Budget Reductions

Financial Ratios

In order to balance the budget each year, the university implemented general budget reductions across all portfolios. A number of items such as energy, taxes, library holdings, graduate fellowships, entrance scholarships, etc. are protected from the general budget reduction. The general budget reductions were necessary to cover the budget shortfall due to the general government grant reductions.

These two financial ratios are based on the audited consolidated financial statements and may be used to measure the acquisition of, and use of, resources to achieve the university’s mission.

Net Income/Loss ratio measures the percentage of the university’s revenues that actually contribute to its net assets. It indicates trends in the university’s net earnings.

Viability Ratio measures the availability of expendable net assets* to cover long term debt** should the university need to settle its obligations as of the balance sheet date. It is an indicator of debt affordability and financial sustainability.

What does it mean to Memorial? As the university’s long term debt increases, without a significant increase in expendable net assets, this ratio will decrease.

* Expendable net assets does not include net assets restricted for endowments, re-measurement gains/losses and post employment benefits liability.

**Long-term debt includes bankers’ acceptance notes.