University of Trent Harvard Case Solution & Analysis

University of Trent Case Study Solution

Analysis of financial position of University of Trent:

It can be said that there are no significant trends in the financial position of University of Trent, revenues from all the sources have seen some little increase and reduction according to the past pattern. On the other hand, the expenses are also moving according to the past patterns, they have also grown and reduced by insignificant amounts as expected by the management. (See exhibit 1a 1b).

The revenue from student’s subscriptions is increasing slightly in all the years, while the revenue from state subscription is decreasing in all the years, same is the case for investment income but the reduction  can be regarded as significant. However, the income from the Alexandra Hospital and from other educational activities is increasing with a good rate. The expenditures of almost all types are increasing which are the primary reason for the increasing deficit of the university particularly the expenses of Alexandra Hospital and other educational activities are increasing drastically. Although the revenues from these sources are also increasing but the increment in revenues and expenses is not in line with each other.

Both the current and quick ratios of University of Trent is increasing which depict good liquidity position of the university, although the expenses are increasing but the management have effectively managed the current liabilities. And the university still have enough current assets to meet the current liabilities. Accounts receivable and payable turnover days have also seen some favorable changes which also reflects the effective strategies of the management. The debt to equity ratio of the University of Trent is increasing which can have some adverse effects on the profitability of the university as they have to bear additional cost.

Evaluation of Chip’s performance:

It can be said that the policies of Chip are effective and his decisions are one of the main reasons for the reduction in some of the expenses, his bold decision regarding the dining services proves to be beneficial for the university. Chip made various strict decisions regarding the bookstore, dining services and regarding laying off temporary employees results in tremendous financial benefits and as a result, the general expenses and administrative expenses reduced drastically. Apart from the financial benefits, there are many non-financial benefits of Chip’s decisions such as the quality of the food served by the dining committee has increased.

Does the performance of Chip is helpful for the university?

It can be said that the performance of Chip is very beneficial and critical for the University of Trent, as the deficit of University is increasing it is necessary for the University to control the expenditures. Although the deficit is still increasing but the policies and decisions of Chip have reduced the pace of deficit. It is essential for the university to have an individual like Chip who can take some bold decisions in order to control the costs. Chip has taken these kinds of decision in his association as an employee of the University of Trent, he cancelled the contract with Chuckwagon which seems to be very difficult for the University as Chuckwagon have very high bargaining power. On the other hand, his decision to lay off the temporary employees and to reduce the overtime  also seems to be crucial for the University, thus making his decisions helpful for the University.

However, it can be argued that his performance is less than perfect as there are some areas in which he could improve his performance which is ultimately beneficial for the university. He can change his leadership style in order to improve his performance even better, he enforces his policies in a very autocratic way, and the democratic style of implementing strategies could be more suitable for the university as his subordinates will be more motivated. Moreover, he should also have to communicate with the study committee regarding the closure of the building which is costing more to the university than the benefits.

Consistency between the goals and financial resources:

The University of Trent’s goals are consistent with the financial resources to some extent, they are reducing expenditure on less important items such as unnecessary overtime to the employees and the management also reduced the amount of expenditure spend on the dining services. Furthermore, the management is spending good amount on the core areas which are necessary in providing quality education to the students.

However, it can be argued that the University of Trent is failing to make the goals consistent with the financial resources it needs to finance them, because the amount of expenses is increasing day by day, the university is running in huge deficit. They need to finance these goals from various sources, some sources can have minimal cash outflows while some sources can have significant cash outflows such as debt finance which will result in interest expenses and transaction costs........................

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