Common use of ABC Academy Example Clause in Contracts

ABC Academy Example. Revenue Year One = $700,000, Year Two = $750,000, Year Three = $775,000 Expenditures Year One = $704,000, Year Two = $746,000, Year Three = $770,000 Formula used to determine the total Three‐Year Net Surplus (Deficit) Year 1: $700,000 ‐ $704,000 = ‐4,000 (‐.57%) Year 2: $750,000 ‐ $746,000 = 4,000 (.53%) Year 3: $775,000 ‐ $770,000 = 5,000 (.65%) ‐$4,000 + $4,000 + $5,000 = $5,000 Aggregated Three Year Net Surplus 2 For purposes of this rating, adjusting net surplus for expenses related to an increase in Net Pension Liability is appropriate. Formula used to determine the total Three Year Revenue $700,000 + $750,000 + $775,000 = $2,225,000 Three Year Revenue Formula used to determine the Aggregated Total Margin $5,000 = . % $2,225,000 Most recent Total Margin is positive and, where calculable, the aggregated three‐year Total Margin is positive.  Meets Standard What is the metric used to determine school status? Sustainability Measure ‐ Total Margin Current Year Total Margin: Current Year Net Surplus / Current Year Total Revenue Aggregated Total Margin: Total Three‐Year Net Surplus / Total Three‐Year Revenues Meets Standard:  The most recent year Total Margin is positive. The Aggregated Three‐Year Total Margin, when calculable, is also positive. Does Not Meet Standard:  Aggregated Three‐Year Total Margin, when calculable, is negative or the most recent year Total Margin is negative. Falls Far Below Standard:  Aggregated Three‐Year Total Margin is negative and most recent year Total Margin is negative. Note: For schools in their first or second year of operation, substitute the “Aggregated Three‐ year Total Margin” with the “Total Margin.” Purpose ‐ The Debt to Asset Ratio measures the amount of debt a school owes compared to the assets they own; it measures the extent to which the school relies on borrowed funds to finance operations. A Debt to Asset Ratio greater than 1.0 indicates a school has more debt than it has assets to pay off said debt. It is a generally accepted indicator of potential long‐term financial issues, as the organization owes more than it owns, reflecting a risky financial position. A ratio less than 0.9 indicates a financially healthy balance sheet, both in the assets and liabilities, and with the balance in the Net Position, or equity, account. What is the formula?

ABC Academy Example. Revenue Year One = $700,000, Year Two = $750,000, Year Three = $775,000 Expenditures Year One = $704,000, Year Two = $746,000, Year Three = $770,000 Formula used to determine the total Three‐Year Net Surplus (Deficit) Year 1: $700,000 ‐ $704,000 = ‐4,000 (‐.57%) Year 2: $750,000 ‐ $746,000 = 4,000 (.53%) Year 3: $775,000 ‐ $770,000 = 5,000 (.65%) ‐$4,000 + $4,000 + $5,000 = $5,000 Aggregated Three Year Net Surplus 2 3 For purposes of this rating, adjusting net surplus for expenses related to an increase in Net Pension Liability is appropriate. Formula used to determine the total Three Year Revenue $700,000 + $750,000 + $775,000 = $2,225,000 Three Year Revenue Formula used to determine the Aggregated Total Margin $5,000 = . % 𝟐𝟐𝟓% 𝐀𝐠𝐠𝐫𝐞𝐠𝐚𝐭𝐞𝐝 𝐓𝐡𝐫𝐞𝐞 𝐘𝐞𝐚𝐫 𝐓𝐨𝐭𝐚𝐥 𝐌𝐚𝐫𝐠𝐢𝐧 $2,225,000 Most recent Total Margin is positive and, where calculable, the aggregated three‐year Total Margin is positive.  ☒ Meets Standard What is the metric used to determine school status? Sustainability Measure ‐ Total Margin Current Year Total Margin: Current Year Net Surplus / Current Year Total Revenue Aggregated Total Margin: Total Three‐Year Net Surplus / Total Three‐Year Revenues Meets Standard:  🞏 The most recent year Total Margin is positive. The Aggregated Three‐Year Total Margin, when calculable, is also positive. Does Not Meet Standard:  🞏 Aggregated Three‐Year Total Margin, when calculable, is negative or the most recent year Total Margin is negative. Falls Far Below Standard:  🞏 Aggregated Three‐Year Total Margin is negative and most recent year Total Margin is negative. Note: For schools in their first or second year of operation, substitute the “Aggregated Three‐ year Total Margin” with the “Total Margin.” Purpose ‐ The Debt to Asset Ratio measures the amount of debt a school owes compared to the assets they own; it measures the extent to which the school relies on borrowed funds to finance operations. A Debt to Asset Ratio greater than 1.0 indicates a school has more debt than it has assets to pay off said debt. It is a generally accepted indicator of potential long‐term financial issues, as the organization owes more than it owns, reflecting a risky financial position. A ratio less than 0.9 indicates a financially healthy balance sheet, both in the assets and liabilities, and with the balance in the Net Position, or equity, account. What is the formula?”

