Financial sustainability of private higher education institutions: The case of publicly traded educational institutions

Sami Al-Kharusi, Sree Rama Murthy

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Public and private education can unlock different doors and help to flood the country with a rising power, sunlight and sustainable development. Hence, this paper argued that there is a need to sustain both public and private higher education. Financial difficulties restrict private higher education from balancing their budget and maintain a balance between a quality education and maximization of shareholders wealth. This paper outlines and analyzes a critical business model for higher education institutions, Dhofar University and Majan College, both of which are publicly traded in Muscat Securities Market. Both the educational institutions are critically examined from profitability, liquidity, long term solvency and asset management perspective using appropriate financial ratios. Five year forecasts of financial statements up to 2021 are estimated to evaluate the financial stability of the two educational institutions. The paper uses Monte Carlo simulation technique to examine the issue of financial sustainability. Overall the finding shows positive financial results for Majan College compared to Dhofar University. The key take away from the analysis is that educational institutions should be funded primarily by equity and not by debt to survive, sustain and provide high quality education.

Original languageEnglish
Pages (from-to)25-38
Number of pages14
JournalInvestment Management and Financial Innovations
Volume14
Issue number3
DOIs
Publication statusPublished - Jan 1 2017

Fingerprint

Educational institutions
Higher education institutions
Sustainability
Education
Financial ratios
Financial stability
Equity
Solvency
Sustainable development
Monte Carlo simulation
Profitability
Asset management
Liquidity
Private education
Public education
Financial result
Business model
Securities market
Shareholder wealth
Financial statements

Keywords

  • Financial ratio system
  • Financial sustainability
  • Higher education institutions
  • Publicly traded
  • Simulation

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Cite this

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