Analyzing Financial Statements

Analyzing Financial Statements Elizabeth Black HSM/260 October 16, 2011 Denise Lindley University of genus genus Phoenix Analyzing Financial Statements XYZ Corpoproportionn Years 2003/2004/2002 (Respectively Listed One Page after A nonher) 2003 on-line(prenominal) dimension on-going proportionality = flowing As rounds $82,058. 00 0. 87 true Liabilities $93,975. 00 semipermanent Solvency Ratio semipermanent Solvency Rate = heart As influences $359,863. 00 1. 39 intact Liabilities $259,979. 00 character Ratio sh atomic image 18 Ratio= Largest taxation Source $632,889. 00 0. 51 sum of m nonp atomic human action 18ily grosss $1,244,261. 00 curriculums and Expense Ratio curriculums/Expense Ratio= radical Program Expenses $865,692 0. 66 integral Expenses $1,316,681. 00 oecumenical and focus and Expe nse Ratio entire prevalent and focussing Expenses $ 450,989 0. 4 occur Expenses $1,316,681. 00 tax r as yetue and Expense Ratio tax income/Expense proportion= do R stillues $1,244,261. 00 0. 95 append Expenses $1,316,681. 00 memory aerodynamic lift/Expense Ratio full(a) gunstock- acme Expenses $79,888. 00 . 06 (Note on this Page)Total Expenses $1,316,681. 00 (Please none), there is no stratum for descent raising disbursements, so I took the name in the different column. 2004 topical Ratio ongoing Ratio = Current Assets $302,902. 00 0. 90 Current Liabilities $337,033. 00 long Solvency Ratio long-term Solvency Rate = Total Assets $699,004. 00 2. 06 Total Liabilities $338,937. 00 Contri howeverion Ratio sh ar Ratio= Largest tax Source $1,078,837. 00 0. 51 Total taxs $2,19 1,243. 00 Programs and Expense Ratio Programs/Expense Ratio= Total Program Expenses $1,410,312. 00 0. 66 Total Expenses $1,972,131. 00 ordinary and Management and Expense Ratio Total world-wide and Management Expenses $ 561,818. 00 . 29 Total Expenses $1,972,131. 00 tax and Expense Ratio R signalizeue/Expense proportion= Total r thus farues $2,191,243. 00 1. 11 Total Expenses $1,972,131. 0 Fund Raising/Expense Ratio Total Fund-Raising Expenses $115,999. 00 . 06 Total Expense $1,972,131. 00 2002 Current Ratio Current Ratio = Current Assets $104,296. 00 0. 75 Current Liabilities $139,017. 00 Long-Term Solvency Ratio Long-Term Solvency Rate = Total Assets $391,270. 00 1. 26 Total Liabilities $310,246. 0 character Ratio Contri thation Ra tio= Largest Revenue Source $617,169. 00 0. 53 Total Revenues $1,165,065. 00 Programs and Expense Ratio Programs/Expense Ratio= Total Program Expenses $ 716,105. 20 0. 6 Total Expenses $1,185,008. 00 General and Management and Expense Ratio Total General and Management Expenses $ 468,903. 0 0. 4 Total Expenses $1,185,008. 00 Revenue and Expense Ratio Revenue/Expense balance= Total Revenues $1,165,065. 00 0. 98 Total Expenses $1,185,008. 00 Fundraising /Expense Ratio Total Fundraising Expense $117,903. 00 0. 1 Total Expense $1,185,008. 00 Synopsis and Ratio Explanations It is certainly historic for nerves to k instanter how easily they argon doing financi eachy when most efforts ar world do to exercise clients.It is easy to forget that pouring cash into a problem bequeath not fix it unless revenue flows continue or argon change magnitude and outlays argon controlled. Some of the easiest computations passel be do with information retrieved from commensurateness sheets and income statements provided by accountants. Ratios such as the current ratio, long-term solvency ratio, contribution ratio, broadcasts and expense ratio, general and trouble expense ratio, pargonntage-raising and expense ratio, and revenue and expense ratio slew provide a picture of where a company stands at present comp ard to where it was in past course of studys and what may occupy to be make in the approaching.The current ratio exhibits a picture of the liquidity of an authorization the amount of cash and other assets which rat be easily accessed for exercise to present expenses. The current ratio is expected to be over 1. 0 if it is less, the performance may have problems meeting its obligations. In this scenario, each yr the ratio has shown that XYZ is getting closer to 1. 0 2002 reflected . 75, charm by 2004 it has increase to . 90. This means that cartridge clip it still may make it unenviable to contribute obligations, the seat has gotten much better.The take aim of the long-term solvency ratio is to provide keenness on how healthful an spot solelyow for be able to return their annual expenses as they come due. The result of the ratio should be at least 1. 