Financial Ratio Analysis for Prosperity of Humanity

Project Overview

In May 2024, I had the privilege of working with Prosperity of Humanity, a registered 501(c)(3) nonprofit organization dedicated to combating homelessness and fostering positive change in the California community. My project focused on performing a comprehensive financial ratio analysis to provide insights into the organization’s financial health and operational efficiency.

About Prosperity of Humanity

Prosperity of Humanity is a beacon of hope for individuals experiencing homelessness in California. With a mission to offer comprehensive and sustainable solutions, the organization provides emergency shelter, transitional housing, healthcare access, educational opportunities, and employment support. Their approach is rooted in community collaboration, transparency, and ethical conduct, ensuring that every action taken fosters long-term change and stability.

Project Goals

The primary objectives of the financial ratio analysis project were to:

1. Assess Financial Health: Evaluate the overall financial stability of Prosperity of Humanity by analyzing key financial ratios.
2. Enhance Transparency: Provide stakeholders with clear, concise financial information to reinforce the organization’s commitment to transparency and accountability.
3. Identify Improvement Areas: Highlight potential financial and operational improvements to support the organization’s mission more effectively.

Key Ratios Analyzed

• Liquidity Ratios: These ratios, including the current ratio and quick ratio, were analyzed to assess the organization’s ability to meet its short-term obligations.
• Profitability Ratios: Although Prosperity of Humanity is a nonprofit, analyzing profitability ratios such as the net margin helped in understanding the efficiency of their operations and resource utilization.
• Efficiency Ratios: Ratios like asset turnover were examined to gauge how effectively the organization utilizes its assets.
• Leverage Ratios: Debt to equity and other leverage ratios were assessed to understand the financial leverage and long-term solvency of the organization.

Findings and Recommendations

The analysis provided several valuable insights:

• Strong Liquidity Position: Prosperity of Humanity maintained a healthy liquidity position, ensuring they could easily meet their short-term liabilities.
• Efficient Resource Utilization: The asset turnover ratio indicated effective use of assets to generate services, reflecting operational efficiency.
• Areas for Improvement: Recommendations were made to enhance financial practices, such as optimizing the balance between revenue sources and expenses to ensure sustainability.

Impact

The financial ratio analysis reinforced Prosperity of Humanity’s commitment to financial transparency and provided a roadmap for future financial planning and strategic decision-making. By identifying strengths and areas for improvement, the organization is better equipped to continue its mission of eradicating homelessness with increased efficacy.

Conclusion

Collaborating with Prosperity of Humanity was a rewarding experience, allowing me to contribute to a noble cause while utilizing my financial expertise. This project underscores the importance of financial analysis in supporting nonprofit organizations to achieve their goals and make a lasting impact on the community.