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New Business Opportunity Your Nonprofit

Your nonprofit has a fiscal year that begins on January 1^st of each year and ends on December 31^st. Below is financial information for as of December 31^st.

Current Assets $ 455,000

Current Liabilities $ 235,000

Year-to-date Revenue $1,000,000

Year-to-date Expenses $ 951,000

Fixed Overhead Expenses $ 665,700

Cash $1,000,000

Marketable Securities $ 0

Accounts Receivable $ 430,000

1. Calculate the following ratio/metrics based on this information:
   1. Current ratio = 1.936
   2. Quick ratio = 6.086
   3. Working capital = 220,000
   4. Profit margin
   5. Operating reserve metric

You have been approached to consider a new business opportunity. You have done some projections and have calculated how that new business would change the information above. If you take on the new business, as of December 31^st the data above would change to:

Current Assets $ 455,000

Current Liabilities $ 235,000

Year-to-date Revenue $1,450,000

Year-to-date Expenses $1,399,000

Fixed Overhead Expenses $ 979,300

Cash $1,000,000

Marketable Securities $ 0

Accounts Receivable $ 430,000

2. How does taking on this new business change the following ratios?
   1. Current ratio
   2. Quick ratio
   3. Working capital
   4. Profit margin
   5. Operating reserve metric

3. As the Executive Director, would you recommend taking on this new business?

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