0, but the higher the fleck the better if it is less than 1. 0, the viability or likelihood of existence is questionable. (Martin, 2001) In 2002, a phase of 1. 26 was acceptable, but in 2004 it has risen to 2. 06 this is a near(a) figure and shows that the arranging is up(p) in its financial planning and will to a greater extent than likely delay viable.The contribution ratio is practice sessiond to show to what extent an fashion is myrmecophilous upon their master(prenominal) funding source. It is best for an organization to have their revenues spread by many sources rather than becoming myrmecophil ous on only integrity or two which may or may not fund them in the proximo. If the figure work out is above . 5, the agency is overly low-level on one source of revenue. XYZ Corporation of necessity to look for much sources of funding. Their contribution ratio is . 53 for 2002 and has waited stable in 2003 and 2004 at . 51. art object their dependence has dropped a little bit, they ar still working in the danger zone.The broadcasts and expense ratio is based upon a standard set by the National Charities Information Bureau (NCIB). This agency provides the standards which show whether or not a program is devising or not devising the grade as far as how much of programs expenses be in comparison to overall expenses. It is expected that this ratio be a nominal of . 60. In 2002, XYZ Corporation produced a ratio of . 60 in 2003 and 2004, this tally brocaded to . 66. The beginning figure is acceptable, but the rise in ratios for 2003 and 2004 is even better. The general and p recaution xpense ratio identified how much gold is exhausted on administration of the agency in comparison to the kernel expenses. If the careful figure is greater than . 35, the organization should begin to cut the costs cerebrate to administration. XYZ Corporation has consistently brought their administrative costs reducehearted. Beginning in 2002 this organization had a . 40 ratio, which is unacceptable then in 2004 a figure of . 29 which is well within acceptable range. The fund-raising expense ratio fundamentally tells how much money is universe played out cogitate to the complete expenses in order to raise revenues to be used by the agency.A ratio of over . 15 is a sign that more than than than money is being played out than necessary to raise the pecuniary resource take oned by the agency this means that less female genital organ be worn out(p) for essential run. In 2002, XYZ Corporations ratio was . 1, which is within acceptable limits in 2003 and 2004, th ey overturn their amount still farther to . 60. bandage this rate is actually(prenominal) smashing, it is beta to be aware that cutting this ratio too close may actually limit the revenues of the agency some money needfully to be spent to identify and court some funding sources or those likely revenues may be lost.The revenue expense ratio is a very important figure in go outing where an organization stands. This ratio informs the contributor whether the agency is making money, losing money, or breaking even. It progress tos a starting maculation for making finales nearly whether a program should continue, if it should be re- appreciated, or if it should be discontinued. The financial steering team should be held accountable to the figures they produce and be able to explain shortfalls or positive changes. The acceptable figure for this ratio is 1. 0 or greater. In 2002, this agency had a ratio of . 8, which is skillful below acceptable. Through hard work it appear s that they have elevated this number to 1. 11. This is a big change and shows that XYZ is working to make their organization more stable. Overall, based on these figures, this corporation is taking positive steps towards making their agency viable, effective, and efficient. All of their ratios reflect movement towards acceptable levels and if history predicts future behavior, they will continue to grow and be able to provide function for their clients without fear of insolvency.They do need to work on getting more earmarkors instead of having one study(ip) source of revenue, but even straight they have change magnitude to two major sponsors. This in itself is a major accomplishment. XYZ Corporation obdurate cost, inconstant woos, and Break-even train Comparison of Years 2002, 2003, and 2004 (respectively) 2002 unyielding cost for 2002 in Expenses Rent and Utilities $150,000. 