Table 3.

1
Relationship Between the Profile Variable of the Business and the Level of
Financial Performance of Photography Business in terms of Liquidity

Profile Variables Eta p-value Interpretation
Type of ownership 0.266 0.278 Not Significant
Years of business operation 0.447 0.053 Not Significant
Initial capital (Php) 0.331 0.808 Not Significant
Average monthly income 0.713 0.004 Significant
Number of workers 0.211 0.451 Not Significant
Financial debt 0.146 0.381 Not Significant

Based from the result, it can be seen that only average monthly income shows
significant relationship on the business liquidity. This was revealed by the obtained p-
value which is less than 0.05 level of significance. This indicates that the business
profile in terms of average monthly income affects the financial performance in terms of
liquidity.
Cash and accounts receivable generated from the operation of business are the
most liquid assets of a photo shop business. Generally, profit is recognized when the
service or goods are rendered or delivered based on accrual accounting. But due to
timing differences, cash flow and profit are not the same. The time gap between the cash
flow and profit may sometimes be large resulting to growth of credit sales thus making the
business vulnerable to cash shortage and eventually liquidity risk.
Liquidity demonstrates a company's ability to pay its current obligations. In other
words, they relate to the availability of cash and other assets to cover accounts payable,
short-term debt, and other liabilities. All small businesses require a certain degree of
liquidity in order to pay their operating expenses on time like for a photo shop business
these include salaries, electricity, rent, supplies, auto expenses for on locations,
maintenance of equipments, software and computer upgrade and interest expense of
loans. Any company's liquidity may vary due to seasonality, the timing of sales and the
state of the economy. Proper cash management results to stable cash position. Aside
from the 15-minute rush photos, they also render photo and video coverage of
memorable occasions, initially collecting down payments and the balance immediately
after to convert it to cash as soon as possible to stretch out the use of funds.
Based on Table 2.1, the amount charged to customers are often received within
the agreed terms of payment, thus there are no concerns about uncollectible accounts.
Still, maintenance of cash reserve is important to cushion sudden influx of job orders
especially during peak seasons. Since majority of the respondents are of sole
proprietorship or family business, turning of job orders immediately into cash is their
common goal by rendering speedy service yet not sacrificing quality.
Preparation of cash budgets and statement of cash flows is needed is not to set
targets for cash but to anticipate future needs. Cash budgets can address "what-if"
scenarios and must be prepared conservatively. It can be used them to test different
possible future scenarios. (Peavler, 2014)

Reference: Cash Management is Important for Your Small Business
Manage Your Cash and Liquidity for Ongoing Business Success
By Rosemary Peavler