Analysis of the Lee College financial activities reveals that the college has been able to demonstrate sound financial health at the end of the fiscal year 2012. Although, the college has recorded loss of $820,000 because the expenses is greater than revenues, however, from the income of $1,800,000 released from plant acquisition and program restriction, Lee College has been able to record increase in the total assets totaled $980,000. Overview of the statement of changes in net assets shows that Lee College records increase of $4,920,000 in net assets between the end of 2011 fiscal year, and the end of 2012 fiscal year
Lee College Financial Activities
Lee College is an academic non-profit organization that awards both undergraduate and graduate degree program to students across the world. Located in the United States, the financial statements of the Lee College conform to the Government Accounting Standard Board (GASB). (Lovvorn & Kieschnick, 2011). Overview of the Lee College financial activity reveals that total unrestricted revenues at the end of the 2012 fiscal year is totaled $16,230,000 while total unrestricted expenses are $17,050,000. However, $3,290,000 is total amount record for the increase in permanent restricted revenues and $650,000 is increase in temporary restricted. Temporary restricted consists of contributions totaled $1,500,000, gain on long-term investment and net assets released from restrictions. Permanent restricted revenues consist of income of endowment totaled $2,540,000 and gains on long-term investment totaled $750,000. Overall amount of permanent restricted revenues are $3,290,000.
Unrestricted revenues reveal the total revenues and total expenses, and unrestricted revenues are divided into temporary unrestricted and permanent unrestricted.
The objective of this paper is to review the financial information of Lee College. In reviewing the financial information of Lee College, the paper provides a statement of activities of Lee College using the following format:
A Statement of Unrestricted Revenues
Expenses
Other Changes in Unrestricted Net Assets
A Statement of Changes in Net Assets.
The financial highlights of the 2012 fiscal years are as follows:
Net Assets of the Lee College at the end of the 2012 Fiscal years is $7,920,000 while the net assets as at July 1, 2011 is $3,000,000 revealing $4,920,000 increase in net assets by 164% between 2011 and 2012 fiscal year as being revealed in Table 1. A statement of changes in the net assets consists of net assets and liabilities at the end of the fiscal year 2012. Statements of change in the college net assets consist of current and non-current liabilities, current and non-current assets and net assets, which are equal to Assets minus Liabilities. Typically, Total Assets is equal Total Liabilities plus Net Assets.
Table 1: Changes in Net Assets of Lee College
Financial Highlights
2011
2012
Changes between 2011 and 2012
% Changes
Net Assets
$3,000,000
$7,920,000
$4,920,000
Statement of Unrestricted Revenues
Lee College total revenue at the end of the fiscal year 2012 is $21,970,000 where $18,030,000 is unrestricted revenues, $650,000 is temporary restricted, and 3,290,000 are permanently restricted. Additionally, Lee College has excess of gain of $11,090,000 on long-term investment. Major source of income for the college are the combination of tuitions and fees, Sales and Services of Auxiliary Enterprises, grant revenue, contributions and unrestricted income on endowment. Typically, combination of tuition and fees and sales and services of auxiliary enterprises form more than 99% of the college total revenue. Based on the Lee College financial statement at the end of the 2012 fiscal year, it is revealed that combination of net tuitions and fees; and Sales and Services of Auxiliary Enterprises form the total of $16, 090,000 from the total revenues while the rest is $140,000 as being revealed in Table 2.
Table 2: Unrestricted Revenues
Unrestricted Revenues
Amount
Net Tuition and Fees
$11,090,000
68.6%
Contributions
$100,000
0.6%
Unrestricted Income on Endowment
$40,000
0.2%
Sales and Services of Auxiliary Enterprises
$5,000,000
30.6%
Total
$16,230,000
From the financial data in Table 2, it is revealed that Lee College financial statement is sustainable since the bulk of Lee College revenues are generated from operations and sales activities and not from endowments and contributions. To evaluate the college financial activities, the paper calculates the unrestricted revenues and total expenses for the 2012 fiscal year.
