Technical reference for each metric in the Financial Health Report. For an orientation to how these metrics work together, see Using the Financial Health Report.
1. Resource Sufficiency and Flexibility
Primary Reserve Ratio
Formula: Expendable Net Assets ÷ Total Expenses
Components: Expendable Net Assets = total net assets minus permanently restricted net assets and net investment in plant
Target: 0.4x or higher. A ratio of 0.4 represents approximately 146 days of operating reserves.
2. Debt Management
Viability Ratio
Formula: Expendable Net Assets ÷ Long-term Debt
Target: 1.25x or higher. Measures ability to settle long-term debt using existing expendable resources.
Debt Service Coverage Ratio
Formula: (Net Operating Income + Depreciation + Interest Expense) ÷ (Annual Principal Payments + Interest Payments)
Target: 1.25x minimum; 2.0x or higher preferred. Shows capacity to meet debt obligations from operations.
Facilities Burden Ratio
Formula: (Depreciation + Interest Expense) ÷ Total Expenses
Target: Lower is generally better. Indicates what proportion of expenses are consumed by facility-related costs.
3. Financial Asset Performance
Return on Net Assets Ratio
Formula: Change in Net Assets ÷ Total Net Assets
Target: Positive and trending upward. Indicates whether the organization is growing stronger financially year over year.
Physical Asset Reinvestment Ratio
Formula: Capital Expenditures ÷ Depreciation
Target: 1.0x or higher over time. A ratio below 1.0 sustained over multiple years suggests underinvestment in facilities.
4. Operating Results
Net Income Ratio
Formula: Change in Unrestricted Net Assets ÷ Total Unrestricted Revenue
Target: Positive. Indicates whether current operations are living within their means.
Net Operating Revenues Ratio
Formula: Unrestricted Operating Income ÷ Total Unrestricted Revenue
Target: Positive. A more conservative measure of operating sustainability that excludes non-operating activity.