A Balance Sheet is the financial presentation of an organization’s or group’s Assets, Liabilities, and Net Equity. It presents a snapshot at a particular point in time, usually with a comparative to a previous point in time to identify trends playing out over a longer term. The Balance Sheet is a fundamental tool used in analyzing the strength, stability, liquidity, well-being, financial structure, and financial risk of that organization or group. Various financial ratios can be used to accomplish this.
In this report we examine the Balance Sheet of the Canadian Charitable and Foundation Sector. We present on the sector’s ability to fund its near-term operating needs, continue its charitable activity over the longer term, and strengthen its impact in the community.
To obtain this insight, we look at the change in the components of the Balance Sheet over the five year period 2016 to 2021. Specifically, we comment on:
• The change in Total Assets relative to the change in Total Liabilities.
• The change in liquid assets, being Cash and Short-Term Investments.
• The change in Inventories required to operate and provide charitable services.
• The change in Long Term and Capital Investments to determine if the sector is providing services to the
community or accumulating an investment portfolio.
• The change in Net Equity to determine if the Sector is accumulating assets contrary to the mandate of the
Several Balance Sheet ratios are presented and discussed:
• Current Ratio, or Working Capital Ratio.
• Debt to Equity Ratio.
• Debt to Asset Ratio.
• Solvency Ratio.
• Net Working Capital.