Professional Documents
Culture Documents
[Type the abstract of the document here. The abstract is typically a short summary of the
contents of the document. Type the abstract of the document here. The abstract is typically a
Contents ...................................................................................................................................................... 1
CHAPTER ONE: COMPANY’S PROFILE.............................................................................................. 4
BRIEF HISTORY .................................................................................................................................... 4
VISION ..................................................................................................................................................... 4
MISSION.................................................................................................................................................. 4
GOALS..................................................................................................................................................... 5
CORE STRATEGY ................................................................................................................................ 5
CORPORATE PHILOSOPHY .............................................................................................................. 5
CORE VALUES ...................................................................................................................................... 5
RECENT DEVELOPMENT ................................................................................................................... 6
ORGANIZATIONAL STRUCTURE...................................................................................................... 7
RANKING of DCWD .............................................................................................................................. 8
CHAPTER TWO: VERTICAL AND HORIZONTAL ANALYSIS OF FINANCIAL STATEMENTS 10
2.1 SUMMARY OF FINANCIAL MANAGEMENT POLICY ........................................................... 10
2.1.1 BASIS OF RECORDING ....................................................................................................... 10
2.1.2 CASH AND CASH EQUIVALENTS ..................................................................................... 10
2.1.3 RECEIVABLES ....................................................................................................................... 10
2.1.4 INVENTORIES ....................................................................................................................... 10
2.1.5 PREPAYMENTS .................................................................................................................... 11
2.1.6 PROPERTY, PLANT AND EQUIPMENT ........................................................................... 11
2.1.7 CONSTRUCTION IN PROGRESS...................................................................................... 12
2.1.8 OTHER ASSETS .................................................................................................................... 12
2.1.9 PROVISIONS .......................................................................................................................... 12
2.1.10 REVENUE ............................................................................................................................. 13
2.1.11 LEASES ................................................................................................................................. 13
2.1.13 EVENTS AFTER THE BALANCE SHEET DATE ........................................................... 14
2.1.14 CONTINGENCIES ............................................................................................................... 14
2.1.15 EMPLOYEE BENEFITS ...................................................................................................... 14
2.1.16 CHANGE IN ACCOUNTING ESTIMATED AND POLICIES ......................................... 14
2.1.18 CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES ........................ 15
1|Page
2.1.19 IMPAIRMENT OF ASSETS ................................................................................................ 16
2.2 VERTICAL ANALYSIS OF BALANCE SHEET ......................................................................... 16
CHAPTER 3: RATIO ANALYSIS OF DCWD ....................................................................................... 28
3.1 LIQUIDITY RATIO ......................................................................................................................... 28
3.1.1 CURRENT RATIO ...................................................................................................................... 29
3.1.2 QUICK ASSET RATIO .............................................................................................................. 29
PROFITABILITY RATIO ...................................................................................................................... 29
DEBT MANAGEMENT RATIO ........................................................................................................... 31
CHAPTER 4: INVESTMENT AND CONSTRUCTION IN PROGRESS ANALYSIS OF DCWD .. 35
INTRODUCTION .................................................................................................................................. 35
CABANTIAN WSS ............................................................................................................................... 36
BINUGAO WSS .................................................................................................................................... 37
DUMOY WSS ....................................................................................................................................... 37
PANACAN WSS ................................................................................................................................... 41
RIVERSIDE WSS ................................................................................................................................. 42
TORIL WSS........................................................................................................................................... 42
TAMUGAN WSS .................................................................................................................................. 43
OTHER PROJECTS ............................................................................................................................ 46
FEASIBILITY STUDY .......................................................................................................................... 47
TUGBOK WSS ..................................................................................................................................... 48
SUMMARY OF DCWD PROJECTS.............................................................................................. 49
2|Page
Table 1 Ranking of Water Districts as to Assets ......................................................................... 8
3|Page
CHAPTER ONE: COMPANY’S PROFILE
BRIEF HISTORY
Davao's first water supply system was established in 1921 which was then known as the
Sales Waterworks System. The said communal system tapped Malagos Creek and laid 28
kilometers of pipelines to serve some 10,000 users at the Davao Poblacion area.
