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Analysis of Financial Statement of Charity and Strategic Vision

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Added on  2022-08-12

Analysis of Financial Statement of Charity and Strategic Vision

   Added on 2022-08-12

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Analysis of Financial Statement of Charity and Strategic Vision
Introduction
The report relates to the Musical Museum financial statement analysis. The Museum is
located in London and is established for charity purpose. The Musical Museum has a
subsidiary Musical Museum Trading Limited, which carries out commercial activity on
behalf of the charity which is in alignment with the objective of the charitable institution of
public benefit. The report presents financial statement analysis of the charity stand alone and
the consolidated accounts/financials of the museum and the trading subsidiary. The report
also harps on the ratio analysis of the financials along with exploration of future operating
budget for the charity.
Analysis
The Musical Museum has experienced a tough Financial Year 2018-19 and the net income of
the charitable organisation has dwindled significantly in comparison to the past financial
year. The organisation has reported a loss/ deficit of Sterling 95,444 with an operating cost of
Sterling 148,150. On the other hand for similar period last year, the institution has reported
surplus of Sterling 57,783 with an operating cost of Sterling 137,291.
Vertical Common Size Statement
The Vertical common size statement of the charity stand alone has been presented here-in-
below:
Statement of Activities
2019 2018
Sl
No Particulars
Musical
Museum %
Musical
Museum %
1
Income resources from generated
Funds
Voluntary Income 46177 90.06% 192629 96.88%
Investment Income 5097 9.94% 6210 3.12%
51274 100.00% 198839
100.00
%
2 Resources Expended
Charitable Activities
Exhibiting Collection of
Instruments 140907 274.81% 130641 65.70%
Governance Costs 7243 14.13% 6650 3.34%
3 Net Income -96876 -188.94% 61548 30.95%
4 Other gains 1432 2.79% -3405 -1.71%
Analysis of Financial Statement of Charity and Strategic Vision_1
2019 2018
Sl
No Particulars
Musical
Museum %
Musical
Museum %
5 Net Movement in Funds -95444 -186.15% 58143 29.24%
On perusal of above table, it may be inferred that the charitable organisation has significant
porting of revenue/income from voluntary income which comes in the form of aid, donation
etc. Also, 10% of the organisation flows from passive investments which the organisation
maintains. The income portion under the voluntary income has been a contributing factor to
survival of charity. However, the importance of same has reduced from 96.88% to 90%
which has led to downfall of charity.
Also, it may be visualised that expenditure/ routine expense has been 275% of revenue in the
FY 2018-19 while the same was 65.7% in the past year. The said dramatic percentage in the
expense couples with downfall of revenue base led to significant erosion of the capital/fund
base of the charitable organisation.
Further, the Vertical common size Financial statement of the charity stand alone has been
presented here-in-below:
Balance sheet
2019 2018
Particulars Musical Museum Musical Museum
1 Fixed Asset
Tangible Asset 1311840 81.98% 1333502 78.64%
Investment 163628 10.23% 162194 9.57%
2 Current Asset
Debtors 34706 2.17% 35947 2.12%
Cash at Bank 93334 5.83% 172709 10.19%
3 Creditors -3250 -0.20% -8650 -0.51%
4 Net Current Asset 124790 7.80% 200006 11.79%
5 Net Asset 1600258 100.00% 1695702 100.00%
6 Funds
Unrestricted funds
General Fund 278368 17.40% 292525 17.25%
Collection Fund 44845 2.64%
Restricted Funds
Heritage Lottery Funds 1311840 81.98% 1348282 79.51%
Memorial Fund 10050 0.63% 10050 0.59%
1600258 100.00% 1695702 100.00%
Analysis of Financial Statement of Charity and Strategic Vision_2
On perusal of the above table, it may be inferred that financial position of the charitable
organisation has decreased over the period. The balance in cash has suffered a big hit of 5%
as its contribution to the total asset of the organisation has decreased from 10% to 5% from
FY 2017-18 to FY 2018-19. Further, the organisation has witnessed a steep fall in the net
current asset for the period.
Horizontal Common Size Statement
The Horizontal common size statement of the charity stand alone has been presented here-in-
below:
2019 2018
Sl
No Particulars
Musical
Museum
Musical
Museum %
1
Income resources from generated
Funds
Voluntary Income 46177 192629 -76.03%
Investment Income 5097 6210 -17.92%
51274 198839 -74.21%
2 Resources Expended
Charitable Activities
Exhibiting Collection of Instruments 140907 130641 7.86%
Governance Costs 7243 6650 8.92%
3 Net Income -96876 61548
-
257.40%
4 Other gains 1432 -3405
-
142.06%
5 Net Movement in Funds -95444 58143
-
264.15%
On perusal of the above table, it may be inferred that the financial statement of activities of
the trust have taken a big hit compared to previous financial year. There has been a
significant decline in aids and charity to the organisation, the fall has been recorded at 76%
over the previous year. Further, the investment income has also witnessed a downfall of 18%
which lead a significant downfall in the total revenue of the charitable organisation which in
turn led to negative income for the current period. The organisation has also witnessed an
increase in expenditure without corresponding increase in revenue which aided to negative
net income for the trust.
Further, the Horizontal common size Financial statement of the charity stand alone has been
presented here-in-below:
Analysis of Financial Statement of Charity and Strategic Vision_3
2019 2018
Analysis of Financial Statement of Charity and Strategic Vision_4

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