Tips For Analyzing and Understanding Your Financial Statements
Please refer to “What You Should Know About Your School District’s Finances – A Guide to Financial Statements” by
Dean Michael Mead, published by GASB
Statement of Net Assets
Financial Position (page 12) - Compare total assets and liabilities to assess your district’s present
financial situation. Do you own (assets) more than you owe (liabilities)?
Net Assets is the most basic definition of financial position; compare to previous years
Ability to Meet Obligations (page 13) - Determine your district’s ability to finance obligations.
Liquidity Ratios (Appendix C) - Used to determine ability to finance obligations in the short term
Current Ratio = Current Assets ÷ Current Liabilities
A low current ratio would imply possible insolvency problems. A very high current ratio
might imply that management is not investing idle assets productively.
Quick Ratio = (Cash + Investments) ÷ Current Liabilities
Leverage Ratios (Appendix C) - Used to determine ability to finance obligations in the long term
Debt-to-Assets Ratio = Total Liabilities ÷ Total Assets
A low Debt Ratio would indicate that we have sufficient assets to cover our debt load.
Debt-to-Net Assets Ratio = Total Liabilities ÷ Total Net Assets
Ability to Finance Future Services (page 14) – Determine your district’s capacity to finance services.
Ability-to-Pay Ratios (Appendix C) - Use nonfinancial data along with liability information from
the Statement of Net Assets to determine your district’s ability to pay for school district services.
Debt per $100 of Assessed Property Value =
(Total Liabilities x 100) ÷ Total Assessed Property Value
Debt per $1,000 of Personal Income =
(Total Liabilities x 1,000) ÷ Total Personal Income
Debt per Capita = Total Liabilities ÷ Total Population
Statement of Activities
Program Revenues (page 18) – These revenues directly correspond with functional expenses.
Charges for Services – fees and charges to the users or recipients of the services that your
district provides.
Operating Grants and Contributions – Revenue received principally from other governments
restricted for the operations of the district.
Capital Grants and Contributions - Revenue received principally from other governments
restricted for the acquisition, construction or rehabilitation of capital assets.
Net Cost of Services (page 19) – Determine the degree to which your district’s activities are financed
with revenues raised from local taxpayers.
Net (Expense) Revenue – These amounts are derived by subtracting total program revenues
from expenses for each program. Negative numbers in this column represent net expenses to
the general public. This means that the particular program is dependent for a portion of
revenues from taxpayer dollars. By determining the ratio of Net Expense to Program Expenses,
you can evaluate the dependency of the program on local taxpayers.
Change in Financial Position (page 22) – Determine if your district is better or worse off financially.
Match Ongoing Revenues to Recurring Expenses – determine if your district is living within its
means by eliminating out-of-the-ordinary items from the equation.
Surplus of Revenues Over Expenses = Total General Revenues + Net Expense
Budgetary Comparison Information
Variances (page 69) – Variances between the original and final budgets may give you a sense of the
district’s ability to budget accurately in the first place and its ability to enforce the budget and control
finances during the year.
School District Financial Statements Handout