Does your church track its expense ratios? This can help you identify key trends in the outflow of resources between years. It also provides the opportunity to compare with other churches and check the reasonableness of your expenses. These ratios represent important indicators every church should understand.
1. Personnel and Mandatory Debt Service Payments to Total Expenses (Excluding Depreciation Expenses)
The ratio of “Personnel (Salaries + Benefits)+ Mandatory Debt Service Payments(Principal + Interest Expense)” to “Total Expenses - Depreciation Expense”
The largest expense on the financial statements of most churches is salaries and benefits. This is understandable, as a church is not in the business of selling products or manufacturing items. It provides services performed by individuals, paid and volunteer. Debt service payments—which are a reduction of ...