NEAR TERM MEASURES. Near Term Measure 1 ‐
NEAR TERM MEASURES. Purpose ‐ The current ratio depicts the relationship between a school’s Current Assets and Current Liabilities. In addition, the Current Ratio is a financial ratio that measures the extent to which a school has enough resources to pay its debts over the coming 12 months. It compares a school's Current Assets to its Current Liabilities. What is the formula? Data source(s): = Statement of Net Position ABC Academy Example = $197,115 = . $95,382 Current ratio is 1.1 or greater Meets Standard What is the metric used to determine school status? Near Term Measure ‐ Current Ratio Current Assets / Current Liabilities Meets Standard: Current Ratio is 1.1 or greater. Or Current Ratio is between 1.0 and 1.1 and one‐year trend is positive. Note: For schools in their first or second year of operation, the Current Ratio must be greater than 1.1. Does Not Meet Standard: Current Ratio is between 0.9 and .99. Or Current Ratio is between 1.0 and 1.1 and one-year trend is negative. Falls Far Below Standard: Current Ratio is less than 0.9. Purpose ‐ The Unrestricted Days Cash‐On‐Hand (UDCOH) ratio indicates how many days a school can pay its operating expenses without an inflow of cash. National standards state 60‐ 120 days of cash‐on‐hand is considered a model practice. What is the formula? — = = — — Data source(s): Statement of Net Position Statement of Activities Notes to the audited financial statements or supplementary information ABC Academy Example Formula used to determine the Average Daily Expense $1,173,620 — $10,000 = $1,163,620 = $, 365 Formula used to determine Unrestricted Days of Cash‐On‐Hand $245,528 = $3,188 60 or more days of cash Meets Standard Near Term Measure ‐ Unrestricted Days Cash‐On‐Hand Ratio Average Daily Expenses : (Total Annual Expenses – Annual Depreciation ‐ Amortization) /365 Unrestricted Days Cash‐On‐Hand: Unrestricted Cash and Equivalents / Average Daily Expense Meets Standard: 60 or more days of cash. Exceptions for schools in year one or two of their original contract term: o Original Contract, Year 1 schools: 15 days or more o Original Contract, Year 2 schools: 30 days or more o Original Contract, Year 3 + schools: 60 days or more o All schools—including schools in their original contract term—showing operating deficits will be held to the normal 60‐day standard. Or Between 30 and 60 days of cash and one‐year trend is positive—a negative trend may still support a Meets Standard rating with adequate documentation...
NEAR TERM MEASURES. Purpose ‐ The current ratio depicts the relationship between a school’s Current Assets and Current Liabilities. In addition, the Current Ratio is a financial ratio that measures the extent to which a school has enough resources to pay its debts over the coming 12 months. It compares a school's Current Assets to its Current Liabilities. What is the formula? 𝑻𝒐𝒕𝒂𝒍 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔 𝑻𝒐𝒕𝒂𝒍 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔 Data source(s): = ��𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂��𝒊𝒐 • Statement of Net Position ABC Academy Example 𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 = $197,115 = 𝟐. 𝟎𝟕 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕��𝒐 𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎��𝑖𝑙𝑖𝑡𝑖𝑒�� $95,382 Current ratio is 1.1 or greater 🞏 Meets Standard What is the metric used to determine school status? Near Term Measure ‐ Current Ratio Current Assets / Current Liabilities
