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Investment Assets Ratio

Source: R/get-investments-assets-ratio.R
get_investments_assets_ratio.Rd

Investment securities as a share of total assets.

Formula:

investments_assets = ( pub_traded_securities + other_securities ) / total_assets

Definitional Range

Bounded [0, 1]. Most operating nonprofits show values near zero; foundations and endowed institutions may show values above 0.80.

Benchmarks and rules of thumb

  • No universal benchmark. Operating nonprofits with values above 0.30 are typically holding significant endowment or reserve portfolios.

  • A high investment ratio combined with a high debt ratio may indicate borrowing to fund operations while holding investments – worth scrutinizing.

Calculated For: 990 filers only.

Usage

get_investments_assets_ratio( df,
  pub_traded_securities     = "F9_10_ASSET_INVEST_SEC_EOY",
  total_assets              = "F9_10_ASSET_TOT_EOY",
  other_securities          = "F9_10_ASSET_INVEST_SEC_OTH_EOY",
  winsorize  = 0.98 ,
  range     = "zo",
  sanitize   = TRUE,
  summarize  = FALSE )

Arguments

df

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

pub_traded_securities

Investments in publicly traded securities, EOY. )

total_assets

Total assets, EOY. )

other_securities

Investments in other securities, EOY. )

winsorize

Winsorization proportion between 0 and 1 (default 0.98).

range

Character string specifying the theoretical range of the ratio, used to set winsorization bounds. Default "zo". 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, imputes zero for NA financial fields before computing, respecting form scope.

summarize

Logical (default FALSE). If TRUE, prints summary statistics and density plots for all four output columns.

Value

The original data.frame with four new columns:

  • investments_assets (raw ratio)

  • investments_assets_w (winsorized)

  • investments_assets_z (z-score)

  • investments_assets_p (percentile rank, 1-100)

Details

Primary uses and key insights

The investment assets ratio measures what share of total assets is held in financial securities (publicly traded and other investments). It distinguishes financially oriented organizations (endowments, foundations) from operationally oriented ones. A high ratio indicates significant financial reserves; a low ratio indicates assets are primarily operational. Most informative for endowed organizations and foundations.

Formula variations and their sources

(Publicly traded securities + other securities) / total assets. Both investment fields (Part X lines 11B and 12B) are PZ scope. A more comprehensive version would include program-related investments (line 13B).

Canonical citations

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

  • Calabrese, T.D. (2013). Running on empty. Nonprofit Management and Leadership, 23(3), 281-302.

Variables used:

  • F9_10_ASSET_INVEST_SEC_EOY: Publicly traded securities, EOY (pub_traded_securities)

  • F9_10_ASSET_INVEST_SEC_OTH_EOY: Other securities, EOY (other_securities)

  • F9_10_ASSET_TOT_EOY: Total assets, EOY (total_assets)

Examples

library( fiscal )
data( dat10k )
d <- get_investments_assets_ratio( df = dat10k )
#> Error in resolve_col(dt, pub_traded_securities): None of the specified columns were found in the data: F9_10_ASSET_INVEST_SEC_EOY
head( d[ , c( "investments_assets", "investments_assets_w", "investments_assets_z", "investments_assets_p" ) ] )
#> Error: object 'd' not found