Lafayette Film Center (LFC) is a not-for-profit theater that presents independent films. In addition to revenue from theater admissions, LFC relies on concession and café sales, grants and other external support, theater rental sales, and proceeds from special events and other programs that not only promote appreciation for independent films, but also generate grants and contributions. LFC’s new executive director has asked you, as the director of finance, to provide an analysis of the organization’s financial position.
Refer to Exhibits 14-7 through 14-10; these exhibits present LFC’s statements of financial position, statements of activities, analysis of expenses by nature and function, and statements of cash flows for the years ended December 31, 2021 and 2020.
1. Does LFC have an endowment? How do you know?
2. How much of LFC’s net assets with donor restrictions were reclassified as unrestricted in 2021? Where can this be found in the statements of financial position and statements of activities?
3. Calculate the four profitability ratios presented in the chapter for LFC for 2021 and 2020 as well as the percent change in each from 2020 to 2021. By which measure did LFC’s profitability deteriorate the most, and by how much?
4. LFC’s total expenses grew by over 100 percent from 2020 to 2021, while its total revenue and other support declined by over 50 percent. Look at the theater’s statements of activities to answer a and b:
a. Excluding interest/investment income and the one-time sale of tax credits, which three revenue or support categories declined by over 50 percent from 2020 to 2021?
b. Which expense category grew by over 100 percent?