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Asset Revenue Ratio

Source: R/get-assets-revenue-ratio.R
get_assets_revenue_ratio.Rd

Measures the size of an organization's asset base relative to its annual revenue.

Formula:

arr = total_assets / total_revenue

Definitional Range

Bounded below at zero; unbounded above. The ratio is undefined when revenue is zero. Typical operating nonprofits show values in the [0.5, 5.0] range. Endowed organizations and capital-intensive nonprofits may show values of 10 or higher.

Benchmarks and rules of thumb

  • No universal benchmark; most meaningful for within-subsector comparisons.

  • Below 1.0: Annual revenue exceeds total assets – common for lean service organizations with minimal physical assets.

  • Above 10: Typically indicates a capital-heavy asset base or a small revenue base relative to accumulated assets.

Calculated For: 990 + 990EZ filers.

Usage

get_assets_revenue_ratio( df,
  total_assets  = "F9_10_ASSET_TOT_EOY",
  total_revenue = c( "F9_08_REV_TOT_TOT", "F9_01_REV_TOT_CY" ),
  winsorize = 0.98 ,
  range     = "zp",
  sanitize  = TRUE,
  summarize = FALSE )

Arguments

df

A data.frame containing the fields required for computing the metric.

total_assets

Total assets, EOY.

total_revenue

Total revenue. Accepts one or two column names; if two are provided they are coalesced with the 990 value taking priority over 990EZ.

winsorize

The winsorization value (between 0 and 1), defaults to 0.98, which winsorizes at the 1st and 99th percentiles.

range

Character string specifying the theoretical range of the ratio, used to set winsorization bounds. Default "zp". Options: "np" (negative to positive), "zp" (zero to positive), "zo" (zero to one), "nz" (negative to zero), or a custom "lo;hi" pair (e.g. "0;10").

sanitize

Logical (default TRUE). If TRUE, NA values in the financial input columns are imputed to zero before the ratio is computed, respecting form scope: Part X and VIII/IX fields (990 only) are imputed only for 990 filers; Part I summary fields (990 + 990EZ) are imputed for all filers. The returned dataframe always contains the original unmodified input columns.

summarize

Logical. If TRUE, prints a summary() of the results and plots density curves for all four output columns (raw, winsorized, z-score, percentile). Defaults to FALSE.

Value

Object of class data.frame: the original dataframe appended with four new columns:

- `assets_rev`   - asset revenue ratio (raw)
- `assets_rev_w` - winsorized version
- `assets_rev_z` - standardized z-score (based on winsorized values)
- `assets_rev_p` - percentile rank (1-100)

Details

Primary uses and key insights

The asset revenue ratio measures how many dollars of assets are held per dollar of annual revenue. It is an asset intensity measure: capital-intensive organizations (hospitals, universities, housing providers with large real estate portfolios) show high ratios; lean operating nonprofits show low ratios. It can also be interpreted as an approximate measure of how long the organization could theoretically operate on its asset base - though this is not a direct liquidity measure.

A related interpretation is efficiency: a lower ratio may indicate more efficient use of assets to generate revenue, though this is not universally true for nonprofits where asset accumulation may reflect reserve-building rather than operational inefficiency.

Formula variations and their sources

Total assets EOY / total revenue. The inverse (revenue / assets) is sometimes called the asset turnover ratio and is more common in commercial analysis. For nonprofits, the assets-to-revenue direction is more intuitive because it expresses asset intensity in terms of revenue multiples. Some studies use average assets ((BOY + EOY)/2) in the denominator to account for mid-year asset changes, but the EOY value is used here for consistency and data availability.

Canonical citations

  • Frumkin, P. & Keating, E.K. (2001). The price of doing good: Executive compensation in nonprofit organizations. Policy and Society, 20(4), 94-112.

  • Bowman, W. (2011). Financial capacity and sustainability of ordinary nonprofits. Nonprofit Management and Leadership, 22(1), 37-51.

Variables used:

  • F9_10_ASSET_TOT_EOY: Total assets, end of year (total_assets, 990)

  • F9_08_REV_TOT_TOT: Total revenue from Part VIII (total_revenue, 990)

  • F9_01_REV_TOT_CY: Total revenue from Part I (total_revenue, 990EZ fallback)

Examples

library( fiscal )
data( dat10k )

d <- get_assets_revenue_ratio( df = dat10k )
#>    :: Total revenue equal to zero :: 200 case(s) replaced with NaN
head( d[ , c( "assets_rev", "assets_rev_w", "assets_rev_z", "assets_rev_p" ) ] )
#>    assets_rev assets_rev_w assets_rev_z assets_rev_p
#>         <num>        <num>        <num>        <int>
#> 1:  2.0113642    2.0113642    0.4226489           64
#> 2:  0.2998503    0.2998503   -0.8496652           13
#> 3:  1.8613909    1.8613909    0.3397683           62
#> 4:  0.1477007    0.1477007   -0.9967334            7
#> 5: 13.2410366   13.2410366    2.7449843           94
#> 6:  1.5215781    1.5215781    0.1345067           56