Primary Reserve Percentage

The primary reserve ratio compares the level of assets that an organization can quickly access and spend to satisfy its fiscal obligations.  In describing the organization’s ability to support current operations from available expendable resources, the ratio measures financial strength of the organization. 

Expendable net assets should increase at a level commensurate with growth in operational activity.  Monitoring this ratio allows a tracking of growth and whether or not growth in resource levels provides an appropriate margin for dealing with opportunity or adversity.

The numerator (expendable net assets) is comprised of unrestricted net assets and expendable restricted net assets as reported in the Statement of Net Position.  The denominator is comprised of operating expenses as reported in the Statement of Revenues, Expenses, and Changes in Net Position.