5. Caleulate LFC's program services ratio 14-10. Lafayette Film Center (LFC) is a not-for- for 2018 and 2017 as well as the percent change in each from 2017 to 2018.Is LFC's program services ratio for 20 profit theater that plays independent films In addition to revenue from theater admis- sions, LFC relies on concession and caf sales, grants and other external support, theater rental sales, and proceeds from special events and other programs that not only promote appreciation for inde- higher than the commonly accepted benchmark? Given your answers to questions 4 and 5. would you recommend that LFC reallocate some of its spending from program services to fundraising in 6. pendent films, but also generate grants and contributions. LFC's new executive director has asked you, as the director of finance, to provide an analysis of the orga- 2015? Why or why not? 7. What was LFC's depreciation expense in 2017 and 2018? Which financial statement(s) provide this information? Now that receivables constitute a much larger proportion of LFC's assets than in the past, the executive director has asked you to calculate the receivables ratio and average collection nization's financial position. Refer to Exhibits 14-7 through 14-10, which present LFC's statements of financial posi- 8. tion, statements of activities, statements of functional expenses, and statements of cash flows for the years ended December 31, 2018 and 2017 turnover 1. Does LFC have an endowment? How period for 2018. sut Nel Asets a. Which revenue items will you b. What is LFC's receivables turnover do you know? bztb exclude from the ratio? Why? How much of LFC's temporarily restricted net assets were reclassified as unrestricted in 2018? Where can this be found in the statements of financial 2. ratio and average collection period for 20182 Are they favorable or position and statements of activities? unfavorable? Why? 3. Calculate the four profitability ratios presented in the chapter for LFC for Would you recommend recalculat- ing the receivables turnover ratio using the average of beginning-of- year and end-of-year receivables in the denominator? Why or why e. 2018 and 2017 as well as the percent change in each from 2017 to 2018. By which measure did LFC's profitability deteriorate the most, and by how much? 4. LFC's total expenses grew by over 100 percent from 2017 to 2018, while its total revenue and other support declined by over 50 percent. Looking at not? 9. Calculate the quick ratio and debt to equity ratio for LFC for 2018 and 2017 as well as the percent change in each from 2017 to 2018. Are these trends favorable or unfavorable? Which pres- ents the greater area of concern for the theater's statements of activities: a. Excluding interest/investment income and the one-time sale of tax credits, which three revenue or support categories declined by over 2018, and why? 10. Given your answers to the questions above and an overall review of LFC's financial statements, would you chat- 50 percent from 2017 to 2018? b. Which expense category grew by acterize LFC's financial position over 100 percent? weak, neutral, or strong? Why? Balance Shee Lafayette Film Center Statements of Financial Position as of December 31, 2018 and 2017 Assets Current Assets 2018 2017 Cash and cash equivalents $ 75,582 174,662 Grants receivable 562,698 137,858 59,508 37,624 50,400 36,172 11,552 Other receivables Prepaid expenses Total Current Assets $ 736,402 $ 409,652 Long-Term Assets Conditional promises to give Deposits Property and equipment, net s 264,514 488,530 7,910 1,510 9,336,672 9,278,61 $ 9.602,696 $9.775.066 Total Long-Term Assets Total Assets Liabilities and Net Assets Current Liabilities $ 108,214 113,240 111,776 Accounts payable Accrued expenses Deferred revenue Line of credit Current portion of capital lease obligations 109,044 31,186 960.510 100,000 48,394 $ 1,260,054 $ 373,410 51,100 Total Current Liabilities Long-Term Liabilities Capital lease obligations less current portion Total Liabilities Net assets 36.59688.638 462,048 $ 1,296,650 s 8,777.934 9,184,130 -Diteanu 538,530 40 , 284,514 $ 9,042,448 9,722.660 Temporarily Restricted Total Net Assets 10.184,708 Total Liabilities and Net Assets The accompanying notes are an integral part of these statements BIT 14-8 Lafayette Film Center Statements of Activities for the Years Ended December 31, 2018 and 2017 Unrestricted 2017 2018 Revenue and Support 