Performance Measures. Information from the Form 990 for the American Heart Association for the fiscal year ending June 30, 2007, follows. The full text of the Form 990 is available.
Required
a. Compute the following performance measures using the Form 990 data presented in this exercise and comment on what information they convey to a potential donor without comparing them to prior years or other comparable agencies.
1. Current ratio—liquidity.
2. Revenues/expenses—going concern.
3. Program expenses/total expenses—program effectiveness.
4. Public support/fund raising expenses—fund raising efficiency.
5. Investment performance.
b. Obtain the audited annual financial statement for the American Heart Association for fiscal year 2007. Calculate the same ratios listed in requirement
a. Comment on any differences. (Note: Use the most recent year for which both audited financial statements and Form 990 are readily available.)
c. Discuss the advantages of analyzing financial performance using audited annual financial statement information versus IRS Form 990 information.