Finance Highlights 2008 0729 - Laserfiche WebLink

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operate if no additional funds were received. In 2004, this ratio was 0.991 and it dipped as low as 0.613 in 2005. It has increased to 1.185 in 2007. According to a survey of 1783 Nonprofit Organizations in the Human Services arena that was performed at the University of Wisconsin-Milwaukee in 2003 (Survey), the mean Defensive Interval Ratio for organizations with Revenues in the $5-10 Million range is 5.014 and the median is 1.689. Davis Street receives a much higher proportion of its revenues from Government Grants (73.2%) than other nonprofits in the Survey (25.6%), so it is important to keep in mind that the stability of these government programs should allow the Center to operate effectively with a lower Defensive Interval Ratio than the general population of the Survey. The Liquid Funds Indicator is another ratio commonly used to evaluate liquidity in the nonprofit sector. It is defined as Total Net Assets minus Restricted Net Assets minus Fixed Assets all divided by Average Monthly Expenses. This ratio is similar to the Defensive Interval, but more conservative in removing assets with restrictions from the calculation. In 2004, the ratio was -1.460 and it has improved to -0.425 by 2007. The mean LFI in the Milwaukee Survey was 2.012 and the median was 0.697. Again, the higher proportion of Government Grants for Davis Street would imply a much higher proportion of restricted assets than the population of the survey. Statistics are not available for comparison, but approximately 78% of Davis Street's Revenues and Support for 2007 were restricted funds, so it would be unfair to place a high degree of significance on a negative LFI. The Debt Ratio is commonly used to indicate future liquidity problems or reduced capacity for future borrowing. It is defined as Average total Debt divided by Average Total Assets. Davis Street has a debt ratio well in line with the population of the Milwaukee Survey (median= 9.2%, mean = 20.1 %). The Fund Balance Ratio, if low, indicates that the organization has little unrestricted, spendable equity available to meet temporary cash shortages, an emergency, or deficit situation in the future. This ratio is defined as Expendable Unrestricted Net Assets divided by Annual Expenses, and although it has improved from -12.7% in 2004 to -3.8% in 2007, it still hovers in a deficit area. Because of the previously mentioned high percentage of restricted revenues, the Fund Balance Ratio maybe less significant to Davis Street than the typical non-profit. Financial Position Summary The financial position of DSFRC has shown dramatic improvement since 2004; solvency has returned and liquidity has been improved dramatically. A positive working capital position should be restored in the near future if current trends continue. Although there is no evidence of any short-term liquidity or solvency issues, we believe it is important for long-range survival to act to reduce leveraging by increasing Net Assets. On several key fmancial measures the Center's financial position is well below commonly used benchmarks and compares unfavorably with its peers, but the significance of these Sustainability Study: Davis Street Family Resource Center - 4/08 Page 6 of 96