In 1973, Davao City Water District (DCWD) was created by the virtue of Presidential
implemented its projects in calculated phases and stages. Transmission and distribution lines,
sources, pumping stations and reservoirs multiplied in large proportions as DCWD coped with
Davao City’s progress. On March 12, 1992, the Supreme Court declared with finality that all
water districts in the country created under PD 198 are government-owned or controlled
surface water, to ensure that abundant and only quality water supply will flow out of the taps of
VISION
“Best water and wastewater service provider with utmost care for the people and the
environment.”
MISSION
“We commit to supply potable and affordable water 24 hours a day, provide wastewater
treatment services, operate efficiently, take a proactive role in environmental concerns and keep
a competent workforce.”
4|Page
GOALS
Attain a 98% Employee Satisfaction Rating; Exceed by 50% the projected water demand
CORE STRATEGY
“Efficient and effective management of all resources for water security in Davao City.”
CORPORATE PHILOSOPHY
CORE VALUES
2) Integrity - cultivating among the people the highest ethical standards by practicing
accountability, honesty, loyalty, credibility, responsibility and transparency in the utility's daily
operations;
5|Page
RECENT DEVELOPMENT
Davao City Water District welcomes the developments of the Davao City Bulk Water
Supply Project and looks forward to the start of its operation that will provide sustainable water
On October 10, the Davao City Council passed on third and final reading an ordinance
that will grant DCWD’s project partner, Apo Agua Infrastructure, Inc., additional allowable use of
land in Barangay Gumalang, Baguio District for the construction of a treatment facility for the
Per the joint venture agreement, Apo Agua will take charge of the water extraction and
treatment while DCWD is responsible for the water distribution. DCWD has already started
various infrastructure development and pipe laying works targeted to be completed in 2017 and
2018.
Once this project becomes operational, water availability and pressure will improve in
DCWD’s service coverage areas with Cabantian and Panacan as priority areas. It will also be
able to expand its services from 112 to 116 Barangays. With the availability of treated bulk
water, DCWD will be able to rest most of its production wells and reduce the use of groundwater
ensuring the long term protection of aquifers and water resource sustainability in Davao City.
6|Page
ORGANIZATIONAL STRUCTURE
HELEN D. EDUARDO A.
ATTY. ABDUL M. BANGAYAN MARIA LUISA L. ATTY. CHARMALOU
PAGUICAN, Ph.D
DATAYA JACINTO D. ALDEVERA
(Member (Chairperson
(Vice Chairperson representing the (Secretary (Member
representing the
representing the Business Sector) representing the representing the
Education Sector)
Professional Sector) Women Sector) Civic Sector)
7|Page
RANKING of DCWD
8|Page
Table 4 RANKING OF WATER DISTRICTS AS TO TOTAL INCOME
9|Page
CHAPTER TWO: VERTICAL AND HORIZONTAL ANALYSIS OF FINANCIAL STATEMENTS
The district adopts the accrual method of accounting. All expenses are recognized when
incurred and reported in the financial statements in the period to which they relate.
Cash is valued at face value and cash in foreign currency is valued at the current
exchange rate. It includes petty cash, revolving fund. Petty cash shall be maintained under the
Imprest System.
2.1.3 RECEIVABLES
Receivables are stated at face value, less allowance for uncollectible accounts.
The district followed the practice of specific identification in charging bad debts in 2055.
As PAS 39, the carrying amount of the asset shall be reduced either directly or through the use
of an allowance account.
2.1.4 INVENTORIES
Inventories are stated at cost which includes purchase price, import duties and taxes,
freight, handling and other cost directly attributable to the acquisition of finish good, materials
and service as well as other cost incurred in bringing the inventories to their present location
and condition.
Cost of ending inventory of supplies and materials is computed using moving average method.
