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In the attempt to fulfill the university’s mission, the leaders must constantly balance each decision and its effect on the various stakeholders at the university. Students, faculty, and outside enterprises all want what is best for themselves, and sometimes those wants can clash. In order to ensure that the university is allocating its resources in a way that is beneficial to stakeholders collectively and focuses on the long-term, financial analysis can be done on the university’s annual financial reports. The financial reports for universities experienced massive changes in the early to late 1990s as the Governmental Accounting Standards Board (GASB) decided how to implement rules for public universities and colleges. The financial reports contain valuable information that can give the reader an idea as to what the university’s financial position looks like, what kind of revenues and expenses are incurred, and the inflows and outflows of cash. A Composite Financial Index (CFI) can then be calculated using the information in the financial reports. After calculating the CFI for Western Michigan University, it was found that the university may be under financial stress. In addition to what appears to be a declining financial performance, WMU is experiencing average to below-average performance in terms of enrollment, retention, and graduation. Considering both financial and non-financial factors, it may be in WMU’s best interest to work towards re-engineering the institution. With the construction of the new South Neighborhood and student center, along with a new budget model that is planned to be implemented soon, WMU does look like it is taking action that may positively influence their CFI in the coming years.
Farrel, Jordan, "An Examination of Western Michigan University's Financial Statements" (2019). Honors Theses. 3214.
Honors Thesis-Open Access