Final Project: Analyzing Financial Statements

Table of Contents

Introduction to Project3

Ratios Analysis for XYZ Corporation3

Break-even point for the XYZ Corporation6

Line Item, Performance, and Program Budget6

Traditional Approaches to Fund Development10

Nontraditional Approaches to Fund Development11

Conclusion of the current and future financial picture12

References13

Appendix15

Final Project: Analyzing Financial Statements

Introduction to Project

XYZ Corporation is located in the state of Texas, as a nonprofit organization. The company imparts psychiatric counseling services for residents of El Paso County This assignment is based on finding out various ratios for the company and discussing its financial health on the whole.

Ratios Analysis for XYZ Corporation

2003

2004

Current Ratio

Current Assets/Current Liabilities

$82,058.00/$93,975.00

= 0.873

$302,902.00/$337,033.00

=0.898

Long-Term Solvency Ratio

Total Debt/ Total Assets

$259,979.00/$359,863.00

= 0.72

$338,937.00/ 699,004.00

= 0.48

Contribution Ratio



(sales - variable costs)/sales.

($1,244,261.00-$1,142,680) / $1,244,261.00 = 0.081

($2,191,243.00-$1,798,130) / $2,191,243.00 = 0.18

Programs/Expense Ratio

Operating Expenses / Dollar value of assets under management

945579 / $359,863.0

= 2.62

1526311/ $699,004.00 = 2.18

General And Management/Expense Ratio

Management and General Expenses/ Net Income

$371,101.00 / $1,316,681.00 = 0.28

$445,819.00 / $1,972,131.00 = 0.23

Revenue/Expense Ratio

Operating Expenses/ Revenues Net of Interest Expense

945579/ 1244075 = 0.76

1526311/ 2191081 = 0.69

The importance of each ratio for the three years of the company is as follows:

Analysis of the financial activities of the governing apparatus allows management to monitor the financial operations of the company. The analysis helps to identify the most profitable hook sphere of activity, and less profitable, and in accordance with this outline measures to eliminate adverse effects. Analysis of financial performance helps to establish how the main areas of activity that require special management attention, and intermediate for the operation of the main. In the wholesale business of the most important criteria are indicators such as sales, profits, assets, liabilities, liquidity, and others. Analysis of financial performance allows us to define the work on these indicators (Mancuso, 1997).

The level of solvency is primarily characterized by a number of indicators of liquidity. The degree of liquidity of the firm is determined by its ability to convert their assets in a relatively short time in cash, is not discounting much of their value, in order to cover its current liabilities. As already mentioned, the liquidity can act as an indicator of the solvency of the firm. If the enterprise liquidity deteriorates, then the firm's management is unable to effectively manage their assets and liabilities, which may lead to the sale or long-term assets, or to the insolvency and bankruptcy. Reduced liquidity is lower profitability firms, the growth of losses, and loss of control in the management of capital. Therefore, liquidity is attached such great importance (Hummel, 2000).

As a matter of assessing the financial performance of the industrial organization, the objective of the evaluation process is to identify indicators of financial performance and special posed by financial ratios. Analysis of the use of active funds of the company is important for financial management. The percentage of sales to current, illiquid assets and the total number of hits determines funds for a certain period of time. The percentage of cost of goods sold to average their number determines the average turnover.

Determining the relationship of current and long-term debt and ...