Hsm 260 Week 2 Ratio Analysis

Great Essays
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 ratio
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It is not operating expense. High Management expense ratio is not considered good. Any company will try to reduce its management expenses to control cost.
Management expense ratio is defined as the management expense as a percentage of total cost.
Management Expense Ratio = Management Expense/Total Expense
2003 Management Expense Ratio=$371,101.00/$1,316,681.00=0.2818=0.282
2004 Management Expense Ratio=$445,819.00/$1,972,131.00=0.226

Management Expense ratio has decreased from 29.6% in year 2002 to 22.6% in year 2004. It is a good indication and shown that XYZ has been able to control its management expenses.

Program Expense Ratio: Program Expense ratio is very important for Non-profit organizations. It indicates how much of the total expenses of a non-profit organization is program related. High program expense ratio indicates that non-profit organization is more efficient and it helps the organization in fund raising. Generally Program expense ratio more than 75% is considered as good.
Program Expense Ratio = Program Expense/Total Expense
2003Program Expense Ratio=
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Final Outcome 2. Various ways to achieve the outcome 3. Actual action to achieve the outcome

Advantage of performance budget is, it is easy to segregate good activities from those which are not expected to give desired result. It outlines the achievements viz.-a-viz. financial outlay set and goals set for each activity. However, using performance budget is not easy. It is very detailed and lengthy.

Approaches to fund development
The most common and traditional type of fund development is through fundraising. The most popular way of fund raising is from local donors. Local support can be acquired through creating awareness among the local people. For example holding a bake sale during a local county event would help raise money and create awareness.
Second traditional way of fund development is through the contribution of members which can be membership fee or annual obligatory donation. A member of the non-profit organization is aware of the needs of the organization. The success of the organization means individual success of the member. Members may be asked to pay an annual membership fee which can be utilized for funding programs. A great example of this might be when you become a member of the local SPCA who will have a monthly membership’s fee which will help fund the

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