An assessment of financial perfomance of Ghana Water Company in the Northern Region: 1994 - 2003

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Ghana Water Company limited is saddled with problems, especially finance. While the population keeps growing, urbanization is growing, the water company (Ghana Water Company Limited) pipelines are too old, chocked and leaking and some of the water operating systems are below design capacity. In the Northern Region of Ghana, Ghana Water Company’s pipelines are not only old but empty for most parts of the years and it meets only 50% of the urban water needs in the region. The main objective of this research was to review and analyze the financial performance of Ghana Water Company Limited in the Northern Region and to recommend measures to improve the company’s financial performance. Data were mainly secondary type Data were gathered from the financial reports of the company in Tamale These are profit and loss accounts, and the balanced sheet for a period of ten years. Primary data were used as supplementary through discussion with management and some workers of the company in the region. Both descriptive and quantitative methods of data analysis were used. The results of the study indicated among others, that the current ratio of the company in Northern Region was consistently lower than the current ratio of the entire company, keeping the company liquidity in insecure conditions. Average debt collection deteriorated from 99 days in 1994 to 488 (lays in 2003 as against the credit policy of 28 days term of the company. Further findings indicate that the rate of increase in expenditure exceeds the rate of increase in revenue. Expenditure growing at a cumulative rate of 37% whilst revenue growths at a cumulative rate of 34%. AU these are as result of inconsistent water flows due to obsolete equipments and lack of expansion of the water systems. The study recommends specifically that there is need for replacement of obsolete equipments and expansion of the existing water systems. Also there is the need for extensive use of highly motivated collection task force to carry out collection and disconnection exercises. Management must be cost effective especially in the area of electricity consumption through the identification and use of cheaper alternative sources of energy such as the solar, or the replacement of energy savings equipment and machinery. Community metering and billing is also recommended to assist in stamping out illegal connections and consumption of water. One general recommendation made is that there is greater need for public-private sector participation in water management in the Northern Region.
A thesis presented to the Department of Economics and Industrial Management, College of Arts and Social Sciences in partial fulfilment for the award of Master of Business Administration (MBA, 2005)