10 Financial Ratios (part 5 of 10)

  1. Debt to Cash in Bank
    1. Definition: Total amount of debt divided by average 3 month bank balance
    2. Results
      1. Minimum: Not to exceed 4:1 which means you have at least one-fourth of your debt in cash on hand
      2. 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.
    3. 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!