CHAPTER 5
This chapter present the summary, findings, conclusion and recommendation of the
study.
Summary
This study focused on the financial analysis of Nine O’ One Paint Center& Enterprises in
Surigao City.
The business profile of Nine O’ One Paint Center& Enterprises included the beginning
capital, number of employees and number of years in operation. The financial ratios were
liquidity ratios consists of the current ratio, quick ratio, net working capital and inventory
turnover. Profitability ratio is gross profit margin and net profit margin. The solvency ratios are
the debt to asset ratio, debt to equity ratio and assets turnover.
The study used the descriptive design using documentary analysis in the form of their
Financial statements which were the financial position, income statement and statement of cash
flow of 2014, 2015 and 2016. The data were analysed and interpreted using the financial
Findings
1. In the business profile of Nine O’One Paint Center& Enterprises in Surigao City. The
beginning capital was P1,200,000 and had 5 employees and had been operating for 3 years.
ST. PAUL UNIVERSITY SURIGAO
Surigao City, Philippines
28
2. As to liquidity ratios, current ratio from year 2014 got 6.89:1, 2015 got 8.43:1 and 2016 got
the results of 2.14:1. 1.2 to 2 above indicated of capable to pay its obligation. As to quick
ratio, the results in year 2014, got 3.76:1, 2015 got 3.03:1 and in the year 2016 the results
was .09:1. In the Years 2014 and 2015, the results were 1 and above and it indicated that they
can pay back its current liability. As to networking capital, the result in the year of 2015 was
better when compared to 2014 and 2016. But both ratios were positive which showed as able
to pay of each short term liability. As to the inventory turnover, from year 2014 to 2015 this
one was the highest as it indicated as greater sales efficiency and lower risk of loss that
results of 5.55 from 4.24 in the previous years of 2015 and 2016 with a result of 0.92.
3. As to profitability ratios, the gross profit margin from the year 2014 was 24.99%, and from
the of year 2015 the results was 21.81%. In 2016, it had 42.16%. Year 2016 showed the
better result. Both years indicated that the company can make a reasonable profit. As to the
net profit ratio, year 2014 got the highest which had a result of 14.21%, and was followed by
11.43% in the year 2016. However, in the year 2015, it got a lowest ratio. It had the result of
4.52% which indicated the least organized and efficient. The highest indicated as a high
margin of safety and lower risk that a decline in sales would result in net loss.
4. As to Solvency ratios, debt to asset ratio was from year 2014 to 2016. Year 2016 got the
highest as it indicated less than 1, and it showed that a considerate proportion of assets were
being funded with those results of 21.13% from 11.56% in the year 2014, and 9.83% in the
year 2015. As to debt to equity ratio from year 2014 to 2016, the result was a lesser ratio as it
indicated that if less than 0.5 most of the company asset was financed through equity. As to
ST. PAUL UNIVERSITY SURIGAO
Surigao City, Philippines
29
the asset turnover, in the year 2015 it had a results of 2.43 times and its indicated that more
sales in the business was produced based on its sales in 2016 as it resulted with 0.61 times
Conclusions
Based on the findings of the study, the following conclusions were drawn:
1. Nine O’ One Paint Center& Enterprises had a beginning of P 1,200,000 with 5 employees
2. As to Liquidity Ratios:
Current ratio. Both years had the highest current ratio which indicated that they can easily
pay back its financial obligation on or before its due and they had also remaining assets after
paying their debts that can be used for the daily operations.
Quick Ratio. Year 2014 got the highest quick ratio in which it can pay its debts using its near
cash assets which was the cash and account receivable and after paying that they had excess
from it that can be used for the operations of their business. And also, in the year 2015, it had
the high quick ratio while in the year 2016, it had the low ratio.
Net Working Capital. Both years had a higher ratio but in the year 2015 it had the highest
working capital which indicated that there was less financial strain that they experienced
because of the enough capital and resources for expansion. They were able to pay its short
30
Inventory turnover. In the year 2014, it had the highest inventory turnover which means a
3. As to Profitability Ratios:
Gross Profit Margin. Year 2016 showed the increase of their profit margin this indicated that
Net Profit Margin. Year 2014 has got the highest ratio that indicated its safety in next years
of operations and there was a lower the risk that decline in sales which would result to net
loss.
