account in the course of the recategorization.
Basic Requirement - A LWD can be considered for upward classification if it meets the
following requirements: 2.1 obtaining the required number of points for the category (Part
III); 2.2 Maintaining current or current responsibilities for debt servicing; and 2.3
maintaining current or current responsibilities for debt servicing. 2.3 Only one upgrade per
year is permitted. Beyond meeting the basic requirements, a LWD must be able to
demonstrate that its financial growth and stability can be sustained in the near future. The
current financial and operational efficiency of a company determines its long-term
profitability. Furthermore, water districts are classified as Creditworthy (CW), Semi-
Creditworthy (SCW), Pre-Creditworthy (PCW), and Non-Creditworthy (NCW) in terms of
credit standards (NCW).
Synthesis of the study:
The aforementioned locally and internationally literature reviews were linked to the
current study in terms of measuring the San Jose Water District’s Financial Performance
using financial tools. Since it provided actual scenarios that may be related to the study, all
of the material and information had significant influence on the construction of this study.
In terms of the tools used in this study to assess the financial performance of the San Jose
Water district, the above mentioned evaluated studies and literatures are mirrored in the
study.
CHAPTER 3
METHOD
This chapter presents the research design, participants of the study, research
instruments, data gathering procedure, and data analysis.
Research Design
The researcher was used quantitative analysis in conjunction with documentary
analysis. The systematic assessment of existing information that will be interpreted by the
researchers is known as documentary analysis. With this, the existing documents analyzed
are the audited financial statements of the San Jose Water District, through the use of
financial analysis tools, this was utilized to assess the passage of the quantity of financial
statement and the financial performance.
Participant of the Study
The study’s participants were the Manager, who has a direct control over day-to-day
operation of the company, and the accountant, who complies the financial statements of San
Jose Water District.

Research Instrument
The needed instrument are the financial statements specifically the audited financial
statements for the year 2018-2021 of San Jose Water Districts.
Data Gathering Procedure
The researchers provide a letter of permission to the college dean to conduct the study
to San Jose Water Districts. After the dean’s approval, another letter sent to San Jose Water
Districts for the acceptance to conduct research and to give access for the entity’s financial
documents.
Ethical Consideration
The researchers considered the following ethics during the research:
• The researchers considered the ethics while conducting the research to ensure the
protection of the firm’s privacy.
• The researchers were polite asking the full consent of the chairman of the board prior
to the study.
• Any type of communication in relation to the study should be done with transparency.
• The protection of the privacy of the firm were ensured by the researchers and results
of this study to handle with utmost confidentiality and concern to all gathered data
from the firm needed for this study to respect and protect their privacy.
Data Analysis
The following Financial Analysis Tool will be used to analyze the data:
Vertical Analysis. This was used to evaluate the line items to show its proportion in
that category. This will helpful to the company to know if there is an improvement in their
performance.
Horizontal Analysis. It compares the account balance over different period of time to
show percentage growth over time.
Efficiency ratios in terms of:
Asset turnover ratio. This was used to indicate company’s profitability; how efficient
it is to generate revenue from its asset. To calculate for this, the formula is Net sales/Total
Asset.
Receivable turnover ratio. This will determine how long does the company collect
their outstanding receivable throughout the year, upon using this ratio the company can
determine how many times its receivables converted into cash. To calculate the receivable
ratio, the formula is Net sales / average accounts receivables. To calculate the average
accounts receivable, beginning accounts receivable + ending receivable / 2.
Average Collection Period. The average number of days between the date of a credit
sale and the date of the purchaser's payment remittance was calculated using this method.
To calculate formula Average Collection Period, the formula is 365 days/Receivable
turnover Ratio.
Profitability Ratio in terms of:
Gross Profit Margin. It was used to measure company’s profitability. To calculate
the Gross Profit, the formula is Revenue - Cost of Goods sold / revenue x 100.
Return on Asset. Indicator of company profitability and assessing how a company
generates money from its assets. It is also a useful tool for determining the company's
success. Net income / Total Asset is the formula to calculate the Return on Asset.
Return on Equity. This was used to analyse the ability of a company to convert equity
capital into net profit. Net income – preferred dividend / Average Shareholder’s Equity to
calculate the ROE.

CHAPTER 4
RESULTS AND DISCUSSION
This chapter presents the results and discussions of the data gathered in this study.
COMPARATIVE FINANCIAL STATEMENTS OF AVERAGE WATER

DISTRICT IN CARAGA
Table 1. Comparative Statement of Financial Position as of December 2018-2019
For the years ended 2018 and 2019
AVERAGE
SAN JOSE WATER WATER
DISTRICT CHANGES DISTRICTS CHANGES
2018 2019 2018 2019
ASSET
Current Asset
cash and cash
equivalent 16.80% 2.97% -13.82% 9.26% 9.95% 0.69%
Receivables 0.85% 0.98% 0.13% 3.84% 3.88% 0.04%
Inventories 3.45% 5.00% 1.55% 3.22% 3.92% 0.70%
Other current Asset 1.98% 4.29% 2.32% 1.51% 1.31% -0.19%
Total current Asset 23.07% 13.24% -9.83% 17.39% 18.78% 1.38%
Non-current Asset
Receivables 0.00% 0.00% 0.00% 3.48% 3.68% 0.20%
other investment 0.00% 0.00% 0.00% 12.03% 16.06% 4.03%
PPE 72.03% 73.74% 1.70% 74.63% 72.46% -2.16%
Intangible Asset 0.23% 0.18% -0.04% 0.65% 0.51% -0.14%
Other Non-current
Asset 4.67% 12.84% 8.17% 2.35% 2.23% -0.12%
Total Non Current
Asset 76.93% 86.76% 9.83% 82.61% 81.22% -1.38%
TOTAL ASSET 100.00% 100.00% 0.00% 100.00% 100.00% 0.00%