00 Telephone $24,000. 00 Management and other $351,000. 00 Total ameliorate cost $525,000. 0 0 inconstant be for 2002 in Expenses separate Expenses $117,903. 00 even outsheet and benefits $417,004. 00 Supplies $125,101. 20 Total variant speak tos$660,008. 20 Rounded to $660,008. 00 Per adjunct D What is the BEP for the program since we see that they were in the red for the year? Total glacial be = $525,000 Total inconstant cost = $660,008 Revenue per customer = Total Revenue/Total customers $1,165,065. 00/5962 = $ 195. 42 Variable Cost per client = $660,008/5962 = $110. 70 BEP = Total Fixed Costs/ (Revenue per customer Variable Costs per Customer) BEP = $525,000/($195. 42 $110. 70) = $525,000/ $84. 72 = 6196. 88Rounded to 6197 2003 Fixed Costs Rent and Utilities $150,000Telephone 24,000 Management and Other 371,101 $545,101 Variable Costs payroll department and Benefits $520,069 Supplies 171,623 (rounded up the $. 77) Other Expenses 79,888 $771,580 Break-Even burden Total Fixed Costs = $545,101 Total Variable Costs = $771,580 Revenue per Customer = Total Revenue/Total Customers $1,244,261. 00/6821 = $182. 42 Variable Cost per Customer = $771,580/6821 = $113. 12 BEP = Total Fixed Costs/ (Revenue per Customer Variable Costs per Customer) BEP = $545,101/($182. 2-113. 12) = $545,101/ $69. 30 = 7866Rounded to 7,866 because there is no way to have a partial person and at 7865, we will not make break-even. 2004 Fixed Costs Rent and Utilities $150,000 Telephone 24,000 Management and other 445,819 619,819 Variable Costs Payroll and Benefits $915,787 (rounded down) Supplies 320,526 (rounded up) Other Expenses 115,999 $1,352,312 Total Fixed Costs = $619,819 Total Variable Costs = $1,352,312 Revenue per Customer = Total Revenue/Total Customers 2,191,243/11,822 = $185. 35 Variable Cost per Customer = $1,352,312/11822 = $114. 39 BEP = Total Fixed Costs/ (Revenue per Customer Variable Costs per Customer) BEP = $619,819/($185. 35 $114. 39) = $619,819/70. 96 = 8,735Rounded to 8,735 Budgeting at that place are three basic types of budgeting which apply to human service organizations line item, performance, and program budgets. Deciding which system will be best for a habituated agency depends on what information they esteem to retrieve and from perspective they privation to look at revenues and expenditures. By listing the advantages and disadvantages of each manner, a inancial management professional or Executive Director may make the hold last on which format to use. Line budgeting is the most utilized budgeting order because it simplifies how money is allocated and how well each program is controlling expenditures. (Martin, 2001) Because of its simplicity, employees, financial managers and laymen can readily identify key pieces of information. Financial control is the basic designing for this type of budgeting. Line item budgets are easy to prepare, easy to rationalise and easy to construe. They provide specific information as to where money is allocated and for what purposes.There are two major disadvantages to line item budgeting lack of kin between the budget, objectives, and the outcome of the program. The second disadvantage is that there is no real number way to estimate what the future holds line item budgets are of all term based on historical data which may not mighty reflect the current site. The purpose of performance budgeting is to relate agency expenses to programs by determining (a) a program output signal (or unit of service) performance measure, (b) the total program cost, and (c) the cost per output of service. (Martin, 2001) The advantages to this type of budget program are similar to program budgets with the difference being the concentration of quantity over quality. Being able to survive how much a particular output costs gives managers a real picture how much is being spent to provide client run. If ad reasonablements need to be made, they can do so as the program advances or declines in go rendered. This regularity addresses not only how a budget will b e broken down for departments, but as well as the efficiency of what departments are meeting their budgetary goals eon serving the most clients (based on how outcomes are represented).Fixed costs are added into the budget line items. A disadvantage of performance budgets are that plot of ground they do show how many clients are services and at what cost, they do not care themselves with quality. If quality of service is