Essay about Hsm 260 Final

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Week Nine Final Project: Analyzing Financial Statements HSM 260 Current Ratio Table [ 1 ] | | 2002 | 2003 | 2004 | Current Ratio | Current Assets | $104,296.00 | 0.75 | $82,058.00 | 0.87 | $302,902.00 | 0.43 | | Current Liabilities | $139,017.00 | | $93,975.00 | | $699,004.00 | | An organization’s current ratio shows how liquid the assets of the agency are by comparison to the short term debts that the agency must pay to continue its operations. This ratio is calculated by taking the assets that can be converted to cash within a year (current assets) and dividing it by the liabilities that are either currently due or will become due within a year (current liabilities). The current ratio, ideally, should be at…show more content…
In a human services agency this figure is important because many of the sources of income are not guaranteed such as donations, grants, or contracts. Because they are not guaranteed if one of the sources of revenue were to decrease or end then it could have a major derogatory effect on the overall financial status of the agency. It is ideal that this number is as low as possible because, the lower the contribution ratio is, the more diversified the sources of revenue are. If the biggest source of income ends and the contribution ratio is low, then the agency has a greater chance of maintaining financial strength and continuing operations. Ideally, this number should be 0.5 or lower. The contribution ratio of XYZ Non-Profit Corporation for the years 2002 through 2004 are shown in Table 3. In all three years the largest revenue source for the XYZ Non-Profit Corporation was grant income. Grant income may be subject to federal, state, or local government budget funding availability; it also may be subject to deadlines or eligibility criteria which may change from year to year. In 2002 and 2003 the ratio was above 0.5 figures that it should be below, however in both 2003 and 2004 the number decreased. By 2004, the ratio was at 0.49 and if the decreasing trend continues over time then it will give the agency more financial flexibility in the event that the grants become unavailable in the future. Program/Expense Ratio Table [ 4

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