Page 19 - Non-Profit Finance
P. 19
Key
Ratios
Ratio Measures Calculation Suggested Standard
Current Ratio Financial Health and Current assets / Current 1.0 - 2.0
ability to pay short-term Liabilities
obligations with available
resources
Operating Reserves Is there sufficient resources Operating reserves / 25%
to support the agency annual (yearly) expenses
and maintain its current
operations (assuming no
other revenues are
generated
Quick Ratio How well the agency can Current assets (excluding 1.0
meet its short-term inventory and prepaid
obligations (used a lot by expenses / current
banks) liabilities
