ST.

PAUL UNIVERSITY SURIGAO

Surigao City, Philippines

CHAPTER 3

METHOD

This chapter presents the research design, participants, instrument, data gathering procedure

and data analysis.

Research Design

The study used the descriptive design using documentary analysis. This method was very

effective in gathering data by observing the location business and the transaction, or seeking to

describe in relating analysis to the accounts of Nine O’ One Paint Center & Enterprises in

Surigao City and analyzing financial analysis.

Participants

The participant of this study was the owner of Nine O’ One Paint Center & Enterprises in

Surigao City. This business was legally registered in BIR and DTI and was operating for more

than a year, and lastly the financial analysis needed in the study was available.

Instrument

The researchers asked permission to the owner to gather data. It was used to utilize the

documentary analysis in gathering information specifically the business transaction that was used

in computing and in analyzing the financial analysis. Validation of the instrument was presented

to the expert. It consisted with the following documentary profile of the business and documents

provided by the owner.

 ST. PAUL UNIVERSITY SURIGAO
Surigao City, Philippines

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Data Gathering Procedure

The researchers conducted this study by sending first a letter, asking for permission from

the Dean of the College of Business and Technology to perform the study outside the school.

Then, another letter was sent for the participants and it was approved and signed by the

researchers’ adviser and experts. One more letter was sent to the owner of Nine O’ One Paint

Center & Enterprises to ask for their approval for the administration of the documentary analysis

to their business. After the approval, the data gathered were computed, interpreted and analyzed

based on the data given.

Ethical Considerations

The researchers considered the following ethics during the conduct of this research:

 The researchers greeted the respondent first before interviewing.

 The researchers respected each other’s point of view.

 The researchers spoke politely to them.

 Consent from the respondents was taken and appropriate permission was ensured for the

usage of their given data.

 ST. PAUL UNIVERSITY SURIGAO
Surigao City, Philippines

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Data Analysis

Data gathered were treated using the following tools:

Financial Ratios Analysis

LIQUIDITY RATIOS

Variable Parameter Qualitative Description

Current Ratio 1.2 to 2 Above Capable to pay its obligation

1.2 Below Indicates that it doesn’t have enough

liquid assets to cover its short-term
liabilities

Quick Ratio 1 & Above Can pay back its current liability

1 & Below Indicates that a company is over-

leveraged, struggling to maintain or
grow sales, paying bills too quickly or
collecting receivables too slowly

Net Working Capital Positive Able to pay off its short-term

liability

Inventory Turnover 1 & Above Indicates greater sales efficiency

and lower risk of loss

1 & Below Indicates poor sales or excess

inventory
PROFITABILITY RATIOS

Variable Parameter Qualitative Description

Gross Profit Margin 35% to 45% Indicates that the company can make
a reasonable profit

Below 35% Indicate a company is under-pricing

 ST. PAUL UNIVERSITY SURIGAO
Surigao City, Philippines

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Net Profit Margin 10 & Above It means that the companies that are
the best organized are the ones that
are the most efficient

10 & Below It means companies that are the least

organized and efficient
SOLVENCY RATIOS

Variable Parameter Qualitative Description

Debt to Asset Ratio If less than 1 Indicates that the bulk of asset
funding is coming from equity

If greater than 1 It shows that a considerable

proportion of assets are being
funded with debt

Debt to Equity Ratio If less than 0.5 Most of the company’s assets are
financed through equity

If greater than 0.5 Most of the company’s assets are

financed through debt

Asset Turnover 1 & above Indicates more sales that a business

in producing based on its assets

1 & below Means that it’s not good for the

company as the total assets aren’t able
to produce enough revenue at the end
of the year