FINANCIAL ANALYSIS BETWEEN TOWN COUNCILS AND MANAGEMENT COPORATIONS

Abstract

Town Councils and Management Corporations are similar in their job scope. There are also many similarities between the two types of organisations. Both are legally required to prepare annual statement of accounts as they are liable to the residents of HDB flats and subsidiary proprietors of condominium development respectively. The annual report for three fiscal years of the six subject organisations are used to explore and examine three key areas of the annual statements namely, income, expenditure and sinking funds provision. Comparative financial analysis is done between the six organisations with the use of financial ratios and statistics. It is detected that Town Councils tend to be more fiscally healthy than the Management Corporations. However, they rely heavily on the annual government grant. Town Councils' main expenditure is on Water and Electricity while Management Corporations tend to spend most of their funds on General and Administrative expenses. Management Corporations also tend to spend more money per unit due to their smaller scale compared to the Town Councils. There is no clear and distinct trend with regards to the sinking funds collection over the past three years in the six organisations. All six organisations have rather low Total Funds/ Sinking Funds ratio which imply that they may not be able to handle large sum of expenditure as their funds are only marginal.We also examined whether determinants like resale price, age and scale of operations have an impact on the financial management of the organisations. However, no trend was identified from the study and as a result; no conclusive analysis can be attained.