Table 2: Lee College Financial Activities for the Fiscal Year 2012
Unrestricted Revenues
Amount
Net Tuition and Fees
$11,090,000
Contributions
$100,000
Unrestricted Income on Endowment
$40,000
Sales and Services of Auxiliary Enterprises
$5,000,000
Total
$16,230,000
Expenses for the Fiscal Year 2012
Amount
Instruction Expenses
$7,000,000
Research Expenses
$4, 500,000
Public Service
Expenses
$1, 200,000
Auxiliary Enterprises
$3, 500,000
Student Services
$150,000
Institutional Support
$700,000
Total Expenses
$17,050,000
Total Operating Income Loss
$820,000
Net Assets from Restriction
Plant Acquisition Restriction
$1,160,000
Program acquisition
$640,000
Total
$1,800,000
Total Gains
$1,800,000 minus $820,000=$980,000
Evaluation of the college financial activities reveals that the total expenses is greater than unrestricted revenue making the college to suffer a loss of $820,000 for the fiscal year 2012. To calculate the loss suffered by the college, the paper deducts Unrestricted Revenues from Total Expenses revealing there is a loss in the total operating income. However, overview of the Lee College financial activities reveals that there are Net Assets Released from Restriction totaled $1,800,000, which comprises of $1,160,000 for the Plant acquisition Restrictions and $640,000 program restrictions. Based on the revenues accrued from net assets released from restrictions, Lee College could boast of the increase in net assets by $980,000. Despite the increase in the Lee Colleges, expense there is an increase in the unrestricted net assets as being revealed in a statement of change in net assets.
A Statement of Change in Net Assets
A statement of change in net assets comprise of the following:
Unrestricted Net Assets
Temporary Restricted
Permanent Restricted
Unrestricted net assets of the Lee College consist of following:
Total Unrestricted Revenues
Net Assets Released From Restrictions
Total Unrestricted Expenses and Losses
Increase in Unrestricted Net Assets
Lee College records $16,230,000 for total unrestricted revenues and $1,800,000 for the net assets released from restrictions and $17,050,000 for total unrestricted expenses. Lee College is able to record $980,000 as an increase in the unrestricted net assets.
From July 1, 2011 to July 30, 2012, there have been an increase in the Net Assets of Lee College totaled $4,920,000. On 1 July 2011, Lee College recorded $3,000,000 in the Net Assets. However, on the 30 July 2012, Lee College records $7,920,000 in Net Assets revealing $4,920,000 increase in Net Assets.
To calculate the increase in net Assets amounted $4,920,00, the paper adds the increase in unrestricted Net Assets totaled $980,000, increase in temporary restricted totaled $650,000 and increase in permanently restricted net assets amounted $3,290,000.
Increase in the Net Assets from 1 January 2011 to 31 December 2012 is $4,920,000 revealing the increase in the 164% in the Net Assets. Lee College has recorded high increase in the Net Assets between 2011 fiscal year and 2012 fiscal year revealing 164% increase. With increase in the organizational Net Assets, Lee College has demonstrated sound financial health despite that the total expenses is higher that the Unrestricted Revenues.
Restatement of the thesis
The paper reviews the financial activities of Lee College in the following format:
A Statement of Unrestricted Revenues
Expenses
Other Changes in Unrestricted Net Assets
A Statement of Changes in Net Assets.
Lee College statement of activities statement reveals that more than 99% of the Lee College revenues are being generated through the combination of tuitions and fees, and sales and services making Lee College to demonstrate sustainable financial activities because largest percentage of college revenues are being generated by operations and sales activities rather than contributions and donations.
To present Lee College financial activities, the paper calculates all the unrestricted revenue of Lee College and all unrestricted expenses. The calculations reveal that Lee College records operating loss for the fiscal year 2012 because the total expenses are greater than total unrestricted revenue. However, from revenues generated from plant acquisition and program restriction totaled $1,800,00, Lee College has been able to record financial gain of $980,000 at the end of 2012 fiscal year.
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