414,818 78,640 196,288 61,350 58,414 Theater admissions Concession and caf sales Memberships Theater rental sales Special events Other programs Interest and investment income Sale of tax credits Grants Contributions 1,522,426 139,684 68,180 47,710 62,006 140,616 45,726 56,656 1,384,002 3.016,550 1,129,112 1,061,762 360,104 $3.676,690 $6,167,354 01 1,826,578 Total Revenue and Support Net assets released from restrictions Total Revenue and Other Support 274,016 $3,950,706 $7,993,932 Expenses Program services General administration Fund raising $3,640,634 $%1,378,472 407,244 302,384 $2,088,100 455,436 260,832 $4,356,902 Total Expenses Change in Net Assets Net assets-beginning of year Net assets-end of year The accompanying notes are an integral part of these statements. (406,196) $5,905,832 9,184,130 3,278,298 $8,777.934 556 PART V Financial Analysis EXHIBIT 14-10 Lafayette Film Center Statements of Cash Flows for the Years Ended December 31, 2018 and 2017 2017 2018 Operating Activities $(680,212) 4,129,254 Change in net assets Adjustments to reconcile change in net assets to cash provided by/lused in) operating activities Depreciation Contributions restricted for building renovations Increase/decrease in operating assets 107,900 -1,843,396 624,356 424,838) 292,666 (33,344) (16,818) Grants receivable Other receivables Conditional promises to give Prepaid expenses Inventory Deposits 1,452 224,016 (11,552) 9,108 6,400 (59,510) (1,510) Increase/(decrease) in operating liabilities Accounts payable Accrued expenses Deferred revenue (5,026) (2,732) 31,186 (423,404) 111,776 Net cash provided by/lused in) operating activities 227,842) $ 5,950,406 Investing Activities Payments for property and equipment Net cashlused in) investing activities S(682,412) (7,159,362) $(682 412 $.159 362 Financing Activities Payments on capital leases (49,336) $(10,084) 100,000 811.174 $89,916 Net increase in line of credit 860,510 Net cash provided by financing activities Net increase decrease) in cash and cash equivalents Cash and cash equivalents-beginning of year Cash and cash equivalents -end of year The accompanying notes are an integral part of these statements. S (99,080) (1,119,040) 1,293,702 174,662 174 5. Caleulate LFC's program services ratio 14-10. Lafayette Film Center (LFC) is a not-for- for 2018 and 2017 as well as the percent change in each from 2017 to 2018.Is LFC's program services ratio for 20 profit theater that plays independent films In addition to revenue from theater admis- sions, LFC relies on concession and caf sales, grants and other external support, theater rental sales, and proceeds from special events and other programs that not only promote appreciation for inde- higher than the commonly accepted benchmark? Given your answers to questions 4 and 5. would you recommend that LFC reallocate some of its spending from program services to fundraising in 6. pendent films, but also generate grants and contributions. LFC's new executive director has asked you, as the director of finance, to provide an analysis of the orga- 2015? Why or why not? 7. What was LFC's depreciation expense in 2017 and 2018? Which financial statement(s) provide this information? Now that receivables constitute a much larger proportion of LFC's assets than in the past, the executive director has asked you to calculate the receivables ratio and average collection nization's financial position. Refer to Exhibits 14-7 through 14-10, which present LFC's statements of financial posi- 8. tion, statements of activities, statements of functional expenses, and statements of cash flows for the years ended December 31, 2018 and 2017 turnover 1. Does LFC have an endowment? How period for 2018. sut Nel Asets a. Which revenue items will you b. What is LFC's receivables turnover do you know? bztb exclude from the ratio? Why? How much of LFC's temporarily restricted net assets were reclassified as unrestricted in 2018? Where can this be found in the statements of financial 2. ratio and average collection period for 20182 Are they favorable or position and statements of activities? unfavorable? Why? 3. Calculate the four profitability ratios presented in the chapter for LFC for Would you recommend recalculat- ing the receivables turnover ratio using the average of beginning-of- year and end-of-year receivables in the denominator? Why or why e. 2018 and 2017 as well as the percent change in each from 2017 