FINANCIAL RATIO ANALYSIS OF SELECTED SEVENTH-DAY ADVENTIST TERTIARY EDUCATIONAL INSTITUTIONS IN SOUTHEAST ASIA

FINANCIAL RATIO ANALYSIS OF SELECTED SEVENTH-DAY ADVENTIST TERTIARY EDUCATIONAL INSTITUTIONS IN SOUTHEAST ASIA By NARUMON KAEWDUANG An Independent Study Project Submitted in Partial Fulfillment of the Requirements For the Degree of Master of Business Administration (Accounting Emphasis) Faculty of Business Administration Asia-Pacific International University October 2017

ii Research Title: Financial Ratio Analysis of Selected Seventh-day Adventist Tertiary Educational Institutions in Southeast Asia Author: Ms. Narumon Kaewduang Research Advisor: Dr. Wayne Hamra Program: MBA Academic Year: 2017-2018 Abstract This qualitative research study used financial ratio analysis techniques to compare the financial health of selected SDA colleges/universities in Southeast Asia. The goals were to identify financial strengths and weaknesses, and discover best practices by looking for potential benchmarks that could be used by sister institutions. Financial statement data for the 2015-2016 academic year was used from two institutions that were willing to participate in this study. The results showed that one university had about twice as many students as the other. The smaller institution had relatively high tuition and fees, but experienced a net loss and declining liquidity. The larger university charged relatively low tuition and fees, but experienced a modest net gain and improving liquidity. These results may help administrators to identify and adopt best practices among peer institutions which may lead to strategies of how financial problems may be resolved and institutional missions may be better carried out. Gathering institutional best practices may also lead to the establishment of future performance benchmarks for SDA higher educational institutions in Southeast Asia and beyond. Keywords: Financial Ratio Analysis, Seventh-day Adventist Higher Educational Institutions Southern Asia-Pacific Division (SSD) Educational Institutions

iii Acknowledgements My advisor for this research project was Dr. Wayne Hamra, MBA Program Instructor, Faculty of Business Administration, Asia-Pacific International University. I would like to express gratitude to him for sharing pearls of wisdom with me, giving guidance, comments, analysis of the data, and editing that greatly improved the manuscript. I would like to thank Dr. Octavian Mantiri, Dean of the Faculty of Education (former Research Director of Asia-Pacific International University), Dr. Danny Rantung, President of Asia-Pacific International University, and Dr. Reymand Hutabarat, President of Universitas Advent Indonesia who supported this study and helped with the acquisition of internal and external information that greatly assisted with the research project, although they may not agree with all the interpretations of this paper. I would like to also thank Mr. Pradeep Tudu and Mr. Franky Mantiri, Vice President of Finance Administration and Financial Controller respectively, of Asia-Pacific International University, for comments that greatly improved the study’s measurement tools. The development of these instruments was also assisted by suggestions and insight provided by Mr. Sundaresan Mohanlingam and Mrs. Nguyen Thi Phuong Linh, Instructors in the Faculty of Business Administration, Asia-Pacific International University, for which the author is most grateful. Narumon Kaewduang

iv Table of Contents Page ABSTRACT ii ACKNOWLEDGEMENTS iii LIST OF TABLES v LIST OF FIGURES vi Chapter 1 Introduction 1 Background of study 1 Seventh-day Adventist educational institutions 2 SDA Colleges and Universities in Southeast Asia 2 Justification of proposed research topic 4 Research question 5 Chapter 2 Literature Review 6 Financial ratio analysis by nonprofit organizations 6 Ratio analysis in higher education 7 Ratio analysis practices in Adventist higher education 9 Ratios analyzed in this study 12 Chapter 3 Research Methods 15 Chapter 4 Results of Study 18 Chapter 5 Conclusion and Discussion 24 REFERENCES 26 APPENDICES 27

v List of Tables Table Number Page Table 1 Southern Asia-Pacific Division (SSD) 4 Higher Educational Institutions: 2015-2016 Student Enrollment Table 2 Chabotar Ratios Deemed Suitable for 7 SDA Higher Educational Institutions Table 3 KPMG Ratios Deemed Suitable for SDA 8 Higher Educational Institutions Table 4 Ratios Used by Some Southeast Asian SDA 10 Higher Educational Institutions Table 5 Selected Liquidity Ratios 12 Table 6 Selected Viability Ratios 13 Table 7 Selected Operating Ratios 14 Table 8 Measurement Tools for SDA Colleges/Universities 15 in Southeast Asian Region Table 9 Measurement Result for SDA Colleges/Universities 19 in Southeast Asian Region Table 10 Liquidity Ratios 19 Table 11 Viability Ratios 20 Table 12 Operating Ratios 22

vi List of Figures Figure Number: Page Figure 1 Map of Southeast Asian Region, Southern Asia-Pacific Division 3 Figure 2 Conceptual Framework for Study 14

1 Chapter 1 Introduction Background of Study Financial Ratio Analysis is a popular financial management tool used by managers or businesses to measure their business performance. Mayer & Shank (2007) state that “financial ratios allow us to get a better view of the firm’s financial health than just looking at the raw financial statements.” There are several analytical tools to evaluate a company’s financial statements, using techniques such as horizontal analysis, vertical analysis, comparative financial statements, trend analysis, and so on, but one of the most valuable is financial ratios. Many managers use ratio analysis to evaluate their strengths and weaknesses, or look for ways to reduce their obligations or avoid problems, or perhaps to establish targets for the financial health of their firms. Fischel et al., (2015) stated that “ratios can also be used to compare a business with its competitors or in comparison to specific benchmarks within the company to determine how consistent its financial results are.” One of the most popular ways to analyze financial statements is to compute and compare the financial ratios to benchmarks for successful firms in an industrial sector. Some are expressed as percentages that measure the rate of profitability, liquidity, proportion of borrowing and returning, how efficiently funds are utilized, and so on. This is done to find a meaningful relationship between individual items or groups of items on balance sheets and income statements which highlight key performance indicators. Ross, Westerfield, Jordan, Lim, & Tan (2012) state that “another way of avoiding the problems involved in comparing companies of different sizes is to calculate and compare financial ratios.” Most managers use financial ratios to interpret performance trends year on year and to benchmark against industry averages, predetermined targets, or the

2 performance of individual competitors. Evaluation of past performance or current financial position using ratio analysis is an appropriate process for every business, and this is an important tool that shouldn’t be overlooked. Seventh-day Adventist Educational Institutions The Seventh-day Adventist (SDA) church is a Protestant Christian denomination that believes in Jesus Christ. The church was established in the United States in the mid-19th century. The denomination reports (General Facts, 2017) that membership “has now grown to consist of approximately 19.5 million members living in 209 countries around the world, and has an integrated network of schools, with more than 7,500 schools worldwide enrolling more than 1.8 million students.” Seventh-day Adventist schools practice holistic principles of spiritual, mental, physical, and social development. As Ellen G. White, a Seventh-day Adventist pioneer wrote: “True education means more than the pursual of a certain course of study. It means more than a preparation for the life that now is. It has to do with the whole being, and with the whole period of existence possible to man. It is the harmonious development of the physical, the mental, and the spiritual powers. It prepares the students for the joy of service in this world and for the higher joy of wider service in the world to come” (White, 1903). The goal is not only gaining academic knowledge, but developing students’ minds, establishing a pattern of living, and learning to follow God’s guidance. Therefore, students are taught to serve others rather than to expect to be served in harmony with Adventist education’s mission and holistic objectives. SDA Colleges and Universities in Southeast Asia Adventist colleges and universities are nonprofit educational institutions operated under the working policy of General Conference of Seventh-day Adventists. A part of the mission of the church’s Southern Asia-Pacific Division (SSD) is to support the work of Adventist institutions in areas such as children, youth, family, education, and health ministry.

3 (SketchBubble, 2017) J. Vincente of the SSD Education Department reports that “there are seventeen colleges/universities in SSD. Fifteen of these are in Southeast Asian region, with a total enrollment 17,683 during 2015-2016 academic year.” (J Vincente, Personal communication, March 3, 2017). In the Southeast Asian region, Adventist colleges and universities located in Indonesia, Malaysia, Myanmar, the Philippines, and Thailand, are part of the Southern Asia Pacific Division’s (SSD) education network. Figure 1 shows a map of Southeast Asia region. Figure 1 Map of Southeast Asian Region, Southern Asia-Pacific Division Seventh-day Adventist higher educational institutions are part of a network of colleges and universities located in many different countries. Taking advantage of these linkages to compare and analyze financial ratios among peer institutions could be quite useful in exploring the effects of similar or difference management practices on operational performance. This could lead to the discovery of best practices or strengthen the strategies used by Adventist higher educational institutions within the region and beyond. Table 1 lists the Adventist colleges/universities located with the territory of the Southern AsiaPacific Division.