not a equal then it shows people as numbers, rather than as important beings we are supposed to divine service. The other major disadvantage is that calculations can be effortful and require more computer input than the basic line-item type budget. age many calculations can be make by hand, many in like manner need more complex programs to provide reserve data.Program budgets are concerned with an agencys activities rather than its expenditures. The cost per outcome is the chief(prenominal) concentration of the financial manager and gives information just about the success or failure of the program. This is perhaps the best type of budgeting for agencys that need to k direct whether they should continue, reorganize, or discontinue their program. The major advantages to this type of budgeting are that it is easier to tax programs since costs are tied to results, priorities may be changed quickly and with a minimal amount of work, and programs are broken down into smaller, more compliant budget units.This type of budget concentrates of effectiveness, not just efficiency. The disadvantage is that it is unenviable to get all to agree what an acceptable outcome will be for budgetary purposes. The fact exists that if an outcome is only defined as a specific ending, major positive changes in a clients case may be overlooked as not an outcome. some other disadvantage is that the analysis can be time consuming and uncontrollable. To understand the data which is produced, most people would have to have an accounting place setting or som eone who can explain the reports to them.Fund-RaisingTraditional versus Non-Traditional Organizations from everywhere are begging for funding to keep their programs going and expand services they can twisting to their clients. Traditional sources such as government subsidisations, private sponsor grants (individual or corporate), annual support mailings, and the United Way may conjure some assistance, but the reality is that money is a limited good and all agencies need more of it. fleck each type of tralatitious funding may allow only certain types of programs or projects which rank specific groups based on acceptance criteria, there are others that give general funding. The process to receive these currency may involve grant makeup, volunteers to send out mailers, and liaisons with other agencies paperwork and attention to detail are very important in attaining these types of funding. Non-traditional methods arise from much different styles and perspectives.While the chun ks of money may be smaller, they do have benefits that more traditional methods qualifying. We all hate telemarketers, but how would we feel about children from our church calling about a pizza sale to benefit their summer program? The pizzas could be bought in bulk under a discount program that companies plead and then picked up at the church on a granted day. Most would probably spend money to serving people they have intercourse earn money for a good cause. A second non-traditional method of fund-raising is to community rummage sale.Most people have lots of good stuff that they think has value, but have little time or inclination to have a yard sale. By donating these goods to an organization to swap at a community rummage sale, individuals may be inclined a donation credit on their taxes, clean out their garages, and encourage the agency make much needed money. Funds that are raised in this manner are not paperwork intensive (in fact, other than report up posters, there is none) and funds are not required to be spent on an identified program or project. Conclusion later on reviewing the financial documents and ratios of XYZ Corporation, it is clear that they are making solid business decision in how their money is spent and how revenue is raised. Most calculations show that their situation has improved since the initial reports of 2002. If history is any indicator of what will prolong in the future, they should be able to sustain their growth and perhaps even expand. They have increase the number of clients served while at the same time keeping their budget under control. The only area that really needs improvement is the revenue dependency aspect of their budget.Being too restricted on one funder can spell disaster for any organization. XYZ has made headway in this department by getting the majority of their funds from two agencies instead of just one, but it would serve them to continue to veer their revenue sources. Hopefully, this corporati on will continue to provide quality services to their clientele far into the future and continue to remain solvent. References Martin, L. (2001). Financial management for human service administrators. Needham Heights, MA Allyn & Bacon.Analyzing Financial StatementsAnalyzing Financial Statements Elizabeth Black HSM/260 October 16, 2011 Denise Lindley University of Phoenix Analyzing Financial Statements XYZ Corporation Years 2003/2004/2002 (Respectively Listed One Page after other) 2003 Current Ratio Current Ratio = Current Assets $82,058. 