Human Service Ratio

Register to read the introduction… Also “in terms of interpretation, the long-term solvency ratio should be at least 1.0 but as a general rule, the higher the ratio the better the organization is doing” (Martin, 2001). The ratio for 2002, 2003 and 2004 is less than the average which means that they have nothing to liquidate. If the ratio of a nonprofit organization is less than 1.0, the organizations financial feasibility might be in question. The organization in 2002, 2003 and 2004 is doing pretty good. There is no question if they are going to be able to pay or not. If the calculations are correct for contribution ratios in years 2002, 2003, and 2004 the organization should be in good standing because in 3 years in a row they generate revenue over 0.5. To the calculations of the program and expenses ratio the organization meets the standard for the 2002, 2003, and 2004. All 3 years are above average percentile at above 0.6. “A private nonprofit human service agency with a general and management/expense ratio greater than .35 should probably start thinking about ways of reducing administrative costs (Martin, 2001, p. 58)”. In 2002 the record shows that the general management and expense was 0.30, in 2003 it was 0.28, and in 2004 it was 0.23 which tell us that there is no need for concerns since it have not passed the 0.35 mark. According to Martin (2001) If the fundraising/expense ratio is greater than 0.15, the human service agency might want to consider changing its approach to fund-raising. According to calculations for 2002 the ratio is 0.10, in 2003 the ratio is 0.06, and in 2004 the ratio is 0.06. Which it show that there is not concern in that area because the ratio is below 0.15. “In the revenue and expense ratio should be at least 1.0 meaning that revenue and expenses are equal” (Martin, 2001, p.59). In year 2002 and 2003 there is a little concern …show more content…
This type of budgeting is managerial device to limit disbursements. “When developed at the agency level, a line-item budget becomes the basic agency financial plan for the fiscal year (Martin, 2001, p.78)”. The advantage of the line item budgeting is that anyone can pick up the line item budget and see the sources and the organizations revenue. It also show how the funds are doing to be distributed among staff, travel, and much more. “The major disadvantages of line-item budgeting systems are twofold. First, line-item budgets say nothing about how much service a human service agency provides, the cost of that service, the number of outcomes the agency accomplished, or their attendant costs” (Martin, 2001, p.83). Another is disadvantage is the limited ability to make changes decision as the environment and conditions change. The purpose of the performance budgeting system is to report the organizations expenditures to the programs by governing programs productivity by functioning processes, programs total cost and service. “The major advantages of performance budgeting systems are that (a) they provide information on the amount of service provided by a human service program and the attendant costs including determination of the cost per output or per unit of service and (b) they raise the level of debate from line-items to programs, program services, program costs, and program efficiency (Martin, 2001, p. 86)”. The weakness of this type of budgeting is that the organization needs to hire a sophisticated cost analysis technique to decide the cost of a program and to obtain precise item rates. The determination of the program budgeting systems is to communicate the organizations expenses to the programs that they provide, to calculate the programs results, and the cost of the programs of attains results. The benefit of this method is that it offers facts of the quantity