4 Table 1 Southern Asia-Pacific Division (SSD) Higher Educational Institutions: 2015-2016 Student Enrollment No Colleges/Universities Location Website Address Student’ Enrollment Southeast Asian Region 1 Adventist International Institute of Advanced Studies Cavite, Philippines www.aiias.edu 604 2 Adventist University of the Philippines Cavite, Philippines www.aup.edu.ph 3,942 3 Asia-Pacific International University Saraburi, Thailand www.apiu.edu 1,134 4 Central Philippine Adventist College Negros Occidental, Philippines www.cpac.edu.ph 892 5 Indonesia Adventist University Bandung, Indonesia www.unai.edu 1,929 6 Klabat University Sulawesi Utara, Indonesia www.unklab.ac.id 3,100 7 Manila Adventist Medical Center and Colleges Manila, Philippines www.amcmanila.org 564 8 Mindanao Sanitarium and Hospital College Iligan City, Philippines www.mshcollege.com 1,254 9 Mountain View College Bukidnon, Philippines www.mvc.edu.ph 1,773 10 Myanmar Union Adventist Seminary Myaungmya, Myanmar www.muas.myanmaradventist. org 610 11 Naga View Adventist College Naga City, Philippines 216 12 Northern Luzon Adventist College Pangasinan, Philippines www.nlac.edu.ph 587 13 Penang Adventist College of Nursing Penang, Malaysia www.pah.com.my/acn 191 14 South Philippine Adventist College Davao del Sur, Philippines www.spaconline.org 375 15 Surya Nusantara Adventist College Sumatra Utara, Indonesia 237 South Asian Region 16 Bangladesh Adventist Seminary and College Gazipur, Bangladesh www.bascollege-bd.org 195 17 Pakistan Adventist Seminary Punjab, Pakistan www.pasc.edu.pk 80 Total 17,683 Justification of Proposed Research Topic Many might think that ratio analysis can be applied only to enterprises, but it is also suitable for colleges and universities as nonprofit organizations. Industry averages or benchmarks haven’t yet appeared for private higher educational institutions, perhaps because most of them are non-profit organizations. So in this situation, a useful way to benchmark financial performance is to compare and analyze the financial statements among sister institutions, in order to discover what financial best practices may be found by using financial ratio analysis techniques. There are several steps of consideration: (1) measurement of resources, (2) scope or extent of measurement formula, and (3) colleges and universities selected.

5 First of all, the researcher will look for similar higher education institutions and compare financial performance among them. This will be a helpful first step for institutions to compare and discover valuable practices or success factors that could be emulated by sister institutions and strengthen the overall work of Adventist higher education in the Southeast Asian region. This could also lead to best practices for Adventist organization in other regions around the world. Seeking to develop benchmark figures may be useful for other institutions in the educational subsector or other fields. Research Question 1. What financial best practices of Southeast Asian SDA colleges/universities may be found from a study of their financial ratios? SDA higher educational institutions in Southeast Asia may be able to establish some performance benchmarks by using financial ratio analysis. Institutions can then evaluate their performance by comparing it to that of affiliated institutions in a peer group, exchanging mutually beneficial information, and sharing results within other parties in the benchmarking group. Possible advantages include increasing competitiveness, raising standards, fixing weaknesses, and learning from the example of similar organizations through business networking. The best practices gathered from each institution may also lead to the establishment of future work standards.

6 Chapter 2 Literature Review The researcher has reviewed the relevant literature and other research studies for information regarding financial ratio analysis techniques that could be used, and also noted some limitations. Financial Ratio Analysis by Nonprofit Organizations Chabotar’s (1989) study entitled “Financial Ratio Analysis Comes to Nonprofits” states that “many observers have concluded that financial ratios, which have been used for many years for financial analysis of business, could also help non-profits. This includes private colleges and universities.” Many private or nonprofit colleges/universities may be unfamiliar with or not see the need for financial ratio analysis to assist in assessing operational performance, and so they have not yet been widely used by such organizations. Financial ratio analysis can be used by any business or organization, regardless of whether it is public, private, for profit, or nonprofit. Businesses need to regularly analyze their past performance, as this often helps to predict future financial trends. Financial ratio analysis helps managers to understand financial events, discern strengths and weaknesses, develop effective plans, and control business operations. Chabotar pointed out that when financial ratios were used to analyze higher education institutions’ work performance, the results were satisfactory. Eight ratios that are specific and appropriate for nonprofit educational businesses were suggested. These ratios help in gaining a clear understanding of the university’s economic condition, with attention paid to receivables and payables turnover rates, and other relevant factors. Because most SDA colleges/universities are dependent on tuition and other service revenues to cover their operating expenses, Five of Chabotar’s ratios were chosen for use in this study. SDA institutions are usually concerned with their cash balances, but as nonprofit organizations,

7 they do not focus too much on return on investment because they have no ownership shares. There ratios are shown below in Table 2. Table 2 Chabotar Ratios Deemed Suitable for SDA Higher Educational Institutions No. Ratios Used by Chabotar Formulas Selected Ratios for SDA Educational Institutions 1 Current Ratio Unrestricted Current Assets Unrestricted Current Liabilities Five ratios are chosen 2 Quick Ratio Unrestricted Current Assets-Inventories Unrestricted Current Liabilities 3 Debt-equity Ratio Plant Debt Net Investment in Plant 4 Source of Funds Revenue Received Per Source Total Expenditures 5 Net Operating Results Net Operating Income Total Revenues 6 Available Funds Ratio Cash and Short-Term Investments Unrestricted Current Liabilities 7 Uses of Funds Three ratios are not used Expenditures by Program or Function Total Expenditures 8 Debt-service Ratio Debt Service Operating Revenue Ratio Analysis in Higher Education According to a study by the professional business services company KPMG and Prager, McCarthy & Sealy (1999) that was published in their book entitled Ratio Analysis in Higher Education, “ratio analysis can measure success factors against institution-specific objectives and then give the institution the tools to improve its financial profile to carry out its vision and mission.” Identifying key relationships and trends shouldn’t substitute for concern that an institution must fulfill its vision and mission. Many institutions might benchmark or compare their financial performance based on industry averages, but the most effective way of identifying a business’ strengths and weaknesses should be based on its own goals and objectives. The KPMG study found that several steps are helpful when applying this model’s concepts: a time period of the past three years makes the most sense, with a higher weight given to the most current year, and measurement of strengths and weaknesses should also focus on the mission or objectives of an institution. It provided for the use of a Composite Financial Index (CFI) model for higher educational institutions which is comprised of twenty-five ratios which are shown below in Table 3. This CFI model can encourage managers to use combined financial performance when making decisions. This helps managers focus on the

8 issues, challenges, and evolution of colleges and universities and leads to an accurate assessment of institutional strengths and weaknesses. Many nonprofit financial officers are concerned with profitability, and view net income as the most significant variable of interest. From the KPMG study, the researcher has chosen four ratios which are suitable for SDA higher educational institutions consisting of (1) Operating Income Ratio, (2) Net Tuition Dependency Ratio, (3) Net Tuition per FTE Student Ratio, and (4) Maintenance Ratio. These ratios focus on inflows from service fees such as tuition, measuring the resources that institutions receive directly from students. One of these ratios allows the institution to see the average amount of actual revenue on a per student basis. The last ratio is concerned with the percentage of educational and general income allocated to plant maintenance. However, many of the remaining twenty-one ratios may not be suitable for SDA higher educational institutions, because they appear to be designed for use by a wide range of nonprofits, and might not be helpful in strengthening their operating performance. When deciding on the relevance of ratio analysis to organizations, managers should clearly understand its limitations, as well as appreciate its many benefits. Table 3 KPMG Ratios Deemed Suitable for SDA Higher Educational Institutions No. Ratios Used by KPMG Formulas Selected Ratios for SDA Educational Institutions 1 Operating Income Ratio Operating Income Operating Expenses Four ratios are chosen 2 Net Tuition Dependency Ratio Net Tuition and Fees Operating Income 3 Net Tuition per FTE Student Ratio Net Tuition and Fees Full-Time Equivalent Students 4 Maintenance Ratio Operations and Maintenance of Plant Educational and General Income 5 Primary Reserve Ratio Expendable Net Assets Total Expenses Twenty-one ratios are not used 6 Secondary Reserve Ratio Nonexpendable Net Assets Total Expenses 7 Net Income Ratio – using an operating indicator Excess (Deficiency) of Unrestricted Operating Revenues Over Unrestricted Operating Expenses Total Unrestricted Operating Income 8 Net Income Ratio – using change in unrestricted net assets Change in Unrestricted Net Assets Total Unrestricted Income 9 Cash Income Ratio Net Cash Provided by Operating Activities Total Unrestricted Income, Excluding Gains 10 Net Auxiliary Income Ratio Net Auxiliary Enterprise Revenues Total Auxiliary Enterprise Revenues 11 Net Hospital Income Ratio Net Hospital Revenues Total Hospital Revenues 12 Contributed Income Ratio Contributed Income Educational and General Expenses

9 Table 3 (Cont.) KPMG Ratios Deemed Suitable for SDA Higher Educational Institutions (Not Selected) No. Ratios Used by KPMG Formulas Selected Ratios for SDA Educational Institutions 13 Educational Core Services Ratio Educational Core Services Expenses Educational and General Income Twenty-one ratios are not used 14 Educational Support Ratio Educational Support Expenses Educational and General Income 15 General Support Ratio General Support Educational and General Income 16 Deferred Maintenance Ratio Outstanding Maintenance Requirements Expendable Net Assets 17 Return on Net Assets Ratio Chang in Net Assets Total Net Assets 18 Capitalization Ratio Modified Net Assets Modified Total Assets 19 Composition of Equity Ratio Financial Assets Physical Assets 20 Return on all Investments Ratio Total Investment Return Average Modified Invested Assets 21 Viability Ratio Expendable Net Assets Long-Term Debt 22 Debt Burden Ratio Debt Service Total Expenditures 23 Debt Coverage Ratio Adjusted Change in Net Assets Debt Service 24 Leverage Ratio Available Net Assets Long-Term Debt 25 Age of Facility Ratio Accumulated Depreciation Depreciation Expense Ratio Analysis Practices in Adventist Higher Education The financial statements of one Adventist Higher Educational Institution (2016) point out “managers are required to make estimates and assumptions that affect reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amount of revenues and expenses during the reporting period.” Evidence from the financial statements of several institutions shows that ratio analysis practices appear to differ from one institution to another, with some evaluating many ratios, while others evaluate only a few. It appears that many Adventist colleges and universities in Southeast Asia already practice a limited form of financial ratio analysis, analyzing their required working capital and liquidity. The organizations are concerned about the cash conversion cycle, accounts receivable collection, and how much money is in hand compared to liabilities, monthly payrolls, and other expenses. Because denominational policies discourage borrowing, they have less interest in ratios that measure levels of debt.

