A Good Measure of Whether a Not-For-Profit Organization Is Operating

question 51

Multiple Choice

A good measure of whether a not-for-profit organization is operating its programs efficiently is:

• A) Fund-raising expenses as a percentage of public support.
• B) The ratio of program expenses to number of clients served.
• C) Total revenues divided by total expenses.
• D) Percentage of program expenses to total expenses.

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Definitions:

Levered Value

The value of an investment or company including debt, reflecting its total worth in a leveraged state.

Cost of Equity

The rate of return that a company must generate on equity-financed projects to retain its market value, reflecting the compensation investors expect for their risk.

EBIT Volatility

This is the measure of how much earnings before interest and taxes (EBIT) fluctuates over time.

Static Model

A fixed scenario analysis tool that assumes no change in variables over time when evaluating economic conditions or investment outcomes.