Financial Outcomes

The financial section of the framework evaluates schools’ near-term and long-term sustainability measures. The eight financial measures help evaluate a school’s responsible use of public funds by indicating the financial health of the school.

The performance framework details the standards of achievement for each measure.

The Guide to Understanding the Financial Framework (webcast) offers detailed explanations of how points are awarded.

The financial measures below describe the outcome necessary to meet the standard.


Financial Measures

Current Ratio

Meets Standard:  Current ratio (current assets divided by current liabilities) is greater than or equal to 1.1 OR current ratio is between 1.0 and 1.1 and one-year trend is positive.

Cash Ratio

Meets Standard:  Cash ratio (cash divided by current liabilities) is greater than 1.0 or cash ratio is equal to 1.0 and one-year trend is positive.

Unrestricted Days Cash

Meets Standard:  60 days cash OR between 30 and 60 days cash and one-year trend is positive. (schools in their first or second year of operations must have 30 days cash).

Default

Meets Standard:  School is not in default of financial obligations.  Financial obligations include, but are not limited to:  nonpayment, breach of financial representation, non-reporting, non-compliance, financial judgements, loan covenants, and/or tax obligations.

Total Margin and Aggregated 3-Year Total Margin

Meets Standard:  1) Total margin — Aggregated 3-year total margin is positive and the most recent year total margin is positive OR aggregated 3-year  total margin is greater than -1.5 percent, the trend is positive for the last two years, and the most recent year total margin is positive.

Debt to Asset Ratio

Meets Standard:  Debt to asset ratio is less than 0.9.

Cash Flow

Meets Standard:  Multi-year cumulative cash flow is positive and cash flow is positive each year OR multi-year cash flow is positive, cash flow is positive in one of two years, and cash flow in the most recent year is positive.

Debt Service Coverage Ratio

Meets Standard:  Debt service coverage ratio is equal to or exceeds 1.1. (net income +depreciation + interest expense)/(annual principal, interest, and lease payments).