10 | P a g e
Inventories of the District include materials and supplies that are kept in stock for the future use
in operations. These are grouped into office supplies, plant materials and operating supplies,
2.1.5 PREPAYMENTS
Prepayments are measured at cost. This account includes advance payment to different
Land is stated at cost less any impairment in value. Except for the land, the District’s
property and equipment are stated at cost less accumulated depreciation and amortization and
The initial cost of property and equipment consists of its price, including import duties,
taxes and any directly attributable cost of bringing the asset to its working condition and location
Expenditures incurred after the assets have been put into operation, such as repairs and
When assets are sold and retired, their cost and accumulated depreciation and
amortization are eliminated from the accounts and any gain or loss resulting from their disposal
Straight line method of computing depreciation for government property, plant and
A residual value equivalent to ten percent of the acquisition cost/appraisal value was
deducted before dividing the same by the Estimated Useful life. The Estimated useful life is
based on the LWUA’s commercial Practice manual. Adjustments arising from the revision of the
11 | P a g e
asset’s useful life were charged to the current and subsequent year’s depreciation expense of
For asset under construction, the Construction Period Theory shall be applied for costing
purposes. Liquidated damages charged and paid for by the contractor shall be deducted from
Cash deposits in closed banks are cash deposits that remained in various closed bank
Assets declared by proper authorities as obsolete and unserviceable, including assets of the
agency no longer used, shall be reclassified to “Other assets” account from the corresponding
inventory and property, plant and equipment accounts that are not subject to depreciation.
2.1.9 PROVISIONS
Provisions are recognized when present obligation will probably lead to an outflow of
economic resources and they can be estimated reliably even if the timing or amount of outflow
mat still be uncertain. Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate. Provisions are measured at the estimate expenditures required
to settle the present obligation, based on the most reliable evidence available at the balance
sheet date, including the risk and uncertainties associated with the present obligation.
12 | P a g e
2.1.10 REVENUE
Revenue is recognized only when it is probable that the economic benefits associated
with the transaction will flow to the enterprise. However, when an uncertainty arises about the
collectability of an amount already included in revenue, the uncollectable amount, or the amount
The District has adopted the accrual basis of accounting in recording the income except
Bills are rendered on the monthly cycle based on the meters read. Water sales are
recorded on the cut-off date with no accruals made for bills delivered after the end of the month.
Fines and penalties are recognized as income of the year as these were collected.
2.1.11 LEASES
straight line basis over the period of the lease. When operating lease is terminated before the
lease period has expired, any payment required to be made to the lessor by the way of penalty
is recognized as an expense in the period in which termination takes place. When assets are
leased out under a finance lease, the present value of the lease payments is recognized as a
receivable. Lease income under finance lease is recognized over the term of the lease using the
Foreign currency transactions are translated into functional currency using exchange
13 | P a g e
2.1.13 EVENTS AFTER THE BALANCE SHEET DATE
Any post year-end events that provide additional information about the district’s position
at the balance sheet date (adjusting events) are reflected in the financial statements. Any post
year –end event that is not adjusting event is disclosed in the notes to financial statements,
when material.
2.1.14 CONTINGENCIES
Contingent liabilities are not recognized in the financial statements. They are disclosed
assets are not recognized in the financial statements but disclosed when an inflow of economic
benefits is probable.
The district recognizes undiscounted amount of short term employee benefits, like
salaries, wages, bonuses, allowance, etc. as expense. The District recognizes expenses for
accumulating compensated absences when these are paid. Non accumulating compensated
The District recognizes the effects of changes in the accounting policy retrospectively.
The effects of changes in accounting policy are applied prospectively if retrospective application
is impractical.
14 | P a g e
2.1.17 SIGNIFICANT MANAGEMENT’S ACCOUNTING JUDGEMENTS AND ESTIMATES
assumptions that affect the amounts reported in the District’s financial statements and
accompanying notes.
