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What are ratios to be used? What are the market norms for non profit organisation?
Quick ratio and Current ratio for short term solvancy
From solvency stand point theses should typically same as any other commercial enterprise. The not-profit set ups also have liabilities and commitments therefore all the Solvency ratios should apply. As far as profit is concerned this could be replaced with surplus of inflows vs outflow or net of expenditure account. Key solvency ratios are debt to equity ratio, debt to capital ratio, debt to assets ratio, times interest earned ratio, fixed charge coverage ratio, etc.
Solvency of non-profit organizations can be calculated with two ratios.
1) Operational Solvency (comparing incomes with all the cash costs)
2) Financial Solvency (Adding costs of any subsidies (like cost of inflation on Equity) to expense in the above ratio
