Performance Measures. Information from the Form 990 for the American Heart Association for the fiscal year ending June 30, 2007, follows.
Required
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.
5. Investment performance.
b. Obtain the audited annual financial statement for the American Heart Association for fiscal year 2007 from www.americanheart.org (or Illustrations14—2 and 14—3 in this text). 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.