The school has presented three important financial papers in comparison of two years (2013 and 2014) showing the profitability, liquidity and cash flow situation and performance. 

Starting with the cash flow presented on (page 9). A cash flow is a financial document that is usually prepared monthly showing the cash inflows and cash outflows of any business. In relation to UN Int. School it clearly shows that the cash (Beginning of year) or opening balance for the year 2013 was (1,390,518) and the cash (End of year) or closing balance was (1,074,515), which shows a loss of $315,943 in that year. Whereas for the year 2014, the opening balance was (1,074,515) and closing end of year balance was (1,757,807) which shows a gain this year with $683,292 therefore relates a more successful year than the previous one. 

Cash flow documents are useful for businesses as they give a clear guidance for managers to effectively manage cash surplus, arrange for future loans, and identifies areas where outflows are exceeding. 

The second document used was the statement of financial position or balance sheet presented on (pages 5, 6, 16 and 17). A balance sheet is document that shows the assets and liabilities of a business. This is a critical paper for all businesses prepared at the end of each financial year to assess a business liquidity situation and level of debt. 

Referring to UN. International school, it shows that total current assets for year 2013 (69,416,074) and 2014 (74,616,147). This is a good improvement as current assets are those owned by a business for less than a year which includes cash which is a very important tool for working capital, especially evident that the level of cash increased from (1,074,515) to (1,757,807) between 2013 and 2014. 

This is towards the level of current liabilities and debt needed to pay within one year that increased from (13,003,821) to (17,784,914) between years 2013 and 2014. It is clear that the level of short term debts have increased with a large percentage towards the level of increase in current assets. 

Where the school needs to maintain high current assets in order to cover its current liabilities. Business use a current ratio to asses this financial situation through the equation of current assets/current liabilities. 

Therefore in 2013 the current ratio is 5.3, and in 2014 is 4.1. 

Moving onward to more factors of the balance sheet which shows an increase in the level of fixed assets for the school. Those assets are usually owned for more than a year. Where in 2013 (56,412,252) and 2014 (56,831,930). Fixed assets increase is beneficial for any business in relation to any long term loans taken and shows more of the business wealth situation. 

The final financial paper presented is the statement of financial income or (Income statement) which usually shows the profitability level of any business identifying the gross, net and retained profits for the end of each financial year. 

The revenue increased for the school from (47,620,678) to (50,357,561) between years 2013 and 2014 which is a good indicator of cash inflow improvement within the year of 2014, whereas expenses also increase from (50,443,136) to (53,464,139) between years 2013 and 2014. This shows a loss of 2,822,458 in 2013 in terms of differences between revenue and expenses, where also a loss of 3,106,578 in 2014. The school may need to increase in revenues and decrease is expenses such as (Salaries) to be able to retain higher profit margins in relation to its investment. This is believed to be possible with more advancements after the 5,000,000 long term loan investment which could improve the level of education and the capital lease of computers and technology. 

 

From the Balance Sheet, the reader gets an understanding of the assets/liabilities, and the equity. In 2014, the liabilities increased in the area of a loan (as per note 6) which the school secured for 5M. However, it appears that in 2013, there was actually more liability because of outstanding accounts payable or accrued expenses.  The school must have addressed this liability, and were therefore able to secure a 5M loan, which did not adversely affect the balance sheet. 

The balance sheet also shows capital lease payments for an investment in technology which will be amortized over a period of 5 years.

Overall the balance sheet shows that offset of the 5M in liability within the differing balance at the end of the sheet.

Initially we see an increase in revenue YOY from 2013 to 2014 of about 2.68M. Was there an increase in student headcount, was there a significant increase in tuition fees. What else could account for this increase in revenue? There was also an increase in ‘other revenue’ of $164,231. What would constitute that amount?

The 2014 expenses incurred from Hurricane Sandy appear to be approx $284,000 more than in 2013 and there was $220,115 more in contributions in 2014 than in 2013 that perhaps offset this difference. 

Their net realized gains on investments in 2014 from 2013 was 1.5 M which shows a good allocation of resources and recovery. 

This demonstrates the in and out of the school’s operations. The inflow and outflow of cash show that the school would have faced difficulty if it did not sell off some of their investments. The net balance is positive, but this would not be the case had they not done this transaction.