Introduction For this assignment, we were asked to assess the financial data of a fictitious non-profit organization as provided in Chapter 10 of McLaughlin’s “Financial Basics for Nonprofit Managers” (McLaughlin, 2009, p. 125). The following provides an assessment of that fictitious organization’s financial stability and its “liquefiable” assets. The Balance Sheet The balance sheet, as provided by McLaughlin (McLaughlin, 2009, p. 125), gives a number of assets that have the potential to be liquefied in an effort to maintain organizational stability. Assets provided by the fictitious organization include cash, savings, pledges, investments, and land and equipment. Cash is usually considered to be the most liquid when meeting debt obligations, …show more content…
Other assets that can be liquefied to support annual operations include accounts/pledges receivable with a year-end total of $25,505, inventories from sale with a year-end carry over of $502,722, and other assets (e.g. investments, land, buildings, real estate, etc.) that have a combined value of $18,506,767. This final value, though not as readily liquefiable as cash or savings, represents approximately 95% of total assets for the organization. Of this total, only a fraction is easily liquefied. Conclusion Overall, it would appear that the fictitious organization provided by McLaughlin (McLaughlin, 2009, p. 125) has the assets to liquefy to achieve sustainability when needed. Yet, not all of these assets (land, buildings, and equipment) are easily liquefied in the short-term. As stated earlier, the organization has roughly two days of cash on hand. It would be advantageous for the organization to diversify and use easily liquefied assets and investments to better pad accessible cash reserves for future shortfalls. Though the organization appears to be approximately $2M in the green at the end of the year, having the ability to liquefy assets quickly is paramount. By evaluating the assets at hand and the amount of time needed to liquefy each of those assets, the organization would
Worth, M. (2014). Nonprofit management: Principles and Practice. 3rd Ed. Thousand Oaks, CA: SAGE Publications, Inc.
As of December 26, 2004, our liquid assets totaled $10,924,000. These assets consisted of cash and cash equivalents in the amount of $10,642,000 and short-term investments in the amount of $282,000. The working capital deficit increased slightly from $50,359,000 as of December 28, 2003 to $51,041,000 as of December 26, 2004. This increase was due primarily to increases in the loss reserve and unearned premiums related to the captive insurance subsidiary and accounts payable and was partially offset by increases in inventories and receivables.
Along such time, the budget has grown over $2000,000, fact that paradoxically left Youth Haven with a deficit of$20,000. Marcel is in the process to upgrade her mindset of for-profit sector molded to the nonprofit sector environment. In addition, an executive director must consider some other factor, even when a nonprofit departs from the way any for-profit business is. In the textbook, Nonprofit Management Principles and Practices, Worth pointed out, “nonprofit managers are confronted with sorting through an array of options and selecting the measures and methods that meet both their own need for useful management information as well as the expectations of funders, watchdogs, and regulators.” (Wroth, P. 161). It is important to understand that administrators of non profits not only have to handle the management side of things but also to make sure that whatever service they are providing to the community is still running
For instance, the profit making health organizations have the main intention of creating profits for the shareholders while the nonprofit organizations are created to further their mission (Knowing the Differences Between Nonprofit and For-Profit Accounting , 2015). Just the way these organizations differ in their purpose and foundation, they also differ in their accounting procedures. Their financial statements are presented in different ways. The financial statements prepared at the end of a year are also very different. The main reason for these differences is because the two organizations follow different accounting standards. In this part, I will lay an explicit focus on how the two organizations present the various items in the owners’ equity statement (Baker,
Worth, M. (2014). Nonprofit management: Principles and Practice. 3rd Ed. Thousand Oaks, CA: SAGE Publications, Inc.
Product Line Manager, Liz Marenakos, of The Financial Edge and The Information Edge, asserts that nonprofits must be “accountable to multiple stakeholders, including private and institutional donors; local, state, and federal agencies; volunteers; program recipients; and the public at large”. She goes on to report that “financial and regulatory compliance, stewardship, and donor trust” are essential to nonprofit accountability (Marenakos, 2011). As previously mentioned, these accountabilities are upward, internal, and
Nonprofit organizations provide socially desirable services without the intention of realizing a profit. They have no ownerships shares that can be sold or traded by individuals, and any excess revenues over expenses is used to enlarge the service capability of the organization. They are financed, at least partially, by taxes, contributions, grants and/or state contracts.
McLaughlin, T. A. (2016). Streetsmart Financial Basics for Nonprofit Managers, 4th edition. New York, NY: John Wiley & Sons, Inc.
A not for profit organization is a corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive (Legal, 2013).” There are immense community benefits as a not-for-profit generally accepts everyone regardless of ability to pay. Nonprofit organizations are granted tax-exempt status which helps them to provide services to the public and are expected to be effective managers of their finances as well as being efficient (Financial Management, 2010). In doing so, they can gain exemptions from federal and state incomes taxes and have the ability to solicit tax-deductible contributions (Financial Management, 2010). Organization must follow legal financial requirements and always adhere to sound accounting principles that produce reliable financial information (Financial Management, 2010).
Worth, M. J. (2011). Nonprofit management: Principles and practice. (2nd ed.). Thousand Oaks, CA: Sage Publications.
Worth, Michael J. Nonprofit Management: Principles and Practice. 3rd Ed. Copyright 2014 by SAGE Publications, Inc.
In reviewing the company’s balance sheet, the current assets and liabilities were reviewed and liquidity ratios were calculated. The capital structure and the fixed and intangible asset accounting of the company were also reviewed. Off-balance sheet items such as leases and contingent liabilities were reported and noted. All of these aspects of the balance sheet were reviewed in order to do a proper analysis of the company’s balance sheet.
This means that the expenses from acquiring these resources are recorded as assets in the company’s balance sheet. The costs will then show on the balance sheet in the coming financial years through amortisation.
The balance sheet is a financial document which identifies the company’s assets and liabilities of a company. By deducting the assets from the liabilities the net worth is calculated, this is a key indicator of the value of the company to its owners.
In classified balance sheet categories of assets are: current assets, investments, fixed assets, intangible assets, etc.