10 SDA colleges/universities are concerned with receivables, especially for students who are responsible for payment of their educational expenses. Institutions tend to encourage needy students to participate in the student work program provided in such institutions so that students can work to support themselves while studying. Five ratios of interest that many be drawn from SDA higher educational institutions’ financial practices include (1) Cash Days Available (in days), (2) Accounts Receivable Turnover, (3) Required Working Capital Ratio, (4) Asset Life-Aging: Buildings (in years), and (5) Return on Assets. These ratios measure organizational capacity to pay operating expenses, approaches to bad debts estimation, average collection periods for receivables, especially from students, ability to pay current liabilities from current assets, and profitability relative to total assets. The fourth ratio in this list is used to calculate in advance when major maintenance work or rebuilding may be necessary. Financial ratios used by some Seventh-day Adventist higher education institutions are shown in Table 4; those selected for use in this study are shown below. Ratios that duplicated those already selected from other studies – and those not selected – are shown on the following page. Table 4 Ratios Used by Some Southeast Asian SDA Higher Educational Institutions (Selected) No. Ratios Used by Some SDA Colleges and Universities Formulas Selected Ratios from SDA Higher Educational Institutions 1 Cash Days Available (in days) Total Cash Total Operating Expense Before Depreciation / 360 Days Five ratios are chosen 2 Account Receivable Turnover (Students/Workers/SDA Organizations/Others) Net Credit Revenue Including Deferred Income Average Accounts Receivable 3 Required Working Capital Current Assets - Current Liabilities Allocated Funds + 20% of Annual Operating Expenses 4 Assets Life-Aging: Building (in years) Building Life Expenctancy (40 yrs) - Accumulated Depreciation 5 Return on Assets Net Income Before Depreciation Total Assets

11 X 100 % X 100 % X 100 % Table 4 (Cont.) Ratios Used by SDA Higher Educational Institutions (Not Selected) No. Ratios Used by Some SDA Colleges and Universities Formulas Selected Ratios from SDA Higher Educational Institutions 6 Accounts Receivable Percentage (Students/workers/SDA organizations/Others) Student Accounts Receivable Total Accounts Receivable Worker Accounts Receivable Total Accounts Receivable SDA Organization Accounts Receivable Total Accounts Receivable Other Receivables Total Accounts Receivable Fourteen ratios are not used 7 Current Ratio Current Assets Current Liabilities 8 Debt to Equity Ratio Total Liabilities Net Fund Balances 9 Account Payable Percentage Student Accounts Payable Total Accounts Payable Worker Accounts Payable Total Accounts Payable SDA Organization Accounts Payable Total Accounts Payable Trust Fund Accounts Payable Total Accounts Payable Other Payables Total Accounts Payable 10 Return on Net Assets Net Income Before Depreciation Net Fund Balances 11 Return on Revenue Operating Gain (Loss) Before Depreciation Total Operating Income 12 Operating Expenses per Day (before depreciation) Total Operating Expense Before Depreciation 360 Days 13 Operating Revenue per Day Total Operating Income 360 Days 14 Operating Gain (Loss) per Day Operating Gain (Loss) Before Depreciation 360 Days 15 Operating Revenue as % of Budget Total Operating Income Total Operating Budget 16 Tuition as % of Revenue Mixed Net Tuition Total Operating Income 17 Operating Expense as % of Budget (before depreciation) Total Operating Expense Before Depreciation Total Operating Budget 18 Payroll as % of Operating Expenses Total Worker Salaries & Benefits Total Operating Expense Before Depreciation 19 Liquidity Percentage Net Liquid Assets (Cash and Cash Equivalents + Denominational Receivables + (Investments-Endowment Fund)) Total Commitments (Total Current Liabilities + Allocated Funds + Cash in Bank Earmarked for Dormitory Construction, Chiller & Water) An important goal of Adventist higher education is to provide Christian educational services. An increase in the number of students enrolled indicates that usage of these services is expanding. So although Adventist higher educational institutions may not strive to be highly profitable, there are significant concerns regarding high operating expenses. As Adventist higher education has many different networks of colleges and universities around the world, comparisons of financial statements should be concerned with dollar X 100 % X 100 % X 100 % X 100 % X 100 % X 100 %

12 amounts, percentage changes, and financial statement time periods should measure the same academic year and comparable twelve month performance. Ratios Analyzed in This Study The ratios of interest to Seventh-day Adventist tertiary educational institutions are mixed and matched from the three sources mentioned above, consisting of (1) the study of Chabotar (1989), (2) the KPMG book, and (3) Adventist institutional practices within the SSD. They may be divided into three core groups of ratios consisting of Liquidity Ratios, Viability Ratios, and Operating Ratios. A brief description of each ratio is offered in the table below, some of which are taken from Williams, Haka, Bettner, & Carcello (2017), while others are formulated by the researcher. Liquidity Ratios Liquidity ratios mostly examine the ability to meet institutional obligations, such as payment of bills, payrolls, and other expenses. They evaluate the margin of safety as to whether institutions haves enough money to pay off their liabilities, and the required working capital for SDA institutions that considers whether enough money is on hand to cover allocated funds, along with 20% of annual operating expenses. Table 5 Selected Liquidity Ratios Ratios Formulas Description Target From 1. Current Ratio Unrestricted Current Assets Unrestricted Current Liabilities A measure of short-term debtpaying ability R ≥ 2.00 Chabotar 2. Quick Ratio Unrestricted Current Assets-Inventories Unrestricted Current Liabilities A measure of short-term debtpaying ability R ≥ 1.50 Chabotar 3. Cash Days Available (In days) Total Cash Total Operating Expense Before Depreciation / 360 Days Indicates capacity of cash in hand to cover operating expenses in days R ≥ 30 days SDA Colleges and Universities 4. Accounts Receivable Turnover (Students) Net Credit Revenue Including Deferred Income Average Student Accounts Receivable Indicates how quickly receivables are collected in days R ≤ 30 days SDA Colleges and Universities 5. Required Working Capital Current Assets - Current Liabilities Allocated Funds + 20% of Annual Operating Expenses A measure of fund needed to pay short-term debt and maintain smooth ongoing operation R ≥ 75% SDA Colleges and Universities

13 Viability Ratios Viability ratios measure basic determinants of an institution’s capacity to continue providing services. Increases in service expenses should lead to proportionate increases in revenues; it is dangerous if this is not the case. Revenue also should come from many sources, and not depend on one source alone. The Debt-Equity ratio examines the proportion of debt to the net value of buildings and other fixed assets. Debt repayment schedules should not be longer than the useful lives of the assets being financed. This includes designating sufficient operating resources to maintain the physical plant in good condition, and comparing the net income to the total assets employed to generate these results. Table 6 Selected Viability Ratios Ratios Formulas Description Targat From 6. Sources of Funds Revenue Received Per Source (Students) Operating (Total) Expenditures Indicates diversity and relative importance of revenue streams in relation to total expenditures Not overly dependent (R ≤ 70%) on single source Chabotar 7. Debt-Equity Ratio (Non-Profits) Plant Debt Net Investment in Plant Indicates debt as a percentage of net value of physical plant R ≤ 10% or R ≤ 20% lower than prior year Chabotar 8. Building Remaining Useful Lives (In Years) Building/Fixture Residual Value x 40 Years Building Original Cost Indicates remaining useful lives of buildings in years R ≥ 20 years SDA Colleges and Universities 9. Maintenance Ratio Plant and Equipment Maintenance Expenses Educational and General Income Indicates operating funds designated for ongoing upkeep of physical plant Adequate, plant kept in good condition; 2.5% - 7.5% KPMG 10.Return on Assets Net Income Before Depreciation Total Assets Indicates institutional profitability relative to total assets R ≥ 5% SDA Colleges and Universities Operating Ratios Net operating results examine an institution’s operating results to determine whether it is realizing a loss or a gain. An institution cannot survive when it experiences persistent deficits. It’s also good for institutions to have enough reserves prepared for unanticipated emergencies, staff expansion, or other needs.

