The Composite Financial Index (CFI) combines four financial ratios into a single score ranging from -4 to 10. A score of 3.0 is generally considered the threshold for financial health. The calculation follows four steps.
Step 1: Calculate Your Four Core Ratios
Primary Reserve Ratio =
Expendable Net Assets ÷ Total Expenses
Measures how long you could operate using only your flexible reserves.
Net Operating Revenues Ratio =
Unrestricted Operating Income ÷ Total Unrestricted Revenue
Indicates whether current operations are living within their means.
Return on Net Assets Ratio =
Change in Net Assets ÷ Total Net Assets
Reveals financial strength relative to previous year.
Viability Ratio =
Expendable Net Assets ÷ Long-term Debt
Measures ability to cover debt with existing resources.
Step 2: Convert to Strength Factors
Each ratio is converted to a strength factor using a standard scale. Divide your actual ratio by the Score 1 value. The result is capped at 10 and floored at -4.
Ratio | Score 1 (Weak) | Score 3 (Healthy) | Score 10 (Strong) |
Primary Reserve | 0.133x | 0.4x | 1.33x |
Net Operating Revenues | 0.7% | 2% | 7.0% |
Return on Net Assets | 2.0% | 6% | 20% |
Viability | 0.417x | 1.25x | 4.17x |
Step 3: Apply Weighting Factors
Weights differ depending on whether your organization carries long-term debt:
Ratio | With Long-term Debt | Without Significant Debt |
Primary Reserve | 35% | 55% |
Net Operating Revenues | 10% | 15% |
Return on Net Assets | 20% | 30% |
Viability | 35% | 0% |
Step 4: Calculate Your Final CFI
Multiply each strength factor by its weight and sum the results:
Ratio | Actual Value | Strength Factor | Weight | Contribution |
Primary Reserve | 0.74x | 5.56 | 35% | 1.95 |
Net Operating Revenues | 2.28% | 3.26 | 10% | 0.33 |
Return on Net Assets | 4.78% | 2.39 | 20% | 0.48 |
Viability | 1.28x | 3.07 | 35% | 1.07 |
CFI |
|
|
| 3.83 |
A CFI of 3.83 indicates solid financial health. For context on interpreting your score and how it appears in the platform, see Using the Financial Health Report.