Introduction For this assignment, we were asked to assess the financial data of a fictitious non-profit organization as provided in Chapter 10 of McLaughlin’s “Financial Basics for Nonprofit Managers” (McLaughlin, 2009, p. 125). The following provides an assessment of that fictitious organization’s financial stability and its “liquefiable” assets. The Balance Sheet The balance sheet, as provided by McLaughlin (McLaughlin, 2009, p. 125), gives a number of assets that have the potential to be liquefied in an effort to maintain organizational stability. Assets provided by the fictitious organization include cash, savings, pledges, investments, and land and equipment. Cash is usually considered to be the most liquid when meeting debt obligations, …show more content…
Other assets that can be liquefied to support annual operations include accounts/pledges receivable with a year-end total of $25,505, inventories from sale with a year-end carry over of $502,722, and other assets (e.g. investments, land, buildings, real estate, etc.) that have a combined value of $18,506,767. This final value, though not as readily liquefiable as cash or savings, represents approximately 95% of total assets for the organization. Of this total, only a fraction is easily liquefied. Conclusion Overall, it would appear that the fictitious organization provided by McLaughlin (McLaughlin, 2009, p. 125) has the assets to liquefy to achieve sustainability when needed. Yet, not all of these assets (land, buildings, and equipment) are easily liquefied in the short-term. As stated earlier, the organization has roughly two days of cash on hand. It would be advantageous for the organization to diversify and use easily liquefied assets and investments to better pad accessible cash reserves for future shortfalls. Though the organization appears to be approximately $2M in the green at the end of the year, having the ability to liquefy assets quickly is paramount. By evaluating the assets at hand and the amount of time needed to liquefy each of those assets, the organization would
Worth, M. (2014). Nonprofit management: Principles and Practice. 3rd Ed. Thousand Oaks, CA: SAGE Publications, Inc.
Balance sheet lists assets, liabilities and owner’s equity. The assets listed on the balance sheet are acquired either by debt (liabilities) or equity. “Companies that use more debt than equity to finance assets have a high leverage ratio and an aggressive capital structure. A company that pays for assets with more equity than debt has a low leverage ratio and a conservative capital structure. That said, a high leverage ratio and/or an aggressive capital structure can also lead
Due to NPO MCCC often have controversial objectives related to the offering of services or intangible products, non-profit organizations MCCC may have non-financial indicators that measure the quantity and quality of services, non-profit organizations have difficulties in developing quantitative techniques helpful for evaluating the performance of the organization. BSC potentially balance financial and non-financial activities, for example, MCCC are willing to establish positive word of
1. As of December 31, Mesa Company has a balance of $5,000 in accounts receivable of which $500 is
Throughout this course my paradigms of what a nonprofit organization have been challenged as we have considered the major aspects and leadership challenges of these organizations. Having worked with for profit and nonprofit organizations in the past I was quite confident that I had a clear understanding of the distinctions between the two. I had worked in organizations that regularly used volunteers to accomplish their mission and felt that the management of these processes were simplistic. Despite these misconceptions, I found that I was able to learn a tremendous amount through our reading, peer interactions, group projects and equally important, my volunteer service as part of this course.
Reading one of the two books available by Mancuso is pertinent to understanding every aspect of starting a nonprofit organization. Describing each process in detail Mancuso’s books are a relevant source for answering any questions or concerns along the way.
In regards to the corporation’s balance sheet, it is necessary to place an importance on liquidity ratios to demonstrate the company’s ability to pay its short term obligations such as accounts payable and notes that have a duration of less than one year. These commonly used liquidity ratios include the current ratio, quick ratio, and cash ratio. All three ratios are used to measure the liquidity of a company or business. The current ratio is used to indicate a business’s ability to meet maturing obligations. The quick ratio is used to indicate the company’s ability to pay off debt. Finally the cash ratio is used to measure the amount of capital as well short term counterparts a business has over its current liabilities.
As of December 26, 2004, our liquid assets totaled $10,924,000. These assets consisted of cash and cash equivalents in the amount of $10,642,000 and short-term investments in the amount of $282,000. The working capital deficit increased slightly from $50,359,000 as of December 28, 2003 to $51,041,000 as of December 26, 2004. This increase was due primarily to increases in the loss reserve and unearned premiums related to the captive insurance subsidiary and accounts payable and was partially offset by increases in inventories and receivables.
In reviewing the company’s balance sheet, the current assets and liabilities were reviewed and liquidity ratios were calculated. The capital structure and the fixed and intangible asset accounting of the company were also reviewed. Off-balance sheet items such as leases and contingent liabilities were reported and noted. All of these aspects of the balance sheet were reviewed in order to do a proper analysis of the company’s balance sheet.
But firstly, it is important to understand what the balance sheet comprises and the role it is intended to carry out. A balance sheet is a financial document which identifies the company’s assets and liabilities. By deducting the assets from the liabilities, the net worth is calculated, this is a key indicator of the value of the company to its owners. It shows the financial position of the company on a particular date, “it is a snapshot of the business and is the best measure that we have for looking at financial health”. However, the fact that it is a snapshot means that it is only valid at the time it is produced, thus it may not represent a true and fair view.
Over the last 20 years, there has been a significant increase in nonprofit and nongovernment organizations (NGOs) in the United States. With the increase in organizations, also came an increase in scandals and in the 1990’s multiple nonprofit and nongovernment organizations lost the public’s trust due to misuse of funds, lavish spending, and improper advances to protected populations. These charity scandals not only hurt direct organization’s reputation, but also led to the mistrust of nonprofit and nongovernmental organizations as a whole (Sidel, 2005). To combat these reputations, NGOs and nonprofit organizations began to self-regulate through employing morally obligated and altruistic employees, accountability practices, and lastly through
... “The Nonprofit Sector: For What and for Whom?” Working Papers of the Johns Hopkins Comparative Nonprofit Sector Project, no. 37. Baltimore: The Johns Hopkins Center for Civil Society Studies, 2000
). Examples of current asset include: Cash, debt claims, stock, account receivable, inventory, prepaid expenses, short-term investments and other liquid assets that can be converted to cash.
Nonprofit managerial accounting adapts the techniques of for-profit analytical analysis to a nonprofit environment to find solutions to managerial
This means that the expenses from acquiring these resources are recorded as assets in the company’s balance sheet. The costs will then show on the balance sheet in the coming financial years through amortisation.