University of Trent Harvard Case Solution & Analysis

University of Trent Case Study Solution

Evaluation of financial performance of University of Trent:

The financial performance of the university in the year 1996 appears to be in line with the performance in the year 2015, no significant trend has been seen in the year 1996. All the items presented in the revenues and expenditure statement are moving as per the expectation and as per their movement in the previous years. (Financial analysis are shown in exhibits)

By analyzing the revenue and expenditure statement, it is assessed that inflows from the student’s fee are increasing by an insignificant amount while the reduction in the investment income seems to be drastic. On the other hand, the income from Alexandra Hospital and from other educational and medical services were increasing by a good percentage.

The expenses that the university is incurring are increasing drastically, although the revenue has grown with a very good number but the deficit of the university is also increasing with a more increased rate thus, depicting difficult operating conditions of the university.

The liquidity position of the university appears to be good, both the current and quick ratios are well above from the minimum threshold of 2:1 and 1:1 respectively. It can be said that university have sufficient current assets to meet-up its current liabilities. The gearing ratio of the university is increasing in the year 1996 but even after the increase the gearing ratio is lower which can be favorable for the university as they can easily additional finance very easily from any source. Fixed asset turnover and total asset turnover is also increasing in the year 1996 which depicts that the fixed assets and total assets of University of Trent are generating more sales in the year 1996 as compared to the level of sales in the year 1995. The negative profit margin and return on equity turns into positive net profit margin and return on equity just because of the little surplus that the company generates in 1996.

Performance evaluation of Chip:

The performance of Chip appears to be very effective, he has taken many decisions which results in great financial and non-financial benefits for the university. As the university generates little surplus in the year 1996, this can be mainly due to the effective decisions of Mr. Chip. His decisions regarding the bookstores and dining services resulted in huge cost savings for the university and general administrative expenses have been reduced just because of the effectiveness of his performance. His performance not only led to the improvement in the financial performance, the non-financial performance of the university has also increased which mainly includes the improvement in the food services provided by the dining committee.

Does the performance of Mr. Chip is beneficial for the university?

It can be argued that the performance of Chip proves to be beneficial for the university, because of his effective performance and effective decision making, the University of Trent has overcome the long standing deficit. Although the university has generated very little surplus, but this little surplus is very difficult to generate in these difficult operating conditions in which expenses are increasing drastically.

Had Chip not taken some of the challenging and difficult decisions, it would be very difficult for the university to generate the surplus. His main decisions which makes his performance beneficial for the university includes the termination of the contract with Chuckwagon, as Chuckwagon was delivering good quality food, many of the faculty members and students were forcing Chip to not to terminate the contract. In addition to this, the decision to lay-off temporary workforce can also be regarded as the main decision of Chip which helps the University of Trent to overcome the continuous deficit.

University of Trent Harvard Case Solution & Analysis



However, the performance of Chip is not perfect, there are numerous occasions where he could improve his performance and execute his duties in a more effective way which will be more beneficial for the university. His leadership style and decision making style needs some amendments, he enforces his policies in a very autocratic way and he doesn’t take any suggestions from the subordinates rather he imposes his decisions on them which can have very adverse consequences on their motivation level. Furthermore, he can negotiate with the study committee regarding the excess piece of building which is costing much to the university.

Consistency b/w goals and financial resources of the university:

The goals of University of Trent seem to be consistent with the financial resources needed to finance them, the management of university is spending according to the expected return from the expenditures. The management is spending minimal on the items which are generating minimal inflows, dining services and bookstores at the university are the most prominent examples of this consistency.These services are generating minimal inflows and as a result of this poor generation, the management is spending less in these items........................

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