Understanding your organization's financial health begins with the Financial Health Report. Think of this report as your financial dashboard - it provides important indicators of your organization's financial condition, much like a car's dashboard shows key information about the vehicle's status. As you become familiar with these indicators, you'll discover how they work together to tell your organization's financial story.
Accessing Your Financial Story
The Financial Health Report transforms complex financial data into meaningful insights about your organization's fiscal wellbeing. When you open the report, you'll first select your fiscal year for analysis. This selection matters because financial health is best understood as a journey rather than a snapshot - each year's report tells one chapter in your organization's ongoing financial story.
The metrics you'll see in this report reflect different aspects of financial health that evolve as organizations grow and mature. Some organizations might show stronger numbers in certain areas while building strength in others. This variation is natural and often reflects an organization's current stage of development and strategic priorities.
Understanding the Report's Structure
The report organizes financial health into four fundamental aspects, each examining your organization's position from a different angle.
1. Resource Sufficiency and Flexibility
This section answers a crucial question: Does your organization have enough flexible resources to adapt and grow? Think of this as your financial breathing room. The Primary Reserve Ratio here serves as your main indicator, showing how long you could operate using only your expendable resources.
2. Debt Management
Just as a household must balance its mortgage against its income and savings, your organization must manage its debt strategically. This section examines your debt from multiple angles, considering both immediate obligations and long-term sustainability. The Viability Ratio, Debt Service Coverage Ratio, and Facilities Burden Ratio work together to provide a complete picture of your debt position.
3. Financial Asset Performance
Your organization's assets should work to support your mission. This section evaluates how effectively you're using your resources to generate returns, both financial and operational. The Return on Net Assets Ratio here tells you whether you're growing stronger financially over time, while the Physical Asset Reinvestment Ratio examines how well you're maintaining your facilities.
4. Operating Results
Day-to-day operations form the foundation of financial health. This section reveals whether your current activities support or strain your financial position through metrics like the Net Income Ratio and Net Operating Revenues Ratio. Think of these as your organization's financial vital signs.
Reading Your Results
Each metric appears in its own box, displaying:
The metric's name
Its calculated value
An information icon (ⓘ)
When you click the info icon, you'll discover:
A clear description of what the metric means for your organization
The target range that suggests good financial health
The exact calculation, broken down into its components
These individual metrics flow together to generate your Composite Financial Index (CFI) score, which provides an overall assessment of financial health. Think of the CFI as a financial health score that combines all these individual measurements into one comprehensive evaluation.
Making the Most of Your Report
To gain the deepest insights from your Financial Health Report:
Look for patterns across related metrics. For example, strong operating results should eventually show up in your resource sufficiency measures.
Consider each category's results in relation to your strategic plans. A lower score in one area might reflect intentional choices rather than problems.
Use the information modals to understand not just how each metric is calculated, but what it tells you about your organization's financial position.
Remember that these metrics work together to tell your financial story. No single measure, not even the CFI, tells the complete story of your organization's financial health.
The Journey in Financial Understanding
This report serves as an introduction to financial health analysis, but there's much more to learn. After you're comfortable navigating these metrics, you'll want to understand:
Why these particular metrics matter for performing arts organizations
How these metrics typically evolve as organizations grow
What patterns might suggest about your strategic options
You'll find these deeper insights in "Understanding Financial Health Analysis," which builds on what you've learned here to develop a strategic view of financial health. From there, the "Financial Health Metrics Reference Guide" will provide detailed technical information about each metric's calculation and interpretation.
Need help interpreting your results? Our support team can help you understand what your numbers mean for your organization's future.
Next Steps
Explore each section of your Financial Health Report
Use the information icons to learn about individual metrics
Consider how the metrics relate to your organization's current priorities
Move on to "Understanding Financial Health Analysis" for deeper strategic insights