Evidence Saving, Wealth, Performance and Prediction of Financial Vulnerability in Taiwan Private Universities

Abstract

The study examined both financial performance and prediction of financial vulnerability as dual ways in evaluating the nonprofit organization (NPO) of Taiwan institutions of higher education( IHE). Applying prior confirmed methods of (a) Fiscal performance, including the saving, wealth, and two saving ratios (Carbone & Winston, 2004), and (b) Four financial distress indicators-debt ratio, revenue concentration, saving surplus and organization size for financial vulnerability (Trussel, 2002), we obtained a result that over the year of 2004-2006, some universities showed declining yearly savings obviously. The four indicators are proved to be useful in predicting the financial vulnerability of higher educational organizations in Taiwan. According to Carbone and Winston (2004), the saving of an individual school describes its performance measure and the slack, breathing space, or vulnerability which is related to its spending or competition. Trussel (2002) found the model using the four indicators useful in predicting financial vulnerability of charitable organizations, and we followed his model and applied to the private universities and colleges in Taiwan. The results show that that financial vulnerability is significantly associated with debt ratio, revenue concentration, and yearly savings, but insignificantly with size. This article also discusses the implication of the findings and future research.