Financial Statements, and the Sarbanes-Oxley Act of 2002

1) Compare and contrast the United Way and Red Cross financial statements. What general observations can
you make about each of them? For example, How are they similar? How are they different?
2) Find an organization of your own. Review their financial statements & post the website link here for me to
access, as well. How does the format and content compare with the United Way and Red Cross?
3) On page 56 of the textbook, two very important financial ratios are presented. Calculate both the “Current
Ratio” and the “Acid Test Ratio” for all 3 of the organizations you have studied. What are the ratios values and
what do they mean?
4) Which organization would you suggest is in the best financial condition, based solely on these 2 ratios?
(Remember, this is just the beginning of our quest to understand how financial ratios reveal the financial health
of an organization. We will incorporate more ratios as we go forward in the course. As we do so, we may have
to adjust our assessment of which organization is actually in the best financial shape, based on other ratios).
5) Briefly summarize the Sarbanes-Oxley Act of 2002 (SOX). In your summary, you need to state whether or
not SOX applies to NFP’s. If it does, in what way does SOX directly affect NFP’s? Are there any indirect
implications for NFP’s? If you locate any web sources that support your answer for this information, share them
6) Locate at least one NFP organization that has voluntarily adopted the provisions of SOX. (I suppose this
gives away at least a part of the answer for # 5 above).

Sample Solution