6-1 discussion: financial analysis tools

Consider the different financial analysis tools that nonprofits can use to evaluate their financial health. For this discussion, refer to the required reading in this module in Essentials of Accounting for Governmental and Not-for-Profit Organizations. Illustration 13-7, Performance Indicators, in the textbook will be particularly useful. This discussion will help you prepare for your final project as you will need to use three ratios/performance indicators to evaluate your organization’s financial health. Address these items in your post:

• What are the performance indicators you are examining in your nonprofit?
• What three key ratios would you use to look at those performance indicators? For each ratio, provide the formulas and explain what the ratio tells you about the performance of your nonprofit. Explain why you think those three are the most important for the organization that you have established?
• Based on the results, what key decisions (e.g., cost cutting, donor campaigns) can be made?