APPENDIX 7AEXAMPLE FINANCIAL RATIO CALCULATIONS
In this appendix we show how to calculate each financial ratio, provide the financial ratio sources for each ratio's numerator and denominator, and then show you how we would interpret the ratio's value and its year-over-year trend. We illustrate using a publicly-available set of financial statements from Habitat for Humanity – Durham (N.C.) Inc.
The first panel shows the Liquidity Ratios.
Sample Ratio Calculations
| Habitat for Humanity, Durham, Inc. | |||||
| Sample Ratio Calculations (Appendix 7A) | Liquidity Ratios | ||||
| Here are snapshots of the worksheet in which we calculated the financial ratios from Chapter 7 for Habitat for Humanity - Durham's financial statements. | |||||
| 2015 | Interpretive Comments for 2015 | 2014 | |||
| Liquidity Ratios | |||||
| Cash Ratio | The organization can cover from cash the upcoming year's known obligations 1.6 times. | ||||
| Cash & Equivalents/Current Liabilities | |||||
| Cash & Equivalents | 1,029,448 | Trend is negative regarding liquidity. | 1,092,823 | ||
| Current Liabilities | 627,296 | Cash and equivalents are from SFP; | 503,656 | ||
| Ratio | 1.64 | Current Liabilities also from SFP. | 2.17 | ||
| Cash Reserve Ratio | More conservative measure than cash ratio. We can cover only 18% (2.2 months) of the year's expenses with cash. | ||||
| Cash & Equivalents/Total Annual Expenses | |||||
| Cash & Equivalents | 1,029,448 | 1,092,823 | |||
| Annual Expenses (from SA) | 5,619,670 | Trend is negative regarding liquidity. | 4,791,740 | ||
| Ratio | 0.18 | Cash and equivalents are from SFP; | 0.23 | ||
| % | |||||
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