The estimates and assumptions used in the agency’s financial statements are based
upon management’s evaluation of relevant facts and circumstances as of the date of the
Judgments and estimates are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be
estimate and assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions are based on
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future periods if the revision
15 | P a g e
2.1.19 IMPAIRMENT OF ASSETS
inventories become lower than cost due to damage, physical deterioration, obsolescence,
The composition of cash in the total assets is increase by 6.99% to 8.05% from 2014 to
2016 due to cash collection from accounts receivables and interest earned in time deposits
which causes to decreased the percentage in the total assets by 7.23% in the year 2014 to
2.53% in the year 2016 which resulted to a decrease of the total percentage of the current to the
total assets by 18.68% to 13.62% from the year 2014 to 2016. In noncurrent assets, the
significant increase of construction in progress by 7.67% to 24.06% from the year 2014 to 2016
causes the increase the increase of the overall composition of noncurrent assets from 81.52%
16 | P a g e
AMOUNT VERTICAL ANALYSIS
ASSETS
CURRENT ASSETS
The total liabilities increase in the overall composition of liabilities and equity by 7.66% to
16.50% from 2014 to 2016 due to continuous increase of the total percentage of loans payable
Domestic by 4.71% to 13.64% in 2016. It indicates that Davao City Water District continue to
engage in debt financing. The overall equity of Davao City Water District continue to decrease
by 92.34% in 2014 to 83.50% in 2016. Though debt financing continue to increase, still big
17 | P a g e
AMOUNT VERTICAL ANALYSIS
LIABILITIES
CURRENT LIABILITIES
NON CURRENTS
LIABILITIES
EQUITY
18 | P a g e
HORIZONTAL ANALYSIS OF BALANCE SHEET
For the comparative years 2014-2015, though total current assets decreased by 3.14%,
its total noncurrent assets increased by 36.09% due to significant increase of construction in
In comparative years 2016-2015, the total current assets increase by 20.62% due to
increase in cash by 47.22%. Its total noncurrent assets also increase by 20.46% due to increase
19 | P a g e
Table 8 Horizontal Analysis the year 2015-2016 for Assets
ASSETS
CURRENT ASSETS
NON CURRENTS
ASSETS
CONSTRUCTION IN
Table 8.1 Horizontal Analysis for the year 2014-2015 for Assets
ASSETS
20 | P a g e
CURRENT ASSETS
NON CURRENTS
ASSETS
CONSTRUCTION IN
21 | P a g e
LIABILITY AND EQUITY
The total liabilities of Davao City Water District in comparative years of 2015-2014 due to
increase in its Loans Payable Domestic by 170.44% and other liability accounts by 69.15%. It
also increase in the comparative years 2016-2015 due to the same reason that loans payable
The total equity of Davao City Water District increase in both comparative years 2015-
2014 and 2016-2015 by 28.83% and 23.07% respectively due to increase of restricted capital by
1051.41% and increase of net income by 14.50% for comparative years 2015-2014 and due to
LIABILITIES
CURRENT LIABILITIES
INTER-AGENCY
OTHER LIABILITY
NON CURRENTS
LIABILITIES
22 | P a g e
DOMESTIC
EQUITY
23 | P a g e
Table 9.1 Horizontal Analysis for Liabilities and Equity
LIABILITIES
CURRENT LIABILITIES
INTER-AGENCY
OTHER LIABILITY
NON CURRENTS
LIABILITIES
LOANS PAYABLE-
EQUITY
24 | P a g e
TOTAL LIABILITIES AND
As of 2014, the OPEX( Operating Expenses ) was 60.63%, the financial expense was
.78% and the net income or loss was 38.59%.During 205, the OPEX was 56.48%, the Financial
expenses was 1.28%, and the net income or loss was 42.24%. While in 206, the OPEX was
62.20%, financial expenses were 1.8I%, and the net income or loss was 35.99%. The data
shows that the DCWD manage to minimize their operating expense during 205 compared to
204 and 206, which resulted to an increased portion of net income during 2015.while in 2016,
the DCWD’s operating expense increased to 62.20%, which led to the decreased portion of net
income or loss.
25 | P a g e
Table 9 Vertical Analysis for Income Statement
The District’s gross income for the year showed a positive growth of 5%. Meanwhile, the
District’s 2015 expenditures went down by 2% compared to 2014. Thus, net income increased
by 15%. During the year, the District’s level rate in personal Services decreased by 12%.
Further, MOOE and financial Expenses increased by 3% and 73% respectively. The District’s
gross income for the year showed a positive growth of 7%. Meanwhile, the district’s 2015
expenditure went up by 19% compared to 2015 due to the recognition of Impairment Loss on
accounts receivable with ages more than one year through the allowance method in accordance
with the Philippine accounting Standards amounting to PHP 180, 303, 026.41. Thus, net income
26 | P a g e
decreased by 9%. During the year, the District’s level rate in Personal Service increased by 8%.
Further, MOOE and financial Expenses increased by 24% and 51% respectively.
