To complete this worksheet, please determine the following values from your most recent audited financial statements. Such statements should cover a full year's (i.e. 12 months) operations. Please contact your accountant/CPA for assistance if needed.

1. Total Owners' Equity. Total owner's or shareholders' equity generally is the result of total assets, less total liabilities (both current and long-term).	___________ (1)
2. Intangible Assets. This amount is the total of such assets as goodwill, non-compete agreement, licenses and franchises, net of amortization.	___________ (2)
3. Unsecured Related-Party Receivables. Any amounts owed to the school by officers, directors, stockholders, and their direct family, which are not secured, are to be included. WARNING: U.S. Department of Education financial statement reviewers are not allowing the school's own stock to serve as collateral. Be very careful of your security!	___________ (3)
4. Net Property, Plant and Equipment. The total of all "fixed" assets, such as furniture, fixtures, equipment, vehicles, buildings, land, library, etc., less all allowances for depreciation and amortization of those same assets. Capitalized lease obligations, net of related depreciation, are to be included.	__________ (4)
5. Post Employment and Retirement Liabilities. Amounts owed to, or on behalf of, former employees for items such as retirement benefits, accumulated sick pay, bonus arrangements are examples of such liabilities. Such liabilities that have been identified and determined are generally required to be recorded in the accounting records, but are frequently missed. If determined and known, such amounts are to be recorded here.	__________ (5)
6. Total Long-Term Debt. "Long-term" debt means an obligation that will not be totally repaid within one year, or the operating cycle of the business, whichever is longer. Total long-term debt includes debt such as notes payable, bonds payable, capitalized leases, mortgages and notes owed to stockholders (depending upon the nature of the obligation), etc. The total long-term debt is determined before the deduction of current maturities, i.e. that part that will be repaid within one year, or the operating cycle of the business.	__________ (6)
7. Total Expenses. Total expenses is just that -- all expenses from the income statement, plus expenses included in "Other Income and Expenses". However, income tax expense, expense of discontinued operations, extraordinary losses, or changes in accounting principles are not included.	__________ (7)
8. Total Assets. Total assets is simply the final total of all assets on the balance sheets.	__________ (8)
9. Income Before Taxes. This amount is taken directly from the audited financial statements and is net income before the deduction of any income taxes.	__________ (9)
10. Total Revenue. The U.S. Department of Education further defines this amount as "Total Pre-tax Revenues". This amount is total operating revenues plus any non-operating revenues and gains. Investment gains are to be recorded net of investment losses. Further, no revenues shown after income taxes (e.g. discontinued operations, extraordinary gains, or changes in accounting principles) on the income statement are to be included.	__________ (10)

Once you have determined that above amounts, continue to calculate the following ratios:

Primary Reserve	STEP 1: Write the value of (1) - Total Owner's Equity - here:	__________ (A)
	STEP 2: Write the value of (2) - Intangible Assets - here:	__________ (B)
	STEP 3: Write the value of (3) - Unsecured Related-Party Receivables - here:	__________ (C)
	STEP 4: Write the value of (4) - Net Property, Plant and Equipment - here:	__________ (D)
	STEP 5: Write the value of (5) - Post Employment and Retirement Liabilities - here:	__________ (E)
	STEP 6: Write the value of (6) - Total Long-Term Debt - here: _____________ (F1) Write the value of (4) again here: _____________ (F2) Compare (F1) and (F2) and write the small amount here:	__________ (F)
	STEP 7: From (A) subtract (B), (C) and (D) and add (E) and (F) to (A). Enter the result:	__________ (G)
	STEP 8: Write the value of (7) - Total Expenses - here:	__________ (H)
	STEP 9: Divide the value of (G) by (H) and enter the result here:	__________ (I)
Equity
	STEP 10: Write the value of (1) - Total Owner's Equity - here:	__________ (A)
	STEP 11: Write the value of (2) - Intangible Assets - here:	__________ (B)
	STEP 12: Write the value of (3) - Unsecured Related-Party Receivables - here:	__________ (C)
	STEP 13: From (A) subtract (B) and (C). Enter the result here:	__________ (D)
	STEP 14: Write the value of (8) - Total Assets - here:	__________ (E)
	STEP 15: Write the value of (2) - Intangible Assets - here:	__________ (F)
	STEP 16: Write the value of (3) - Unsecured Related-Party Receivables - here:	__________ (G)
	STEP 17: From (E) subtract (F) and (G). Enter the result here:	__________ (H)
	STEP 18: Divide the value of (D) by the value of (H). Enter the result here:	__________ (II)
Net Income
	STEP 19: Write the value of (9) - Income Before Taxes - here:	__________ (A)
	STEP 20: Write the value of (10) - Total Revenues - here:	__________ (B)
	STEP 21: Divide the value of (A) by the value of (B). Enter the result here:	__________ (III)
After calculating the above ratios, those ratios must then be converted to a "Strength-Factor Score". Therefore, proceed as follows. HOWEVER, NO VALUE DETERMINED IN THIS STEP CAN RESULT IN A VALUE GREATER THAN 3.0 OR LESS THAN -1.0!
	STEP 22: Record the Primary Reserve ratio - (I) above - here: __________ Multiply the Primary Reserve ratio by 20 and record the result here:	__________ (IV)
	STEP 23: Record the Equity ratio - (II) above - here: __________ Multiply the Equity ratio by 6 and record the result here:	__________ (V)
	STEP 24: Record the Net Income ratio - (III) above - here: __________ Multiply the Net Income ratio by 33.3 and add 1 to the result. Record here:	__________ (VI)
After calculating the "Strength-Factor" scores above, the next step is to calculate the "Weighted" score as follows:
	STEP 25: Multiply the Primary Reserve strength-factor score - (IV) - by 30% (.3)	__________
	STEP 26: Multiply the Equity strength-factor score - (V) - by 40% (.4)	__________
	STEP 27: Multiply the Net Income strength-factor score - (VI) - by 30% (.3)	__________
Final Step: Add the values determined in STEPS 25, 26 and 27 together. The result is your final Composite score:		=========

Institutions with Composite scores less than 1.0 will be required to submit financial guarantees. Institutions with Composite scores between 1.0 and 1.4 will be considered "in the zone" and will be subject to additional monitoring. Institutions with Composite scores 1.5 or greater will be considered fully financial responsible.