UN Financial Performance Analysis Walden Conservatory of Music Case Study

University of Nairobi

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FINANCIAL PERFORMANCE ANALYSIS
Name:
Course:
Instructor:
Date:

1

FINANCIAL PERFORMANCE ANALYSIS

2

Walden Conservatory of Music
Question #1
Liquidity

Solvency

Current Ratio

Debt to Asset

Liquid Funds Amount

Debt to Net Asset

Liquid Funds Indicator

Times Interest Earned ratio

Quick Ratio

Defensive Interval

Profitability

Efficiency

Return on Investment (ROI)

Savings Indicator

Program Service ratio

Ratio analysis is presented in the excel worksheet attached herein.
Question #2 Financial Performance of Walden Conservatory
In terms of liquidity position, Walden Conservatory has been in a suitable liquid place
since 2016. However, it has reduced gradually, as evidenced by a decrease in current ratio, quick
ratio, liquid funds amount, and liquid funds indicator. The current ratio and quick ratio can be
used to measure the firm’s short term liquidity position over a given period. A firm with a
current ratio of above 1.0 is in a sound liquidity position. Walden’s current ratio has been
reducing over the 12 years of the analysis. The positive thing, however, is that the company is in
a suitable liquid position since the current ratio has been over 1. Also, the quick ratio is above
1.00, denoting that the firm has enough quick assets in the form of cash and cash equivalents to
pay for its current liabilities. In terms of the defensive interval, liquid funds amount, and liquid
funds indicator, it has been reducing over the specified period implying that the company’s
liquid position is diminishing, and measures need to be implemented to redefine its liquidity.

FINANCIAL PERFORMANCE ANALYSIS

3

The company’s solvency is excellent. From the year 2006 to the year 2018, Walden
Conservatory had more assets than its liabilities. Therefore, the company has been performing
well in terms of the ability to pay off its long term debts. The company’s debt asset ratio and debt
to net assets ratio have been less than one but reducing over the period meaning that more of the
business is being financed by debt, and it may have trouble paying back its loans in the future.
On the other hand, Time Interest Earned ratio has been unstable between the years. The ratio was
always zero for the first few years before it started rising again. According to Chen (2019), a
higher interest coverage ratio represents the company’s ease of paying the interest expense,
whereas a lower ratio implies the company’s difficulty in paying the interest expense.
Walden Conservatory’s profitability has been unstable between 2006 and 2018. Return
on investment from 2006 declined until 2012, where it has been rising. A positive and rising ROI
means ...

JesseCraig (17924)
Carnegie Mellon University
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