¶ … financial position of the nonprofit organization is designed to provide specific insights about its liquidity, long time solvency and assets management ratios. These areas will help to determine if the entity is facing tremendous financial challenges. Moreover, they will highlight how administrators can seize upon new opportunities in the future.
To determine the strength of the nonprofit organization a comparison will be conducted with the city of Charlottesville. The below table is contrasting various financial ratios.
The Liquidity, Long Time Solvency and Asset Management Ratios for the Non-Profit vs. Charlottesville
Nonprofit (Table 9.4)
Charlottesville 2005
Current Ratio
Working Capital
$1,041,067
$32,953,718
Quick Ratio
Debt to Asset Ratio
.17
("Financial Statement for a Small Nonprofit," 2006) ("City of Charlottesville Net Assets," 2005)
Analyze the comparison of ratios
The current ratio is showing that the nonprofit is in a better financial condition to address short-term obligations and liquidity challenges. This is because they are several times higher than the figures for the city of Charlottesville. The working capital and quick ratios are illustrating a similar situation when it comes to the two entities. The debt to asset ratio is showing how the nonprofit has financed less of their assets with debt in contrast to the city of Charlottesville. These figures are indicating the nonprofit is in a stronger fiscal position. (Gibson, 2008) ("Financial Statement for a Small Nonprofit," 2006) ("City of Charlottesville Net Assets," 2005)
Analyze the measures of liquidity
The measures of liquidity are indicating that the nonprofit can be able to fund its short- and long-term operations. This is because it has readings which are 3 to 4 times higher in contrast with Charlottesville. In the future, they have the ability to deal with a host of financial challenges more effectively and can use these tools to make adjustments quickly. (Gibson, 2008) ("Financial Statement for a Small Nonprofit," 2006) ("City of Charlottesville Net Assets," 2005)
Analyze the long-term solvency
The long-term solvency is showing how the nonprofit is in a stronger position. This is from them having greater readings in contrast with Charlottesville. For example, the debt to asset ratio is much lower for the nonprofit. Over the course of time, this will result in them having the ability to repay their long-term obligations and adapt with new challenges they will face. (Gibson, 2008) ("Financial Statement for a Small Nonprofit," 2006) ("City of Charlottesville Net Assets," 2005)
Analyze asset management rations
You’re 78% through this paper. Sign up to read the full paper.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.