14 Analyze Analyze Table 7 Selected Operating Ratios Ratios Formulas Description Target From 11. Net Operating Results Net Operating Income Operating Income Indicates organization surplus or deficit as percentage of income R ≥ 5% Chabotar 12. Net Tuition Dependency Ratio Net Tuition & Educational Fees Operating Income Percentage of operating income derived from tuition and fees R ≤ 70% decreasing ratio shows income diversification KPMG 13. Net Tuition per Student Ratio Net Tuition and Educational Fees Number of Students Enrolled Indicates average revenue on per student basis Increasing trend is positive KPMG 14. Operating Income Ratio Operating Income Operating Expenses Indicates profitability of selfgenerated operating income R ≥ 1.0 a surplus R < 1.0 a deficit KPMG 15. SelfSupport Ratio Self-Generated Operating Income Operating Income Operating income less subsidies as percentage of total income R ≥ 95% SDA Colleges and Universities The study’s conceptual framework is shown below in Figure 2. Figure 2 Conceptual Framework for Study Financial Ratio Analysis: University A - Liquidity Ratios - Viability Ratios - Operating Ratios Comparing Financial Ratio Analysis: University A - Best Practices Financial Ratio Analysis: University B - Best Practices Financial Ratio Analysis: University B - Liquidity Ratios - Viability Ratios - Operating Ratios

15 Chapter 3 Research Methodology Methods and Data This project is a qualitative research study using exploratory financial ratio analysis, comparing the financial performance of peer institutions. This to indicate the level of financial health of selected Adventist colleges and universities in Southeast Asia. Ratio analysis consisted of three groups of ratios, consisting of Liquidity Ratios, Validity Ratios, and Operating Ratios as already described in this paper. Table 8 shows the measurement tools used in this study. Table 8 Measurement Tools for SDA Colleges/Universities in Southeast Asian Region Measurement Tools of the Study Ratios Used by Chabotar Ratios Used by KPMG Ratios Used by Selected SDA Colleges and Universities Liquidity Ratios Current Ratio (Chabotar ) Current Ratio Current Ratio Quick Ratio (Chabotar ) Quick Ratio Cash Days Available (In Days) (SDA) Cash Income Ratio Cash Days Available (In Days) Account Receivable Turnover (Students) (SDA) Account Receivable Turnover (Students) Required Working Capital Ratio (SDA) Required Working Capital Ratio Viability Ratios Source of Funds (Chabotar ) Source of Funds Contributed Income Ratio Debt-Equity Ratio (Non-Profit) (Chabotar ) Debt-Equity Ratio Composition of Equity Ratio Debt to Equity Ratio Building Remaining Useful Lives (In Years) (SDA) Age of Facility Ratio Building Remaining Useful Lives: Buildings and Fixtures (In Years) Maintenance Ratio (KPMG) Maintenance Ratio Return on Assets (SDA) Return on Net Assets Ratio Return on Assets Operating Ratios Net Operating Results (Chabotar ) Net Operating Results Net Auxiliary Income Ratio Return on Revenue Net Tuition Dependency Ratio (KPMG) Net Tuition Dependency Ratio Tuition as % of Revenue Mixed Net Tuition per Student Ratio (KPMG) Net Tuition per FTE Student Ratio Operating Income Ratio (KPMG) Operating Income Ratio Self-Support Ratio (SDA) Educational Support Ratio Self-Support Ratio

16 Validation of the measurement tool was primarily based on the literature review. However, the researcher also invited two experienced financial administrators and two experienced accounting educators who are familiar with the financial operations of Adventist higher education institutions to critique the instrument. They suggested removing two liquidity ratios in order to keep from over-emphasizing the importance of liquidity. They also suggested adding three additional ratios, namely the Maintenance Ratio, Return on Assets Ratio, and Self-Support Ratio. These ratios help financial managers see if adequate provision is made in maintenance budgets for preserving institutional physical plants, how much net income has been produced from investments in assets, and the level of selfsupport that has been achieved. They advised setting targets for each ratio in accordance with the studies of Chabotar and KPMG, with some modifications based on the operating performance of SDA colleges and universities. They also suggested shrinking the five categories of financial ratios originally envisioned (Liquidity, Debt Structure, Sources of Funds, Net Operating Results, and Required Working Capital) into three (Liquidity, Validity, and Operating Ratios), which resulted in switching some ratios from one category to another. Small adjustments were made in terms or components used for the numerator or denominator of some ratios to align them with financial statement data and facilitate a comparative study. For example, Buildings and Fixtures were combined in the financial statement, so both values are part of the ratio measuring Remaining Useful Lives (In Years). The number of Full-Time Equivalent (FTE) Students was not available for one institution, so the Net Tuition ratio reflects the number of students enrolled instead. Calculations for some numerators and denominators were less complex than in the literature since the institutions studies were quite small. Notes detailing how each calculation was made may be found in Appendix B. The study used data from the financial statements for the 2015-2016 academic year from two sample institutions referred to as University A and University B. These institutions were selected from among the Adventist colleges and universities in Southeast Asia based on their willingness to participate in this study. The currencies used were converted to US

17 dollars for comparative purposes since the data came from different countries. Foreign exchange rates as of August 31, 2017 were used so that the dollar values would be relatively current at the time of the analysis. Descriptive analysis was used to identify financial strengths and weaknesses, to discover best practices, and to uncover success factors from the participating institutions. Microsoft Excel was used to conduct an analysis of the financial ratios. Descriptive analysis followed general interpretation standards for basic financial ratios, along with additional information provided by the studies of Chabotar (1989) and KPMG (1999).

18 Chapter 4 Results of Study Study Findings The findings show that University A has tried to maintain its liquidity at an acceptable level by keeping enough cash to pay off its obligations promptly. This may be seen from its Cash Days Available (45.5 Days), which is higher than the suggested benchmark of 30 days. However, its Quick Ratio (1.30) and Current Ratio (1.48) are slightly below their targets of 1.5 and 2.0 respectively. Its income is based primarily on only a single source (student tuition and fees), and these tuition rates are relatively high, both of which put institutional finances at risk if student enrollment declines. Its employees expenses are relatively high (57% of total expenses), with departmental expenses of 13%, depreciation of 14%, and other expenses of 15%. It is significant that when student enrollment goes down, the university must still carry fixed employment costs. Subsidy support from its parent organization is about 11% of total operating expenses, but during 2016, it still faced a loss of -9.6%. University B has been more successful in diversifying its income, with only 36.7% coming from tuition fees, and nearly two-third of direct operating income coming from other revenue sources. This shows that institution has established other income generating activities that have broadened its financial base, which is very helpful for a nonprofit organization. It has only a small amount of cash in hand – Cash Days Available (17.7 days), and carries its Student Accounts Receivable for about three months (91.4 days). On the other hand, it charges low tuition fees, has generated other types of income, and has a student enrollment that is nearly twice as large as the previous institution. Its expenses seem quite different from those of University A, with a smaller percentage of employee expenses (47%) and the remainder composed of other expenses (53%). Generally high fixed labor costs are characteristic of service businesses because of

19 employee expenses. This university had limited fixed costs, and was able to generate a 0.9% gain, which is quite commendable. This university’s best practices of interest include a strategy with low tuition fees, higher student enrolment, control of fixed costs, and positive net income. But it risks not having enough cash in hand to meet its operating needs. Table 9 Measurement Result for SDA Colleges/Universities in Southeast Asian Region Measurement Ratio University A University B Target 1. Liquidity Ratios Current Ratio Quick Ratio Cash Days Available (In Days) Account Receivable Turnover (Students) Required Working Capital 1.48 1.30 45.5 days 25.9 days 25.1% 2.28 2.12 17.7 days 91.4 days 48.1% R ≥ 2.00 R ≥ 1.50 R ≥ 30 days R ≤ 30 days R ≥ 75% 2. Viability Ratios Sources of Funds Revenue Received from Student Revenue Received from Other Sources Revenue Received from Appropriations Debt-Equity Ratio (Non-Profits) Building Remaining Useful Lives (In Years) Maintenance Ratio Return on Assets 71.4% 9.8% 10.0% 3.8% 23.6 years 3.3% 1.7% 66.3% 31.6% 2.1% 12.3% 23.0 years 13.3% 8.1% Not overly dependent (R ≤ 70%) on single source R ≥ 10% or R ≥ 20% lower than prior year R ≥ 20 years Adequate, plant kept in good condition; 2.5% - 7.5% R ≥ 5% 3. Operating Ratios Net Operating Results Net Tuition Dependency Ratio Net Tuition per Students Ratio Operating Income Ratio Self-Support Ratio -9.6% 62.0% $ 2,976 0.91 89.0% 0.9% 36.7% $ 611 1.01 97.9% R ≥ 5% R ≤ 70% decreasing ratio shows income diversification Increasing trend is positive R ≥ 1.0 a surplus R < 1.0 a deficit R ≥ 95% Table 10 Liquidity Ratios Ratios Formulas University A University B Target 1. Current Ratio Unrestricted Current Assets Unrestricted Current Liabilities 1,274,382 862,293 1.48 572,441 250,710 2.28 R ≥ 2.00 2. Quick Ratio Unrestricted Current Assets - Inventories Unrestricted Current Liabilities 1,122,498 862,293 1.30 530,862 250,710 2.12 R ≥ 1.50 3. Cash Days Available (In days) Total Cash Total Operating Expense Before Depreciation / 360 Days 645,711 14,192 45.5 days 145,657 8,220 17.7 days R ≥ 30 days 4. Account Receivable Turnover (Students) Net Credit Revenue Including Deferred Income Average Student Accounts Receivable 360 ÷ (4,259,919 / 306,951) 25.9 days 360 ÷ (1,177,893 / 299,049) 91.4 days R ≤ 30 days 5. Required Working Capital Current Assets - Current Liabilities Allocated Funds + 20% of Annual Operating Expenses 412,089 1,644,454 25.1% 321,731 668,600 48.1% R ≥ 75% University A has enough cash to pay off all its obligations for around 45.5 days; employee costs account for about 2/3 of its expenses. Liquidity is lower than the Current Ratio and