LIABILITIES
Current Liabilities
Financial Liabilities 1.87% 5.12% 3.26% 10.51% 11.99% 1.48%
Inter-Agency
Payables 1.08% 1.50% 0.42% 1.25% 0.99% -0.26%
Trust Liabilities 4.25% 0.43% -3.81% 6.46% 14.11% 7.66%
Deferred Credits 0.00% 0.06% 0.06% 3.79% 2.76% -1.02%
other payables - - - 0.30% 0.48% 0.19%
Provision 0.60% 0.00% -0.60% 3.32% 3.91% 0.60%
Total Current
Liabilities 7.79% 7.11% -0.68% 18.06% 22.66% 4.60%
Non-current
Liabilities
Financial Liabilities 92.21% 92.66% 0.45% 98.11% 78.65% -19.46%
Trust Liabilities 0.00% 0.00% 0.00% 0.39% 11.41% 11.02%
other Deferred
Credits 0.00% 0.23% 0.23% 5.47% 9.61% 4.15%
loans payable 0.00% 0.00% 0.00% 8.57% 7.56% -1.01%
Provision 0.00% 0.00% 0.00% 4.69% 3.37% -1.32%
Total non Current
Liabilities 92.21% 92.89% 0.68% 81.94% 77.34% -4.60%
TOTAL
LIABILITIES 12.37% 11.17% -1.20% 56.55% 56.07% -0.48%
EQUITY
GOVERNMENT
EQUITY 68.18% 67.12% -1.06% 12.21% 11.55% -0.66%
RETAINED
EARNINGS 31.82% 32.88% 1.06% 87.06% 88.58% 1.52%
revaluation surplus - - - 10.13% 9.74% -0.39%
TOTAL EQUITY 87.63% 88.83% 1.20% 43.45% 43.93% 0.48%
TOTAL
LIABILITY &
EQUITY 100.00% 100.00% 0.00% 100.00% 100.00% 0.00%
Table 1 shows the comparative vertical analysis of San Jose Water District as of
December 2018 to December 2019. It can be seen that their cash and cash equivalents have
dropped by 13.82% indicating that their collection policies are unsystematic, and they have
more cash outflows than cash inflows. Their total current assets showed a percentage of
23.07% and 13.24% in 2018 and 2019, respectively. This indicates a decrease of 9.83%
which means that they have used a lot more of their cash to purchase or finance other non-
current assets as part of their investments. Accounts receivable have increased to 0.99% out
of the total 100 percent of assets. When compared to the industry average which has a greater
percentage of current assets of 18.78% in 2019 indicates that they are more capable to meet
short-term obligations than the San Jose Water District.
As to the non-current asset, it shows that their Property, Plant, and Equipment have
increased by 1.70% indicating that the entity purchased new equipment for use in day to day
operations that resulted in the increase of their total non-current assets by 9.83%. When
compared to the industry average, they both have poor liquidity since they have a high
proportion of non-current assets to current assets.
Current liabilities have decreased by 0.86% which indicates that the company's
capital structure remained sound because its current assets exceeded its current liabilities. A
positive working capital is acquired if a company's current assets surpass its current
liabilities. A sufficient level of working capital ensures that a company can fully satisfy its
short-term obligations over the next twelve months. This demonstrates a company's financial
strength (Blokhin, 2021). When compared to the industry average, San Jose Water District
has lower liabilities which means they have greater creditworthiness than the industry
average.
Non-current liabilities decreased by 0.68 percent, resulting in a 1.20 percent decrease
in total liabilities, resulting in the firm having repaid their particular debts owed to its
suppliers.
Total equity increased to 88.83 percent of total equity and liability, implying that
they have more capital invested in the company than liability, implying that the firm was
financing a minimum percentage of its assets with debt, indicating good financial health, as
opposed to the industry average, which has a higher percentage of total liabilities than total
equity, implying that their total assets were mostly funded by debt than own capital.

SAN JOSE AVERAGE

WATER CHAN WATER
DISTRICT GES DISTRICTS CHANGES
2019 2020 2019 2020
ASSET
Current Asset
cash and cash
equivalent 2.97% 3.12% 0.15% 9.95% 10.89% 0.94%
receivables 0.98% 0.99% 0.02% 3.88% 4.97% 1.08%
inventories 5.00% 4.50% -0.50% 3.92% 3.21% -0.70%
Other current Asset 4.29% 3.73% -0.57% 1.31% 2.21% 0.90%
Non-current Asset
receivables 0.00% 0.00% 0.00% 3.68% 3.50% -0.18%
other investment 0.00% 0.00% 0.00% 16.06% 16.25% 0.18%
PPE 73.74% 75.72% 1.98% 72.46% 71.38% -1.08%
Intangible Asset 0.18% 0.12% -0.06% 0.51% 0.42% -0.09%
Other Non-current
Asset 12.84% 11.83% -1.01% 2.23% 2.44% 0.21%
Total Non Current
Asset 86.76% 87.66% 0.90% 81.22% 79.51% -1.71%
TOTAL ASSET 100.00% 100.00% 0.00% 100.00% 100.00% 0.00%
LIABILITIES
Current Liabilities
Financial Liabilities 5.12% 2.94% -2.18% 11.99% 13.07% 1.08%
Inter-Agency Payables 1.50% 1.45% -0.05% 0.99% 6.25% 5.27%
Trust Liabilities 0.43% 4.26% 3.83% 14.11% 7.11% -7.01%
Deferred Credits 0.06% 0.00% -0.06% 2.76% 2.65% -0.11%
other payables 0.00% 0.00% 0.00% 0.48% 1.35% 0.87%

Provision 0.00% 0.00% 0.00% 3.91% 3.90% -0.02%
Total Current
Liabilities 7.11% 8.65% 1.53% 22.66% 26.59% 3.92%
Non-current
Liabilities
Financial Liabilities 92.66% 91.35% -1.30% 78.65% 80.96% 2.31%
other Deferred Credits 0.23% 0.00% -0.23% 9.61% 12.04% 2.43%
loans payable 0.00% 0.00% 0.00% 7.56% 0.64% -6.92%
Provision 0.00% 0.00% 0.00% 3.37% 3.89% 0.51%
Total non Current
Liabilities 92.89% 91.35% -1.53% 77.34% 73.41% -3.92%
TOTAL
LIABILITIES 11.17% 22.90% 11.73% 56.07% 55.13% -0.94%
EQUITY
GOVERNMENT
EQUITY 67.12% 65.33% -1.78% 11.55% 15.14% 3.59%
RETAINED
EARNINGS 32.88% 34.67% 1.78% 88.58% 90.65% 2.07%
revaluation surplus 0.00% 0.00% 0.00% 9.74% 9.53% -0.21%
TOTAL EQUITY 88.83% 77.10% -11.73% 43.93% 44.87% 0.94%
TOTAL LIABILITY
& EQUITY 100.00% 100.00% 0.00% 100.00% 100.00% 0.00%
Table 2 shows the comparative vertical analysis of San Jose Water District’s financial
position as of December 2019 to December 2020. As can be seen from the results, cash
increased by 0.15 percent while total current assets decreased slightly. It is a good sign that
they have increased rather than decreased their cash and cash equivalents. When compared
to the industry average which increased their total current assets to 20.49% indicates that
working capital will increase.
In terms of non-current assets, their Property, Plant, and Equipment climbed by 1.98
percent, suggesting that the company purchased new equipment for use in day-to-day
operations, resulting in a 0.90 percent growth in total non-current assets. They both have
inadequate liquidity as compared to the industry average because they have a high
percentage of non-current assets to current assets.
Current liabilities increased by 1.53%. Despite the fact that the company's current
liabilities had decreased, its capital structure remained sound because its current assets
outweighed its current liabilities. San Jose Water District has smaller liabilities than the
industry average, indicating that they are more creditworthy than the industry average.
The non-current liabilities have decreased by 1.53%, but it is also seen above that
their total liabilities increased; Thus, it indicates that the company has a lot of debts acquired.
This means that the entity saved money by incurring obligations, but because of the firm's
high level of liabilities, there may be additional risk that causes financial difficulties
(Avercamp, 2022).
In terms of equity, retained earnings increased by 1.78 percent while government
equity decreased by 1.78 percent, resulting in an 11.73 percent decrease in total equity. This
demonstrates that, despite a small decrease in total equity, the firm was still in good financial
standing based on how they finance their assets. It can be seen that their total equity exceeds
their total liabilities, implying that the firm used debt to finance a minimum percentage of
its assets. When compared to the industry average which has a higher percentage of liabilities
over equity indicates that their total assets are mostly funded with debts than of the owner’s
capital. When compared to the industry average, which has a higher percentage of liabilities
over equity, their total assets are largely funded by debts rather than the capital of the owners.