4. As to Solvency Ratio:
Debt to Asset Ratio. Both years had the lowest ratio which resulted to a lower debt to total
asset ratio and was considered better for of financial stability of the company. If the value of
total asset ratio is low, it suggests that the company has borrowed fewer funds as compared
Debt to Equity Ratio. Both years had the lowest ratio which means the company’s assets
Asset Turnover. Year 2015 had the highest asset turnover which indicated effective enough
in utilizing their assets because it can generate sales. And it was able to compensate the costs
incurred in acquiring their assets as well evaluate the future performance of the same asset.
ST. PAUL UNIVERSITY SURIGAO
Surigao City, Philippines
31
Recommendations
In the view of the findings and conclusions of the study, the following recommendations
were made:
1. The owner of the Nino O' One Paint Center& Enterprises should use the findings of the study
to serve as the basis for decision making to operate well and to maximize the wealth of the
business.
2. The findings of this study would serve as basis for creating marketing strategies on how to
cope with the situation such as managing its inventories, increase current assets or reduce
current liabilities and its equity to continue its business and generate more assets and sales.
32
REFERENCES
Avenir, R. (2017). What are Activity Ratios.Retrieved from:
http://smallbusiness.chron.com/activity-ratios-57298.html
Keythman,B. (2017). How to Calculate and Interpret a Company's Net Working Capital.
Retrived from:http://smallbusiness.chron.com/calculate-interpret-companys-net-working-
capital-16051.html
ST. PAUL UNIVERSITY SURIGAO
Surigao City, Philippines
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Kokemuller, N (2017). What Does It Mean When Your Quick Ratio Is Below Industry?
Retrived from: http://smallbusiness.chron.com/mean-quick-ratio-below-industry-
20412.html
Laman, R. et. Al (2015) Financial System Market & Management. Manila, Phillipines:
GIC Enterprise & Co. Inc.
Lan,J. (2013). 16 Financial Ratios for Analyzing a Company’s Strengths and Weaknesses.
Retrieved from: http://www.aaii.com/journal/article/16-financial-ratios-for-analyzing-a-
companys-strengths-and-weaknesses.touch
Morgan, R. (2017).What Is the Average Gross Profit Margin for a Small Retail Business?
Retrieved from: http://smallbusiness.chron.com/average-gross-profit-margin-small-retail-
business-22607.html
Suralta, B(2017). The Current Ratio: Formula, What It Is, & How to Calculate It.
Retrieved from. https://fitsmallbusiness.com/what-is-current-ratio-formula/
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APPENDIX B
LETTER ASKING PERMISSION TO CONDUCT THE STUDY
ST. PAUL UNIVERSITY SURIGAO
Surigao City
Respectfully yours,
ROSELYN T. DORON
ALJHUNDE L. JUANITE
LOWELLA B. LAOSINGUAN
Researchers
Noted:
DR. ERLITA C. GUERRA DR. RAMIL A. RAVANES
Adviser Professor
ST. PAUL UNIVERSITY SURIGAO
Surigao City, Philippines
36
APPENDIX C
LETTER OF THE PARTICIPANT
ST. PAUL UNIVERSITY SURIGAO
Surigao City
Pauline peace!
The undersigned are currently writing their undergraduate thesis entitled: “FINANCIAL
ANALYSIS OF NINE O’ ONE PAINT CENTER & ENTERPRISES IN SURIGAO CITY, “in
partial fulfillment of the requirement to the degree of Bachelor of Science in Accounting
Technology.
In this regard, we would like to request your time to allow us to gather information from your
business.
Thank you and God bless!
Respectfully yours,
ROSELYN T. DORON
ALJHUNDE L. JUANITE
LOWELLA B. LAOSINGUAN
Researchers
Noted:
DR. ERLITA C. GUERRA DR. EFREN R. EMPOT
Adviser Dean, College of Business and Technology