- Debt to Cash in Bank
- Definition: Total amount of debt divided by average 3 month bank balance
- Results
- Minimum: Not to exceed 4:1 which means you have at least one-fourth of your debt in cash on hand
- Optimum: Less than 3:1 which means your cash on hand is one-third or more of your debt; you can pay off one-third or more of your debt immediately.
- Consequences: The more cash you have, the better interest rate you can get for your debt. This will be a significant savings over time. It will also help you have more peace of mind.
Now What? So What?
- Compare your church’s financial ratios to the optimum range for each ratio.
- Develop a 2-3 year plan to bring your ratios in line with best financial practices.
Lead On!