ABC Academy Example. Revenue Year One = $700,000, Year Two = $750,000, Year Three = $775,000 Expenditures Year One = $704,000, Year Two = $746,000, Year Three = $770,000 Formula used to determine the total Three‐Year Net Surplus (Deficit) Year 1: $700,000 ‐ $704,000 = ‐4,000 (‐.57%) Year 2: $750,000 ‐ $746,000 = 4,000 (.53%) Year 3: $775,000 ‐ $770,000 = 5,000 (.65%) ‐$4,000 + $4,000 + $5,000 = $5,000 Aggregated Three Year Net Surplus 2 For purposes of this rating, adjusting net surplus for expenses related to an increase in Net Pension Liability is appropriate. Formula used to determine the total Three Year Revenue $700,000 + $750,000 + $775,000 = $2,225,000 Three Year Revenue Formula used to determine the Aggregated Total Margin $5,000 = . % 𝟐𝟐𝟓% 𝐀𝐠𝐠𝐫𝐞𝐠𝐚𝐭𝐞𝐝 𝐓𝐡𝐫𝐞𝐞 𝐘𝐞𝐚𝐫 𝐓𝐨𝐭𝐚𝐥 𝐌𝐚𝐫𝐠𝐢𝐧 $2,225,000 Most recent Total Margin is positive and, where calculable, the aggregated three‐year Total Margin is positive.  🞏 Meets Standard What is the metric used to determine school status? Sustainability Measure ‐ Total Margin Current Year Total Margin: Current Year Net Surplus / Current Year Total Revenue Aggregated Total Margin: Total Three‐Year Net Surplus / Total Three‐Year Revenues Meets Standard:  🞏 The most recent year Total Margin is positive. The Aggregated Three‐Year Total Margin, when calculable, is also positive. Does Not Meet Standard:  🞏 Aggregated Three‐Year Total Margin, when calculable, is negative or the most recent year Total Margin is negative. Falls Far Below Standard:  🞏 Aggregated Three‐Year Total Margin is negative and most recent year Total Margin is negative. Note: For schools in their first or second year of operation, substitute the “Aggregated Three‐ year Total Margin” with the “Total Margin.” Purpose ‐ The Debt to Asset Ratio measures the amount of debt a school owes compared to the assets they own; it measures the extent to which the school relies on borrowed funds to finance operations. A Debt to Asset Ratio greater than 1.0 indicates a school has more debt than it has assets to pay off said debt. It is a generally accepted indicator of potential long‐term financial issues, as the organization owes more than it owns, reflecting a risky financial position. A ratio less than 0.9 indicates a financially healthy balance sheet, both in the assets and liabilities, and with the balance in the Net Position, or equity, account. What is the formula?? (𝑻𝒐𝒕𝒂𝒍 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔 — 𝑵𝒆𝒕 𝑷𝒆𝒏𝒔𝒊𝒐𝒏 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔) = 𝑫𝒆𝒃𝒕 𝒕𝒐 𝑨𝒔𝒔𝒆𝒕 𝑹𝒂𝒕𝒊𝒐 𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔 Data source(s): • Statement of Net Position • Net Pension Liability balance information • Confirmation that employer contribution expenses are not backed out from Statement of Activities ABC Academy Example Total Liabilites = $12,000 = 𝟎. 𝟔𝟎 𝐃𝐞𝐛𝐭 𝐭𝐨 𝐀𝐬𝐬𝐞𝐭 𝐑𝐚𝐭𝐢𝐨 Total Assets $20,000 Debt to Asset Ratio is less than 0.90 🞏 Meets Standard What is the metric used to determine school status? Sustainability Measure ‐ Debt to Asset Ratio Total Liabilities / Total Assets