Advances in Management and Applied Economics

Financial Health of Australian Universities as Measured by Composite Financial Index

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• Abstract

  Recent studies have observed that a significant number of universities have been on an “unsustainable financial path”. In addition, the financial meltdown of 2008 coupled with some unfavorable turn of events predicted a decline in revenue in Australian Universities for the year 2011 from the surplus of 2010. In light of these findings, this study seeks to find out the financial health of Australian universities in 2011 by using the Composite Financial Index (CFI). A single metric such as CFI offers a more holistic approach to understanding the overall financial health especially for higher educational institutions. The findings show that most universities in Australia had strong financial health in 2011 indicating that there has been no adverse financial impact due to unfavorable events. Further, the study also reveals that financial health of Australian universities in 2011 was not influenced by factors such as size of university, rank of university, ratio of international students, ratio of graduate students, number of undergraduate programs offered, number of graduate programs offered, number of employees, ratio of teachers, and ratio of staff.