Effectiveness of Financial Analysis to the

Survival Rate of the Small, Medium

Enterprises in Batangas City
 An Academic Critique on a Thesis:

Effectiveness of Financial Analysis to the Survival Rate of the Small, Medium Enterprises
in Batangas City

A critique by Veronica Andrea C. Casaba

PRESENTATION OF THESIS

The research “Effectiveness of Financial Analysis to the Survival Rate of the Small,
Medium Enterprises in Batangas City” focuses in identifying the extent of effectiveness and
usefulness of financial analysis that can contribute to the success and profitability of SME’s and
help them have a longer survival rate. It was conducted by Ms. Hazel Aclan, together with her
co-researchers Ms. Maria Shiela Panopio and Ms. Edelyn Raymundo. Their main purpose is for
the benefit of the users and also to create strategies for other enterprises who desire to obtain
and sustain longer survival rate.

The topic that the authors focused on, catches the attention of people who are interested
in establishing a business and pays attention on how the SME’s in Batangas City are
progressing. With its tally of 85 pages plus bibliography, the thesis is characterized to be more
limited compared to voluminous studies. Even though it may be limited, the contents are
sufficient and substantial to make the study a trusted piece of work. The research may be well
conducted but in terms of its physical aspect, few mistakes on its format were found like the
margin and the size of the page number.
 Chapter 1- Introduction: A Critique

Chapter 1 of the research is composed of the introduction, background of the study,

statement of the problem, theoretical framework, and significance of the study and definition of
terms which is in accordance to the required structure of the thesis. The authors mainly pointed
out in this chapter an overview of the contents and background of the topic for users to have a
better perspective on the conducted research.

It is evidently observed in this chapter that the main focus was on the financial analysis
of SME’s in Batangas City and how it is effective in measuring the enterprises’ stability. It is
written in a deductive approach wherein it begins with a general topic mainly the financial
analysis and further deduced down to the main focus which is the problems of SME’s relating to
its effectiveness. The focal point was mentioned which is the problems being faced by SME’s
particularly the survival rate, based on the studies of Aldaba and other statistics. Most SME’s in
the country can last up to 3-5 years that made the researchers interested and conducted the
study. Although the scope of the population was only in Batangas City, they also included
information about the business in the Philippines and further discussing it by explaining the
growth and development of SME’s in the country. They did not only base the information and
facts on primary data but they also acquired reliable information in books, newspapers and the
internet. On the part of the statement of the problem, they used the interrogative question form
starting with the general questions and followed by specific questions. On the part of the
theoretical framework, most researchers are having a trouble in finding the most appropriate
framework to support their research. In this particular thesis, the authors were able to obtain
theories and studies that were significant to the research. The theories used were not only
focused on the financial analysis itself but they also discussed on the measures including
profitability, liquidity, solvency, repayment capacity and financial efficiency. On the part of the
conceptual framework, I-P-O model was used to describe the main concept and procedure of
the research. It is also observed that in each box in the I-P-O model that they clearly described
on what it is all about. Even though the topic was quite broad, the scope and limitations was
also explained. The researchers questioned and interviewed the top management and
managers who decide for the operations and management to acquire reliable responses and
data that was used in interpretation and arriving to conclusions.

After these critical observations, chapter one was well discussed that the contents of it
were related to each other that may guide the users in the same direction. The first thing to be
said is that all in all, it appears to be a reliable piece of work. Its contents were done objectively
without any misleading opinions that may result to the unreliability of the study. Nowhere in the
text does the chapter appear to be directed by already accepted assumptions or prejudices.
 Chapter 2 - Review of Literature: A Critique

Chapter 2 describes, summarizes, evaluates and clarifies the literatures that may
support to the study conducted. The researchers used studies that are not directly related but
some discussions made on them are somehow fit to the concept of this study. It gave a
theoretical base and helped determine the nature of the research. It also conveyed to the users
on what knowledge and ideas have been established on a topic, and what their strengths and
weaknesses are.

This chapter first cited concepts about the financial analysis by including different
explanations regarding it, to better conceptualize the main topic. They used different insights by
well known analysts both foreign and local to elucidate its thought and concept. After explaining
the concept of financial analysis, they also discussed what small and medium enterprises are.
They explained the SME’s based on the laws regulating it and used statistics to further define
that SME’s are highly expanding in the country with a total of 99.1% and large enterprises with
0.99%. After further clarifications regarding the concept, they also included researches to better
support the focal point of the research. The significance of each of the research was highlighted
that gave the researchers idea to further investigate and analyze on the assessment of the
effectiveness of the financial analysis. They used a total of nine studies as their base for the
study and most of them are from foreign analyst. Out of the nine studies, only three were
evidently in the same field as to the present study where it focuses on the financial and
operation analysis even though it may differ on the respondents. The remaining studies may not
be the same but it served as a good base for clarifications including the indicators of financial
analysis and how can it influence financing activities. Most of the studies had been conducted
over the past 5 to 10 years and that evidently proves the reliability of data without any major
changes. However, some of the details in study used like titles were not mentioned that may
possibly make the users question the reliability of the information.

Overall, this chapter is well supported by related studies even though some of it may be
questioned of its reliability. They should have focused more on using studies that may
strengthen their research. Despite the limited studies used, they had finished this chapter
without using any opinions that don’t have a solid foundation. It was completed materially with
substantial information.
 Chapter 3- Research Methodology: A Critique

Chapter 3 highly focused on how the research was conducted by simply discussing the
process of gathering data and how it will be used as information in making conclusions for the
study. It includes the research design, research environment, sampling design data gathering
instrument and procedure, and statistical treatment of data which are the common composition
of this chapter. It served as vital tool because it further illustrates the process in acquiring the
necessary data, the validation required and the treatment of each that may lead to the desired
outcome by the researchers.

It is observed that descriptive method was used by the researchers since it is more
concerned on finding out “what is”. It also illustrated data and characteristics about the
population which is only in the vicinity of Batangas City and the phenomena being studied.
Primary data was used and it was acquired through the process of survey and questionnaires
where they determined the SME’s background information such as the nature of the business,
number of years in operation, number of employees and the average annual net income. This
chapter also demonstrated the sampling design used which is simple random sampling because
it is faster, cheaper and economical. It is also more effective, more accurate and more
comprehensive in gathering data compared to other methods. As mentioned, they used survey
and questionnaires which consists of two parts: the profile of the business organization and
questions regarding the outcome of financial analysis. It was validated by the thesis adviser,
statistician and other experts. The only issue in using this type of method is that the
respondents may give an objective and false answer to make their business look good. It should
be suggested that they use secondary data like financial statements to further justify the
financial strengths and weaknesses of the business. Regarding to the treatments of data, they
applied the recommended methods by the statistician like relative frequency, weighted mean
and one-way analysis of variance to arrive at a realistic and reliable result. All of the data used
was dependable because it was gathered with permission in administering the survey.

In conclusion, chapter three creditably explained and illustrated on how the process of
data gathering will be done with the appropriate instruments and methods. It was substantial
that all the necessary information needed was stated together with its evidences. However,
there were typographical errors found like in punctuation marks but it is immaterial to the
content of the chapter.