27 | P a g e
CHAPTER 3: RATIO ANALYSIS OF DCWD
LIQUIDITY RATIO
CURRENT RATIO
28 | P a g e
3.1.1 CURRENT RATIO
As we observed from year 2014 to 2016, the ratio decreased from 6.31% to 4.75%. This
occurred because current liabilities are rising faster than current assets. As the data shows from
2014 to 2016, the current assets increased by 17%, whereas, the current liabilities increased by
55%. This indicates that DCWD’s liquidity position is somehow weak but by no means
desperate.
From 2014 to 2016, the ratio has decreased from 9.86% to 3.51%. This occurred
because DCWD’s quick assets decreased by 9%, while, current liabilities increased by 6%.
From 2015 to 2016, there was an insignificant increased by 3.5% to 3.69%. This occurred
because DCWD’s quick assets increased by 30%, while, its current liabilities increased by 23%.
This indicates that the company’s ability to pay its short term obligations without relying on its
From 2014 to 2016, the ratio increased from 4.38% to 8.19%. This occurred because the
cash provided by the operating activities increased by 38% from 2014 to 2016. This indicates
that it is an improvement in short term solvency due to the positive impact of the cash provided
PROFITABILITY RATIO
PROFITABILITY RATIO
29 | P a g e
OPERATING PROFIT MARGIN
PHP
PHP
As we observed from year 2014 to 2016, the percentage was decreased from 39.37% to
37.80%. This indicates that DCWD’s operating costs are too high as compared to the past
years.
Based on the data, from 2014 to 2016, the percentage was decreased from 38.59% to
35.99%. This result occurred because of two reasons. First, DCWD’s operating income
decreased because of the firm’s high operating costs. Second, the profit margin was negatively
30 | P a g e
DEBT MANAGEMENT RATIO
DEBT RATIO
PHP
PHP
DEBT RATIO
From 2014 to 2016 the debt ratio increased. The increased debt ratio indicates that the
assets financed by the DCWD’s creditors have increased over the years. As a result, the
interest charges also increased. As we observed, the increased of DCWD’s ratio does not
31 | P a g e
DEBT TO EQUITY RATIO
From 2014 to 2016, the ratio increased from 8.29% to 19.76%. This indicates that
DCWD’s capital structure is quite risky due to the increase of debt ratio but no means
desperate.
Based on the data from 2014 to 2016, the ratio decreased from 80.60% to 30.88%. This
indicates that DCWD’s ability to pay off its interest charges was fluctuating due to the increase
ACCOUNTS RECEIVABLE
TURNOVER
32 | P a g e
Net Sales PHP 2,169,723,909.85 PHP 2,022,919,640 PHP 1,933,561,493
The Accounts Receivable Turnover increased over the years (2014 to 2016). This was
because of the amount of Accounts Receivable from 2014 – P280, 607, 998 decreased to P155,
744, 105.72 during 2016 which were collected and converted to cash and the increased amount
of revenue from P1, 933, 561, 493 as of 2014 to 2, 169, 723, 909.85 during 2016 due to the
increased charge of meter rental charge from P15 to P21. The increasing Accounts Receivable
Turnover is an indicator that the conversion of Accounts Receivable to cash of DCWD from
The DCWD’s Average Collection Period from 2014 to 2016 have decreased. The reason
behind this decrease was because of the increasing Accounts Receivable Turnover. This
indicates that DCWD has improved its credit policies within three years.
From 2014 to 2016 the Fixed Asset Turnover of DCWD have decreased. This occurred
because despite of the increasing net sales and net PPE, the increase of net PPE dominated
33 | P a g e
over the increase of net sales. The decrease Fixed Asset Turnover indicates that DCWD did not
used its fixed assets intensively based on the data from 2014 to 2016.
From 2014 to 2016 the ratio decreased; from .50 to .35. This indicates that DCWD is not
generating enough sales given its total asset. This occurred because DCWD have lots of
projects that were under extensive construction or modernization such as Transmission and
Distribution lines, reservoirs, pumping stations and etc. which cause the declining ratio of Total
Asset Turnover.
