Current Ratio
The question focused on the 9 subsectors of publicly listed service companies in the
Philippines. The results of the current ratio analysis produced a mean score of 2.10 and a
standard deviation of 0.11. These statistical figures offer important insights into the liquidity
management practices of the service subsectors.
Mean. The mean current ratio of 2.10 indicates that, on average, the subsectors within the
service industry are moderately doing well in managing their current ratio. A mean score just
above the midpoint of 2.00 suggests that companies are sufficiently capable of covering their
short-term obligations, though there is room for improved performance in liquidity. The score
implies that companies generally have enough current assets to cover liabilities, but they are not
maximizing their liquidity potential, stopping short of achieving excellence.
Standard Deviation. The standard deviation of 0.11 reveals low variation in current ratio
performance across the 9 subsector, meaning most companies are closely aligned in their ability
to handle liquidity demands. This low variation signifies that few companies are deviating
significantly from the mean, indicating consistency in how liquidity is managed across the
service industry. This suggests that liquidity challenges are relatively uniform, with companies
consistently meeting their obligations but without excelling in liquidity optimization.
The overall findings indicate that while liquidity management is not a significant obstacle for
most companies, there is potential for growth. Companies may benefit from strategies aimed at
enhancing current asset management to reach a higher standard of financial health.
Accounts Receivable Collection Period
The statement of problem 2 also examined the accounts receivable collection periods.
The mean score for the accounts receivable management was 1.97, with a standard deviation of
0.15. These statistics provide insights into the overall effectiveness of the receivables
management in the service company per subsector.
Mean. A mean score of 1.97 suggests that, on average, service companies in the Philippines are
slightly below the "moderate" in managing receivables collection. This score indicates that
while companies are maintaining an acceptable collection pace, there is room for improvement in
shortening collection times and optimizing cash flow. The fact that the mean score is just below
2.00 signals that some companies may experience delays in collecting receivables, impacting
their liquidity.
Standard Deviation. The standard deviation of 0.15 suggests a moderate degree of consistency
in collection practices, with a low variation among companies in this area. This low variation
implies that most firms in the sector exhibit similar performance levels in receivables
management, with few outliers. Such consistency may reflect industry-wide practices or
challenges in the accounts receivable process that result in common patterns of receivables
collection.
These results indicate that while accounts receivable collection periods are manageable for most
companies, there is a sector-wide opportunity to improve efficiency in collections, thereby
enhancing liquidity and potentially freeing up capital for other operational needs.
Accounts Payable Payment Period
The statement of problem 2 also revealed that the publicly listed service companies in the
Philippines per subsector are managing their accounts payable payment periods at a slightly
higher than moderate, with a mean score of 2.12 indicating satisfactory but not exceptional
performance. The low standard deviation of 0.19 reflects that most companies handle their
payables similarly, without significant variation.
Mean. The mean score of 2.12 reflects a slightly higher-than-moderate ability among service
companies to manage their payment obligations. This score suggests that companies generally
maintain a satisfactory level of payment discipline, ensuring they meet creditor obligations
without imposing excessive pressure on cash flow. However, with a mean only slightly above the
2.00 mark, there is room for enhancing efficiency to manage cash outflows more effectively.
Standard Deviation. The standard deviation of 0.09 indicates very low variability in the
accounts payable payment period across companies, pointing to a high degree of consistency in
payment practices. This low variation suggests that most companies are closely aligned in how
they handle payment obligations. The uniformity of practices could be due to sector norms or
industry-wide payment policies that create a standard approach across companies.
The findings suggest that the accounts payable management in the service sector is generally
well-controlled, with companies managing payments satisfactorily. However, there is room for
improvement in optimizing payment cycles to improve cash flow flexibility and working capital
management. This could potentially allow companies to better allocate resources toward growth
or other strategic initiatives.
