Close Nav
Open Nav
Close Nav

Six Tells of an Impending Financial Crisis

Six Tells of an Impending Financial Crisis

By Michael K. Townsley

Colleges sometimes miss the ‘tells’ that indicate an increasing risk of a major financial crisis. Our experience has found six critical ‘tells’ that colleges should carefully monitor. For more information about this subject, see TIPS on College Leadership, available on Amazon.

      1. Serial and Growing Deficits

      1. Short-term cash loans are increasing annually by large amounts

      1. Net Tuition shrinks year-to-year

      1. Enrollment in a major is less than the number of faculty

      1. Payables are increasing

      1. Burnout Score is less than three

            • Use the following model to compute your score:

      Cash Burnout Model © (data from Cash Flow in the Audit)

      Total Operations, Cash (A)
      Change in Operations if Negative (B)
      Burnout Score (A/B)
      A Burnout Score that is less than three indicates the possibility of a financial crisis within three years.

      If you have concerns about your college’s financial condition, contact us below.