Since 1950, World Vision has served close to 100 million people in nearly 100 countries around the world. “World Vision provides emergency relief and long-term community development programs, including local leadership training” (2011 Audited Financial Statement).
Refugees, earth quake and hurricane survivors, abandoned and exploited children, survivors of famine and civil war, families and children affected by AIDS are all served by the non-profit organization (“Who we are”).
With a staff of more than 40,000, employees are mostly based in their home countries or regions. The organization believes this allows for a “deeply personal understanding of how best to assist local children and families. ” Employees come from very diverse backgrounds including: hydrology, micro-enterprise development, and public health, to name a few (“Who we are”).
World Vision’s organizational mission and values are interwoven into the company culture. Employees have a clear understanding of the purpose of the organization and their role within the rganization. According to the World Vision website, the organizational mission is: World Vision is an international partnership of Christians whose mission is to follow our Lord and Savior Jesus Christ in working with the poor and oppressed to promote human transformation, seek justice, and bear witness to the good news of the Kingdom of God (“Who we are”).
According to the World Vision website, the organizational vision is: Our vision for every child, life in all its fullness; Our prayer for every heart, the will to make it so (“Who we are”).
The Term Paper on Organizational Behavior Organization Forces Mission
Organizational Behavior, by definition, is the study of human behavior, attitudes, individual differences, and performance in organizational settings. Understanding the internal and external forces within an organization is important to the success of any business. The internal and external forces that are to be understood are restructuring, economy, competition, fiscal policies, organizational ...
World Vision takes financial responsibility very seriously, and is ranked extremely high among websites that rate non-profits for efficiency including: Charity Navigator, Guide Star, and Evangelical Council for Financial Accountability (ECFA).
According to Charity Navigator, World Vision ranks among the most efficient non-profits: Table 1- Organizational Efficiency Program Expenses| 88. 3%| | | Administrative Expenses| 4. 0%| | | Fundraising Expenses| 7. 5%| | | Fundraising Efficiency| $0. 07| | | | | | | Figure 1- Organizational Efficiency
According to World Vision’s 2006 Consolidated Financial Statements, around 40% of their revenue comes from private sources, including individuals, World Vision clubs in schools, corporations and foundations; 27% comes from governments and multilateral aid agencies such as USAID and the Department for International Development (DFID) in the UK; 30% comes from other World Vision programs and nonprofit organizations as Gift in Kind. Aside from cash contributions, World Vision accepts gifts in kind, typically food commodities, medicine, and clothing donated through corporations and government agencies.
Approximately half of World Vision’s programs are funded through child sponsorship. Individuals, families, churches, schools, and other groups sponsor specific children or specific community projects in their own country or abroad. Sponsors send funds each month to provide support for the sponsored children or projects. World Vision is a religious organization that competes with other non-profit companies in the health care and social assistance sectors.
World Vision competes with organizations that advocate for human rights, assist with poverty issues, feed the hungry, promote self-sufficiency, work with impoverished children, and focus on issues related to women and children. Competitors of World Vision include: Children International, Food for the Hungry, Habitat for Humanity, Action Against Hunger, Christian Relief Services, Lutheran World Relief, Catholic Charities, Red Cross, Action Against Hunger, Care, City Harvest, Feed the Children, Salvation Army, just to name a few.
The Business plan on World Vision Case Study
World Vision, Inc. was founded as a nonprofit corporation in 1950 by Bob Pierce, an American evangelist. As World Vision in the United States grew, World Vision organizations were formed in New Zealand, Australia, and Canada, which were primarily fund-raising partners, and World Vision in the United States dominated in size and influence. Occasionally, a national World Vision entity was formed in ...
Because World Vision is a non-profit organization, it is a bit difficult to measure the overall market share. However, it is safe to say that World Vision holds quite the non-profit market share with total support and revenue reaching $1,040,546 in 2011 (2011 Audited Financial Statement).