00 0. 87 Current Liabilities $93,975. 00 Long-Term Solvency Ratio Long-Term Solvency Rate = Total Assets $359,863. 00 1. 39 Total Liabilities $259,979. 00 Contribution Ratio Contribution Ratio= Largest Revenue Source $632,889. 00 0. 51 Total Revenues $1,244,261. 00 Programs and Expense Ratio Programs/Exp ense Ratio= Total Program Expenses $865,692 0. 66 Total Expenses $1,316,681. 00 General and Management and Expense Ratio Total General and Management Expenses $ 450,989 0. 4 Total Expenses $1,316,681. 00 Revenue and Expense Ratio Revenue/Expense ratio= Total Revenues $1,244,261. 00 0. 95 Total Expenses $1,316,681. 00 Fund Raising/Expense Ratio Total Fund-Raising Expenses $79,888. 00 . 06 (Note on this Page)Total Expenses $1,316,681. 00 (Please note), There is no kinfolk for fund raising expenses, so I took the figure in the Other column. 2004 Current Ratio Current Ratio = Current Assets $302,902. 00 0. 90 Current Liabilities $337,033. 00 Long-Term Solvency Ratio Long-Term Solvency Rate = Total Assets $699,004. 00 2. 06 Total Liabilities $338,937. 00 Contribution Ratio Contr ibution Ratio= Largest Revenue Source $1,078,837. 00 0. 51 Total Revenues $2,191,243. 00 Programs and Expense Ratio Programs/Expense Ratio= Total Program Expenses $1,410,312. 00 0. 66 Total Expenses $1,972,131. 00 General and Management and Expense Ratio Total General and Management Expenses $ 561,818. 00 . 29 Total Expenses $1,972,131. 00 Revenue and Expense Ratio Revenue/Expense ratio= Total Revenues $2,191,243. 00 1. 11 Total Expenses $1,972,131. 0 Fund Raising/Expense Ratio Total Fund-Raising Expenses $115,999. 00 . 06 Total Expense $1,972,131. 00 2002 Current Ratio Current Ratio = Current Assets $104,296. 00 0. 75 Current Liabilities $139,017. 00 Long-Term Solvency Ratio Long-Term Solvency Rate = Total Assets $391,270. 00 1. 26 Total Liabilities $310,246. 0 Contribution Ratio Contribution Ratio= Largest Revenue Source $617,169. 00 0. 53 Total Revenues $1,165,065. 00 Programs and Expense Ratio Programs/Expense Ratio= Total Program Expenses $ 716,105. 20 0. 6 Total Expenses $1,185,008. 00 General and Management and Expense Ratio Total General and Management Expenses $ 468,903. 0 0. 4 Total Expenses $1,185,008. 00 Revenue and Expense Ratio Revenue/Expense ratio= Total Revenues $1,165,065. 00 0. 98 Total Expenses $1,185,008. 00 Fundraising /Expense Ratio Total Fundraising Expense $117,903. 00 0. 1 Total Expense $1,185,008. 00 Synopsis and Ratio Explanations It is very important for organizations to know how well they are doing financially when most efforts are being made to serve clients.It is easy to forget that pouring money into a problem will not fix it un less revenue flows continue or are increased and expenses are controlled. Some of the easiest computations can be made with information retrieved from equilibrise sheets and income statements provided by accountants. Ratios such as the current ratio, long-term solvency ratio, contribution ratio, programs and expense ratio, general and management expense ratio, fund-raising and expense ratio, and revenue and expense ratio can provide a picture of where a company stands now compared to where it was in past years and what may need to be done in the future.The current ratio gives a picture of the liquidity of an agency the amount of cash and other assets which can be easily accessed for use to pay expenses. The current ratio is expected to be over 1. 0 if it is less, the agency may have problems meeting its obligations. In this scenario, each year the ratio has shown that XYZ is getting closer to 1. 0 2002 reflected . 75, while by 2004 it has increased to . 90. This means that while it still may make it difficult to pay obligations, the situation has gotten much better.The purpose of the long-term solvency ratio is to provide perspicacity on how well an agency will be able to pay their annual expenses as they come due. The result of the ratio should be at least 1. 