Fund Development and Financial Performance of the Non-Profit Entity at XYZ Corp

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1. The ratios are as follows: 2003 2004 Current ratio 0.87 0.90 Long term solvency 1.38 2.06 Contribution ratio 0.480 0.546 Programs & expense ratio 1.05 0.90 General & management expense ratio 0.298 0.203 Fund-raising ratio .024 .048 Revenue/exp ratio 0.945 1.11 These different ratios can be used to analyze the financial performance of the non-profit entity. The current ratio is important because it measures the organization's liquidity. The current assets are those that can be converted to cash quickly (within a year) and the current liabilities are those liabilities that are due within a year. A current ratio should ideally be over 1.0, because that indicates that the organization has enough assets to meet its needs for the coming year. This organization will need additional funding to meet its cash flow needs for the coming year. The long-term solvency ratio is related to the current ratio, but focuses on the long-term ability of the company to liquidate and meet its debt obligations. Any number over 1.0 is healthy and this entity appears to have an asset base sufficient to cover its debt obligations in the long-run. The other ratios mainly focus on operating metrics. The programs and expense ratio illustrates the degree to which the entity is spending its revenue on programs. It is important for the entity to spend as much as possible of its revenue on programs, rather than on support functions. That said, most non-profit entities need to direct

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