20 Quick Ratio targets, and its Required Working Capital of 25.1% is significantly below the targeted standard of 75%. Inventory is insignificant, but its accounts receivable are considerable, the largest portion of which is represented by student accounts receivable. The student accounts receivable collection period is 25.9 days, which is less than one month and represents good performance. University B has enough cash to cover its daily obligations for only 17.7 days, and so its cash position is very tight; it risks not having enough funds to get through the month. Its Current Ratio and Quick Ratio are above the targets, except for Required Working Capital (48.1%), which is still less than the target (75%). This university’s current assets are more than twice that of its current liabilities; this is because its accounts receivable represent a considerable total amount. The largest portion consists of Other Accounts Receivable, which seemingly refers to student accounts receivable (83% of total receivables). It is also evidenced in the Student Accounts Receivable Turnover, which shows a collection period of 91.4 days, or about three months, which is longer than the targeted benchmark. This shows that the university has extended credit to students instead of requiring them to pay cash, and may lead to a future cash flow problem. Table 11 Viability Ratios Ratios Formulas University A University B Target 6. Sources of Funds Revenue Received from Students Operating (Total) Expenditures Revenue Received from Other Sources Operating (Total) Expenditures Revenue Received from Appropriation Operating (Total) Expenditures Operating Loss Operating (Total) Expenditures 4,259,919 5,969,367 587,079 5,969,367 597,338 5,969,367 525,031 5,969,367 71.4% 9.8% 10.0% 8.8% 2,124,321 3,205,919 1,013,999 3,205,919 67,599 3,205,919 - 66.3 % 31.6 % 2.1% - Not overly dependent (R ≤ 70%) on single source 7. Debt-Equity Ratio (Non-Profit) Plant Debt Net Investment in Plant 581,821 15,278,143 3.8% 289,627 2,350,912 12.3% R ≥ 10% or R ≥ 20% lower than pior year 8. Building Remaining Useful Life (In Years) Building/Fixture Residual Value x 40 Years Building Original Cost 13,842,121 x 40 8,160,468 23.6 years 2,734,240 x 40 1,573,289 23.0 years R ≥ 20 years

21 Table 11 (Cont.) Viability Ratios Ratios Formulas University A University B Target 9. Maintenance Ratio Plant and Equipment Maintenance Expenses Educational and General Income 161,558 4,846,998 3.3% 416,362 3,138,320 13.3% Adequate, plant kept in good condition 2.5% - 7.5% 10.Return on Assets Net Income Before Depreciation Total Assets 335,280 19,839,893 1.7% 246,717 3,061,121 8.1% R ≥ 5% University A is 71.4% dependent on student income, so it faces a dangerous situation when student enrollment declines. Its Debt-Equity Ratio is still in good condition (3.8%), which is lower than the target of 5%, but this is also dangerous when compared with its operating loss of 8.8%. The average remaining useful lives of buildings and fixtures are about 23 years, so it needs to begin thinking about where funds may be found to eventually replace them. It spent 3.3% of its operating income on maintenance, a rate that exceeds the benchmark, while its assets generated a return of 1.7%, which is considerably lower than the required target (5%). University B depends on students for 66.3% of its revenue, with departmental sales contributing an additional 31.6% of net operating income. This diversification of revenue sources helps to protect the university from over-reliance on a single source of income, strengthening its financial base as a nonprofit organization. Its Debt-Equity Ratio is a bit high at 12%, but most of this debt is long-term in nature (about 1/2 from Other Liabilities, 1/2 from Inter-Funds Loans Payable). The average remaining useful lives of fixed assets is about 23 years. It spent 13.3% of operating income on maintenance, which is 2 – 3 times higher than its target, and very high compared to the other university. It generated an 8.1% return on its assets, which is 3% higher than the target and four times higher than its sister institution.

22 Table 12 Operating Ratios Ratios Formulas University A University B Target 11. Net Operating Results Net Operating Income Operating Income (525,031) 5,444,336 - 9.6% 28,812 3,205,919 0.9% R ≥ 5% 12. Net Tuition Dependency Ratio Net Tuition & Educational Fees Operating Income 3,374,679 5,444,336 62.0% 1,177,893 3,205,919 36.7% R ≤ 70% decreasing ratio shows income diversification 13. Net Tuition per Students Ratio Net Tuition and Educational Fees Number of Students Enrolled 3,374,679 1,134 $ 2,976 1,177,893 1,929 $ 611 Increasing trend is positive 14. Operating Income Ratio Operating Income Operating Expenses 5,444,336 5,969,367 0.91 3,205,919 3,177,107 1.01 R ≥ 1.0 a surplus R < 1.0 a deficit 15. Self-Support Ratio Self-Generated Operating Income Operating Income 4,846,998 5,444,336 89.0% 3,138,320 3,205,919 97.9% R ≥ 95% University A experienced a 9.6% loss for the year, which is considerably lower than the targeted amount. It is heavily dependent on student tuition and fees, with little diversification of revenue, and this raises its risk of running an operating deficit. Its Operating Income Ratio is 0.91, which is lower than 1.0, and shows that it is currently running at a deficit. The largest portion of its expenses (57%) are employee expenses, with 14% for depreciation and 13% for departmental expenses. It depends on appropriations from its parent organization for 11% of revenue, but is still running an operating loss. It received an average of US$ 2,976 in net tuition and fees from each student, which is about 4.5 times more than what was received from the other university, which also has about twice as many students. University B realized a modest gain of 0.9% from its 2015-2016 operations, which was albeit an amount lower than the target. It was more successful in diversifying its income, with 66.3% from student income, 31.6% from departmental sources, and just 2.1% from appropriations. Its Operating Income Ratio is 1.01, which shows a tiny surplus. Its employee expenses accounted for 47% of operating expenses, with 53% allocated to other expenses. This is interesting because service businesses generally spend relatively large amounts on employee expenses. It received a small operating appropriation from its parent organization of 2.1%, which shows that the university can support its own work. It spent 7% on depreciation, and 13.3% on maintenance, which is almost double the benchmark

23 amount. Its net tuition received per Student was US$ 611, which was less than one-fourth the amount received by the other university. However, student enrolment at this university was almost 2 times greater than that at the other institution.

24 Chapter 5 Discussion and Conclusion Discussion Most SDA colleges/universities are dependent on tuition and other service revenues to cover their operating expenses. Institutions are usually concerned with their cash balances, but they do not focus too much on return on investment because they are nonprofit organizations. They avoid debt, financing, and encourage students with accounts receivable to enroll in the institution’s work program. The KPMG study stated that “ratio analysis can measure success factors against institution-specific objectives and then give the institution the tools to improve its financial profile to carry out its vision and mission.” An important goal of Adventist higher education is to provide Christian educational services. An increase in the number of students enrolled indicates that usage of these services is expanding. The results showed that one university had about twice as many students as the other. The smaller institution had relatively high tuition and fees, but experienced a net loss and declining liquidity. The larger university charged relatively low tuition and fees, but experienced a modest net gain and improving liquidity. Comparative studies utilizing financial ratio analysis of sister institutions may be beneficial to managers or organizations by helping them to spot the best practices of other institutions from among their peer group, or by benchmarking their performance against other institutions. These best practices may lead to examples of how they can conquer problems or better carry out their mission based on a healthy financial foundation. Identifying institutional strengths and weaknesses in comparison to common standards can be very helpful to administrators, as such a practice may help them to learn valuable lessons without making expensive investments or taking a long time to find out what

25 works by trial and error. It may also help managers to accomplish better budget planning by understanding what is wasteful or what may be improved, and how to reduce operational costs or complex workflows. It may lead to more effective and systematic work processes, and constitute a step of understanding an organization’s own level of competence from the perspective of comparable institutions. Conclusion These results may help administrators to identify and adopt best practices among peer institutions which may lead to strategies of how financial problems may be resolved and institutional missions may be better carried out. Gathering institutional best practices may also lead to the establishment of future performance benchmarks for SDA higher educational institutions in Southeast Asia and beyond. Future research studies should take into consideration the economic environment when trying to adopt suitable practices from one location to another. There are many external factors that lead to differences in the particular financial situation of each institution. For example, rates of compensation are based on the cost of living in each country. But the general ideas from a study, will hopefully be helpful so that managers may find out best practices from other affiliated institutions.

26 References Adventist Higher Educational Institution. (2016). Financial Statement Report: Notes to the Financial Statement. Thailand: Author. Chabotar, K. J. (1989). The Journal of Higher Education. Financial Ratio Analysis Comes to Nonprofits, 60(2), 188. Fischel, A., Sturgeon, A., Ahmed, S., Bowen, H., Edwards, J., Beeden, A., & Kennedy, S. (Eds.). (2015). How business works. China: Penguin Random House. General Facts. (2017). Who are Seventh-day Adventists? Seventh-day Adventist Church Official Website. Retrieved March 29, 2017, from http://press.adventist.org/en/ KPMG LLP & Prager, McCarthy & Sealy, LLC (1999). Ratio Analysis in Higher Education: Measuring Past Performance to Chart Future Direction. Available from http://www.prager.com/FinancialAdvisory/StrategicFinancialAnalysis Mayer, T. R., & Shank, T. M. (2007). Financial analysis with Microsoft Excel, 4th Edition. The United States of America: Thomson South-Western. Ross, S. A., Westerfield, R. W., Jordan, B. D., Lim, J., & Tan, R. (2012). Fundamentals of corporate finance. Singapore: McGraw-Hill. South East Asia Map [Online image]. (2017). Retrieved June 5, 2017 from https://www.sketchbubble.com/en/powerpoint-south-east-asia-map.html Vincente, J. M. (2017, March 3). Email White, E. G. (1903). Education. California, CA: The Ellen G. White Publications. Williams, J. R., Haka, S. F., Bettner, M. S., & Carcello, J. V. (2017). Financial & Managerial Accounting. The United States of America: McGraw-Hill Education.

