Financial Ratios
Financial Ratios
The creditable performance calculation for the Valley of the Sun United Way (VSUW) is used to guarantee that their organization will perform at their most likely current ratio, long-term solvency ratio, contribution ratio, and general and management/expense ratio (Goetsch & Davis, 2010).
The current ratio will enable VSUW to easily see their current expenses that may be aquired and make sure that the organization has enough resources to pay all of their current obligations. VSUW will be able to see if there is ever a need to liquefy their assets to keep them from being in debt as well as keep them within their budget so that they are able to meet their expenditures. If VSUW can apply the long-term solvency ratio it will help them to keep current on their expenses and pay annual expenses as they incur. As indicated by the financial statements, VSUW has a positive credit rating and when they would apply this ratio they would be able to maintain in good standing and have room to demand accommodations as the case maybe (United Way, 2010).The adaptation of the current ratio and the long-term solvency ratio present matching short-term and long-term position of the financial condition of a private nonprofit human service agency (Goetsch & Davis, 2010). Another ratio that VSUW could use would be the contribution ratio. The objective of the contribution ratio is to evaluate the organization’s reliance on its main revenue supply. The percentages of contributions collected for VSUW show the decreased contributions in the previous year and VSUW can focus on collecting pledges or increase their provision for allowance for uncollected pledges in the current year. VSUW needs to keep in mind that if any of the revenue supply may be lost or a foundation grant is not renewed, the financial feasibility of the organization probably is in critical condition (Goetsch & Davis, 2010).
VSUW needs to keep up on contact with their revenue supply and focus
The creditable performance calculation for the Valley of the Sun United Way (VSUW) is used to guarantee that their organization will perform at their most likely current ratio, long-term solvency ratio, contribution ratio, and general and management/expense ratio (Goetsch & Davis, 2010).
The current ratio will enable VSUW to easily see their current expenses that may be aquired and make sure that the organization has enough resources to pay all of their current obligations. VSUW will be able to see if there is ever a need to liquefy their assets to keep them from being in debt as well as keep them within their budget so that they are able to meet their expenditures. If VSUW can apply the long-term solvency ratio it will help them to keep current on their expenses and pay annual expenses as they incur. As indicated by the financial statements, VSUW has a positive credit rating and when they would apply this ratio they would be able to maintain in good standing and have room to demand accommodations as the case maybe (United Way, 2010).The adaptation of the current ratio and the long-term solvency ratio present matching short-term and long-term position of the financial condition of a private nonprofit human service agency (Goetsch & Davis, 2010). Another ratio that VSUW could use would be the contribution ratio. The objective of the contribution ratio is to evaluate the organization’s reliance on its main revenue supply. The percentages of contributions collected for VSUW show the decreased contributions in the previous year and VSUW can focus on collecting pledges or increase their provision for allowance for uncollected pledges in the current year. VSUW needs to keep in mind that if any of the revenue supply may be lost or a foundation grant is not renewed, the financial feasibility of the organization probably is in critical condition (Goetsch & Davis, 2010).
VSUW needs to keep up on contact with their revenue supply and focus
References: Goetsch, D. L., & Davis, S. B. (2010). Quality management for organizational excellence: Introduction to total quality (6th ed.). Upper Saddle River, NJ: Pearson. United Way. (2010). Valley of the Sun United Way. Retrieved from http://www.vsuw.org/