Financial ratio analysis of selected hardware stores in the first district of Rizal fiscal year 2013-2015 Kylie Anne P. Gonzaga, Bernadette V. Lumenario, Hazel Jesslyn B. Uban

Thesis BSA University of Rizal System, Binangonan 2017

includes bibliographical references

This study aimed to determine and analyze the financial performance and position of Selected Hardware Stores in the First District of Rizal Fiscal Year 2013-2015 through the use of financial ratio analysis. The researchers arrived at the total of 16 companies registered in Securities and Exchange Commission as their subject of which about eighteen point seventy five percent (18.75%) or three companies (3) from the total population were qualified as their respondents. The respondents were the samples chosen based on the established criteria. The researchers revealed that majority of the respondents were operating as a closed corporation under the retailing business for over 16 Years as the longest and 3 Years as the shortest. The companies ranged their capital from Php. 1,250,000 to Php. 11,396,219 with a total number of employees ranging from 10 to 17. The financial statements gathered served as the major instrument in computing its financial ratios as to the short term solvency and liquidity, asset liquidity and management efficiency, long-term financial position or leverage and profitability. They also computed their trend percentages to show the annual growth rate of the statement of financial position and income statement of each respondent. Based on the presentation, interpretation and analysis of data gathered the researchers found out that: In terms of liquidity hardware stores are liquid enough to cover all their obligations when they come due. On the other hand, in terms of asset management it was concluded that the hardware stores in the First District of Rizal allocated their assets properly and no funds are tied up on unproductive investments. While in terms of leverage, hardware stores were observed to be debt dependent, that most of their assets were financed by borrowed capital. Thus, their share capital if not remained constant increased in minimal amount which resulted to less favorable ratios. Because of this the researchers recommended to reduce their dependency on borrowed capitals to reduce the risk of noncompliance with their obligation. In terms of profitability, hardware stores are earning enough every Year. Even though profitability ratios constantly fluctuate each Year hardware stores were still able to earn profit. Based on the findings of the study the researchers concluded the following. The selected hardware stores are good investment option but there should be a proper management of assets and operations. They are liquid enough to cover and pay their short-term financial obligations also they properly allocate their resources to various assets and are considered profit generating entities based on the computed profitability ratios. In addition, hardware stores do not acquire long term debts since the nature of their business relies on short term obligations from their supplies. Furthermore, the selected hardware stores are concluded stable in consideration with the computed financial ratios but not all their financial ratios meet the industry average. Based on the summary of findings and conclusion the researchers hereby made the following recommendations. The companies should limit their dependence on short-term borrowings and give attention to the company's liquidity and solvency. They should also continue to control their expenses to earn higher income and implement or improve their inventory management to lessen the funds tied up in inventory. Moreover, they should take into account the improvement s of long term-assets. Lastly, the companies are encouraged to use Financial Ratio Analysis to provide assistance in managing their assets, obligations, operations and other financial related aspects.