An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

John M Trussel
Pennsylvania State University - Harrisburg

Abstract: The purpose of this study is to provide a comprehensive framework for analyzing the financial statements of a nonprofit organization. I develop a method of financial assessment using 10 analyses. These analyses incorporate several methods and focus on the areas of liquidity, activity, return on capital, adequacy of resources, use of resources, and leverage. I also include more sophisticated performance measures, such the likelihood of financial problems and the likelihood of accounting manipulation. Descriptive statistics are presented for five major sectors of nonprofit organizations--arts, education, human services, public benefit and health.

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