Explain why you think those three are the most important for the organization that you have established?

Consider the different financial analysis tools that nonprofits can use to evaluate their financial health. For this discussion, refer to the required reading in this module in Essentials of Accounting for Governmental and Not-for-Profit Organizations. Illustration 13-7, Performance Indicators, in the textbook will be particularly useful. This discussion will help you prepare for your final project as you will need to use three ratios/performance indicators to evaluate your organization’s financial health. Address these items in your post:What are the performance indicators you are examining in your nonprofit?What three key ratios would you use to look at those performance indicators? For each ratio, provide the formulas and explain what the ratio tells you about the performance of your nonprofit. Explain why you think those three are the most important for the organization that you have established?Based on the results, what key decisions (e.g., cost cutting, donor campaigns) can be made?In responding to your peers, choose posts that have not been responded to yet. Respectfully critique your peer’s rationale for the three most important key ratios for their performance indicators. What other ratios/performance indicators should your peer consider and why? Support your position, citing the text. Note: you must submit your initial post before you can see your peer’s posts.reading Recourses:Required ResourcesAll reading should be completed within your custom VitalSource e-book, and not within the Connect platform.NOTE: In this custom e-book, the correct page numbers are found at the top of the page, not at the bottom. The numbers at the bottom are remnants of the customization.Textbook:Benchmarking and Performance Measures, pp. 145–148Evaluating Performance, pp. 179–180In these sections the textbook will provide information on benchmarks and key performance indicators used to evaluate the financial performance of a nonprofit organization. We will learn about different types of ratios, what they indicate in relation to performance, and how to calculate them. Additionally, the reading provides additional insight into key performance indicators used to evaluate the financial performance of a nonprofit organization. We will learn about the most commonly used ratios to evaluate a nonprofit organization’s financial statements.While reading the textbook, consider the following questions:What key performance indicators are used to evaluate a nonprofit organization?Where can you obtain the data needed to calculate the key performance indicators presented?What is the National Taxonomy of Exempt Entities (NTEE) and what is it used for?How is the program expense ratio used to measure efficiency?What is the formula used for the fund-raising efficiency ratio and what does this performance indicator tell you?Which ratio provides a measure of how long a nonprofit can sustain operations without obtaining additional funds?Additional Support (Optional)Analyzing Financial Information Using RatiosThis website provides information about 14 different types of ratios that nonprofits can use to analyze financial information about their organizational health. As you review the website, consider the following questions:What type of ratios would you consider for different performance indicators?How might you communicate how you have calculated the ratios for your organization’s financial health to your nonprofit’s board or to the CEO?Essentials of Accounting for Governmental and Not-for-Profit Organizations Paul Copley McGraw-Hill Thirteenth Edition 2018 P a g e | 2 Syllabus Last Updated 2/14/2020 Accounting for Governmental and Nonprofit Entities Jacqueline Reck, Suzanne Lowensohn, and Daniel Neely McGraw-Hill Eighteenth Edition 2019 Module Overview:In the previous module, we learned about budgeting for nonprofit organizations. We gained an understanding of the importance and process of budgeting. Even though nonprofits do not have a profit motive, it is very important for them to manage resources in order to meet their mission. The budget provides a guide and enables the nonprofit organization to manage current resources while planning for the future. Once a budget is established, it should be compared to actual results to make sure the organization is on track and may need to be modified if circumstances change that were not accounted for when the budget was developed.In this module, we continue our focus on financial management and delve into financial analysis. Financial analysis in a nonprofit organization is somewhat different than that of a for-profit entity. As we have established, a nonprofit does not have a profit motive; therefore, the primary performance indicators used in the for-profit sector do not provide the insight needed in the nonprofit sector. Financial performance in a nonprofit is measured by being able to meet the mission it has established versus return on equity (ROE) or earning-per-share (EPS), which are typical performance measures used in the financial analysis for a for-profit entity. Nonprofit managers use budgets and/or prior year financial statements as benchmarks to analyze the current year’s results (“Analyzing Financial Information,” n.d.). Some of the key performance indicators we will focus on will provide insight into liquidity, efficiency, and effectiveness.By the end of this module, you will have a basic understanding of financial analysis in a nonprofit organization. You will be able to identify and explain how benchmarks and performance measures can be used to evaluate a nonprofit’s financial health.ReferenceAnalyzing financial information using ratios. (n.d.). Retrieved from https://www.propelnonprofits.org/resources/analyzing-financial-information-using-ratios/In the previous module, we learned about budgeting for nonprofit organizations. We gained an understanding of the importance and process of budgeting. Even though nonprofits do not have a profit motive, it is very important for them to manage resources in order to meet their mission. The budget provides a guide and enables the nonprofit organization to manage current resources while planning for the future. Once a budget is established, it should be compared to actual results to make sure the organization is on track and may need to be modified if circumstances change that were not accounted for when the budget was developed.In this module, we continue our focus on financial management and delve into financial analysis. Financial analysis in a nonprofit organization is somewhat different than that of a for-profit entity. As we have established, a nonprofit does not have a profit motive; therefore, the primary performance indicators used in the for-profit sector do not provide the insight needed in the nonprofit sector. Financial performance in a nonprofit is measured by being able to meet the mission it has established versus return on equity (ROE) or earning-per-share (EPS), which are typical performance measures used in the financial analysis for a for-profit entity. Nonprofit managers use budgets and/or prior year financial statements as benchmarks to analyze the current year’s results (“Analyzing Financial Information,” n.d.). Some of the key performance indicators we will focus on will provide insight into liquidity, efficiency, and effectiveness.By the end of this module, you will have a basic understanding of financial analysis in a nonprofit organization. You will be able to identify and explain how benchmarks and performance measures can be used to evaluate a nonprofit’s financial health.Reference13-7 In the previous module, we learned about budgeting for nonprofit organizations. We gained an understanding of the importance and process of budgeting. Even though nonprofits do not have a profit motive, it is very important for them to manage resources in order to meet their mission. The budget provides a guide and enables the nonprofit organization to manage current resources while planning for the future. Once a budget is established, it should be compared to actual results to make sure the organization is on track and may need to be modified if circumstances change that were not accounted for when the budget was developed.In this module, we continue our focus on financial management and delve into financial analysis. Financial analysis in a nonprofit organization is somewhat different than that of a for-profit entity. As we have established, a nonprofit does not have a profit motive; therefore, the primary performance indicators used in the for-profit sector do not provide the insight needed in the nonprofit sector. Financial performance in a nonprofit is measured by being able to meet the mission it has established versus return on equity (ROE) or earning-per-share (EPS), which are typical performance measures used in the financial analysis for a for-profit entity. Nonprofit managers use budgets and/or prior year financial statements as benchmarks to analyze the current year’s results (“Analyzing Financial Information,” n.d.). Some of the key performance indicators we will focus on will provide insight into liquidity, efficiency, and effectiveness.By the end of this module, you will have a basic understanding of financial analysis in a nonprofit organization. You will be able to identify and explain how benchmarks and performance measures can be used to evaluate a nonprofit’s financial health.Reference13-7 How can a non-for-profit museum ensure that its gift shop activities will not will not result in an unrelated business income tax liability?