Appendix 1
POINT LOMA NAZARENE UNIVERSITY |
Key Performance Indicator: Modified Net Income Ratio |
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Baseline 2002-03: |
1.20% |
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One Year Objective: |
1.5% |
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5-Year Goal: |
3% |
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10-Year Goal: |
4% |
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Actual: |
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2003-04 |
1.75% |
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2004-05 |
1.58% |
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2005-06 |
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| Action by BOT to include MNIC in operating budget |
BOT |
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| Actual $ set aside according to BOT action |
CFO |
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| Cabinet budgetary discipline to implement |
Cabinet |
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Definition/Calculation:
Change in Net Assets (Unrestricted)/Total Revenues, Gains, and Other Support
The "Modified" Net Income Ratio excludes, from both the numerator and denominator, realized and unrealized gains/losses on investments and
net assets released for construction, resulting in a measure that more accurately reflects the manageable part of the University's financial operation.
Strategic Implications:
The net income ratio indicates whether total unrestricted activities resulted in a surplus or deficit. It demonstrates whether the institution lived within its
available resources. Improvements in this key ratio will also result in improvements in the Primary Reserve and Viability ratios.
POINT LOMA NAZARENE UNIVERSITY |
Key Performance Indicator: Modified Viability Ratio |
Baseline 2002-03: |
84% |
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One Year Objective: |
90% |
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5-Year Goal: |
120% |
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10-Year Goal: |
175% |
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Actual: |
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2003-04 |
81.5% |
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2004-05 |
75.1% |
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2005-06 |
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| Action by BOT to include item in annual operating budget |
BOT |
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| Implementation by Cabinet |
Cabinet |
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Definition/Calculation:
Expendable Net Assets/Long Term Debt
Expendable Net Assets (for purposes of this ratio) is calculated as follows:
Unrestricted Net Assets ***
- Property, Plant & Equipment (net of depreciation)
- Construction in Progress
+ Long Term Debt
*** The usual definition of Expendable Net Assets includes both Unrestricted and Temporarily Restricted Net Assets. However, the
definition used in the CEFA and ABAG bond covenants includes only Unrestricted Net Assets. Hence the use of the word "modified"
in describing this ratio.
Strategic Implications:
The viability ratio measures the availability of expendable net assets to cover debt. Annual calculation of the modified viability ratio is a requirement
of the CEFA and ABAG bond debt covenants and PLNU must maintain a ratio greater than 50%.
POINT LOMA NAZARENE UNIVERSITY |
Key Performance Indicator: Primary Reserve Ratio |
Baseline 2002-03: |
61% |
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One Year Objective: |
65% |
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5-Year Goal: |
80% |
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10-Year Goal: |
100% |
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Actual: |
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2003-04 |
53.0% |
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2004-05 |
45.7% |
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2005-06 |
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| BOT action to include PRR in operating budget |
BOT |
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| $ set aside to create reserve |
CFO |
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| Cabinet follow budget disciplines to build reserve |
Cabinet |
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Definition/Calculation:
Expendable Net Assets/Total Expenses
Expendable Net Assets is calculated as follows:
Unrestricted Net Assets
+ Temporarily Restricted Net Assets
- Property, Plant & Equipment (net of depreciation)
- Construction in Progress
+ Long Term Debt
Strategic Implications:
The primary reserve ratio measures the financial strength and liquidity of the institution by comparing expendable net assets to total expenses.
This ratio is very important to bond rating agencies such as Moody's.