SAN JOSE AVERAGE

WATER CHAN WATER
2020 2021 2020 2021
ASSET
Current Asset
cash and cash
equivalent 3.12% 0.04% -3.08% 10.89% 11.86% 0.97%
receivables 0.99% 2.45% 1.46% 4.97% 3.46% -1.50%
inventories 4.50% 5.90% 1.40% 3.21% 4.26% 1.05%
Other current Asset 3.73% 3.85% 0.12% 2.21% 1.25% -0.97%
Non-current Asset
receivables 0.00% 0.00% 0.00% 3.50% 3.40% -0.10%
other investment 0.00% 0.00% 0.00% 16.25% 14.74% -1.51%
PPE 75.72% 74.62% -1.09% 71.38% 71.33% -0.05%
Intangible Asset 0.12% 0.08% -0.04% 0.42% 1.14% 0.72%
Other Non-current
Asset 11.83% 13.05% 1.22% 2.44% 4.54% 2.10%
Total Non Current
Asset 87.66% 87.75% 0.09% 79.51% 79.38% -0.14%
TOTAL ASSET 100.00% 100.00% 0.00% 100.00% 100.00% 0.00%
LIABILITIES
Current Liabilities
Financial Liabilities 2.94% 2.82% -0.12% 13.07% 8.99% -4.08%
Inter-Agency Payables 1.45% 1.65% 0.21% 6.25% 0.99% -5.26%
Deferred Credits 0.00% 0.00% 0.00% 2.65% 13.32% 10.66%
other payables 0.00% 0.00% - 1.35% 0.51% -0.84%
Provision 0.00% 1.21% 0.00% 3.90% 6.03% 2.14%
Total Current
Liabilities 8.65% 11.13% 2.48% 26.59% 4.77% -21.81%
Non-current
Liabilities
Financial Liabilities 91.35% 88.87% -2.48% 80.96% 71.43% -9.52%
Trust Liabilities 0.00% 0.00% 0.00% 0.47% 0.81% 0.34%
other Deferred Credits 0.00% 0.00% 0.00% 12.04% 27.31% 15.27%
loans payable 0.00% 0.00% 0.00% 0.64% 1.73% 1.09%
Provision 0.00% 0.00% 0.00% 3.89% 7.52% 3.64%
Total non Current
Liabilities 91.35% 88.87% -2.48% 73.41% 83.94% 10.52%
TOTAL
LIABILITIES 22.90% 22.97% 0.07% 55.13% 100.00% 44.87%
EQUITY
GOVERNMENT
EQUITY 65.33% 64.17% -1.17% 15.14% 12.21% -2.93%
RETAINED
EARNINGS 34.67% 35.83% 1.17% 90.65% 87.06% -3.59%
revaluation surplus 0.00% 0.00% - 9.53% 10.13% 0.61%
TOTAL EQUITY 77.10% 77.03% -0.07% 44.87% 43.45% -1.42%
TOTAL LIABILITY
& EQUITY 100.00% 100.00% 0.00% 100.00% 100.00% 0.00%
Table 3 shows the comparative vertical analysis of San Jose Water District’s financial
position as of December 2020 to December 2021. As can be seen in the table, their cash and
cash equivalents have slightly decreased by 3.98% which indicates lower available cash to
be available for use in daily short-term finances. When compared to the industry average,
which has a higher percentage of current assets of 20.62 percent in 2019, the San Jose Water
District is more capable of meeting short-term obligations.
Their Property, Plant, and Equipment declined by 1.09 percent in non-current assets,
implying that their PPE has undergone depreciation, which diminishes its value owing to
wear and tear and the loss of their useful life. They both have insufficient liquidity as
compared to the industry average due to a high non-current asset to current asset ratio.
The number of current obligations has increased by 2.48 percent. Even though the
company's current obligations had shrunk, its capital structure remained solid because its
current assets outweighed its current liabilities. San Jose Water District's liabilities are lower
than the industry average, indicating that they are more creditworthy.
Non-current liabilities decreased by 2.48 percent, resulting in a 0.07 percent increase
in total liabilities, resulting in the firm having repaid their particular debts owed to its
suppliers.
In terms of equity, retained earnings climbed 1.17 percent while government equity
declined 1.17 percent, resulting in a total equity decrease of 0.07 percent. This shows that,
despite a minor drop in total equity, the company is still in solid financial shape due to the
way it finances its assets. The fact that their entire equity surpasses their total liabilities
indicates that the company employed debt to finance a small portion of its assets. When
compared to the industry average, which has a higher percentage of liabilities over equity,
their total assets are largely funded by debts rather than the capital of the owners. When
compared to the industry average, their total assets are mostly funded by debts rather than
the owners' capital.
Table 4. Comparative Statement of Financial Performance as of December 2018-2019
Table 4 shows the comparative vertical analysis of the statement of financial
performance of San Jose Water District as of December 2018 and 2019. The service and
business income come up with a total of 0.00%. Thus, this sign is a non-valuable outcome.
And it means that the shares, donation and grants, the gains, and the other non-operating
income decreases its total value indicating that the firm public service is considered to be
ineffective. As of total expenses, the result of personal expenses has decreased to 8.63%.
Moreover, when compared to the average water district their percentage are closely to its
result of the SJWD, but the average water district results is 5.91%, which generally term that
the average water district generated and income prior to the service and business, however,
in summary the overall total percentages are both the same, this indicates that there is no
significant difference between the two.

SAN JOSE AVERAGE

WATER CHAN WATER
2018 2019 2018 2019
INCOME
Service and business
income 100.00% 100.00% 0.00% 92.50% 98.41% 5.91%
shares, donation and
grants 0.00% 0.00% 0.00% 1.96% 1.42% -0.54%
Gains 0.00% 0.00% 0.00% 0.04% 0.00% -0.04%
other non-operating
income 0.00% 0.00% 0.00% 2.28% 2.58% 0.30%
Total Income 100.00% 100.00% 0.00% 100.00% 100.00% 0.00%
EXPENSES
Personnal expenses 48.87% 40.24% -8.63% 26.21% 28.24% 2.03%
Maintenance&Other
Operating 34.10% 43.59% 9.49% 38.06% 46.76% 8.70%
Financial Expenses 0.00% 0.00% 0.00% 8.18% 6.94% -1.24%
Non-cash Expenses 11.09% 11.20% 0.10% 13.48% 16.48% 3.01%
TOTAL EXPENSES 94.06% 95.03% 0.97% 91.14% 95.08% 3.94%
PROFIT BEFORE TAX 5.94% 4.97% -0.97% 8.45% 4.92% -3.52%
Assistance and subsidy 0.00% 0.00% 0.00% 0.46% 18.64% 18.18%
NET INCOME 5.94% 4.97% -0.97% 8.48% 6.26% -2.23%
For the Maintenance & Other Operating, increased by 9.49%. For the Financial
Expenses, it comes up with the result of 0.00%, which means that the company did not incur
any expenses from outside of the company prior to the year 2018 and 2019. In terms of non-
cash expenses, it has increased to 0.10%. Generally, the total expenses of the firm increased
to 0.97%, however, this would not indicate that the company business is running effectively
because their net income reflects the company stability which is generally an indicator if
their public service is effective or not. But as a result, the firm net income declined to 0.97%,
which means their operation is not completely competent. This can have an impact on the
financial well-being of everyone associated with the company. Furthermore, when it
compares to the average water district, the results of the personal expenses are not much
likely near to the result of SJWD, however, the results of SJWD decreased by 8.69%
resulting to average water district got higher expenses which seen in the results that they got
increased of result by 2.03%. This indicates that average water district results are higher than
SJWD pertaining to personal expenses. Moreover, in Maintenance & Other Operating, the
percentage is close to the results of SJWD, indicating that there is no difference between the
two. However, San Jose Water District net income is higher than the industry average,
indicating that it is more profitable.