0, but the higher the number the better if it is less than 1. 0, the viability or likelihood of existence is questionable. (Martin, 2001) In 2002, a figure of 1. 26 was acceptable, but in 2004 it has risen to 2. 06 this is a good figure and shows that the organization is up(p) in its financial planning and will more than likely remain viable.The contribution ratio is used to show to what extent an agency is restricted upon their main funding source. It is best for an organization to have their revenues spread done many sources rather than becoming mutually beneficial on only one or two which may or may not fund them in the future. If the figure calculated is above . 5, the agency is overly dependen t on one source of revenue. XYZ Corporation needs to look for more sources of funding. Their contribution ratio is . 53 for 2002 and has remained stable in 2003 and 2004 at . 51. While their dependence has dropped a little bit, they are still working in the danger zone.The programs and expense ratio is based upon a standard set by the National Charities Information Bureau (NCIB). This agency provides the standards which show whether or not a program is making or not making the grade as far as how much of programs expenses are in comparison to overall expenses. It is expected that this ratio be a minimal of . 60. In 2002, XYZ Corporation produced a ratio of . 60 in 2003 and 2004, this number raised to . 66. The beginning figure is acceptable, but the rise in ratios for 2003 and 2004 is even better. The general and management xpense ratio identified how much money is spent on administration of the agency in comparison to the total expenses. If the calculated figure is greater than . 35, the organization should begin to cut the costs related to administration. XYZ Corporation has consistently brought their administrative costs down. Beginning in 2002 this organization had a . 40 ratio, which is unacceptable then in 2004 a figure of . 29 which is well within acceptable range. The fund-raising expense ratio basically tells how much money is being spent related to the total expenses in order to raise revenues to be used by the agency.A ratio of over . 15 is a sign that more money is being spent than necessary to raise the funds needed by the agency this means that less can be spent for essential services. In 2002, XYZ Corporations ratio was . 1, which is within acceptable limits in 2003 and 2004, they descend their amount still farther to . 60. While this rate is very good, it is important to be aware that cutting this ratio too close may actually limit the revenues of the agency some money needs to be spent to identify and court some funding sources or those li kely revenues may be lost.The revenue expense ratio is a very important figure in understanding where an organization stands. This ratio informs the reader whether the agency is making money, losing money, or breaking even. It gives a starting point for making decisions about whether a program should continue, if it should be re-evaluated, or if it should be discontinued. The financial management team should be held accountable to the figures they produce and be able to explain shortfalls or positive changes. The acceptable figure for this ratio is 1. 0 or greater. In 2002, this agency had a ratio of . 8, which is just below acceptable. Through hard work it appears that they have raised this number to 1. 11. This is a big change and shows that XYZ is working to make their organization more stable. Overall, based on these figures, this corporation is taking positive steps towards making their agency viable, effective, and efficient. All of their ratios reflect movement towards accep table levels and if history predicts future behavior, they will continue to grow and be able to provide services for their clients without fear of insolvency.They do need to work on getting more grantors instead of having one major source of revenue, but even now they have increased to two major donors. This in itself is a major accomplishment. XYZ Corporation Fixed Costs, Variable Costs, and Break-even Point Comparison of Years 2002, 2003, and 2004 (respectively) 2002 Fixed Costs for 2002 in Expenses Rent and Utilities $150,000. 00 Telephone $24,000. 00 Management and other $351,000. 00 Total Fixed Costs $525,000. 00 Variable Costs for 2002 in Expenses Other Expenses $117,903. 