Robert S. Landrebe says that it's important for a board to understand their school's financial health so that their strategic planning is well informed. Boards are inundated with financial data, but most financial information can be boiled down to four key ratios. The key ratios answer the most important questions: (1) Is a school living within its resources? (2) Does the school have sufficient resources and flexibility to advance the mission of the school? (3) Are the financial resources, including debt, being managed strategically? The Composite Financial Index score can help the board understand what capacity the school has to launch new strategic initiatives. It doesn't make sense for a board to approve a strategic plan if they don't know whether they have the capacity to accomplish the initiatives. Understanding the school's financial health helps the board make the best decisions.