SAN JOSE AVERAGE

WATER CHA WATER
DISTRICT NGE DISTRICTS CHANGES
2019 2020 2019 2020
INCOME
income 100.00% 100.0% 0.0% 98.41% 98.16% -0.25%
grants 0.00% 0.0% 0.00% 1.42% 2.02% 0.60%
Gains 0.00% 0.0% 0.00% 0.00% 0.00% 0.00%
other non-operating
income 0.00% 0.0% 0.00% 2.58% 2.71% 0.14%
Total Income 100.00% 100.0% 0.00% 100.00% 100.00% 0.00%
EXPENSES
Personnal expenses 40.24% 41.5% 1.23% 28.24% 29.41% 1.17%
Maintenance&Other -
Operating 43.59% 35.3% 8.26% 46.76% 46.74% -0.02%
-
Non-cash Expenses 11.20% 10.0% 1.16% 16.48% 14.51% -1.98%
-
TOTAL EXPENSES 95.03% 88.8% 6.25% 95.08% 95.99% 0.91%
PROFIT BEFORE TAX 4.97% 11.2% 6.25% 4.92% 4.01% -0.91%
Assistance and subsidy 0.00% 0.0% 0.00% 18.64% 0.00% -18.64%
NET INCOME 4.97% 11.2% 6.25% 6.26% 4.01% -2.25%
The table 5 shows the comparative vertical analysis of the statement of financial
performance of San Jose Water District as of December 2019 and 2020. The service and
business decreased to 0.00%. As to the shares, donation and grants, increased to 0.00%.
However, this will not figure out that the firm's total income has increased its overall results.
Because as seen in the table above that it resulted to 0.00% which indicates that they did not
contemplate earning prior to those years. Moreover, when compared to the average water
district their percentage is close to its result of the SJWD, indicating that there is no
significant difference between the two.
As of total expenses, the personal expenses increased to 1.23%. For the Maintenance
& Other Operating, decreased by 8.26%. For the Financial Expenses, it rose to 1.94%, which
means that they got a higher amount of expenses outside of company expenses, particularly
loans, etc. In terms of non-cash expenses, it declined to 1.16%. Generally, the total expenses
of the firm decrease to 6.25%, however, this would not indicate that the company business
is running ineffective because their net income reflects the company stability which is
generally an indicator if their public service is effective or not. But as a result, the firm net
income rose to 6.25%, which means their operation was profitable. One of several things
that investors and financial entities will look at is net income. A high net income implies that
the firm is financially stable and has enough money to cover its expenses. It also helps a
company to indicate whether it is likely to succeed for a long run operation (Bock, 2020).
Furthermore, in Maintenance & Other Operating, the percentage is close to the results of
SJWD as compared to the average water districts percentage indicating that there is no
difference between the two. Moreover, when it compares to the average of the water district,
the results of the personal expenses are not as likely near the result of SJWD, this indicates
that SJWD had a higher personnel expense than average water district. However, San Jose
Water District net income is higher than the industry average, indicating that it is more
profitable.

SAN JOSE AVERAGE

WATER CHA WATER
DISTRICT NGE DISTRICTS CHANGES
2020 2021 2020 2021
INCOME
income 100.0% 100.00% 0.00% 98.16% 99.26% 1.10%
grants 0.0% 0.00% -0.00% 2.02% 0.92% -1.10%
Gains 0.0% 0.00% 0.00% 0.00% 0.00% 0.00%
other non-operating
income 0.0% 0.00% 0.00% 2.71% 1.16% -1.55%
Total Income 100.0% 100.00% 0.00% 100.00% 100.00% 0.00%
EXPENSES
Personnal expenses 41.5% 41.72% 0.25% 29.41% 37.57% 8.16%
Maintenance Other
Operating 35.3% 38.30% 2.97% 46.74% 30.26% -16.48%
Non-cash Expenses 10.0% 9.18% -0.86% 14.51% 16.15% 1.64%
TOTAL EXPENSES 88.8% 91.91% 3.13% 95.99% 87.51% -8.48%
PROFIT BEFORE TAX 11.2% 8.09% -3.13% 4.01% 12.49% 8.48%
NET INCOME 11.2% 8.09% -3.13% 4.01% 12.49% 8.48%
The table 6 shows the comparative vertical analysis of the statement of financial
performance of San Jose Water District as of December 2020 and 2021. San Jose Water
District total income was coming from its service and business income for both 2020 and
2021. As compared to the total income of average water districts in Caraga it can be seen
above that their income were coming from service and business income wherein it increases
about 1.10% in 2021, however the shares, donation and grants and the other non-operating
income decrease about 1.10% and 1.55% respectively,
As of total expenses, the personal expenses increased to 0.25%. For the Maintenance
& Other Operating, increased by 2.97%. For the Financial Expenses, it rose to 0.76%, which
means that they got a higher amount of expenses outside of company expenses, particularly
loans, etc. In terms of non-cash expenses, it declined to 0.86%. Generally, the total expenses
of the firm decrease to 3.13%, however, this would not indicate that the company business
is running ineffective because their net income reflects the company stability which is
generally an indicator if their public service is effective or not. But as a result, the firm net
income decreased by 3.13%, which means their operations during 2020-2021 will have a
negative impact on their financial status and have poor outcomes overtime. San Jose Water
District's net income is lower than the industry average, indicating that they are more
profitable.
Financial Condition of San Jose Water District
EFFICIENCY RATIOS
The table 7 shows the result of financial ratios as to the efficiency ratio that measure the
efficiency of San Jose Water District.
SAN JOSE WATER INDUSTRY

DISTRICT RATIO AVERAGE
2018 2019 2020 2021
ASSET TURNOVER RATIO 0.18 0.18 0.17 0.18 0.49
ACCOUNTS RECEIVABLE
TURNOVER RATIO 21.16 18.46 17.15 7.45 9.63
AVERAGE COLLECTION
PERIOD 17.25 19.77 21.29 49.02 45.18
Table 7 compares San Jose Water District's financial ratios to the industry average.
The asset turnover ratios for the years 2018, 2019, 2020, and 2021 were 0.18, 0.18, 0.17, and
0.18, respectively. This shows that the entity performed poorly because its ratios are not
particularly high, implying that San Jose Water District may be experiencing management
or production challenges. When compared to the industry average of 0.49, it shows that they
are inefficient at utilizing sales and revenues from their asset base, but the industry average
has a higher ratio than San Jose Water District, indicating that they are more favorable.
From 2018 through 2021, San Jose Water District has accounts receivable turnover
percentages of 21.16, 18.46, 17.15, and 7.45, respectively. It can be deduced that the ratios
have been decreasing over time, reaching 7.45 in 2021, indicating that the entity's ability to
extend credit to its quality customers has been declining, most likely due to the pandemic,
which has slowed the collection process or made their credit policies unprofitable, but they
are in good shape from 2018 to 2020, indicating that San Jose Water District operates on a
cash basis. When compared to the industry average, San Jose Water District has far more
conservative lending practices, however their credit periods have shortened since 2021,
indicating an insufficient collection process.
San Jose Water District reported average collection period ratios of 17.25, 19.77,
21.29, and 49.02 from 2018 to 2021, respectively. San Jose Water District ratios have been
increasing year over year from 2018 to 2020, indicating that they have efficient credit and
collection policies that do not exceed 30 days’ collection, but a ratio of 49.02 in 2021 is
slightly high, indicating that their credit and collection policies have been declining, most
likely as a result of the pandemic's post effect on their overall performance. While compared
to the industry average of 45.18, the San Jose Water District is significantly more efficient
in receiving payments, particularly when navigating the four-year period of average
collection period.
PROFITABILITY RATIOS
The table 8 shows the result of financial ratios as to the profitability ratio that measure
profitability of San Jose Water District.
SAN JOSE WATER INDUSTRY

DISTRICT RATIO AVERAGE
2018 2019 2020 2021
GROSS PROFIT MARRGIN 0.06 0.05 0.11 0.08 0.12
RETURN ON ASSET 0.01 0.01 0.02 0.01 0.05
RETURN ON EQUITY 0.01 0.01 0.02 0.02 0.15
Legend:
Variable Parameter Qualitative Description
Gross Profit Margin Below 0.10 Low

