Presented below are financial statements (except cash flows) for two not-for-profit organizations. Neither organization has any permanently restricted net assets. ABC Not-for-Profit XYZ Not-for-Profit Statement of Activities Unrestricted Temporarily Restricted Unrestricted Temporarily Restricted Revenues Program service revenue $ 6,195,000 $ 2,310,000 Contribution revenues 3,387,500 $ 756,000 3,260,000 Grant revenue 102,000 $ 1,031,000 Net gains on endowment investments 18,100 Net assets released from restriction Satisfaction of program restrictions 462,000 (462,000 ) 557,000 (557,000 ) Total revenues 10,062,600 396,000 6,127,000 474,000 Expenses Education program expenses 6,221,000 1,565,000 Research program expense 1,262,000 2,556,000 Total program service expenses 7,483,000 4,121,000 Fund-raising 516,000 386,000 Administration 656,000 1,235,000 Total supporting service expenses 1,172,000 1,621,000 Total expenses 8,655,000 5,742,000 Increase in net assets 1,407,600 396,000 385,000 474,000 Net assets January 1 4,214,000 765,000 1,043,500 326,000 Net assets December 31 $ 5,621,600 $ 1,161,000 $ 1,428,500 $ 800,000 STATEMENT OF NET ASSETS ABC Not-for-Profit XYZ Not-for-Profit Current assets Cash $ 211,000 $ 362,000 Short-term investments 271,000 99,600 Supplies inventories 38,000 156,000 Receivables 445,500 194,500 Total current assets 965,500 812,100 Noncurrent assets Pledges receivable 271,000 Long-term investments 2,650,000 Land, buildings, and equipment (net) 3,181,000 1,774,000 Total noncurrent assets 6,102,000 1,774,000 Total assets $ 7,067,500 $ 2,586,100 Current liabilities Accounts payable $ 29,000 $ 135,000 Total current liabilities 29,000 135,000 Noncurrent liabilities Notes payable 184,500 Total noncurrent liabilities 184,500 Total liabilities 213,500 135,000 Net Assets Unrestricted 4,031,000 2,370,500 Temporarily restricted 161,000 80,600 Permanently restricted 2,650,000 0 Total net assets 6,842,000 2,451,100 Total liabilities and net assets $ 7,055,500 $ 2,586,100 Required: a. Calculate the following ratios (Assume 365 days): Program expense. Fund-raising efficiency. Working capital. b. For each ratio, which of the two organizations has the stronger ratio. (Do not round intermediate calculations. Round "Program expense" answers to 1 decimal place and "Fund-raising efficiency" answers to 3 decimal places and "Working capital" answers to nearest whole number.)

Presented below are financial statements (except cash flows) for two not-for-profit organizations. Neither organization has any permanently restricted net assets. ABC Not-for-Profit XYZ Not-for-Profit Statement of Activities Unrestricted Temporarily Restricted Unrestricted Temporarily Restricted Revenues Program service revenue $ 6,195,000 $ 2,310,000 Contribution revenues 3,387,500 $ 756,000 3,260,000 Grant revenue 102,000 $ 1,031,000 Net gains on endowment investments 18,100 Net assets released from restriction Satisfaction of program restrictions 462,000 (462,000 ) 557,000 (557,000 ) Total revenues 10,062,600 396,000 6,127,000 474,000 Expenses Education program expenses 6,221,000 1,565,000 Research program expense 1,262,000 2,556,000 Total program service expenses 7,483,000 4,121,000 Fund-raising 516,000 386,000 Administration 656,000 1,235,000 Total supporting service expenses 1,172,000 1,621,000 Total expenses 8,655,000 5,742,000 Increase in net assets 1,407,600 396,000 385,000 474,000 Net assets January 1 4,214,000 765,000 1,043,500 326,000 Net assets December 31 $ 5,621,600 $ 1,161,000 $ 1,428,500 $ 800,000 STATEMENT OF NET ASSETS ABC Not-for-Profit XYZ Not-for-Profit Current assets Cash $ 211,000 $ 362,000 Short-term investments 271,000 99,600 Supplies inventories 38,000 156,000 Receivables 445,500 194,500 Total current assets 965,500 812,100 Noncurrent assets Pledges receivable 271,000 Long-term investments 2,650,000 Land, buildings, and equipment (net) 3,181,000 1,774,000 Total noncurrent assets 6,102,000 1,774,000 Total assets $ 7,067,500 $ 2,586,100 Current liabilities Accounts payable $ 29,000 $ 135,000 Total current liabilities 29,000 135,000 Noncurrent liabilities Notes payable 184,500 Total noncurrent liabilities 184,500 Total liabilities 213,500 135,000 Net Assets Unrestricted 4,031,000 2,370,500 Temporarily restricted 161,000 80,600 Permanently restricted 2,650,000 0 Total net assets 6,842,000 2,451,100 Total liabilities and net assets $ 7,055,500 $ 2,586,100 Required: a. Calculate the following ratios (Assume 365 days): Program expense. Fund-raising efficiency. Working capital. b. For each ratio, which of the two organizations has the stronger ratio. (Do not round intermediate calculations. Round "Program expense" answers to 1 decimal place and "Fund-raising efficiency" answers to 3 decimal places and "Working capital" answers to nearest whole number.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter9: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 1Q: Define each of the following terms: Operating plan; financial plan Spontaneous liabilities; profit...