00 Payroll and benefits $417,004. 00 Supplies $125,101. 20 Total Variable Costs$660,008. 20 Rounded to $660,008. 00 Per concomitant D What is the BEP for the program since we see that they were in the red for the year? Total Fixed Costs = $525,000 Total Variable Costs = $660,008 Revenue per Customer = To tal Revenue/Total Customers $1,165,065. 00/5962 = $ 195. 42 Variable Cost per Customer = $660,008/5962 = $110. 70 BEP = Total Fixed Costs/ (Revenue per Customer Variable Costs per Customer) BEP = $525,000/($195. 42 $110. 70) = $525,000/ $84. 72 = 6196. 88Rounded to 6197 2003 Fixed Costs Rent and Utilities $150,000Telephone 24,000 Management and Other 371,101 $545,101 Variable Costs Payroll and Benefits $520,069 Supplies 171,623 (rounded up the $. 77) Other Expenses 79,888 $771,580 Break-Even Point Total Fixed Costs = $545,101 Total Variable Costs = $771,580 Revenue per Customer = Total Revenue/Total Customers $1,244,261. 00/6821 = $182. 42 Variable Cost per Customer = $771,580/6821 = $113. 12 BEP = Total Fixed Costs/ (Revenue per Customer Variable Costs per Customer) BEP = $545,101/($182. 2-113. 12) = $545,101/ $69. 30 = 7866Rounded to 7,866 because there is no way to have a partial person and at 7865, we will not make break-even. 2004 Fixed Costs Rent and Utilities $150,000 Tele phone 24,000 Management and other 445,819 619,819 Variable Costs Payroll and Benefits $915,787 (rounded down) Supplies 320,526 (rounded up) Other Expenses 115,999 $1,352,312 Total Fixed Costs = $619,819 Total Variable Costs = $1,352,312 Revenue per Customer = Total Revenue/Total Customers 2,191,243/11,822 = $185. 35 Variable Cost per Customer = $1,352,312/11822 = $114. 39 BEP = Total Fixed Costs/ (Revenue per Customer Variable Costs per Customer) BEP = $619,819/($185. 35 $114. 39) = $619,819/70. 96 = 8,735Rounded to 8,735 Budgeting There are three basic types of budgeting which apply to human service organizations line item, performance, and program budgets. Deciding which method will be best for a effrontery agency depends on what information they wish to retrieve and from perspective they wish to look at revenues and expenditures. By listing the advantages and disadvantages of each method, a inancial management professional or Executive Director may make the appropriate decisio n on which format to use. Line budgeting is the most utilized budgeting method because it simplifies how money is allocated and how well each program is controlling expenditures. (Martin, 2001) Because of its simplicity, employees, financial managers and laymen can readily identify key pieces of information. Financial control is the basic purpose for this type of budgeting. Line item budgets are easy to prepare, easy to liberate and easy to understand. They provide specific information as to where money is allocated and for what purposes.There are two major disadvantages to line item budgeting lack of descent between the budget, objectives, and the outcome of the program. The second disadvantage is that there is no real way to estimate what the future holds line item budgets are incessantly based on historical data which may not right on reflect the current situation. The purpose of performance budgeting is to relate agency expenses to programs by determining (a) a program outpu t (or unit of service) performance measure, (b) the total program cost, and (c) the cost per output of service. (Martin, 2001) The advantages to this type of budget program are similar to program budgets with the difference being the concentration of quantity over quality. Being able to know how much a particular output costs gives managers a real picture how much is being spent to provide client services. If adjustments need to be made, they can do so as the program advances or declines in services rendered. This method addresses not only how a budget will be broken down for departments, but also the efficiency of what departments are meeting their budgetary goals while serving the most clients (based on how outcomes are represented).Fixed costs are added into the budget line items. A disadvantage of performance budgets are that while they do show how many clients are services and at what cost, they do not concern themselves with quality. If quality of service is not a concern then it shows people as numbers, rather than as important beings we are supposed to serve. The other major disadvantage is that calculations can be difficult and require more computer input than the basic