0.10-0.19 Average
0.20 and above High
Return on Asset 0.18 below Low
0.05-0.19 Average
0.20 and above High
Return on Equity Below 0.15 Low
Above 0.15 High
San Jose Water District's gross profit margins were 0.06, 0.05, 0.11, and 0.08 in the
years 2018 to 2021, respectively. In the years 2018, 2019, and 2021, it can be classified as
low, indicating that they are having difficulty managing sales costs. Furthermore, a ratio of
0.11 in 2020 can be qualitatively regarded as average, showing that they have better control
over their cost of sales. When compared to the industry average, a ratio of 0.12 can be
considered as average, implying that they are good at pricing their items correctly and
practicing average cost management.
In terms of return on assets, they had ratios of 0.01, 0.04, 0.02, and 0.01 from 2018
to 2021, respectively. A low ratio indicates that they are having difficulty increasing earnings
or that they have over-invested in assets that have failed to generate revenue growth. When
compared to the industry average, a ratio of 0.05 is considered good or average, indicating
that they are doing a good job at boosting earnings.
In terms of return on equity, the ratios were 0.01, 0.01, 0.02, and 0.02 from 2018 to
2021. It is of poor quality, showing that the San Jose Water District is failing to profit on its
owner's equity capital. A ratio of 0.15 can be defined as high when compared to the industry
average, indicating that they are better at using owner's equity than the industry average.
According to Henricks (2021), return on equity can assist investors in making wise financial
decisions. Accepting what ROE means and how to apply it when making comparisons
companies can help design a sound investment plan. The business has a good Return on
Assets and Return on Equity, which implies it is useful for the company because it illustrates
how the business properly manages its whole assets to provide a return on its owner. So, it
can be good if the business performances in terms of profitability and returns of business
should be given priority by the businessman.

Proposed Recommendations
Based on the study's findings and conclusions, the researchers have proposed
recommendations to improve decision making.
The proposed recommendation to improve San Jose Water District's financial
management performance is an attempt to offer a wise and better decision that would address
the following areas of concern:
Areas of concern Inputs to improve financial Person’s concerned
management performance and
efficiency.
Efficiency The capital investments included This may pertain to the
huge sums of money, thus, caution manager of a company
is needed. Worded in another way, whose obliged to do such
it is possible to observe an improvements for the
investment in it. The cost-benefit benefits of a company’s
principle can be used to achieve the instability.
best result.
Profitability Consider the company's primary This may pertain to the

expenses, such as maintenance and
manager of a company
other operating expenses, to boost
who’s obliged to do such
net income and increase gross profit
margins, which would increase improvements for the

returns on assets and equity, or, in
benefits of a company’s
other words, use the company's
instability.
assets effectively to increase sales,
which can improve overall
profitability.
CHAPTER 5
SUMMARY, CONCLUSION AND RECOMMENDATION
This chapter presents the summary, finding, conclusions and recommendations of the study.
Summary
This research focused on the financial statement analysis of the San Jose Water
District for the fiscal years 2018-2021 in order to improve the entity's financial management
performance.
The financial statements examined were the statement of financial position, the
statement of financial performance, and the statement of changes in equity for the fiscal years
ended 2018, 2019, 2020 and 2021. The horizontal and vertical financial statement analysis,
as well as financial ratio analysis, were used in the financial statement analysis. Financial
ratios were divided into two (2) types: efficiency ratios and profitability ratios. The asset
turnover ratio, receivable turnover ratio, and average collection period were subdivided into
three (3) efficiency ratios. Profitability ratios were divided into three (3) categories: gross
profit margin, return on asset, and return on equity.
The research design of this study used quantitative documentary analysis in
collecting the data from San Jose Water District in the form of audited financial statement.
The data was analyzed and interpreted using financial statement horizontal and vertical
analysis, as well as financial ratio analysis

Findings
Based on the results of the study, the following findings are summarized follows:
1. As to the comparative financial analysis of the statement of financial position of San
Jose Water District which comprises three accounts namely, Asset, Liabilities and
Equity, both asset and equity accounts have increased while the liability account
decreased by 1.20% in the year 2018 to 2019. It signifies that San Jose Water District
paid down some of its liabilities or loans, therefore lowering their overall asset but
the asset increased a little. Furthermore, a growth of retained earnings is good
because it indicates that San Jose Water District has been profitable. In the year 2019
to 2020, both assets and liabilities have increased while the equity has decreased a
little, therefore, it means that even though the liabilities have increased the growth of
assets and equity outweighs the value of the liability; the San Jose Water District has
been consistently profitable. In the years 2020 to 2021, it was found that total assets
and total liabilities have increased but total equity decreased a little. But when
compared to the industry average, it can be understood that their total assets are
funded with debts rather than by using owner's capital from years 2018 to 2021.
As to the financial performance of San Jose Water District for the years 2018 and
2019, the total revenue comes solely from service and business income. In terms of
the firm’s total expenses, for the year 2018 and 2019, it increased by 0.97% which
decreased total net income by 0.97% and for the year 2019 and 2020 expenses
decreased by 6.25% which means that the entity’s operation is doing well even
though in years 2018 to 2019, their expenses have slightly increased but their net
income have increased by 6.25% on year 2020 than the previous year. But during
2021, it can be seen that their total net income fell to 0.03%, signifying that during
that year SJWD incurred some losses on their income.
2. In the efficiency ratio analysis of San Jose Water District in comparison with the
industry average, under the asset turnover ratios for the years 2018, 2019, 2020, and
2021 were 0.18, 0.18, 0.17, and 0.18, respectively wherein the industry average has
a ratio of 0.49. Additionally, accounts receivable turnover had ratios of 21.16, 18.46,
17.15, and 7.45, respectively from years 2018 to 2021 while an industry average has
a ratio of 9.63. Moreover, the under average collection period had ratios of 17.25,
19.77, 21.29, and 49.02 from 2018 to 2021, respectively. On the other hand, the
industry average has a ratio of 45.18.
3. In the profitability ratio analysis of San Jose Water District in comparison with the
industry average, under the gross profit margin had ratios of 0.06, 0.05, 0.11, and
0.08 in the years 2018 to 2021, respectively whereas the industry average had a ratio
of 0.12. Furthermore, return on assets had ratios of 0.01, 0.04, 0.02, and 0.01 from
2018 to 2021, respectively while the industry average had a ratio of 0.05. Lastly,
return on equity had ratios of 0.01, 0.01, 0.02, and 0.02 from 2018 to 2021 while the
industry average had a ratio of 0.15.

CONCLUSIONS:
Based on the findings of the study, the following conclusions are drawn:
In the near future, the company can and will generate more revenue. Investments in
property, plant, and equipment are expected to yield higher profits over time. To keep costs
as low as possible, the costs of maintaining these assets, as well as depreciation, must be
closely monitored.
The entity has effectively managed its assets, liabilities, and equity, and if this trend
continues, it has the potential to improve its financial position in the future. In contrast,
overall financial performance remains positive, albeit with a decrease in 2019 but a return to
good standing in 2020. In 2021, the performance declined due to the high level of expenses,
as a result, expenses should be kept to a minimum.
As a result of financial ratios, financial management performance improves. San Jose
Water District's efficacy.
Efficiency
The company collects accounts receivables efficiently but their assets aren’t able to
produce enough revenue. Given the amount of money invested in the company, it is essential
to keep a close eye on its property, plant, and equipment management.
Profitability
The company is somehow not good in profitability performance since they possess
low-margin in gross profit, so it indicates the entity's inability to control cost. They also
possess bad returns in asset which can be concluded as low maximum use of its assets and
shows low equity returns.
Recommendation
In view of the findings and conclusion of the study, the researchers have prepared
recommendations to improve decision making:
1. Accounting estimate must be fully accounted for, evaluated and reviewed over time
to reflect a realistic amount on all accounting information to avoid overestimation.
Internal controls can also be implemented to ensure correct accounting reporting
and asset security.
2. Monitoring and controlling expenditure in relation to income can be made to ensure
that spending does not surpass available funds. Despite a positive net income over
the years, security is the best way to increase profits. Cost and expense
management can be implemented.
The following recommendations were also made
1. The study's findings may be used by the San Jose Water District to improve the
entity's financial management performance.
2. The study's findings will help San Jose Water District become financially self-
sufficient in order to sustain the company's development programs and effectively
maximize the company's advantages.
3. The findings may also serve as the foundation for developing strategies for reducing
maintenance and other operating costs, as well as providing guidance on investment
strategy for future development.
4. The findings of the study will also serve as basis for creating strategies such as:
● The cost-benefit analysis or principle was used to develop a strategy for lowering
maintenance and other operating costs, as well as the company’s property, plant, and
equipment.
● Investment strategy for future company development: Due to the economic
constraints of the local government, an investing strategy that would recognize all
accessible sources of financing, such as private funds, for the company's future
growth will have to be developed.

