Presented below are financial statements (except cash flows) for two not-for-profit organizations. ABC Not-for-ProfitXYZ Not-for-ProfitStatement of ActivitiesUnrestrictedDonor-RestrictedUnrestrictedDonor- RestrictedRevenues Program service revenue$ 5,595,000 $ 2,250,000 Contribution revenues3,327,500$ 750,0003,200,000 Grant revenue 96,000 $ 1,025,000Net gains on endowment investments17,500 Net assets released from restriction Satisfaction of program restrictions450,000(450,000)377,000(377,000)Total revenues9,390,000396,0005,827,000648,000Expenses Education program expenses5,525,000 1,680,000 Research program expense1,350,000 2,232,000 Total program service expenses6,875,000 3,912,000 Fund-raising550,000 412,000 Administration650,000 990,000 Total supporting service expenses1,200,000 1,402,000 Total expenses8,075,000 5,314,000 Increase in net assets1,315,000396,000513,000648,000Net assets, January, 14,208,000759,0001,037,500320,000Net assets, December, 31$ 5,523,000$ 1,155,000$ 1,550,500$ 968,000Statement of Net AssetsABC Not-for-ProfitXYZ Not-for-ProfitCurrent assets Cash$ 205,000$ 356,000Short-term cash equivalents265,00099,000Supplies inventories32,000150,000Receivables439,500188,500Total current assets941,500793,500Noncurrent assets Noncurrent pledges receivable173,00086,000Endowment investments2,590,000 Land, buildings, and equipment (net)3,175,0001,768,000Total noncurrent assets5,938,0001,854,000Total assets$ 6,879,500$ 2,647,500Current liabilities Accounts payable$ 23,000$ 129,000Total current liabilities23,000129,000Noncurrent liabilities Notes payable178,500 Total noncurrent liabilities178,500 Total liabilities201,500129,000Net Assets Unrestricted5,523,0001,550,500Donor restricted for purpose155,0000Donor restricted for endowment1,000,000968,000Total net assets6,678,0002,518,500Total liabilities and net assets$ 6,879,500$ 2,647,500Required:Calculate the following ratios (assume depreciation expense is $480,000 for both organizations and is allocated among program and supporting expenses):Program expense.Fund-raising efficiency.Days cash on hand.Working capital (expressed in days). RatiosProgram expenseFund-raising efficiencyWorking capital (days)Days cash on hand85.1Answer is not complete.ABCXYZStronger Ratio%73.6%ABC Not-for-ProfitXYZ Not-for-ProfitdaysdaysXYZ Not-for-ProfitdaysdaysXYZ Not-for-Profit

Ratio Analysis for ABC and XYZ Not-for-ProfitsBased on the provided financial statements, we can…

Answered: Ratios Program expense Fund-raising…

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 1Q

Question

Presented below are financial statements (except cash flows) for two not-for-profit organizations.

	ABC Not-for-Profit	XYZ Not-for-Profit
Statement of Activities	Unrestricted	Donor-Restricted	Unrestricted	Donor- Restricted
Revenues
Program service revenue	$ 5,595,000		$ 2,250,000
Contribution revenues	3,327,500	$ 750,000	3,200,000
Grant revenue		96,000		$ 1,025,000
Net gains 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	5,525,000		1,680,000
Research program expense	1,350,000		2,232,000
Total program service expenses	6,875,000		3,912,000
Fund-raising	550,000		412,000
Administration	650,000		990,000
Total supporting service expenses	1,200,000		1,402,000
Total expenses	8,075,000		5,314,000
Increase in net assets	1,315,000	396,000	513,000	648,000
Net assets, January, 1	4,208,000	759,000	1,037,500	320,000
Net assets, December, 31	$ 5,523,000	$ 1,155,000	$ 1,550,500	$ 968,000

Statement of Net Assets	ABC Not-for-Profit	XYZ Not-for-Profit
Current assets
Cash	$ 205,000	$ 356,000
Short-term cash equivalents	265,000	99,000
Supplies inventories	32,000	150,000
Receivables	439,500	188,500
Total current assets	941,500	793,500
Noncurrent assets
Noncurrent pledges receivable	173,000	86,000
Endowment investments	2,590,000
Land, buildings, and equipment (net)	3,175,000	1,768,000
Total noncurrent assets	5,938,000	1,854,000
Total assets	$ 6,879,500	$ 2,647,500
Current liabilities
Accounts payable	$ 23,000	$ 129,000
Total current liabilities	23,000	129,000
Noncurrent liabilities
Notes payable	178,500
Total noncurrent liabilities	178,500
Total liabilities	201,500	129,000
Net Assets
Unrestricted	5,523,000	1,550,500
Donor restricted for purpose	155,000	0
Donor restricted for endowment	1,000,000	968,000
Total net assets	6,678,000	2,518,500
Total liabilities and net assets	$ 6,879,500	$ 2,647,500

Calculate the following ratios (assume depreciation expense is $480,000 for both organizations and is allocated among program and supporting expenses):
- Program expense.
- Fund-raising efficiency.
- Days cash on hand.
- Working capital (expressed in days).

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