1. Financial Management of Nonprofits College of Public and Community Service University of Massachusetts Boston ©2010 William Holmes 1

2. BALANCE SHEET ELEMENTS Assets Liabilities Net Equity/Retained Revenue Vertical or Horizontal Organization 2

3. BALANCE SHEET ASSETS: 1 1. Cash 2. Financial Instruments 3. Accounts Receibable 4. Inventory (LIFO basis) 5. Pre-paid expenses 3

4. BALANCE SHEET ASSETS: 2 6.Restricted Cash 7.Equipment 8.Investments 9.Restricted accounts 4

5. BALANCE SHEETS LIABILITIES 1. Wages 2. Taxes 3. Accounts payable 4. Notes payable 5. Mortgage payable 6. Restricted liabilities 5

6. BALANCE SHEET NOTES Restrictions on assets and liabilities Use of Cash Basis or Accrual Basis Expected changes Contingent changes Discuss financial ratios 6

7. BALANCE SHEET FINANCIAL RATIOS Debt-to-equity ratio: liability/equity Working capital: current assets-current liabilities Current ratio: assets/liabilities Debt ratio: liabilities/assets Fixed Asset Turnover ratio: revenue/fixed assets 7