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APPENDIX A
LETTER TO CONDUCT THE STUDY

APPENDIX B
LETTER TO THE PARTICIPANT

APPENDIX C
AUDITED FINANCIAL STATEMENTS OF SAN JOSE WATER DISTRICT








APPENDIX D
Computation of Comparative Financial Analysis
STATEMENT OF FINANCIAL POSITION FOR 2018

SAN JOSE PERCENT AVERAGE PERCENT
WATER AGE WATER AGE
DISTRICT DISTRICT
ASSETS
Current Asset
cash and cash equivalent ₱11,126,955 16.80% ₱12,523,671.47 9.26%
.90
receivables ₱560,223.08 0.85% ₱5,201,670.13 3.84%
inventories ₱2,285,699. 3.45% ₱4,351,429.36 3.22%
73
Other current Asset ₱1,310,617. 1.98% ₱2,038,081.97 1.51%
57
Total current Asset ₱15,283,496 23.07% ₱23,532,543.80 17.39%
.28
Non-current Asset
receivables - - ₱4,707,890.95 3.48%
other investment - - ₱16,277,024.92 12.03%
PPE ₱47,724,002 72.03% ₱100,961,360.9 74.63%
.50 0
Intangible Asset ₱150,000.00 0.23% ₱875,332.19 0.65%
Other Non-current Asset ₱3,093,902. 4.67% ₱3,181,305.78 2.35%
55
Total Non Current Asset ₱50,967,905 76.93% ₱111,758,278.5 82.61%
.05 4
TOTAL ASSET ₱66,251,401 100.00% ₱135,290,822.3 100.00%
.33 4
LIABILITIES
Current Liabilities
Financial Liabilities ₱153,075.73 1.87% ₱8,043,298.79 10.51%
Inter-Agency Payables ₱88,352.90 1.08% ₱954,742.29 1.25%

Trust Liabilities ₱348,188.63 4.25% ₱4,941,132.32 6.46%
Deferred Credits - - ₱2,896,470.89 3.79%
other payables - - ₱227,734.69 0.30%
Provision ₱49,382.77 0.60% ₱2,536,061.67 3.32%
Total Current Liabilities ₱639,000.03 7.79% ₱13,817,325.77 18.06%
Non-current Liabilities
Financial Liabilities ₱7,558,618. 92.21% ₱75,056,148.04 98.11%
38
Trust Liabilities - - ₱298,079.31 0.39%
other Deferred Credits - - ₱4,181,977.90 5.47%
loans payable - - ₱6,557,254.70 8.57%
Provision - - ₱3,589,493.63 4.69%
Total non Current ₱7,558,618. 92.21% ₱62,685,107.46 81.94%
Liabilities 38
TOTAL LIABILITIES ₱8,197,618. 12.37% ₱76,502,433.23 56.55%
41
EQUITY
GOVERNMENT ₱39,578,682 68.18% ₱7,179,622.73 12.21%
EQUITY .27
RETAINED EARNINGS ₱18,475,100 31.82% ₱51,183,212.74 87.06%
.20
revaluation surplus - - ₱5,957,750.00 10.13%
TOTAL EQUITY ₱58,053,782 87.63% ₱58,788,389.04 43.45%
.47
TOTAL LIABILITY & ₱66,251,400 100.00% ₱135,290,822.2 100.00%
EQUITY .88 7

SAN JOSE PERCENT AVERAGE PERCEN
WATER AGE WATER TAGE
DISTRICT DISTRICT
ASSET
Current Asset
cash and cash equivalent ₱1,971,852. 2.97% ₱13,847,209.10 9.95%
42
receivables ₱649,111.80 0.98% ₱5,402,717.65 3.88%
inventories ₱3,318,879. 5.00% ₱5,449,192.10 3.92%
98
57
Total current Asset ₱8,789,938. 13.24% ₱26,133,829.39 18.78%
77
Non-current Asset
receivables - - ₱5,120,395.60 3.68%
PPE ₱48,948,411 73.74% ₱100,857,652.8 72.46%
.24 5
Other Non-current ₱8,523,910. 12.84% ₱3,101,842.02 2.23%
Asset 38
Total Non Current ₱57,593,821 86.76% ₱113,053,293.6 81.22%
Asset .62 3
TOTAL ASSET ₱66,383,760 100.00% ₱139,187,123.0 100.00%
.39 2
LIABILITIES
Current Liabilities
Inter-Agency Payables ₱111,261.89 1.50% ₱770,813.19 0.99%
Deferred Credits ₱4,085.04 0.06% ₱2,157,220.68 2.76%
other payables - - ₱377,130.72 0.48%
Provision - - ₱3,054,000.10 3.91%
Total Current ₱527,294.08 7.11% ₱17,685,933.37 22.66%

Liabilities
Financial Liabilities ₱6,869,717. 92.66% ₱61,373,044.33 78.65%
98
Trust Liabilities - - ₱8,902,100.42 11.41%
other Deferred Credits ₱17,074.54 0.23% ₱7,502,295.16 9.61%
loans payable - - ₱5,899,203.70 7.56%
Provision - - ₱2,633,237.41 3.37%
Total non Current ₱6,886,792. 92.89% ₱60,349,987.33 77.34%
Liabilities 52
TOTAL LIABILITIES ₱7,414,086. 11.17% ₱78,035,920.70 56.07%
60
EQUITY
GOVERNMENT ₱39,578,682 67.12% ₱7,063,114.37 11.55%
EQUITY .27
RETAINED ₱19,390,991 32.88% ₱54,167,042.40 88.58%
EARNINGS .52
TOTAL EQUITY ₱58,969,673 88.83% ₱61,151,202.17 43.93%
.79
TOTAL LIABILITY & ₱66,383,760 100.00% ₱139,187,122.8 100.00%
EQUITY .39 8

WATER AGE WATER AGE
DISTRICT DISTRICT
ASSET
Current Asset
cash and cash equivalent ₱2,453,839. 3.12% ₱15,171,307.05 10.89%
48
receivables ₱780,838.11 0.99% ₱6,919,228.06 4.97%
inventories ₱3,533,993. 4.50% ₱4,477,764.63 3.21%
93
83
35
Non-current Asset
receivables - - ₱4,870,187.89 3.50%
PPE ₱59,493,185 75.72% ₱99,468,071.97 71.38%
.39
Other Non-current Asset ₱9,291,797. 11.83% ₱3,400,785.61 2.44%
38
Asset .77 9
TOTAL ASSET ₱78,573,722 100.00% ₱139,344,830.0 100.00%
.12 1
LIABILITIES
Current Liabilities
Inter-Agency Payables ₱260,252.71 1.45% ₱4,804,249.68 6.25%
Deferred Credits ₱0.00 0.00% ₱2,036,737.26 2.65%
other payables - - ₱1,038,966.72 1.35%