The company is also listed in the Forbes. com Special Report: The 200 Largest U. S. Charities (Barrett, 2012).
Section II- Evaluating Financial Statements World Vision could benefit from analyzing financial statements, financial ratios, and industry averages.
By using a variety of methods to evaluate finances including horizontal and vertical analysis, World Vision would have a broader financial view. By also assessing liquidity ratios, leverage ratios, and profitability ratios, World Vision could gain additional insight into how the organization compares with competitors (Mowen, Hansen & Heitger, 2012).
Horizontal analysis will allow World Vision to “express a line item as a percentage of some prior amount”; therefore, allowing the comparison of previous year’s financial statements (Mowen, Hansen & Heitger, 2012, pg. 670).
Looking at past financial statements to compare to current financial statements allows organizations to see an overall picture of how the company is expanding and increasing profits, or what may be keeping the company from expanding and increasing profits. By focusing on vertical analysis, World Vision can directly link relationships in the company’s financial statement. For instance, by basing the assessment on net sales (or in this case–donations, government funding, and gifts in kind), the non-profit can find relationship percentages compared with that particular year’s net donations.
Vertical analysis can determine if the cost of goods (services) has increased and if operating expenses have increased. This can then be analyzed to see how this may be related/linked to net donations. With a company as global and massive as World Vision, it is important (yet complicated) to assess factors such as operating expenses, program expenses, administrative expenses, and fundraising expenses. For a non-profit, it is important for these expenses to be efficiently tracked as this affects the organizational rating with reputable websites like Charity Navigator and Charity Watch.
The Business plan on Ratio and Financial Statement Analysis
This paper analyzes tools used in financial analysis such as ratios. Financial ratio analysis is a judicious way for different stakeholders to use for different goals. This paper demonstrates that financial ratio analysis is an important instrument to estimate resources and their used. It also demonstrates that despite the fact that financial ratio analysis is an excellent tool, it does have ...
Liquidity ratios are extremely important to an organization like World Vision, whose operation relies, at times, on government funding. Government funding monies may come in intermittently and the organization may have to rely on other sources of income, which may include funding from creditors. The current ratio, the measure of a company’s ability to pay short-term liabilities, is crucial to World Vision’s immediate operations. The general rule of thumb is that a ratio of 2. 0 is needed for a company to be considered in a good position to pay off debt (Mowen, Hansen & Heitger, 2012).
When assessing the current ratio, it should be considered that a declining ratio is not necessarily bad as it could signal an excessive investment in current resources. Leverage ratios are also vital in determining the company’s financial health, as World Vision most likely uses credit for funding certain projects. The long term goals of the company are often evaluated, and times-interest-earned ratio can help determine the company’s ability to pay back debt. Also, the debt ratio measures the “percentage of assets financed by creditors and the riskiness of the company” (Mowen, Hansen & Heitger, 2012, pg. 82).
Finally, profitability ratios are useful when determining if invested funds are being used efficiently (Mowen, Hansen & Heitger, 2012).
World Vision should pay particular attention to return on sales (return on investment), as this is important for both internal and external stakeholders. As a non-profit, World Vision is carefully scrutinized when it comes to the way donation money is handled and spent. By using the evaluation techniques discussed above, World Vision may experience both positive and negative ramifications. First of all, it is very important hat the ratios and horizontal analysis is computed correctly, otherwise, useful conclusions cannot be drawn. Also, companies in the past have been known to modify ratios to increase stock price. This can have dire consequences, as Enron so notoriously proved. If the analyses are done correctly, positive conclusions can be drawn that will allow the company to assess growth, plan future goals, and decide where changes need to be made to increase overall efficiency. Overall it is clear that World Vision is performing well based on the ratios listed in Table 2 (World Vision, 2012).
The Essay on World Vision Website Analysis
World Vision Philippines is a non-profit organization that advocates helping the children, families and communities in the Philippines in overcoming poverty and injustice. I have chosen this company because there were two questions that were running through my mind. First is, “How does a non-profit organization market their company? Second, “What do they exactly sell?” For a non-profit ...