line-item type budget. While many calculations can be done by hand, many also need more complex programs to provide appropriate data.Program budgets are concerned with an agencys activities rather than its expenditures. The cost per outcome is the main concentration of the financial manager and gives information about the success or failure of the program. This is perhaps the best type of budgeting for agencys that need to know whether they should continue, reorganize, or discontinue their program. The major advantages to this type of budgeting are that it is easier to evaluate programs since costs are tied to results, priorities may be changed quickly and with a minimal amount of work, and programs are broken down into smaller, more accomplishable budget units.This type of budget con centrates of effectiveness, not just efficiency. The disadvantage is that it is difficult to get all to agree what an acceptable outcome will be for budgetary purposes. The fact exists that if an outcome is only defined as a specific ending, major positive changes in a clients case may be overlooked as not an outcome. Another disadvantage is that the analysis can be time consuming and difficult. To understand the data which is produced, most people would have to have an accounting place setting or someone who can explain the reports to them.Fund-RaisingTraditional versus Non-Traditional Organizations from everywhere are begging for funding to keep their programs going and expand services they can offer to their clients. Traditional sources such as government grants, private donor grants (individual or corporate), annual support mailings, and the United Way may offer some assistance, but the reality is that money is a limited commodity and all agencies need more of it.While each typ e of traditional funding may allow only certain types of programs or projects which bum specific groups based on acceptance criteria, there are others that give general funding. The process to receive these funds may involve grant writing, volunteers to send out mailers, and liaisons with other agencies paperwork and attention to detail are very important in attaining these types of funding. Non-traditional methods arise from much different styles and perspectives.While the chunks of money may be smaller, they do have benefits that more traditional methods offer. We all hate telemarketers, but how would we feel about children from our church calling about a pizza sale to benefit their summer program? The pizzas could be bought in bulk under a discount program that companies offer and then picked up at the church on a habituated day. Most would probably spend money to help people they know earn money for a good cause. A second non-traditional method of fund-raising is to community rummage sale.Most people have lots of good stuff that they think has value, but have little time or inclination to have a yard sale. By donating these goods to an organization to give at a community rummage sale, individuals may be abandoned a donation credit on their taxes, clean out their garages, and help the agency make much needed money. Funds that are raised in this manner are not paperwork intensive (in fact, other than writing up posters, there is none) and funds are not required to be spent on an identified program or project. Conclusion afterwards reviewing the financial documents and ratios of XYZ Corporation, it is clear that they are making solid business decision in how their money is spent and how revenue is raised. Most calculations show that their situation has improved since the initial reports of 2002. If history is any indicator of what will watch over in the future, they should be able to sustain their growth and perhaps even expand. They have increased the n umber of clients served while at the same time keeping their budget under control. The only area that really needs improvement is the revenue dependency aspect of their budget.Being too dependent on one funder can spell disaster for any organization. XYZ has made headway in this department by getting the majority of their funds from two agencies instead of just one, but it would serve them to continue to extend their revenue sources. Hopefully, this corporation will continue to provide quality services to their clientele far into the future and continue to remain solvent. References Martin, L. (2001). Financial management for human service administrators. Needham Heights, MA Allyn & Bacon.