Essay Hsm 260 Final

1682 Words Jun 9th, 2013 7 Pages
HSM 260

Final

February 23,2013

Calculation of Ratios:

Ratio | 2003 | 2004 | Current Ratio = Current Asset Current Liability | 0.87 | 0.90 | Long-Term solvency Ratio = Total Asset / Total Liability | 1.38 | 2.06 | Contribution Ratio = Largest Revenue Source/ Total Revenue | 0.51 | 0.49 | Management Expense Ratio = Management Expense/Total Expense | 0.282 | 0.226 | Program Expense Ratio = Program Expense/Total Expense | 0.66 | 0.72 | Revenue Expense Ratio = Total Revenue/Total Expense | 0.945 | 0.111 |

Importance of Ratios:

Current Ratio: Current ratio measures the capability of the company in paying current liability. Higher the current ratio, better the liquidity position of the company. Generally, a current
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Revenue Expense Ratio: Revenue expense ratio tells what is company’s revenue for each dollar spent by the company. High revenue expense ratio is considered as good and indicates that company is efficient. Generally, for a commercial firm, Revenue expense ratio is greater than but for a non-profit organization Revenue Expense ratio may be below 1.
Revenue Expense Ratio = Total Revenue/Total Expense
2003 Revenue Expense Ratio: 1,244,261/1,316,681= 0.94
2004 Revenue Expense Ratio: 2,191,243/1,972,131= 1.11

In year 2002, XYZ was having Revenue-Expense ratio below 1. By year 2003, XYZ has achieved Revenue expense ratio of 1.11 and became profit making. This may be the result of improving efficiency and controlling cost.

Overall, XYZ Organization is in good financial health. It has enough liquidity and capability to meet short term as well as long term debt obligations. Organization is improving its financial health and efficiency.

Calculation of fixed cost, variable costs, and break-even point:
Average Customer:
2002 5,962
2003 6,821
2004 11,822
Total 24,605
Years ÷3 8,202
Average Revenue per Unit: 2002 $1,165,065
2003 $1,244,261
2004 $2,191,243
Total $4,600,569
Years 3
Average Revenue: $1,533,523
Average Customers: ÷ 8,202
Average Revenue per Unit: $187

Average Variable Cost per Unit: 2002 $1,011,008 =$417,004 +

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