By looking at factors like current ratio, World Vision is in a good position to pay off debt with a rating of 1. 54. Also, World Vision’s return on fund raising (FR) efforts and contributions reliance is excellent. Table 2- World Vision Financial Ratios Section III- standard cost According to Mowen, Hansen & Heitger (2012, pg. 409), “standard costs are developed for direct materials, direct labor and overhead. ” Standard cost sheets are developed to calculate overall standard unit cost, which includes all associated costs. Standard costs are used as target costs (or basis for comparison with the actual costs), and are developed from historical data analysis or from time and motion studies. They almost always vary from actual costs, because every situation has its share of unpredictable factors also called normal cost” (Standard Cost).
For World Vision, this may include: cost of food supplies, cost of shipping food supplies, labor associated with packaging food, labor associated with delivering food, administration, overhead, fundraising, marketing, etc.
Standard cost for World Vision is not quite as straight forward as it might be for a manufacturing company. There are additional variables, and associated costs, linked with a global service organization like World Vision. “An important part of standard cost accounting is a variance analysis, which breaks down the variation between actual cost and standard costs into various components (volume variation, material cost variation, labor cost variation, etc. ) so managers can understand why costs were different from what was planned and take appropriate action to correct the situation” (Product Costing, 2012).
Unfavorable variances take place when the actual prices of the services/products are greater than standard prices. Favorable variances take place when the reverse happens (Mowen, Hansen & Heitger, 2012).
With that said, it should be noted that favorable variances do not always equal ‘positive’ outcomes. To establish the cause of variance, managers must examine the cause of the outcome. When companies focus on trends over time, World Vision can make a determination of areas that may need closer investigation. Investigating the cause of variances and taking corrective action, like all activities, have a cost associated with them” (Mowen, Hansen & Heitger, 2012, pg. 413).
The Essay on Investment and Net Operating Profit
There are many methods to evaluate the performance of each division. We can use profitability ratios, liquidity ratio and debt ratio and so on to do the measurement. Just like many big company in the world, ROI, the indicator of money gained or lost on an investment relative to the amount of money invested, is the most popular way to do the measurement. However, in my opinion, EVA or RI should be ...
If World Vision management notices a variance in the cost of services, a determination should be made on whether or not it is likely that this variance will reoccur. World Vision should, most likely, take the stance of only investigating variances that are large enough to fall outside a suitable range. By establishing control limits on cost of services at World Vision, management would be able to determine if a cost falls outside the acceptable range.
Organizations should focus investigations on obvious cost variance, as this will help avoid financial waste associated with investigation. According to Advantages and Disadvantages of Standard Costing and Variance Analysis found on the website- www. accountingformanagement. com (2012), the limitations to standard costing include: * It cannot be used in those organizations where non-standard products are produced. If the production is undertaken according to the customer specifications, then each job will involve different amount of expenditures. The process of setting standard is a difficult task, as it requires technical skills. The time and motion study is required to be undertaken for this purpose. These studies require a lot of time and money. * There are no inset circumstances to be considered for fixing standards. The conditions under which standards are fixed do not remain static. With the change in circumstances, if the standards are not revised the same become impracticable. * The fixing of responsibility is not an easy task. The variances are to be classified into controllable and uncontrollable variances.
Standard costing is applicable only for controllable variances. For World Vision, standard costing is not an appropriate financial assessment measure, as the services provided are non-standard, the services do not remain static, and variances are not controllable. Section IV- Future Financial Analysis According to Mowen, Hansen & Heitger (2012), poor planning or budgeting can result in a firm not having sufficient cash to meet liabilities as they come due. Budgeting is a process where future revenues and costs are estimated.
