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Understand Financial Statement

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Without money, no mission, no matter now meritorious, can be achieved. (Bryce, 1992, p.8) Understanding and Evaluating the Financial Statements of Not for Profit Organizations Approach to Ratio Analysis 1.Measurement of financial performance by ratio analysis helps identify organizational strengths and weaknesses by detecting financial anomalies and focusing attention on business. 2.Ratio analysis is a well established tool to evaluate an organization’s profitability, liquidity and financial st
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  Understanding and Evaluating the FinancialStatements of Not for Profit Organizations Approach to Ratio Analysis  1.Measurement of financial performance by ratio analysishelps identify organizational strengths and weaknesses bydetecting financial anomalies and focusing attention onbusiness.2.Ratio analysis is a well established tool to evaluate an organization’s profitability, liquidity and financial stability.As such it can be used to answer a variety of questions. Without money, no mission, no matter now meritorious,can be achieved. (Bryce, 1992, p.8)  Statement of Financial Condition  The Statement of Activities provides information on the operatingactivities of a nonprofit between one date and another. National Youth Training and Resources Organization   Comparative Statements of Financial Position   For the Years Ended December 31, 1999 and 2000 2000(Rs.) 1999 (Rs.) Assets  Cash 200,000 142,000Pledges Receivable (net) 120,000 65,000Investments 755,000 700,000Prepaid Expenses 15,000 13,000Fixed Assets (net) 220,000 40,000 Total Assets 1,310,000 960,000   Liabilities and Net Assets   Liabilities  Accounts Payable 50,000 60,000Grants Payable 25,000Refundable Advances 20,000Long Term Debt 200,000 Total Liabilities 295,000 60,000    Net Assets  Unrestricted 325,000 300,000Temporarily Restricted 45,000Permanently Restricted 645,000 600,000 Total Net Assets 1,015,000 9 00,000   Total Liabilities and Net Assets 1,310,000 960,000   Questions Asked to Assess Financial Performance   1.Mission ã What is your organizational mission? ãIs the mission consistent with the stakeholder’s values?   ã How does that translate into goals and objectives? ã What is the business model/strategy? ã What are present obstacles to fulfilling the mission?  2. Service Delivery ã What is the demand for these services? ã What type, volume and quality of services are delivered? ã Are these services compatible with mission? ã Are they meeting goals and objectives (are spent on right stewardshipthings)? ã What are present obstacles in service delivery? 3. Organizational Management ã What is the experience and expertise of management? ã What is the quality of internal support systems? ã What is the administrative efficiency? ã What is the appropriateness of compensation?
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