NEW COLLEGE OF FLORIDA RATIO ANALYSIS Financial Condition Ratios: Current Ratio 6/30/2006 6/30/2005 6/30/2004 6/30/2003 6/30/2002 Current Assets $17,683,601 $13,129,677 $12,297,855 $7,084,580 $5,009,573 Current Liabilities $2,308,991 $3,211,567 $3,911,353 $1,904,157 $772,378 Current Ratio 7.66 4.09 3.14 3.72 6.49 The current ratio is probably the most widely recognized measure of liquidity. Conventional thinking holds that this ratio should be at least 2:1. Generally, the higher the ratio the better; however, there is a point where one may begin to question the wisdom of holding a significant amount of short term assets when a higher return could be achieved by investing in longer term investments. The current ratio of 7.66 indicates New College has over 7 times more in current assets than current liabilities and is indicative of a liquid financial position. Although more than the recommended level, nearly 50% of our current assets are in receivables. Without the receivables our current ratio would be 3.92 for 2005-06. Return on Net Assets Ratio Change in Net Assets $3,688,581 $1,460,325 $2,819,988 $1,717,587 $1,372,484 Beginning Net Assets $28,716,076 $27,257,214 $24,437,226 $22,719,639 $21,347,155 Return on Net Assets 12.85% 5.36% 11.54% 7.56% 6.43% This ratio determines whether an institution is financially better off than in previous years by measuring economic return. New College has recorded increases to Net Assets for five consecitive years; a positive trend. The increase of 12.85% for fiscal year 2005-06 is growing faster than the rate of inflation as measured by either the Consumer Price Index (CPI) or the Higher Education Price Index (HEPI). A main reason for the increase in Net Assets is due to PECO repair and renovation funds which have not yet been expended. 6/30/2006 NEW COLLEGE OF FLORIDA 6/30/2005 6/30/2004 6/30/2003 6/30/2002 Viability Ratio RATIO ANALYSIS Unrestricted Net Assets $4,803,697 $4,181,566 $3,511,440 $1,986,712 $1,741,229 Restricted Expendable Net Assets 3,284,420 4,807,439 4,689,771 3,340,974 1,822,488 Sub-total $8,088,117 $8,989,005 $8,201,211 $5,327,686 $3,563,717 Long-Term Debt $30,035,833 $4,012,440 $4,119,515 $4,219,515 $4,318,053 Viability Ratio 0.27 2.24 1.99 1.26 0.83 The ratio of expendable net assets to long-term debt indicates the relative liquidity of an institution. It is an indicator of financial strength and reflects the availability of sufficient cash, or other convertible assets, to settle it's obligations as of the date of the Statement of Net Assets. There is no absolute threshold that indicates financial viability, since long-term debt will not need to be paid off all at once. The ratio declined in 2005-06 due to assuming additional debt related to the construction of five new student dorms. 6/30/2006 6/30/2005 6/30/2004 6/30/2003 6/30/2002 Contribution Ratios State Appropriations $13,055,306 $11,991,035 $10,929,582 $9,810,504 $7,998,915 Total Operating Expenses $22,124,766 NEW COLLEGE OF FLORIDA $17,601,366 $20,557,363 $16,960,369 $16,090,281 RATIO ANALYSIS Contribution Ratio 59.01% 58.33% 62.10% 57.84% 49.71% Student Tuition & Fees (net) $1,166,495 $1,400,834 $2,447,055 $3,005,199 $3,072,286 Total Operating Expenses $22,124,766 $20,557,363 $17,601,366 $16,960,369 $16,090,281 Contribution Ratio 5.27% 6.81% 13.90% 17.72% 19.09% Sales & Services-Auxiliary Enterprise $2,986,547 $2,738,261 $2,658,135 $2,424,461 $2,284,696 Total Operating Expenses $22,124,766 $20,557,363 $17,601,366 $16,960,369 $16,090,281 Contribution Ratio 13.50% 13.32% 15.10% 14.29% 14.20% Revenues by source, expressed as a percentage of operating expenses, are referred to as contribution ratios. By measuring revenue sources as a contribution to total operating expenses, institutions can ensure that, over time, revenues are keeping pace with expenses. The contribution ratios above represent three of our largest revenue sources. We plan to compare these revenue sources from year to year to determine if the growth in these revenues are keeping pace with the growth in operating expenses. If we experience continued decline in any of these ratios we may need to (1) develop other sources of operating or non-operating revenues to cover the growth in operating expenses; (2) reduce operating expenses; or (3) reduce unrestricted net assets. The decrease in Student Tuition & Fees beginning with the 2003-04 fiscal year was the result of a change in how we calculated our tuition scholarship allowances. Although Student Tuition & Fees reflects a decreasing percentage for two consecitive years, we believe this decrease is due more to the increases in state appropriations and Auxiliary enterprise funds rather than a loss of tuition revenues. Creditworthiness Ratios: Debt Burden Ratio 6/30/2006 6/30/2005 6/30/2004 6/30/2003 6/30/2002 Debt Service $328,243 $328,243 $332,885 $326,215 $326,930 Total Operating Expenses $20,103,437 $20,103,437 $17,601,366 $16,960,369 $16,090,281 NEW COLLEGE OF FLORIDA Debt Burden Ratio 1.63% RATIO ANALYSIS 1.63% 1.89% 1.92% 2.03% This ratio examines New College's dependence on debt as a source of financing its mission and the relative cost of debt to overall expenses. Debt service includes the required principal and interest payments required under the indenture. The higher the ratio, the fewer resources available for general operating purposes. A low ratio, or declining trend in ratios, indicates that debt service has sufficient coverage. New College's debt service is 1.63% percent of operating expenses. Investment bankers have identified an upper threshold for this ratio at 7 percent. While 7 percent is a generally accepted threshold, it will not necessarily preclude an institution from obtaining additional external financing. However, ratios higher than 7 percent will likely face greater scrutiny from rating agencies and creditors. The planned building of a new student housing dorm will increase our debt burden ratio in future years.
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