27 Appendices Appendix 1 Financial Statement Information for University A UNIVERSITY A BALANCE SHEET July 31, 2016 and 2015 (12 months period) In US Dollars ASSETS 2014 - 2015 2015 - 2016 $ Current Assets Cash and Cash Equivalents 1,376,916 645,711 Inventory 127,719 151,884 Prepaid Expenses 14,879 8,798 Denominational Receivables 218,099 178,701 Accounts Receivable Student Accounts Receivable 306,756 307,146 Employee Receivable 2,904 7,992 Employee Accountable Advances 5,875 5,446 Government Student Loans - 342 Other Receivables 40,372 19,003 Less: Allow. for Doubtful Accts (71,394) (50,641) Net Student and Employee Receivables 284,513 289,288 Current Assets 2,022,126 1,274,382 Noncurrent Assets Fixed Assets Fixed Asset - Cost 30,609,497 30,909,213 Accumulated Depreciation (15,932,740) (15,419,108) Net Fixed Asset 14,676,757 15,490,105 Other Noncurrent Assets Employees Educational. Loans - Net 209,126 223,906 Investments - Endowment Funds 2,588,862 2,734,671 Other Assets 210,337 116,830 Net Other Noncurrent Assets 3,008,325 3,075,406 Total Noncurrent Assets 17,685,082 18,565,511 TOTAL ASSETS 19,707,208 19,839,893 LIABILITIES Current Liabilities Trade Accounts Payable 113,716 116,775 Denominational Payables 32,823 61,150 Other Payables 93,150 109,336 Students A/C Credit Balances 372,435 173,846 Employees A/C Credit Balances 18,060 56,791 Accrued Expenses 174,543 74,333 Funds Held in Trust for Others 47,607 60,688 Deferred Appropriation Income - 55,194 Deferred Student Income 40,857 1,083 Student Deposit Payable - Current 119,992 153,096 Loan Payable - Current 43,059 - Total Current Liabilities 1,056,241 862,293

28 2014 - 2015 2015 - 2016 $ Long-term Liabilities Student Deposit - Noncurrent 98,175 153,096 Loan Payable - Noncurrent 301,414 258,354 Accrued Severance Payable 171,377 189,624 Total Long-Term Liabilities 570,966 601,075 Total Liabilities 1,627,207 1,463,368 FUND BALANCES Unrestricted 14,036,825 14,193,771 Internal Pools 198,489 183,993 Temporarily Restricted General 226,397 122,289 Scholarships 176,964 248,062 Research, Upgrading, & Prof. Development 30,705 66,755 Permanently Restricted 3,410,621 3,561,654 Total Fund Balances 18,080,001 18,376,525 TOTAL LIABILITIES AND FUND BALANCE 19,707,208 19,839,893 UNIVERSITY A INCOME STATEMENT July 31, 2016 and 2015 (12 months period) In US Dollars REVENUE: 2014 - 2015 2015 - 2016 $ Revenue Received from Students Tuition Income 2,138,983 2,116,879 Student Fees 1,236,986 1,257,800 Dormitory Income 506,950 527,427 Cafeteria 331,808 357,813 Total Received from Students 4,214,728 4,259,919 Revenue Received from Other Sources Guestroom 13,692 59,019 MC Mart 20,058 24,025 Vehicle Income 10,370 22,645 Rent Income 105,911 109,156 Other Income 226,036 372,233 Total Received from Other Sources 376,067 587,079 Revenue Received from Appropriations SAUM Appropriation 302,934 340,092 IDE Code 1 Support 248,012 226,057 Bu. Sary support 4,390 31,189 Total Received from Appropriations 555,336 597,338 Total Revenue 5,146,130 5,444,336 Operating Expenses Employee Expenses 3,334,256 3,423,199 Departmental Expenses 1,734,737 802,440 Specifically Budgeted Expenses - 280,394 General Expenses - 603,024 Total Operating Expenses Before Depreciation 5,068,994 5,109,057 Net Income (Loss) Before Depreciation 77,136 335,280 Depreciation & Amortized Expenses 873,281 860,310 Total Operating Expenses 5,942,274 5,969,367 Net Income (Loss) After Depreciation (796,144) (525,031) Student Enrollment = 1,134

29 Appendix 2 Financial Statement Information for University B UNIVERSITY B BALANCE SHEET June 30, 2016 and 2015 (12 months period) In US Dollars ASSETS 2014 - 2015 2015 - 2016 $ Current Assets Cash and Bank 146,312 145,657 Inventory 37,359 41,578 Prepaid Expenses & Other Current Assets 17,941 11,886 Accounts Receivable SDA Organizations 796 102,311 Employees 34,959 32,049 Other Accounts Receivable 286,630 311,468 Less: Allow. for Doubtful Accts (72,509) (72,509) Net Student and Employee Receivables 249,876 373,319 Current Assets 451,488 572,441 Fixed Assets 2,447,904 2,350,912 Other Assets 146,328 137,768 TOTAL ASSETS 3,045,720 3,061,121 LIABILITIES Current Liabilities Accounts Payable 219,952 215,599 Notes Payable - Current 18,378 19,085 Agency & Trust Funds 33,377 11,665 Other Liabilities - Current - 4,361 Total Current Liabilities 271,707 250,710 Other Liabilities Other Liabilities - Long Term 138,557 153,861 Inter-Fund Loans Payable - Long Term 136,536 128,818 Total Other Liabilities 275,093 282,679 Total Liabilities 546,800 533,389 FUND BALANCES Unallocated Function (128,546) (37,708) Allocated Funds 33,234 76,760 Invested in Plant Function 2,594,232 2,488,681 Total Fund Balances 2,498,920 2,527,733 TOTAL LIABILITIES AND FUND BALANCE 3,045,720 3,061,121

30 UNIVERSITY B INCOME STATEMENT June 30, 2016 and 2015 (12 months period) In US Dollars REVENUE: 2014 - 2015 2015 - 2016 $ Revenue Received from Students Tuition Income 1,084,809 1,177,893 Services Income 593,308 607,606 Rent Income 316,536 338,822 Total Received from Students 1,994,653 2,124,321 Revenue Received from Other Sources Incidental Department Sales 590,331 685,201 Other Direct Operating Income (329) (22) Investment Income 10,610 10,962 Cash Sales 225,758 309,353 Formulir Income 7,499 8,401 Income Adjustment (109) - Miscellaneous Income 39,267 11,833 Ujian Saringan Masuk (TPA, E3 dll) 5,182 612 Exchange Gains - General (23,296) (12,341) Total Received from Other Sources 854,912 1,013,999 Revenue Received from Appropriations Tithe and Donations - 3,821 Allocated Funds - 53,805 Capital Appropriation - 9,973 Total Received from Appropriations - 67,599 Total Revenue 2,849,565 3,205,919 Operating Expenses Employee Expenses 1,419,654 1,490,201 Departmental Expenses 453,933 417,804 Specifically Budgeted Expenses 24,963 27,989 General Expenses 939,255 1,023,207 Total Operating Expenses Before Depreciation 2,837,805 2,959,202 Net Income (Loss) Before Depreciation 11,760 246,717 Depreciation & Amortized Expenses 202,651 217,905 Total Operating Expenses 3,040,456 3,177,107 Net Income (Loss) After Depreciation (190,891) 28,812 Student Enrollment = 1,929 *Note: Adjusting of Balance Sheet and Income Statement in the same format to make compatible for comparisons.

31 Appendix 3 Calculation Details for Financial Ratios 1. Current Ratio Current Ratio Unrestricted Current Assets Unrestricted Current Liabilities 1,274,382 862,293 1.48 572,441 250,710 2.28 R ≥ 2.00 University A University B Unrestricted Current Assets 1,274,382 572,441 Divide: Unrestricted Current Liabilities 862,293 250,710 Current Ratio 1.48* 2.28* *R ≥ 2.00 University A ASSETS 2015 - 2016 $ Current Assets Cash and Cash Equivalents 645,711 Inventory 151,884 Prepaid Expenses 8,798 Denominational Receivables 178,701 Accounts Receivable Student Accounts Receivable 307,146 Employee Receivable 7,992 Employee Accountable Advances 5,446 Government Student Loans 342 Other Receivables 19,003 Less: Allow. for Doubtful Accts (50,641) Net Student and Employee Receivables 289,288 Current Assets 1,274,382 LIABILITIES Current Liabilities Trade Accounts Payable 116,775 Denominational Payables 61,150 Other Payables 109,336 Students A/C Credit Balances 173,846 Employees A/C Credit Balances 56,791 Accrued Expenses 74,333 Funds Held in Trust for Others 60,688 Deferred Appropriation Income 55,194 Deferred Student Income 1,083 Student Deposit Payable - Current 153,096 Loan Payable - Current - Total Current Liabilities 862,293 University B ASSETS 2015 - 2016 $ Current Assets Cash and Bank 145,657 Inventory 41,578 Prepaid Expenses & Other Current Assets 11,886 Accounts Receivable SDA Organizations 102,311 Employees 32,049 Other Accounts Receivable 311,468 Less: Allow. for Doubtful Accts (72,509) Net Student and Employee Receivables 373,319 Current Assets 572,441 LIABILITIES Current Liabilities Accounts Payable 215,599 Notes Payable - Current 19,085 Agency & Trust Funds 11,665 Other Liabilities - Current 4,361 Total Current Liabilities 250,710