to 2018. By which measure did LFC's profitability deteriorate the most, and by how much? 4. LFC's total expenses grew by over 100 percent from 2017 to 2018, while its total revenue and other support declined by over 50 percent. Looking at not? 9. Calculate the quick ratio and debt to equity ratio for LFC for 2018 and 2017 as well as the percent change in each from 2017 to 2018. Are these trends favorable or unfavorable? Which pres- ents the greater area of concern for the theater's statements of activities: a. Excluding interest/investment income and the one-time sale of tax credits, which three revenue or support categories declined by over 2018, and why? 10. Given your answers to the questions above and an overall review of LFC's financial statements, would you chat- 50 percent from 2017 to 2018? b. Which expense category grew by acterize LFC's financial position over 100 percent? weak, neutral, or strong? Why? Balance Shee Lafayette Film Center Statements of Financial Position as of December 31, 2018 and 2017 Assets Current Assets 2018 2017 Cash and cash equivalents $ 75,582 174,662 Grants receivable 562,698 137,858 59,508 37,624 50,400 36,172 11,552 Other receivables Prepaid expenses Total Current Assets $ 736,402 $ 409,652 Long-Term Assets Conditional promises to give Deposits Property and equipment, net s 264,514 488,530 7,910 1,510 9,336,672 9,278,61 $ 9.602,696 $9.775.066 Total Long-Term Assets Total Assets Liabilities and Net Assets Current Liabilities $ 108,214 113,240 111,776 Accounts payable Accrued expenses Deferred revenue Line of credit Current portion of capital lease obligations 109,044 31,186 960.510 100,000 48,394 $ 1,260,054 $ 373,410 51,100 Total Current Liabilities Long-Term Liabilities Capital lease obligations less current portion Total Liabilities Net assets 36.59688.638 462,048 $ 1,296,650 s 8,777.934 9,184,130 -Diteanu 538,530 40 , 284,514 $ 9,042,448 9,722.660 Temporarily Restricted Total Net Assets 10.184,708 Total Liabilities and Net Assets The accompanying notes are an integral part of these statements BIT 14-8 Lafayette Film Center Statements of Activities for the Years Ended December 31, 2018 and 2017 Unrestricted 2017 2018 Revenue and Support 414,818 78,640 196,288 61,350 58,414 Theater admissions Concession and caf sales Memberships Theater rental sales Special events Other programs Interest and investment income Sale of tax credits Grants Contributions 1,522,426 139,684 68,180 47,710 62,006 140,616 45,726 56,656 1,384,002 3.016,550 1,129,112 1,061,762 360,104 $3.676,690 $6,167,354 01 1,826,578 Total Revenue and Support Net assets released from restrictions Total Revenue and Other Support 274,016 $3,950,706 $7,993,932 Expenses Program services General administration Fund raising $3,640,634 $%1,378,472 407,244 302,384 $2,088,100 455,436 260,832 $4,356,902 Total Expenses Change in Net Assets Net assets-beginning of year Net assets-end of year The accompanying notes are an integral part of these statements. (406,196) $5,905,832 9,184,130 3,278,298 $8,777.934 556 PART V Financial Analysis EXHIBIT 14-10 Lafayette Film Center Statements of Cash Flows for the Years Ended December 31, 2018 and 2017 2017 2018 Operating Activities $(680,212) 4,129,254 Change in net assets Adjustments to reconcile change in net assets to cash provided by/lused in) operating activities Depreciation Contributions restricted for building renovations Increase/decrease in operating assets 107,900 -1,843,396 624,356 424,838) 292,666 (33,344) (16,818) Grants receivable Other receivables Conditional promises to give Prepaid expenses Inventory Deposits 1,452 224,016 (11,552) 9,108 6,400 (59,510) (1,510) Increase/(decrease) in operating liabilities Accounts payable Accrued expenses Deferred revenue (5,026) (2,732) 31,186 (423,404) 111,776 Net cash provided by/lused in) operating activities 227,842) $ 5,950,406 Investing Activities Payments for property and equipment Net cashlused in) investing activities S(682,412) (7,159,362) $(682 412 $.159 362 Financing Activities Payments on capital leases (49,336) $(10,084) 100,000 811.174 $89,916 Net increase in line of credit 860,510 Net cash provided by financing activities Net increase decrease) in cash and cash equivalents Cash and cash equivalents-beginning of year Cash and cash equivalents -end of year The accompanying notes are an integral part of these statements. S (99,080) (1,119,040) 1,293,702 174,662 174