Financial performance of armed forces and police savings and loans association, incorporated, in Camp Aguinaldo Quezon city calendar year 2010-2014 Unique L. Doblada, Christian A. Estrabo, Aida M.Fabia, Molly Mae D. Matematico

Thesis BSBA-FM University of Rizal System, Binangonan 2017

includes bibliographical references

This study primarily aimed to evaluate the financial performance of AFPSLAI, in Camp Aguinaldo Quezon City Calendar Year 2010 to 2014. The researchers used descriptive cross sectional and time series research method which is the most appropriate method to describe the recent financial performance of AFPSLAI by measuring the annual growth rate, the percentage share of account, financial health of statement financial of position and statement comprehensive income from the Year 2010 to 2014 using the horizontal, vertical and financial ratio analysis. The annual report and profile of AFPSLAI used as the primary source of data, likewise secondary sources where the local and foreign literature and studies, books, related topics, thesis and website for reference. From the presentation, analysis and interpretation the researchers found out that from the base Year 2010, the annual growth rate of AFPSLAI in terms of total assets has favorable annual growth rate which is mainly driven by the significant improvement. As a result asset quality was seen improving with the significant drop of its past due loan ratio as well as adequate provisioning for probable losses because of the aggressive collection effort and expansion of the Loans portfolio. Meanwhile the level of capital contribution and deposit liabilities of AFPSLAI reflected a growth. For the past 5 Years the proportion held by the deposit liabilities was observed to be expanding as its Year on Year growth is higher than of the capital contribution. Relative to percentage share of account base on total assets from Year 2010 to 2014, AFPSLAI in terms of Cash and Cash Equivalent, Held to maturity investment and property and equipment has decreasing trend and in terms of Loans and Receivable, net which comprise the highest bulk of the total asset continue to increase. The Capital contribution has unfavorable shares but the deposit liabilities have favorable shares, Surplus reserve has increasing trend while surplus free has decreasing trend. It only implies that AFPSLAI focused investing to loans and receivable which concern to assist and sustain financial needs of customer and maintain efficient cash and cash equivalent in order to continuously support the needed funds for their business operation as well as protection from risks. The current ratio of AFPSLAI maintains its efficiency in the Year 2010-2014. The Acid test or Quick ratio is much more detailed test of a company's ability to meet its short term debt, using only the most liquid asset to be divided by the current liabilities. The overall liquidity trend of AFPSLAI was seen declining and kept at a reasonable level which at one and reflects the optimal utilization of funds towards more productive earnings. The higher Debt proportion the higher the risk since creditors must be paid before the owners in the event of bankruptcy. AFPSLAI has slightly increased in debt ratio. This means that the creditors have larger proportion than the owners in terms of provision of capital for the acquisition of total asset. Then in the Year 2013 and 2014 the creditors provided 0.89 in purchasing of assets which is higher than the other Year, this could be interpreted that the owners decreased their contribution in asset acquisition. Equity ratio indicates the proportion of assets provided by the investors, it reflect financial strength and caution to creditors in the sense that having high equity ratio suggest less reliance on debt financing. However, a high equity ratio percentage also suggests sustainability to the company making it less risky to borrow future loans. AFPSLAI revealed that the equity ratio slightly decreased. This means that the company used debt financing in acquiring their assets than equity financing. AFPSLAI debt and equity ratio has increasing and decreasing trend but at the end of the Year, it slightly increase. The Debt to Equity ratio of AFPSLAI conveyed that for every P1.00 chance of blessing or opportunity to improve operation, there are 8.60 chances of having risk or low chance of using borrowed in improving the company's operation. This means that the Year 2012 was the most risky in the part of the company and the least risky was the Year 2011. AFPSLAI in terms of equity and debt ratio obtained decreasing trend in the end of the Year. This could be interpreted that for every P1.00 of shareholders equity only 0.12 is available to pay for the creditors which is unfavorable for the safety of the latter and there is less chances for the shareholders to pay their creditors using their equity. The equity ratio of AFPSLAI has also decline at the end of the Year. It indicates that the company is less return relative into their shareholders and weak in terms of return on equity ratio and its shareholder cannot create substantial asset for their investment. The return on asset of AFPSLAI has a constant percentage of 0.01 from the Year 2011 to 2014. It implies that the company maintains its financial performance in terms of using the assets to earn income. Return on working capital of AFPSLAI increases in the Year 2012 and suddenly fall down in the Year 2013 up to 2014. It indicates that there is an efficiency in the Year 2012 but it decreases when the company unable to be efficient in using the current asset in the Year 2013 and 2014. Based on the findings and conclusion, the researchers recommend that they should conduct more learning programs aimed at developing a culture of excellence that builds on good customer relationship and exceptional work values. They should apply the enterprise-risk management framework; management should come up with the risk management plan to serve as a guide in managing all foreseeable risk in the life cycle of the association. The objective of the plan is to formulate strategies and identify risk owners to manage the association-related risk such that there is acceptable minimal impact on its financial and operational performance. They must enhance support system to ensure member's convenience. They should improve overall market share through competitive differentiation of products, selling strategies and distribution channels. To secure the firm's stability of a favorable long term financial position, the company should think of their creditor's margin of safety. This would be possible if the owners of the firm will contribute more on the acquisition of assets rather than borrowing and having a higher equity over liability that will create margin of safety to creditors. To be able to maintain or further improve their financial yields, AFPSLAI's marketing strategies that will increase more their interest income and they should execute reduction on their operating expenses to achieve higher net income. The future researchers can use the same study but they should used additional parameters in order to have effective and efficient financial performance evaluation, on the other hand, using industry standard would provide effective comparison and contrast evaluation.