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

Required: a. Calculate the following ratios (assume depreciation expense is $750,000 for both organizations and is allocated among program and supporting expenses):

• Program expense.
• Fund-raising efficiency.
• Days cash on hand.
• Working capital (expressed in days).

b. For each ratio, which of the two organizations has the stronger ratio.

ABC Not-for-Profit Temporarily Unrestricted Restricted XYZ Not-for-Profit Temporarily Unrestricted Restricted $5,595,000 3,327,500 $2,250,000 3,200,000 $ 750,000 96,000 $1,025,000 17,500 450,000 9,390,000 (450,000) 396,000 377,000 5,827,000 (377,000) 648,000 Statement of Activities Revenues Program service revenue Contribution revenues Grant revenue Net gains on endowment investments Net assets released from restriction Satisfaction of program restrictions Total revenues Expenses Education program expenses Research program expense Total program service expenses Fund-raising Administration Total supporting service expenses Total expenses Increase in net assets Net assets January 1 Net assets December 31 5,621,000 1,256,000 6,877,000 456,000 650,000 1,106,000 7,983,000 1,407,000 4,208,000 $5,615,000 1,559,000 2,256,000 3,815,000 356,000 1,229,000 1,585,000 5,400,000 427,000 1,037,500 $1,464,500 396,000 759,000 $1,155,000 648,000 320,000 $ 968,000 ABC Not-for-Profit XYZ Not-for-Profit $ 205,000 265,000 32,000 439,500 941,500 $ 356,000 99,000 150,000 188,500 793,500 265,000 2,590,000 3,175,000 6,030,000 $6,971,500 1,768,000 1,768,000 $2,561,500 Statement of Net Assets Current assets Cash Short-term cash equivalents Supplies inventories Receivables Total current assets Noncurrent assets Noncurrent pledges receivable Endowment investments Land, buildings, and equipment (net) Total noncurrent assets Total assets Current liabilities Accounts payable Total current liabilities Noncurrent liabilities Notes payable Total noncurrent liabilities Total liabilities Net Assets Unrestricted Donor restricted for purpose Donor restricted for endowment Total net assets Total liabilities and net assets $ 23,000 23,000 $ 129,000 129,000 178,500 178,500 201,500 129,000 4,025,000 155,000 2,590,000 6,770,000 $6,971,500 2,364,500 68,000 0 2,432,500 $2,561,500