34 | P a g e
CHAPTER 4: INVESTMENT AND CONSTRUCTION IN PROGRESS ANALYSIS OF DCWD
INTRODUCTION
Davao City Water District (DCWD) as the largest water district in the Philippines, being a
phases and stages. Transmission and distribution lines, sources, pumping stations, and
reservoirs multiplied in the large proportions as DCWD coped with Davao City’s progress.
Investment pertains to the sinking fund of DCWD/ LWUA joint account deposited under
Construction in progress is agency assets that are still under construction of various
infrastructure projects and water supply system. For assets under construction, the Construction
Period Theory shall be applied for costing purposes. Liquidated damages charged and paid for
by the contractor shall be deducted from the total cost of the asset. Any related expenses
incurred during the construction of the project, such as license fees, clearance fees, etc. shall
be capitalized.
The following are the Water Supply Systems that are the Construction in progress of
DCWD;
35 | P a g e
CABANTIAN WSS
TO DATE OF
COMPLETION
Cabantian PW 1
Cabantian WSS
For the year 2014-2015, there was significant progress by 78%. In the year 2015 a lot of
projects under construction has been completed and classified as PPE for 2016.
36 | P a g e
BINUGAO WSS
TO DATE COMPLETION
Exploratory well 1%
Total 1%
7,962,814.00 71,349.00
BINUGAO WSS
DUMOY WSS
TO DATE OF
COMPLETION
WSS
37 | P a g e
PW# 14
PW# 10
PW# 7
PW# 11
Dumoy PW#40
assembly of Dumoy PW #
01
assembly of Dumoy PW #
02
assembly of Dumoy PW #
03
38 | P a g e
assembly of Dumoy PW #
07
assembly of Dumoy PW #
20
assembly of Dumoy PW #
21
assembly of Dumoy PW #
22
assembly of Dumoy PW #
24
assembly of Dumoy PW #
26
assembly of Dumoy PW #
28
assembly of Dumoy PW #
29
assembly of Dumoy PW #
39 | P a g e
33
assembly of Dumoy PW #
34
monitoring at Dumoy
Dumoy WSS
There is significant progress for the year 2014 to 2015 by 39%. For the year 2015, a lot of
projects has been completed which has been classified as PPE for 2016.
40 | P a g e
PANACAN WSS
date Completion
H.O. A (Stage 1)
PW#2
Panacan WSS
Projects completed in the year 2014 are classified as PPE in 2015. Projects are still in
41 | P a g e
RIVERSIDE WSS
date Completion
expansion projects
Riverside WSS
Progress in the year 2014 to 2015 showed 6% which is minimal compared to other
projects. On the other hand, a lot of projects has been completed in the year 2015 and being
classified as PPE in 2016. The status of the remaining projects for 2016 is 63%.
TORIL WSS
date Completion
42 | P a g e
Toril WSS
No projects has been accomplished for Toril WSS. Only 79% significant progress for
TAMUGAN WSS
date Completion
Supply system at
Tamugan
Tamugan road
no.1
junction of Bacaca to
DPWH Tamugan
Tamugan
43 | P a g e
Const'n of 3 units 500 69,917,888.00 13,694,822.00 20%
Mc Arthur Highway
Tamugan DCWD
improvement of trans.
Line
Circumferential road to
part A
WSS
44 | P a g e
Pipeline imprt'n 192,977,790.00 120,416,222.00 62%
Traversing Davao-
Tamugan WSS
45 | P a g e
OTHER PROJECTS
date completion
at Matina
Blvd
workshop
46 | P a g e
Construction of DCWD Felcris 1,604,300.00 1,501,395.00 94%
project A
project B
project C
500,000.00
Other Projects
Significant progress by 38% from 2015 to 2016. Other projects include the other PPE
FEASIBILITY STUDY
47 | P a g e
completion
&devt of groundwater
safety plan
Feasibility Study
Expenses incurred in this area are payments to experts who are to conduct further study
TUGBOK WSS
to date completion
District.
48 | P a g e
depth pilot hole.
flow meter
Reservoir no. 5
Tugbok WSS
Significant progress happen to the project from 2014-2015 by 54%. Furthermore, there
are projects that has been completed in 2015 which are classified as PPE in 2016. The
remaining project that are still in progress has the status of 28% being complete.
49 | P a g e
CABANTIAN WSS 36,401,518.00 33,148,972.00 91%
50 | P a g e