University of Trent Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

University of Trent Case Solution

Financial Analysis

The financial position of the University of Trent was determined by examining various data available. The common sizing of the balance sheets of year 19X5 and 19 X6 was performed with their comparison and changes took place with respect to the previous year. The common sizing of revenues and expenses was also executed.

The present position of the University of Trent with respect to its position in the previous years was also determined by the trend analysis of the balance sheet and revenues and expenses sheet of University of Trent. Some important ratios for the year 19X5 and 19X6 were also calculated to efficiently analyze the financial strength of the University of Trent.

Comparison of 19X5 to 19X6

The comparison of balance sheet of 19X5 and balance sheet of 19X6 was evaluated to determine the changes in 19X6 with respect to 19X5. A growth of 11% has been observed in total assets of University of Trent in 19X6 as the total assets grew from $462,794,000 to $513,794,000.

The 10% of growth represents the growth in several terms of balance sheet. The cash was assumed to be growing from $1886, 000 in the year 1995 to a rate of 50%, which represents that it reached to $2803,000in the year 1996.

A big influence of growth in Stock and Bonds has been observed. The Stocks and Bonds were$102,113, 000 in the year 1995, which increased by 28% in year 1996. The present value of stocks and bonds is$130,340, 000.

The 5% growth in investment in plant is also negativelyaffecting the total growth of 11%. All the other assets also increased in the year 1996 as compared to the year 1995 as there was 4% growth in Accounts Receivables, 13% in Loan Receivable, 13% in Inventories, 17% in Prepaid Expenses and Deferred Charges and 8% growth in Real estates and mortgages havebeen observed by the comparison of the balance sheet of both years 1995 and 1996 respectively.

The liabilities and shareholders’ equity was also examined in the comparison of the two years’ balance sheet. The 25% of increase in total liabilities has been observed,which is a major factor in the 11% growth in terms of liabilities and shareholders’ equity. The total liabilities increased from $98,982,000 to $123,958,000 in the year 1996.

All the liabilities havebeen increased exceptthe notes payable, which shows a decrease of 71%which shows the ability of the company to reduce its burden. On the other hand,99% increase in Accounts payable, 4% in student deposits, 50% in long term debts, 16% in advances on research contracts, 5% in deferred income, 27% in agency funds and 46% increase in reserve funds havebeen observed.

The largeincrease in liabilities shows that the company is moving towards debt. The fund balances havealso increased by 7%which shows the change in shareholders’ equity or growth in shareholders’ equity.

Common-size balance sheets for the two years

Common-size of balance sheets for the year 1995

All the assets and liabilities are examined by allocating a percentage that represents their contribution in total assets or total liabilities and shareholders’ equity. A huge percentage of 61.05%with respect to 100% of total assets represents the investment in plant by the University of Trent, whereas the Stocks and Bonds are contributing 22.06% to the total assets of University of Trent.

The long-term debt contributes 13.62% to the total. The total liabilities are 21.39%to the total capital of the University of Trent. The Shareholders’ equity has a percentage of 78.61 to the total capital. The huge percentage of Fund Balances represents that the company was more of a equity financing company in the year 1995. The other percentages are also calculated in the spreadsheet..................

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