32 2. Quick Ratio Quick Ratio Unrestricted Current Assets - Inventories Unrestricted Current Liabilities 1,122,498 862,293 1.30 530,862 250,710 2.12 R ≥ 1.50 University A University B Unrestricted Current Assets** 1,274,382 572,441 Less: Inventory (151,884) (41,578) Unrestricted Current Assets - Inventories 1,122,498 530,862 Unrestricted Current Assets - Inventories 1,122,498 530,862 Divide: Unrestricted Current Liabilities 862,293 250,710 Current Ratio 1.30* 2.12* *R ≥ 1.50 Note: **Please see previous page for details 3. Cash Days Available (In days) Cash Days Available (In days) Total Cash Total Operating Expense Before Depreciation / 360 Days 645,711 14,192 45.5 days 145,657 8,220 17.7 days R ≥ 30 days University A University B Income (Loss) Before Depreciation Net** 5,068,994 5,109,057 Divide: 360 Days 360 360 Expenses per Day 14,192 8,220 Cash and Cash Equivalents 645,711 145,657 Divide: Expenses per Day 14,192 8,220 Cash Days Available (In days) 45.5 days* 17.7 days* *R ≥ 30 days Note: **Please see previous page for details University A 2015 - 2016 $ Cash and Cash Equivalents 645,711 Net Income (Loss) Before Depreciation 335,280 University B 2015 - 2016 $ Cash and Bank 145,657 Net Income (Loss) Before Depreciation 246,717

4. Account Receivable Turnover (Students) Account Receivable Turnover (Students) Net Credit Revenue Including Deferred Income Average Student Accounts Receivable 360 ÷ (4,259,919 / 306,951) 25.9 days 360 ÷ (1,177,893 / 299,049) 91.4 days R ≤ 30 days University A University B Student Accounts Receivable Beginning** 306,756 286,630 Student Accounts Receivable Ending 307,146 311,468 Average Student Accounts Receivable 306,951 299,049 Revenue Received per Source (Students) 4,259,919 1,177,893 Divide: Average Student Accounts Receivable 306,951 299,049 Revenue Received per Source to A/C Receivable 13.88 3.94 360 Days 360 360 Divide: Revenue Received per Source to A/C Receivable 13.88 3.94 Account Receivable Turnover (Students) 25.9 days* 91.4 days* *R ≥ 30 days Note: **Please see previous page for details It is assumed that "Other Accounts Receivable" refers to Student Accounts Receivable for University B Working Note! University B 2015-2016 $ Schedule 03 Account Receivable Beginning Ending SDA Organizations 796 102,311 Employees 34,959 32,049 Other Accounts Receivable 286,630 311,468

34 5. Required Working Capital Required Working Capital Current Assets - Current Liabilities Allocated Funds + 20% of Annual Operating Expenses 412,089 1,644,454 25.1% 321,731 668,600 48.1% R ≥ 75% University A University B Actual Working Capital Current Assets** 1,274,382 572,441 Less: Current Liabilities (862,293) (250,710) Working Capital 412,089 321,731 Required Working Capital 20% of Annual Operating Expenses 1,021,811 591,840 Plus: Allocated Funds 622,643 76,760 Total Requirement 1,644,454 668,600 Excess (Shortfall) in Meeting Requirement (1,232,365) (346,869) Percentage of Required Capital 25.1%* 48.1%* *R ≥ 75% Note: **Please see Appendix 1 and 2 for details University A 2015 - 2016 $ Total Current Assets 1,274,382 Total Current Liabilities 862,293 Allocated Funds 622,643 Annual Operating Expenses 5,109,057 (Before Depreciation) 20% 20% of Annual Operating Expenses 1,021,811 University B 2015 - 2016 $ Total Current Assets 572,441 Total Current Liabilities 250,710 Allocated Funds 76,760 Annual Operating Expenses 2,959,202 (Before Depreciation) 20% 20% of Annual Operating Expenses 591,840

35 6. Sources of Funds Sources of Funds Revenue Received from Students Operating (Total) Expenditures 4,259,919 5,969,367 71.4% 2,124,321 3,177,107 66.3% Not overly dependent (R ≤ 70%) on single source University A University B Revenue Received from Students** 4,259,919 71.4%* 2,124,321 66.3%* Divide: Operating (Total) Expenditures 5,969,367 3,177,107 (1) Revenue Received from Students 4,259,919 71.4% 2,124,321 66.3% (2) Revenue Received from Other Sources 587,079 9.8% 1,013,999 31.6% (3) Revenue Received from Appropriations 597,338 10.0% 67,599 2.1% (4) Operating Loss 525,031 8.8% Total 5,969,367 100% 3,205,919 100% Operating (Total) Expenditures 5,969,367 3,177,107 * Not overly dependent (R ≤ 70%) on single source Note: **Please see Appendix 1 and 2 for details

36 7. Debt-Equity Ratio (Non-Profit) Debt-Equity Ratio (Non-Profit) Plant Debt Net Investment in Plant 581,821 15,278,143 3.8% 289,627 2,350,912 12.3% R ≥ 10% or R ≥ 20% lower than pior year University A University B Plant Debt 581,821 289,627 Divide: Net Investment in Plant 15,278,143 2,350,912 Debt-Equity Ratio (Non-Profit) 3.81%* 12.3%* * R ≥ 10% or R ≥ 20% lower than pior year Working Note! University A 2015 - 2016 $ Plant Debt Outstanding Bus Loan Balance 97,407 Loan for Water Treatment Plant 150,707 Loan for Chiller System 75,353 Dormitory Loan Payable - Non Current 258,354 Total Plant Debt 581,821 Net Value of Plant Investments Land Improvements 1,084,933 Buildings and Fixtures 13,842,121 Furnishings and Equipment 293,157 Vehicles 57,931 Total Plant Investments 15,278,143 University B 2015 - 2016 $ Plant Debt SDA Organization (Fixed Assets) 2,587 Other Liabilities - Current 4,361 Other Liabilities - Long Term 153,861 Inter-Fund Loans Payable - Long Term 128,818 Total Plant Debt 289,627 Net Value of Plant Investments Land Improvements 266,519 Buildings and Fixtures 2,734,240 Furnishings and Equipment 1,082,917 Allowance for Depreciation (1,732,764) Total Plant Investments 2,350,912

37 = Building Remaining Useful Life (In Years) 8. Building Remaining Useful Life (In Years) Building Remaining Useful Life (In Years) Building/Fixture Residual Value x 40 Years Building Original Cost 13,842,121 x 40 8,160,468 23.6 years 2,734,240 x 40 1,573,289 23.0 years R ≥ 20 years Building/Fixture Residual Value x 40 Years ** Building Original Cost University A University B Building Original Costs 13,842,121 2,734,240 Less: Accumulated Depreciation (5,681,653) (1,160,951) Building Residual Values 8,160,468 1,573,289 ** Building Life Expectancy = 40 Years 40 40 Building Remaining Useful Life (In Years) 23.6 years* 23.0 years* * R ≥ 20 years Working Note! University A 2015 - 2016 $ Net Value of Plant Investments Land Improvements 1,084,933 Buildings and Fixtures 13,842,121 Furnishings and Equipment 293,157 Vehicles 57,931 Total Plant Investments 15,278,143 Accumulated Depreciation Land Improvements 3,931,180 Buildings and Fixtures 5,681,653 Furnishings and Equipment 5,381,904 Vehicles 340,822 Computer and Software 83,549 Total Accumulated Depreciation 15,419,108 University B 2015 - 2016 $ Fixed Assets Land Improvements 266,519 Buildings and Fixtures 2,734,240 Furnishings and Equipment 1,080,199 Total Fixed Assets 4,080,958 Accumulated Depreciation Land Improvements 113,163.28 Buildings and Fixtures 1,160,951 Furnishings and Equipment 458,650 Total Accumulated Depreciation 1,732,764

38 9. Maintenance Ratio Maintenance Ratio Plant and Equipment Maintenance Expenses Educational and General Income 161,558 4,846,998 3.3% 416,362 3,138,320 13.3% Adequate, plant kept in good condition 2.5% - 7.5% University A University B Plant and Equipment Maintenance Expenses 161,558 416,362 Divide: Educational and General Income 4,846,998 3,138,320 Maintenance Ratio 3.3%* 13.3%* *Adequate, plant kept in good condition 2.5% - 7.5% Working Note! University A 2015 - 2016 $ Departmental Expenses Rental Expense 9,805 Repairs (Building & Equipment) 161,558 Security Expense 9,041 Software Licenses 5,236 TV Channel Expense 6,330 Vehicle Fuel and Oil 20,099 Vehicle Insurance 3,261 Vehicle Maintenance and Repair 6,063 Vehicle Misc 174 Vehicle Registration 886 Write Off Material Expenses 1,291 Total Departmental Expenses 223,743 Educational and General Income Revenue Received from Students 4,259,919 Revenue Received from Other Sources 587,079 Total Educational and General Income 4,846,998 University B 2015 - 2016 $ Operating Expenses Workers' Salary & Allowances Expenses 1,490,201 Travel Expenses 20,710 Program Specific 10,536 Administrative Expenses 167,674 Office Expenses 30,964 General Expenses 1,023,207 Plant Operation & Maintenance 416,362 Total Operating Expense 3,159,654 Educational and General Income Revenue Received from Students 2,124,321 Revenue Received from Other Sources 1,013,999 Total Educational and General Income 3,138,320 10. Return on Assets Return on Assets Net Income Before Depreciation Total Assets 335,280 19,839,893 1.7% 246,717 3,061,121 8.1% R ≥ 5% University A University B Net Income Before Depreciation ** 335,280 246,717 Divide: Total Assets 19,839,893 3,061,121 Return on Assets 1.7%* 8.1%* *R ≥ 5% Note: ** Please see Appendix 1 and 2 for details

