Question: Information from the 2010 Form 990 and the 2010 annual

Information from the 2010 Form 990 and the 2010 annual report for the AmeriCares Foundation follows. Use the following information to complete the exercise.

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.
b. Using the annual financial statements provided in this exercise, calculate the same ratios listed in requirement a. Comment on any differences.
c. Discuss the advantages of analyzing financial performance using audited annual financial statement information versus IRS Form 990 information.

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