Analyzing+Financial+Statements

Analyzing+Financial+Statements - Analyzing Financial...

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Analyzing Financial Statements Page 1 Analyzing Financial Statements Axia College of University of Phoenix
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Analyzing Financial Statements Page 2 Financial Ratios for XYZ Corporation Current Ratio: Current Assets / Current Liabilities 2003 Current Assets = $82,058.00 2004 Current Assets = $302,902.00 2003 Current Liabilities = $93,975.00 2004 Current Liabilities = $337,033.00 2003 Current Ratio = 0.87 2004 Current Ratio = 0.90 Long Term Solvency (LTS) Ratio: Total Assets / Total Liabilities 2003 Total Assets = $359,863.00 2004 Total Assets = $699,004.00 2003 Total Liabilities = $259,979.00 2004 Total Liabilities = $338,937.00 2003 LTS Ratio = 2.60 2004 LTS Ratio = 0.94 Contribution Ratio: Largest Revenue / Total Revenue 2003 Largest Revenue = $632,889.00 2004 Largest Revenue = $1,078,837.00 2003 Total Revenue = $1,244,261.00 2004 Total Revenue = $2,191,243.00 2003 Contribution Ratio = 0.51 2004 Contribution Ratio = 0.49 Programs / Expense Ratio: Total Program Expense (TPE) / Total Expense 2003 TPE = $841,692.00 2004 TPE = $1,386,312.00 2003 Total Expense = $ 1,316,681.00 2004 Total Expense = $1,972,131.00 2003 Programs / Expense Ratio = 0.64 2004 Programs / Expense Ratio = 0.70
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Analyzing Financial Statements Page 3 General and Management/Expense ratio: General & Management Expense(GME)/Total Expense 2003 GME = $474,989.00 2004 GME = $585,818.00 2003 Total Expense = $1,316,681.00 2004 Total Expense = $1,972,131.00 2003 Ratio = 0.36 2004 Ratio = 0.30 Revenue / Expense Ratio: Total Revenue / Total Expense 2003 Total Revenue = $1,244,261.00 2004 Total Revenue = $2,191,243.00 2003 Total Expense = $1,316,681.00 2004 Total Expense = $1,972,131.00 2003 Ratio = 0.94 2004 Ratio = 1.11 (Provide a 200- to 300-word explanation of the importance of each ratio for all three years listed in Appendix D. Include a statement on whether or not the organization’s financial picture has improved within the three-year period specified in Appendix D.) Appendix D lists 5 ratios that are each important in different ways. A non-profit organization uses the current ratio to evaluate its assets. These assets could be cash or other things such as donations and grants. This allows them to better understand what the company is worth by determining the company’s assets. A non-profit organization uses the long-term solvency ratio to find out if they are likely to be able to pay their bills and continue services in the future. This ratio will tell the non-profit exactly how much they depend on contributions from other sources outside of their organization. The organization uses the management/expense ratio to tell them how much they should set aside for administrative costs, besides their program costs. If they save too much money in this category, they spend less money on their programs. Meaning more money is going to management and the programs are not getting enough. This could result in a negative impact on the clients and the future of the organization. The revenue/expense ratio tells them how much funding they have used to support their fund-raising programs and other expenses. The revenue/expense ratio is like the management/expense ratio; if too much money goes into revenue/expense, not enough will go to their programs.
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