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HLC Ratios - FY06-10
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  • 1. Higher Learning Commission Ratios- FY2006 thru FY2010
    MCC's Ratios and CFI Score
    Ratio and Description Ideal per HLC20102009 2008 2007 2006
    Primary Reserve Ratio.40 or better0.506 0.470 0.469 0.475 0.505
    This ratio indicates the amount of time during which an
    institution could pays it expenses - a .40 indicates would have
    the ability to cover about 5 months of expenses from reserves.
    It means institutions operating at this ratio rely on internal
    cash flow to meet short term cash needs, are able to carry on
    reasonable facilities maintenance, and appear capable of
    managing modest unforeseen adverse financial events.
    Net Operating Revenue Ratio 2% - 4% 4.90% 0.26% 6.00% 6.44% 1.36%
    A positive ratio indicates the college experienced an
    operating surplus for the year. The larger the surplus, the
    stronger the institution financial performance as a result of the
    year's activity. However, a large surplus may indicate
    under spending on mission critical investments.
    Return on Net Assets Ratio 3%-4% 6.00% -0.10% 7.40% 8.67% 1.77%
    This ratio determines whether the institution if financially better
    off than in previous years by measuring total economic return.
    The ratio furnishes a broad measure of the change in an
    institution's total wealth over a single year and is based on
    the level and change in total net assets. Thus, the ratio provide
    the most comprehensive measure of the growth or decline in
    total wealth of an institution over a specific period of time.
    Viability Ratio 1.00 0.743 0.637 0.823 0.741 0.992
    This ratio measures one of the most basic determinants of
    clear financial health: the availability of expendable net assets
    to cover debt should the institution need to settle it obligations
    as of the balance sheet date. The level that is right for the
    institution is institution-specific.
    Composite Financial Indicator Score (CFI)3 or greater 3.2 1.79 3.5 3.66 2.53
    This ratio combines the four core ratios above into a single
    score. The combination, using a prescribed weighting plan,
    allows a weakness or strength in a specific ratio to be offset
    by another ratio result. The CFI is useful in helping boards
    and senior management understand the financial position
    that the institution enjoys in the marketplace.

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