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Financial Statements Analysis Of YMCA New York

Question

Enclosed please find the YMCA of Greater New York audited financial statements for the year ended December 31, 2000 and December 31, 2001 including footnotes to the financial statements. Using the financial statements and accompanying footnotes to the statements, answers all of the questions provided below:

  • For which revenue or support line item, would a 10% decline create the greatest financial problem for the Y? Why?
  • Calculate the quick ratio for 2000 and 2001. Did it improve or get worse from 2000 to 2001, assuming that the organization’s management is relatively conservative? The quick ratio for this organization is the cash + pledges receivable + government receivables + receivables, all divided by book overdraft + accounts payable and accrued expenses + accrued salaries and related expenses.
  • The Y’s manager of all promotions and campaign activities is responsible for generating all contributions (but not for special events). She is very proud of the work she and her staff did in 2001, contending they “did more with less”. Use the financial statements to support the manager’s assertions.
  • For 2001, what percent of promotion and campaign expenses are directly related to fund raising support services? The total change in net assets in 2001 was greater or less than 2000?
  • Almost 25% of the total changes in net assets for 2000 could be considered as coming from a “one-shot” source of revenue. What is this source and explain why it is considered non-sustainable?
  • How is the lawsuit explained under “subsequent events” in the notes handled in the financial statements? Explain briefly.
  • Book overdraft liability (which refers to a bank overdraft) increased by almost the same amount as Accounts Payable and Accrued salaries decreased. What may this indicate?
  • How much did the Y pay in income taxes in 2001? How do you know?
  • Even though operating revenues and support exceeded operating expenses by a greater amount in 2001 ($20.3 million) than 2000 ($15.6 million) due primarily to the increase in contributions, cash flow from operations dropped considerably. Explain the main reason for this discrepancy.
  • A new board member of the Y has proposed transferring funds that the Board has restricted for investment and other purposes to Temporarily Restricted Net Assets, until money for that purpose has been used and then transfer it back to the Unrestricted Net Assets. As CFO, what do you do? Why?
  • Debt obligations in 2001 remained at essentially the same level as 2000 even though the Y paid off over $1.2 million in 2001. Why?
  • In both 2000 and 2001 the Y’s overall net cash flow was negative despite a variety of investing and financing activities that were intended to increase cash. Identify at least one of these activities related to investing and one related to financing.
  • An internal audit has uncovered a mistake. $2 million in Accrued salaries and related expenses were not recorded or reported on the 2001 Statement of Financial Position. Please make the necessary adjustments to all of the Y’s 2001 financial statements, except for the statement of functional expenses.

 

Summary

The question belongs to Accounting and it discusses about financial statement analysis. The analysis is being done on the statements of YMCA of New York for the financial years 2000 and 2001.

Total Word Count 590

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