Analyzing Financial Statements

Topics: Costs, Variable cost, Fixed cost Pages: 4 (973 words) Published: April 16, 2013
Analyzing Financial Statements
Crystal Roberts
April 14, 2013
Melinda Perry

* Introduction:
XYZ Corporation is a 501(c)3 non-profit organization in El Paso County Texas. This organization provides psychiatric counseling services to residents of El Paso County at minimal cost. The organization employs four licensed professionals to provide these services to the target population. XYZ Corporation utilizes government funding to supplement providing low cost care. The demand for services has increased tremendously over the last two years. The financial statements and calculations of the XYZ Corporation show the increase in demand as well as the increase in profits. * Current Ratio:

Current Assets/Current Liabilities:
* Long-Term Solvency Ratio:
Total Assets/Total Liabilities
* Contribution Ratio:
Largest Revenue Source/Total Revenue

* Programs/Expense Ratio:
Total Program Expenses/Total Expenses
* General and Management/Expense Ratio:
Total General and Management Expense/ Total Expenses
* Revenue/Expense Ratio:
Total Revenue/Total Expense
* Explanation:
The ratios of each year are important for the XYZ Corporation in order to fully comprehend financial data. Each ratio has its own purpose to the XYZ Corporation these purposes are as follows; Current Ratio: This ratio allows the agency to ensure they are not facing any liquidity issues. This ratio assesses the agency’s liquidity or ability to convert assets to cash. Long Term Solvency Ratio: A solvency ratio assesses the agency’s ability to pay its long term debts and measure the ability for long term survival. If there is a consistently negative ratio the organization is a failure. Contribution Ratio: The purpose of the...
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