Professional Documents
Culture Documents
Financial Benchmarking
Presented by:
Bob Prill, CPA and Tori Bryson, CPA
Hoffman, Stewart & Schmidt, P.C.
Agenda
Ratio Analysis
Benchmarking
Dashboards
Ratio Analysis
Used to evaluate relationships among
Liquidity Ratios
Measure the ability of the entity to repay its
Liquidity Ratios
Quick ratio Quick assets are defined as cash,
Liquidity Ratios
Receivables turnover Measures the number of
Liquidity Ratios
Average collection period Measures the
Liquidity Ratios
Defensive Interval Ratio Measures the
Profitability Ratios
Profitability ratios measure an entitys
Profitability Ratios
Asset turnover ratio Measures how efficiently
Profitability Ratios
Return on assets ratio Overall measure of
Solvency Ratio
Measure long-term risk.
Debt to total assets ratio Measures the
percentage of assets provided by creditors.
Calculated by dividing total debt (liabilities) by
total assets.
Benchmarking
Benchmarking is the use of nonfinancial
Benchmarking
Before beginning with benchmarking each
Benchmarking
Why benchmark?
Save time by reviewing highlights
Track progress toward goals
Spot potential problems
Identify patterns
Provide meaningful information
Benchmarking
Who is going to use the results?
Knowing who is going to use the information is
key to determining what to measure.
Groups that may benefit from benchmarking are
the Board of Directors, senior leadership, and
program managers.
Each of these groups will measure different
metrics.
Benchmarking
What to measure?
Knowing what to measure and why is the key to
effective benchmarking. Below are five areas
to consider when selecting appropriate
benchmarks.
Mission related outcomes
Strategic initiatives
Drivers of success
Risk factors
Services and resources
Benchmarking
Mission related outcomes
A common nonprofit mission is to produce some
sort of beneficial change in a defined
population. These nonprofits measure success
of the mission by defining and measuring the
programs outcomes. An example of an
outcome would be improved health of the uninsured population of a community.
Incremental improvements in health might be
hard to measure, so the nonprofit would define
the outcome in terms of outputs, activities or
inputs.
Benchmarking
Outputs are the direct products of program
activities.
Examples include:
Number of patient visits
Number of classes taught
Number of counseling sessions conducted
Number of participants served
Benchmarking
Inputs are the resources that are dedicated to
Benchmarking
Activities are what the program does with
Benchmarking
Strategic Initiatives
Strategic initiatives tie into the strategic plans
major themes, directions or initiatives and
should define the benchmarking metrics.
Benchmarking
Drivers of Success
Drivers of success are the key performance
indicators, outcomes, goals or activities that are
essential for fulfilling the mission.
Risks Factors
Risks factors negatively affect the success of the
organization. They include regulatory
noncompliance, potential litigation, and
financial risk factors such as default on debt
obligations.
Benchmarking
Services and resources
Service responsiveness is the degree to which
existing services are responsive to existing
needs. It can be gauged by trends in clients
served, client satisfaction scores, retention
rates.
Service quality can be gauged by measures of
Benchmarking
Services and resources
Resource acquisition measures how effective
the organization is in getting necessary
resources such as contributions or required
staff.
Resource management includes a broad range
Dashboards
Dashboards are user-friendly tools for displaying
performance measures (benchmarks) to the
Board or management.
The dashboard displays several key indicators
that can demonstrate progress toward a goal
or warning signs of a pending problem.
Dashboards
Once an organization has determined what to
benchmark, they can present the information
in a dashboard format.
Dashboard typically come in two formats:
Scorecard format presents the key performance
Dashboards
Example of a simple scorecard
Dashboards
Example of graphical presentation
Dashboards
Comparison to industry standards
Dashboards
Comparison to Peers
Questions?
Thank You!
Bob Prill, CPA
rprill@hss-cpas.com
Tori Bryson, CPA
tori@hss-cpas.com
Hoffman, Stewart & Schmidt, P.C.
4900 Meadows Road, Suite 200
Lake Oswego, Oregon 97035
(503) 220-5900