A study of the usefulness of financial ratio indicators by presidents and chief financial officers of small institutions within the Council of Independent Colleges and Universities

The purpose of this study was to investigate the perceived usefulness of financial ratio indicators by presidents and chief financial officers (CFOs) of small institutions within the Council of Independent Colleges and Universities (CIC). This study also examined whether there were any statistical differences in the perceptions of presidents and CFOs at small private majority and Historically Black Colleges and Universities (HBCUs) within the CIC.As part of the study, surveys were mailed to 24 university presidents and 24 CFOs at small private majority institutions and 24 university presidents and 24 CFOs at HBCUs within the CIC. Participates were asked to completed a questionnaire consisting of 15, three part questions regarding the perceived usefulness of financial ratios for understanding, communicating, and preparing and monitoring their institution's financial condition and strategic plan. Participates who responded to the survey included 11 university presidents and 6 CFOs at small private majority institutions and 4 university presidents and 9 CFOs at HBCUs.The findings of this study revealed that there were no statistically significant differences in the overall perceptions of presidents and CFOs of small private institutions within the CIC. The findings of the study also reveal that there were no statistically significant differences in the perceptions of private majority and HBCU institutions in the usefulness of financial ratios. However, the findings of the study did reveal statistically significant differences between the four groups in several individual ratios and sub-categories of ratios. The researcher also sensed that there is an increase in the awareness of the use of financial ratios by HBCUs. This heightened awareness is being driven by the use of financial ratios by a regional accreditation agency as a method of evaluating institutional financial condition.