The Term Paper on The World Population Explosion And The Cost Of Unc
The World Population Explosion and the Cost of Uncontrolled Immigration Dwight D. Murphey Wichita State University The Immigration InvasionWayne Lutton and John Tanton Petoskey, Michigan: The Social Contract Press, 1994 It would hardly seem too much to say that data released in The Immigration Invasion indicate that thecultural and even the political existence of the United States as history has ...
By taking into account labor, materials, manufacturing overhead, and selling and administrative expenses companies have the ability to monitor an annual budget. Companies can make more informed financial decisions by following projected financial statements. The process of planning allows a company to look towards the future to see what actions should be taken to meet potential goals. By planning for the future, management can develop a direction for the organization, predict future problems, and develop future policies (Mowen, Hansen & Heitger, 2012).
Net present value, also known as NPV, can measure the profitability of an investment and shows the variation between the current value of the cash inflows and outflows associated with the project (Mowen, Hansen & Heitger, 2012).
When the NPV is positive, this shows the organization that the project will increase the company’s wealth. The NPV is an important indicator of whether or not a company should move forward with a project or investment. According to Mowen, Hansen & Heitger (2012): * If the NPV is greater than zero, the investment is profitable and, therefore, acceptable.
A positive NPV signals that (1) the initial investment has been recovered, (2) the required rate of return has been recovered, and (3) a return in excess of (1) and (2) has been received. * If the NPV equals zero, the decision maker will find acceptance or rejection of the investment equal. * If the NPV is less than zero, the investment should be rejected. In this case, it is earning less than the required rate of return. According to the website, World Vision has encompassed the organizations future goals into what they call–The Millennium Development Goals (MDGs).
These goals range from halving extreme poverty to halting the spread of HIV and AIDS and providing universal primary education. The target date of these goals is 2015, and World Vision has “galvanized unprecedented efforts to meet the needs of the world’s poorest” (Eight ways to change the world).
These eight goals include: 1. Eradicate extreme poverty & hunger 2. Achieve universal primary education 3. Promote gender equality & the empowerment of women 4. Reduce child mortality 5. Reduce maternal mortality 6. Combat HIV and AIDS, malaria and other diseases 7.
Ensure environmental sustainability 8. Develop a global partnership for development When evaluating these goals, World Vision should consider the NPV of specific projects related to these goals. By using several capital budgeting techniques, World Vision can decide whether a project/investment should be considered. Utilizing the payback rule, profitability index, IRR and NPV, World Vision is able to determine the best financial decisions for the company. By determining how long it will take to recover the cost of investment for the firm, World Vision can use the payback rule.
In using the investment rule, the company looks at a certain number of time periods to determine a cutoff for whether to invest in a project. The net present value is defined as the sum of the present values (PVs) of the individual cash flows of the same entity. The internal rate of return on an investment or project is the “annualized effective compounded return rate” or “rate of return” that makes the net present value (NPV as NET*1/(1+IRR)^year) of all cash flows (both positive and negative) from a particular investment equal to zero (Mowen, Hansen, & Heitger, 2012).
Section III- Summary and Recommendations
Napoleon Hill, a distinguished author, once said that “ideas are the beginning point of all fortunes. ” For Bob Pierce, the founder of World Vision, it was the humbling experience of meeting a battered and abandoned child that sparked the idea for World Vision. Fifty years later, World Vision continues to lead the way in humanitarian efforts across the globe. Organizational efficiency allows World Vision to adapt to the changing world. More and more leaders, government agencies, and private organizations partner with World Vision in an attempt to better the world one child at a time, across communities in need.
The magnitude of World Vision’s reach is tremendous, and because of the monumental respect and trust of many organizations towards World Vision, the need to refine and maintain quality practices is vital. Over the last several years, World Vision has implemented programs around the world focusing on children and the communities in which they live. World Vision has called upon global leaders to treat the problems of childhood disease, hunger, and poverty as a priority. As they look to the future, I recommend that World Vision continue looking for ways to reach out to children of the world and render assistance and support.
