Six Tells of an Impending Financial Crisis
Colleges sometimes miss the ‘tells’ that indicate an increasing risk of a major financial crisis. Our experience has found six critical ‘tells’ that colleges should carefully monitor. For more information about this subject, see TIPS on College Leadership, available on Amazon.
- Serial and Growing Deficits
- Short-term cash loans are increasing annually by large amounts
- Net Tuition shrinks year-to-year
- Enrollment in a major is less than the number of faculty
- Payables are increasing
- Burnout Score is less than three
- Use the following model to compute your score:
Cash Burnout Model © (data from Cash Flow in the Audit)
| Total Operations, Cash (A) | |
| Change in Operations if Negative (B) | |
| Burnout Score (A/B) | |
| A Burnout Score that is less than three indicates the possibility of a financial crisis within three years. | |
If you have concerns about your college’s financial condition, contact us below.