Provision - - ₱2,992,850.70 3.90%
Total Current ₱1,555,984. 8.65% ₱20,421,715.41 26.59%
Liabilities 94
Financial Liabilities ₱16,439,451 91.35% ₱62,187,998.23 80.96%
.48
Trust Liabilities - - ₱361,306.85 0.47%
other Deferred Credits - - ₱9,250,748.79 12.04%
other payables - - ₱493,691.38 0.64%
Provision - - ₱2,985,342.54 3.89%
Total non Current ₱16,439,451 91.35% ₱56,394,175.91 73.41%
Liabilities .48
TOTAL LIABILITIES ₱17,995,436 22.90% ₱76,815,891.32 55.13%
.42
EQUITY
GOVERNMENT ₱39,578,682 65.33% ₱9,468,511.72 15.14%
EQUITY .27
.43
TOTAL EQUITY ₱60,578,285 77.10% ₱62,528,934.18 44.87%
.70
TOTAL LIABILITY & ₱78,573,722 100.00% ₱139,344,825.5 100.00%
EQUITY .12 0

WATER AGE WATER AGE
DISTRICT DISTRICT
ASSET
Current Asset
cash and cash equivalent ₱35,194.00 0.04% ₱7,722,905.50 11.86%
receivables ₱1,965,797. 2.45% ₱2,254,521.58 3.46%
00
inventories ₱4,723,025. 5.90% ₱2,774,313.92 4.26%
00
Other current Asset ₱3,082,196. 3.85% ₱810,720.90 1.25%
00
00
Non-current Asset 0.00%
receivables 0.00% ₱2,210,319.00 3.40%
other investment 0.00% ₱9,593,752.50 14.74%
PPE 59755160 74.62% ₱46,440,353.75 71.33%
Intangible Asset 64500 0.08% ₱743,074.25 1.14%
Other Non-current Asset ₱10,449,800 13.05% ₱2,956,798.25 4.54%
.00
Asset .00
TOTAL ASSET ₱80,075,672 100.00% ₱65,103,028.58 100.00%
.00
LIABILITIES
Current Liabilities
Financial Liabilities 518919 2.82% ₱3,613,848.17 8.99%
Inter-Agency Payables 304283 1.65% ₱399,454.75 0.99%
Trust Liabilities ₱1,000,979. 5.44% ₱894,092.50 2.22%
00
Deferred Credits 0.00% ₱5,351,576.33 13.32%
other payables 0.00% ₱204,361.67 0.51%

Provision ₱222,464.00 1.21% ₱2,424,651.67 6.03%
Total Current 2046645 11.13% ₱6,455,496.58 4.77%
Liabilities
Non-current Liabilities 0.00% 0.00%
Financial Liabilities ₱16,346,806 88.87% ₱28,708,046.20 71.43%
.00
Trust Liabilities 0.00% ₱327,492.25 0.81%
other Deferred Credits 0.00% ₱10,975,263.88 27.31%
others payable 0.00% ₱696,667.50 1.73%
Provision 0.00% ₱3,024,130.89 7.52%
Total non Current ₱16,346,806 88.87% ₱33,733,587.92 83.94%
Liabilities .00
TOTAL LIABILITIES ₱18,393,451 22.97% ₱40,189,084.50 100.00%
.00
EQUITY 0.00% ₱40,189,084.50 100.00%
GOVERNMENT ₱39,578,682 64.17% ₱7,179,622.73 12.21%
EQUITY .27
.00
revaluation surplus - 0.00% ₱5,957,750.00 10.13%
TOTAL EQUITY ₱61,682,221 77.03% ₱58,788,389.04 43.45%
.27
TOTAL LIABILITY & ₱80,075,672 100.00% ₱135,290,822.2 100.00%
EQUITY .27 7
STATEMENT OF FINANCIAL PERFORMANCE FOR 2018

SAN JOSE PERCEN CARAGA WATER PERCEN
WATER TAGE DISTRICTS TAGE
DISTRICT
INCOME
Service and ₱11,854,731.55 100.00% ₱49,157,767.27 92.50%
business income
shares, donation ₱0.00 - ₱1,040,769.33 1.96%
and grants
Gains ₱0.00 - ₱21,347.23 0.04%
other non- - - ₱1,209,114.18 2.28%
operating income
Total Income ₱11,854,731.55 100.00% ₱53,144,290.66 100.00%
EXPENSES
Personnal expenses ₱5,792,915.14 48.87% ₱13,929,001.08 26.21%
Maintenance&Oth ₱4,042,476.23 34.10% ₱20,225,107.03 38.06%
er Operating
Financial Expenses ₱0.00 - ₱4,344,918.50 8.18%
Non-cash ₱1,314,880.59 11.09% ₱7,162,414.57 13.48%
Expenses
TOTAL ₱11,150,271.96 94.06% ₱48,433,174.98 91.14%
EXPENSES
PROFIT BEFORE ₱704,459.59 5.94% ₱4,490,149.57 8.45%
TAX
Assistance and - - ₱243,000.00 0.46%
subsidy
NET INCOME ₱704,459.59 5.94% ₱4,507,506.72 8.48%

DISTRICT
INCOME
Service and ₱11,981,344.05 100.00% ₱51,747,418.78 98.41%
business income
shares, donation ₱340.42 0.00% ₱744,473.18 1.42%
and grants
Gains ₱86.69 0.00% ₱0.00 0.00%
other non- - - ₱1,354,090.46 2.58%
operating income
Total Income ₱11,981,771.16 100.00% ₱52,583,993.97 100.00%
EXPENSES
Maintenance&Oth ₱5,223,177.46 43.59% ₱24,588,438.04 46.76%
er Operating
Financial Expenses ₱150.00 0.00% ₱3,648,257.30 6.94%
Non-cash ₱1,341,397.01 11.20% ₱8,668,062.53 16.48%
Expenses
TOTAL ₱11,385,702.95 95.03% ₱49,994,262.34 95.08%
EXPENSES
PROFIT BEFORE ₱596,068.21 4.97% ₱2,589,731.64 4.92%
TAX
assistance/subsidy - - ₱9,800,000.00 18.64%
NET INCOME ₱596,068.21 4.97% ₱3,289,731.64 6.26%

DISTRICT
INCOME
Service and ₱13,385,696.31 99.97% ₱52,961,406.64 98.16%
business income
shares, donation ₱4,085.04 0.03% ₱1,088,209.77 2.02%
and grants
Gains ₱187.20 0.00% ₱0.00 0.00%
other non- - - ₱1,464,735.38 2.71%
operating income
Total Income ₱13,389,968.55 100.00% ₱53,953,856.83 100.00%
EXPENSES
Maintenance&Oth ₱4,730,780.07 35.33% ₱25,217,756.71 46.74%
er Operating
Financial Expenses ₱260,601.48 1.95% ₱3,359,213.15 6.23%
Non-cash ₱1,344,052.80 10.04% ₱7,827,255.87 14.51%
Expenses
TOTAL ₱11,887,588.95 88.78% ₱51,789,868.84 95.99%
EXPENSES
PROFIT BEFORE ₱1,502,379.60 11.22% ₱2,163,987.99 4.01%
TAX
NET INCOME ₱1,502,379.60 11.22% ₱2,163,987.99 4.01%

