Resumen

BUNTING, Mark. Dimensions and indicators of non-profit financial condition: Evidence from South African public universities. S. Afr. j. econ. manag. sci. [online]. 2020, vol.23, n.1, pp.1-17. ISSN 2222-3436.  http://dx.doi.org/10.4102/sajems.v23i1.2974.

BACKGROUND: More than three decades of research have failed to achieve convergence on a method for the measurement of non-profit financial condition, with the literature reporting a bewildering array of financial dimensions, and more than 100 ratios and indicators AIM: This article offers a contribution to a broader discourse in non-profit financial analysis by recognising, and taking action in response to, the potential threat to research validity arising from the generally unchallenged presumption that accounting numbers provide a complete, unbiased and error-free representation of an entity's underlying economic reality. SETTING: The 23 South African public universities in continuous existence for the 10 financial years from 01 January 2007 to 31 December 2016. METHODS: From the non-profit financial analysis literature, three foundational models are identified, and 24 associated ratios are specified as candidate indicators of financial condition. These are calculated for each university from accounting numbers which have been adjusted in mitigation of inadequacies of the financial reporting rules. Principal component analysis is applied to evaluate the indicators, and eliminate those which lack significant association with the emergent dimensionality of financial condition. RESULTS: The financial condition of South African public universities is positively associated with liquid discretionary financial assets, which are interpreted as representative of financial resilience and defensive capacity in the presence of economic shock. Unrestricted equity has incremental relevance, suggesting that the universities derive financial benefits from a capital structure in which assets are funded through sources that are burdened with neither debt obligations nor donor restrictions. CONCLUSION: This research appears to be among the first to propose a dimensionality for non-profit financial condition that is developed on a foundation of responding to the need for mitigation of inadequacies in the financial reporting system.

Palabras clave : Non-profit financial condition; university financial health; Higher education finance.

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