Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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

ABC Not-for-Profit XYZ Not-for-Profit
Statement of Activities Unrestricted Temporarily Restricted Unrestricted Temporarily Restricted
Revenues
Program service revenue $ 7,095,000 $ 2,400,000
Contribution revenues 3,477,500 $ 765,000 3,350,000
Grant revenue 111,000 $ 1,040,000
Net gains on endowment investments 19,000
Net assets released from restriction
Satisfaction of program restrictions 480,000 (480,000 ) 827,000 (827,000 )
Total revenues 11,071,500 396,000 6,577,000 213,000
Expenses
Education program expenses 7,121,000 1,574,000
Research program expense 1,271,000 3,006,000
Total program service expenses 8,392,000 4,580,000
Fund-raising 606,000 431,000
Administration 665,000 1,244,000
Total supporting service expenses 1,271,000 1,675,000
Total expenses 9,663,000 6,255,000
Increase in net assets 1,408,500 396,000 322,000 213,000
Net assets January 1 4,223,000 774,000 1,052,500 335,000
Net assets December 31 $ 5,631,500 $ 1,170,000 $ 1,374,500 $ 548,000

Statement of Net Assets ABC Not-for-Profit XYZ Not-for-Profit
Current assets
Cash $ 220,000 $ 371,000
Short-term cash equivalents 280,000 100,500
Supplies inventories 47,000 165,000
Receivables 454,500 203,500
Total current assets 1,001,500 840,000
Noncurrent assets
Noncurrent pledges receivable 280,000
Endowment investments 2,740,000
Land, buildings, and equipment (net) 3,190,000 1,783,000
Total noncurrent assets 6,210,000 1,783,000
Total assets $ 7,211,500 $ 2,623,000
Current liabilities
Accounts payable $ 38,000 $ 144,000
Total current liabilities 38,000 144,000
Noncurrent liabilities
Notes payable 193,500
Total noncurrent liabilities 193,500
Total liabilities 231,500 144,000
Net Assets
Unrestricted 4,040,000 2,379,500
Donor restricted for purpose 170,000 99,500
Donor restricted for endowment 2,740,000 0
Total net assets 6,950,000 2,479,000
Total liabilities and net assets $ 7,181,500 $ 2,623,000

Required: a. Calculate the following ratios (assume depreciation expense is $765,000 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. (Assume 365 days in a year. Do not round intermediate calculations. Round "Program expense" answers to 1 decimal place and "Fund-raising efficiency" answers to 3 decimal places and "Days cash on hand", "Working capital" answers to nearest whole number.)

Ratios ABC XYZ Stronger Ratio
Program expense % %
Fund-raising efficiency
Days cash on hand days days
Working capital (days) days days

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accountability Of Local Authorities In England And Wales, 1831-1935 Volume 1

Authors: Hugh Coombs, J. R. Edwards

1st Edition

1138965758, 9781138965751

More Books

Students also viewed these Accounting questions

Question

i need correct answrrs 1 0 9 2 . ( CCUS ) .

Answered: 1 week ago

Question

Why has Negotiating Women, Inc. focused its attention on women?

Answered: 1 week ago