SAN JOSE PERCENTA AVERAGE PERCENT
WATER GE WATER AGE
DISTRICT DISTRICT
INCOME
Service and business ₱14,638,630. 100.00% ₱26,340,537.33 99.26%
income 00
shares, donation and 0.00% ₱244,144.50 0.92%
grants
Gains 0.00% ₱0.00 0.00%
other non-operating 0.00% ₱309,074.50 1.16%
income
Total Income ₱14,638,630. 100.00% ₱26,535,765.33 100.00%
00
EXPENSES 0.00% ₱0.00 0.00%
0
Maintenance&Other ₱5,607,318.0 38.30% ₱8,029,584.83 30.26%
Operating 0
Financial Expenses ₱396,650.00 2.71% ₱1,295,605.58 4.88%
Non-cash Expenses ₱1,344,053.0 9.18% ₱4,284,398.64 16.15%
0
TOTAL EXPENSES ₱13,454,791. 91.91% ₱23,222,222.00 87.51%
00
PROFIT BEFORE ₱1,183,839.0 8.09% ₱3,313,543.33 12.49%
TAX 0
NET INCOME ₱1,183,839.0 8.09% ₱3,313,543.33 12.49%
0
APPENDIX E
Computation of Financial Ratios
2018 2019 2020 2021

Asset Turnover Ratio
(Revenues/Total assets) 0.18 0.18 0.17 0.18
11,854,731.5 11,981,77 13,389,96 14,638,63

Revenues 5 1.16 8.55 0.00
66,251,400.8 66,383,76 78,573,72 80,075,67

Total Assets 8 0.39 2.12 2.00
Accounts Receivable Turnover

Ratio (Revenues/Receivables) 21.16 18.46 17.15 7.45
11,854,731.5 11,981,77 13,389,96 14,638,63

Revenues 5 1.16 8.55 0.00
649,111.8 780,838.1 1,965,797

Receivables 560,223.08 0 1 .00
Average Collection Period

(days/receivable turn over 17.25 19.77 21.29 49.02
days 365 365 365 365
receivable turnover ratio 21.16 18.46 17.15 7.45

Gross profit margin

(gross profit/revenue) 0.06 0.05 0.11 0.08
Gross Profit 704,459.59 596,068.21 1,502,379.60 1,183,839.00
revenue 11,854,731.55 11,981,771.16 13,389,968.55 14,638,630.00
return on asset
(profit/total asset) 0.01 0.01 0.02 0.01
profit from operation 704,459.59 596,068.21 1,502,379.60 1,183,839.00
total asset 66,251,400.88 66,383,760.39 78,573,722.12 80,075,672.00
return on equity
(net income/equity) 0.012 0.010 0.025 0.019
net income 704,459.59 596,068.21 1,502,379.60 1,183,839.00
owners equity 58,053,782.47 58,969,673.79 60,578,285.70 61,682,221.00
APPENDIX F
BASIS FOR CATEGORIZATION
Table 1
SERVICE CONNECTION CATEGORY
Table 2
POINT-RATING CATEGORY
Factors/Points/Definition/Significance
EQUIVALENT POINTS
I. GROSS REVENUES = 40 POINTS

II. TOTAL ASSETS = 40 POINTS

III. NET INCOME BEFORE INTEREST & DEPRECIATION = 15 POINTS

IV. STAFF PRODUCTIVITY INDEX = 5 POINTS
Table 3
POINT-RATING CATEGORY
CURRICULUM VITAE
Personal Information
Name: Rissamae N. Agape
Date of Birth: March 8, 2001
Date of Place: Brgy. Silop, Surigao City
Address: Brgy. Silop, Surigao City, Surigao Del Norte
Civil Status: Single
Nationality: Filipino
Parents: Mrs. Myrna N. Agape
Mr. Jerry G. Agape
Educational Background
Elementary: Roxas Elementary School
Secondary: Surigao Del Norte National High School (Junior High)
Cabrera Altres National High School (Senior High)
Tertiary: Saint Paul University Surigao
Course: Bachelor of Science in Accountancy

Name: Jessie Bae P. Paredes
Date of Birth: August 30, 2001
Date of Place: Lobogon Del Carmen, Surigao Del Norte
Address: P-4 Sta. Cruz, San Jose, Dinagat Islands
Parents: Mrs. Bernalda P. Paredes
Mr. Jesse M. Paredes
Elementary: Sta. Cruz Elementary School
Secondary: Don Ruben Edera Ecleo Sr. Memorial National High School

Name: Jay Clark P. Pol
Date of Birth: March 4, 2000
Place of Birth: Brgy. Linongganan, San Francisco, SDN
Address: Brgy. Linongganan, San Francisco, SDN
Parents: Mr. Terencio R. Pol
Mrs. Jelly P. Pol
Elementary: linongganan Elementary School
Secondary: San Nicolas High School (Junior High)
Saint Paul University Surigao (Senior High)


AGAPE-PAREDES-POL - Evaluation of Financial Performance of San Jose Weter District

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Paul University Surigao

EVALUATION OF FINANCIAL PERFORMANCE

In Partial Fulfilment of the Requirements for the Degree

Evaluation of Financial Performance of San Jose Water District ii

contribution of ideas and support to the realization of this study.

complete this study.

and shaping the study through expertise in the field of accounting.

she showed in completing this work.

Evaluation of Financial Performance of San Jose Water District iii

financial management performance of the company.

Keywords: Financial Statement Analysis, Horizontal Analysis, vertical Analysis, Efficiencies

Ratios and Profitability Ratios.

Evaluation of Financial Performance of San Jose Water District

1 THE PROBLEM AND ITS BACKGROUND 1

2 REVIEW OF RELATED LITERATURE 16

Evaluation of Financial Performance of San Jose Water District

4 RESULTS AND DISCUSSION 46

5 SUMMARY, CONCLUSION AND RECOMMENDATION 67

A Letter to Conduct the study 78

CURRICULUM VITAE 107

Evaluation of Financial Performance of San Jose Water District

LIST OF TABLES, FIGIURES AND GRAPHS

1 Comparative Statement of Financial Position of 46

1 Schematic Diagram of the Study 5

Evaluation of Financial Performance of San Jose Water District

THE PROBLEM AND ITS BACKGROUND

responsible for providing and maintaining clean water to residents of a geographical

The Water District is a government-owned and controlled corporation (GOCC)

(LWUA), Civil Service Commission (CSC), Department of Budget and Management

departments, each of which focuses on a different aspect of water resource development.

Evaluation of Financial Performance of San Jose Water District 2

flood control, pollution, watershed management, and other issues.

finances to carry out its mandate.' 8 February 2021, Manila Bulletin).

Background of the Study

Evaluation of Financial Performance of San Jose Water District 3

of Conformance (CCC) No. 578 on July 8, 1998. (LWUA).

facing economic problem due to pandemic?’’.

Evaluation of Financial Performance of San Jose Water District 4

CONCEPTUAL FRAMEWORK OF THE STUDY

Evaluation of Financial Performance of San Jose Water District 5

FIGURE 1. SCHEMATIC DIAGRAM OF THE STUDY

Evaluation of Financial Performance of San Jose Water District 6

performance of San Jose Water District.

primary instrument used by investors to decide whether or not to invest in a firm.

Statement of Financial Position. It investigates a company's financial situation. It

accounting, Asset should equal to Liabilities plus Equity.

Statement of Financial Performance. It generates company's income and expenses

revenue at the very top.

financial stability (Kumari, 2020).

accounts in relation to one another.

Evaluation of Financial Performance of San Jose Water District 7

receives payment from the buyer.

value to its shareholders or owners’ resources that already exist.

Evaluation of Financial Performance of San Jose Water District 8

Gross Profit Margin. It determines how efficient a company’s production by

purchased assets in order to generate income or profit.

Statement of the Problem

performance of San Jose Water District in Dinagat Islands.

Specifically, this study aims to answer the following questions:

1.1. Statement of Financial Position?

1.2. Statement of Financial Performance?