Question: Presented below are financial statements (except
Presented below are financial statements (except cash flows) for two not-for-profit organizations. Neither organization has any permanently restricted net assets.
a. Calculate the following ratios:
Program expense.
Fund-raising efficiency.
Working capital.
b. For each ratio, explain which of the two organizations has the stronger ratio.
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Statement of Activitles ABC Not-for-Profit XYZ Not-for-Profit Temporarlly Temporarlly Unrestricted Restricted Unrestricted Restricted Revenues $5,595,000 3,327,500 Program service revenue $2,250,000 Contribution revenues $ 750,000 3,200,000 Grant revenue 96,000 $1,025,000 Net galns on endowment Investments 17,500 Net assets released from restriction Satisfaction of program restrictions 450,000 (450,000) 377,000 (377,000) Total revenues 9,390,000 396,000 5,827,000 648,000 Expenses Education program expenses 5,621,000 1,559,000 Research program expense 1,256,000 2,256,000 Total program service expenses 6,877,000 3,815,000 Fund-ratsing 456,000 356,000 Administration 650,000 1,229,000 Total supporting service expenses 1,106,000 1,585,000 Total expenses 7,983,000 5,400,000 Increase In net assets Net assets January 1 1,407,000 396,000 427,000 648,000 4,208,000 759,000 1,037,500 320,000 Net assets December 31 $5,615,000 $1,155,000 $1,464,500 $ 968,000 STATEMENT OF NET ASSETS ABC Not-for-Proflit XYZ Not-for-Profit Current assets Cash $ 105,000 $ 256,000 Short-term Investments 265,000 99,000 Supplies Inventories 32,000 150,000 Recelvables 239,500 88,500 Total current assets 641,500 593,500 STATEMENT OF NET ASSETS ABC Not-for-Profit XYZ Not-for-Profit Noncurrent assets Pledges recelvable Long-term Investments Land, bulldings, and equipment (net) 465,000 2,590,000 3,275,000 1,968,000 Total noncurrent assets 6,330,000 1,968,000 Total assets $6,971,500 $2,561,500 Current llablitles Accounts payable $ 23,000 $ 129,000 Total current llabilitles 23,000 129,000 Noncurrent llabiltles Notes payable 178,500 Total noncurrent lablities 178,500 Total llabilities 201,500 129,000 Net Assets Unrestricted 5,615,000 1,464,500 Temporarly restricted 1,155,000 968,000 Permanently restricted Total net assets 6,770,000 $6,971,500 2,432,500 Total llabilities and net assets $2,561,500
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