39 11. Net Operating Results Net Operating Results Net Operating Income Operating Income (525,031) 5,444,336 - 9.6% 28,812 3,205,919 0.9% R ≥ 5% University A University B Net Operating Income (After Depreciation) ** (525,031) 28,812 Divide: Total Revenues (Operating Income) 5,444,336 3,205,919 Net Operating Results -9.6%* 0.9%* *R ≥ 5% Note: ** Please see Appendix 1 and 2 for details 12. Net Tuition Dependency Ratio Net Tuition Dependency Ratio Net Tuition & Educational Fees Operating Income 3,374,679 5,444,336 62.0% 1,177,893 3,205,919 36.7% R ≤ 70% decreasing ratio shows income diversification University A University B Tuition Income ** 2,116,879 1,177,893 Plus: Student Fees 1,257,800 - Net Tuition and Educational Fees 3,374,679 1,177,893 Net Tuition and Educational Fees 3,374,679 1,177,893 Divide: Operating Income 5,444,336 3,205,919 Net Tuition Dependency Ratio 62.0%* 36.7%* * R ≤ 70% decreasing ratio shows income diversification Note: ** Please see Appendix 1 and 2 for details

40 13. Net Tuition per Students Ratio Net Tuition per Students Ratio Net Tuition and Educational Fees Number of Students Enrolled 3,374,679 1,134 $ 2,976 1,177,893 1,929 $ 611 Increasing trend is positive University A University B Tuition Income ** 2,116,879 1,177,893 Plus: Student Fees 1,257,800 - Net Tuition and Educational Fees 3,374,679 1,177,893 Net Tuition and Educational Fees 3,374,679 1,177,893 Divide: Number of Students Enrolled 1,134 1,929 Net Tuition per Students Ratio $ 2,976* $ 611* * Increasing trend is positive Note: ** Please see Appendix 1 and 2 for details 14. Operating Income Ratio Operating Income Ratio Operating Income Operating Expenses 5,444,336 5,969,367 0.91 3,205,919 3,177,107 1.01 R ≥ 1.0 a surplus R < 1.0 a deficit University A University B Operating Income (Total Revenues) ** 5,444,336 3,205,919 Divide: Total Operating Expenses 5,969,367 3,177,107 Operating Income Ratio 0.91* 1.01* * R ≥ 1.0 a surplus, R < 1.0 a deficit Note: ** Please see Appendix 1 and 2 for details

41 15. Self-Support Ratio Self-Support Ratio Self-Generated Operating Income Operating Income 4,846,998 5,444,336 89.0% 3,138,320 3,205,919 97.9% R ≥ 95% University A University B Operating Income (Total Revenues) ** 5,444,336 3,205,919 Less: Operating Subsidies from Parent Organization (597,338) (67,599) Self-Generated Operating Income 4,846,998 3,138,320 Self-Generated Operating Income 4,846,998 3,138,320 Divide: Operating Income (Total Revenues) 5,444,336 3,205,919 Self-Support Ratio 89.0%* 97.9* * R ≥ 95% Note: ** Please see Appendix 1 and 2 for details University A 2015-2016 $ Revenue Received from Operating Appropriations 597,338 Total Revenues 5,444,336 University B 2015-2016 $ Revenue Received from Operating Appropriations 67,599 Total Revenues 3,205,919

42 Appendix 4 Financial Statement Information (Original Work Sheets) for University A UNIVERSITY A BALANCE SHEET July 31, 2016 and 2015 (12 months period) In Baht ASSETS 2014 - 2015 2015 - 2016 $ Current Assets Cash and Cash Equivalents 45,681,933 21,422,770 Inventory 4,237,338 5,039,039 Prepaid Expenses 493,637 291,893 Denominational Receivables 7,235,883 5,928,747 Accounts Receivable Student Accounts Receivable 10,177,238 10,190,176 Employee Receivable 96,344 265,161 Employee Accountable Advances 194,923 180,678 Government Student Loans - 11,362 Other Receivables 1,339,431 630,450 Less: Allow. for Doubtful Accts (2,368,640) (1,680,115) Net Student and Employee Receivables 9,439,296 9,597,712 Current Assets 67,088,087 42,280,161 Noncurrent Assets Fixed Assets Fixed Asset - Cost 1,015,531,297 1,025,474,954 Accumulated Depreciation (528,600,516) (511,559,754) Net Fixed Asset 486,930,781 513,915,201 Other Noncurrent Assets Employees Educational. Loans - Net 6,938,157 7,428,537 Investments - Endowment Funds 85,890,689 90,728,166 Other Assets 6,978,337 3,876,054 Net Other Noncurrent Assets 99,807,183 102,032,757 Total Noncurrent Assets 586,737,964 615,947,958 TOTAL ASSETS 653,826,051 658,228,118 LIABILITIES Current Liabilities Trade Accounts Payable 3,772,769 3,874,240 Denominational Payables 1,088,961 2,028,788 Other Payables 3,090,446 3,627,432 Students A/C Credit Balances 12,356,277 5,767,700 Employees A/C Credit Balances 599,171 1,884,148 Accrued Expenses 5,790,800 2,466,156 Funds Held in Trust for Others 1,579,442 2,013,449 Deferred Appropriation Income - 1,831,181 Deferred Student Income 1,355,527 35,920 Student Deposit Payable - Current 3,980,960 5,079,275 Loan Payable - Current 1,428,571 - Total Current Liabilities 35,042,924 28,608,291 Long-term Liabilities Student Deposit - Noncurrent 3,257,149 5,079,275 Loan Payable - Noncurrent 10,000,000 8,571,426 Accrued Severance Payable 5,685,785 6,291,167 Total Long-Term Liabilities 18,942,934 19,941,868 Total Liabilities 53,985,858 48,550,158

43 2014 - 2015 2015 - 2016 $ FUND BALANCES Unrestricted 465,699,730 470,906,753 Internal Pools 6,585,256 6,104,341 Temporarily Restricted General 7,511,171 4,057,183 Scholarships 5,871,147 8,229,961 Research, Upgrading, & Prof. Development 1,018,709 2,214,716 Permanently Restricted 113,154,180 118,165,006 Total Fund Balances 599,840,193 609,677,960 TOTAL LIABILITIES AND FUND BALANCE 653,826,051 658,228,118 UNIVERSITY A INCOME STATEMENT July 31, 2016 and 2015 (12 months period) In Baht 2014 - 2015 2015 - 2016 $ REVENUE: Tuition Income 70,965,048 70,231,701 Student Fees 41,039,497 41,730,031 Dormitory Income 16,819,081 17,498,443 Total 128,823,626 129,460,175 Service Department Cafeteria 11,008,395 11,871,168 Guestroom 454,268 1,958,070 MC Mart 665,458 797,091 Total Service Department Revenue 12,128,121 14,626,330 Other Income Vehicle Income 344,034 751,294 Rent Income 3,513,822 3,621,471 Other Income 7,499,183 12,349,586 Total Other Income 11,357,039 16,722,351 External Support SAUM Appropriation 10,050,426 11,283,227 IDE Code 1 Support 8,228,303 7,499,899 Bu. Sary support 145,638 1,034,762 Total External Support 18,424,367 19,817,888 Total Other Income and External Support 29,781,406 36,540,239 Total Revenue 170,733,153 180,626,744 Operating Expenses Employee Expenses 110,620,617 113,571,461 Departmental Expenses 57,553,383 55,931,714 Total Operating Expenses Before Depreciation 168,174,000 169,503,175 Net Income (Loss) Before Depreciation 2,559,153 11,123,569 Depreciation & Amortized Expenses 28,972,863 28,542,521 Total Operating Expenses 197,146,863 198,045,696 Net Income (Loss) After Depreciation (26,413,710) (17,418,952)

44 Appendix 5 Financial Statement Information (Original Work Sheets) for University B UNIVERSITY B BALANCE SHEET June 30, 2016 and 2015 (12 months period) In Rupiahs ASSETS 2014 - 2015 2015 - 2016 $ Current Assets Cash and Bank 1,937,479,032 1,928,816,875 Accounts Receivable 3,308,901,747 4,943,547,319 Inventory 494,709,261 550,587,358 Prepaid Expenses and Other Current Assets 237,577,840 157,395,224 Total Current Assets 5,978,667,880 7,580,346,776 Fixed Assets 32,415,508,654 31,131,132,927 Other Assets 1,937,699,992 1,824,349,996 TOTAL ASSETS 40,331,876,526 40,535,829,699 LIABILITIES Current Liabilities Accounts Payable 2,912,632,624 2,854,999,071 Notes Payable - Current 243,360,000 252,720,000 Agency & Trust Funds 441,989,688 154,464,835 Other Liabilities - Current - 57,749,996 Total Current Liabilities 3,597,982,312 3,319,933,902 Other Liabilities Other Liabilities - Long Term 1,834,791,786 2,037,455,542 Inter-Fund Loans Payable - Long Term 1,808,027,260 1,705,826,385 Total Other Liabilities 3,642,819,046 3,743,281,927 Total Liabilities 7,240,801,358 7,063,215,829 NET ASSETS Unallocated Function (1,702,226,278) (499,334,053) Allocated Funds 440,092,800 1,016,465,000 Invested in Plant Function 34,353,208,646 32,955,482,923 Total Net Assets 33,091,075,168 33,472,613,870 TOTAL LIABILITIES & NET ASSETS 40,331,876,526 40,535,829,699