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Question: 14-7 Performance measure: Information from the 2010 form 990 and the 2010 annual report for feeding america, follows. Use the following information to complete the exercise. A. Compute the following performance measures using the Form 990 data presented and comment on what information they convey to a potential donor whit out 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. Fund-raising expenses/public support B. Using the annual financial statement provided in this exercise, calculate the same ratio listed in requirement a. Comments on any differences. C. Discuss the advantages of analyzing financial performances using audited annual financial statement information versus IRS form 990 information.

Chapter 14 Not-for-Profit Orgmizations-Regulatory, Taxuation, and Performaince Iswes 619 AMERICARES FOUNDATION INC., 2010 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Assets Current Assets: Cash and cash equivalents Contributions receivable, net Interest and miscellaneous receivables 6,735,894 27,659,146 4,943,012 13,459,815 1,509,634 Prepaid expenses Discontinued operations- assets 40,446 117,531,773 561,235 191,088,046 702,266 Total current assets 153,320,386 212,603,989 Noncurrent Assets: Other assets- Contributions receivable, net Property held for investment Beneficial interest in- 207,234 420,234 299,690 Perpetual assets held in trust Trust agreements 2,951,153 1,498,997 4825,643 2,828,936 1.493,616 4,950,020 Total other assets Property and equipment- 700,267 1,396,604 2,932,067 (1,819,771) 3,209,167 8,034,810 700,267 1,464,183 ,904,977 1,489,278) 3,580,149 8,530,169 221,134,158 Furniture and equipment Leasehold improvements Accumulated depreciation and amortization Net property and equipment Total noncurrent assets Total assets 161,355, 196 Liabilities and Net Assets Current Liabilities: 5,416,846 3,637,496 5 4,534,146 5,754,455 Accounts payable and accrued expenses Committed grants and relief supplies Discontinued operations liabilities 9,054,342 10,638,773 Total current liabilities 576,682 279,207 Liabilities under split-interest agreements Loan payable Committed grants and relief supplies Noncurrent Liabilities: 267,760 855,889 9,910,231 Total noncurrent liabilities Total liabilities 12 439 096 164,519,441 40,120,459 4,055,162 85,525,149 61,742,437 4177 379 151 444 965 $161,355,196 Net Assets: Unrestricted 208,695062 221134,15a restricted Total liabilities and net assets

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STEP! Compute the current ratio: As per the annual report of FM Not for Profit organization the cash is $24,906,039, accounts receivable is $4,543,820, other assets is $974,092, deferred revenue is $618,895, grants payable is $5,043,646, accounts payable is $12,915,046, and pledges and grants receivable is $21,689,039 nt ratio Current assets Current liabilities Cash +Accounts receivable +Other assets+Pledges and grants receivable Deferred revenue+Grants payable+Accounts payable $24,906,039+$4.543,820+$974,092+$21.689.039 S618,895 +S5,043,646+S12,915,046 S52,112,990 $18,577,587 -2.81: Therefore, the current ratio is 2.811.This implies that FM Not for Profit organization is liquid because it covers current liabilities are almost three times STEP2 Compute the revenue and expense ratio: It is given that the total revenues are $1,893,358,627 and total expenses are $1,886,998,720 Revenue and expense ratio Total revenues Total expenses S1,893,358,627 S1,886,998,720 1.00:1 Therefore, the revenue and expense ratio is 1.00 This implies that the organization is able to cover its current expenses with the revenuesSTEP3 Compute the program effectiveness: It is given that the program expense is $1,858,064,890 and total expenses are $1,886,998,720. Program effectiveness - Program expenses100 Total expenses $1,858,064,890 $1,886,998,720 98% x 100 Therefore, the program effectiveness is 98% This indicates that the organization is highly effective with 98 percent expenses of the program and only 2% (100%-98%) is related to support. STEP4 Compute the fund-raising ratio: It is given that the fund-raising expenses are $22,111,792 and the public support is $1,855,398,787 Fundraising ratio- Fund raising expenses Public support $22,111,792 S1,855,398,787 0.01:1 Therefore, the fund-raising ratio is 0.01:1. This specifies that FM Not for Profit organization is spending around $0.01 for fund-raising for each dollar that is received from the public supportSTEP5 Compute the current ratio: As per the annual report of FM Not for Profit organization the current assets of 2013 is $49,707,000 and current liabilities of 2013 is $19,045,000. Current ratio Current assets Current liabilities $49,707,000 S19,045,000 -2.61: Therefore, the current ratio is 2.61:1 Here, the current ratio has slightly decreased on comparing with the computation of current ratio resulted from the Form 990 STEP6 Compute the revenue and expense ratio: It is given that the total revenues of 2013 are $1,944,436,000 and total expenses of 2013 are $1,939,393,000 Total revenues Total expenses $1,944,436,000 S1,939,393,000 Revenue and expense ratio - -1.00:1 Therefore, the revenue and expense ratio is 00This implies that the organization is able to cover its current expenses with the revenues. Here, there is no difference in this ratio as compared to the Form 990STEP7 Compute the program effectiveness It is given that the program expense of 2013 is $1,910,102,000 and total expenses of 2013 are $1,939,393,000 Program effectivenessTotal expenses Program expenses x 100 S1,910,102,000 $1,939,393,000 x 100 -98% Therefore, the program effectiveness is 98% This indicates that the organization is highly effective with 98 percent expenses of the program and only 2% (100%-98%) is related to support. Here, there is no difference in this ratio as compared to the Form 990 STEP8 Compute the fund-raising ratio It is given that the fund development of 2013 is $22,143,000 and the total public support of 2013 is $1,872,090,000 Fund raising expenses Fundraising ratio- Public support S22,143,000 S1,872,090,000 0.01: Therefore, the fund-raising ratio is 0.01:1 This specifies that FM Not for Profit organization is spending around $0.01 for fund-raising for each dollar that is received from the public support. Here, there is no difference in this ratio as compared to the Form 990STEP9 Following are the advantages of evaluating financial performance using audited annual financial statement and Internal Revenue Service (IRS) Form 990: orm audited annual financial statements. Both the financial performance indicator is needed for a sophisticated reader to generate valuation information.

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