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Presented below are financial statements (except cash flows) for two not-for-profit organizations. Neither organization has any permanently restricted net assets.

	ABC Not-for-Profit		XYZ Not-for-Profit
Statement of Activities	Unrestricted		Temporarily Restricted	Unrestricted		Temporarily Restricted
Revenues
Program service revenue	$	6,195,000					$	2,310,000
Contribution revenues		3,387,500		$	756,000			3,260,000
Grant revenue					102,000				$	1,031,000
Net gains on endowment investments		18,100
Net assets released from restriction
Satisfaction of program restrictions		462,000			(462,000	)		557,000		(557,000	)
Total revenues		10,062,600			396,000			6,127,000		474,000
Expenses
Education program expenses		6,221,000						1,565,000
Research program expense		1,262,000						2,556,000
Total program service expenses		7,483,000						4,121,000
Fund-raising		516,000						386,000
Administration		656,000						1,235,000
Total supporting service expenses		1,172,000						1,621,000
Total expenses		8,655,000						5,742,000
Increase in net assets		1,407,600			396,000			385,000		474,000
Net assets January 1		4,214,000			765,000			1,043,500		326,000
Net assets December 31	$	5,621,600		$	1,161,000		$	1,428,500	$	800,000

STATEMENT OF NET ASSETS	ABC Not-for-Profit		XYZ Not-for-Profit
Current assets
Cash		$	211,000	$	362,000
Short-term investments			271,000		99,600
Supplies inventories			38,000		156,000
Receivables			445,500		194,500
Total current assets			965,500		812,100
Noncurrent assets
Pledges receivable			271,000
Long-term investments			2,650,000
Land, buildings, and equipment (net)			3,181,000		1,774,000
Total noncurrent assets			6,102,000		1,774,000
Total assets		$	7,067,500	$	2,586,100
Current liabilities
Accounts payable		$	29,000	$	135,000
Total current liabilities			29,000		135,000
Noncurrent liabilities
Notes payable			184,500
Total noncurrent liabilities			184,500
Total liabilities			213,500		135,000
Net Assets
Unrestricted			4,031,000		2,370,500
Temporarily restricted			161,000		80,600
Permanently restricted			2,650,000		0
Total net assets			6,842,000		2,451,100
Total liabilities and net assets		$	7,055,500	$	2,586,100

Required:
a. Calculate the following ratios (Assume 365 days):

Program expense.
Fund-raising efficiency.
Working capital.

b. For each ratio, which of the two organizations has the stronger ratio.
(Do not round intermediate calculations. Round "Program expense" answers to 1 decimal place and "Fund-raising efficiency" answers to 3 decimal places and "Working capital" answers to nearest whole number.)

RATIO
АВС
XYZ
Stronger Ratio
Program expense
%
%
Fund-raising efficiency
Working capital
days
days

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