We realize that reading and understanding financial statements can be boring and complex. This guide will help explain the various parts of the financial statements to nonaccountants. It was created with you in mind, incorporating suggestions from employees throughout the University who are NOT accountants.

We hope you find this guide useful. Throughout this page, click on any orange term for a complete definition. Please complete the feedback section for any suggestions you may have to improve this tool for understanding the University’s financial statements.

Statement of Net Position (Balance Sheet)

The Statement of Net Position, also known as the Balance Sheet, is the first part of the Annual Financial Report. This is where the University reports the resources it holds (assets) and the claims against those resources (liabilities).

We will start by reviewing the different types of assets held by the University of Florida. After that, we will talk about the liabilities, or claims on the University’s assets. Finally, we will bring the two together by discussing UF’s net position, which is the difference between the University’s assets and liabilities.


Assets can be current assets or noncurrent assets, depending on when they are expected to be used or could be converted to cash. Three major assets on UF’s balance sheet are described below.


Investments on the balance sheet can change a great deal each year depending on interest rates or market value. This is because the financial statement reflects the changes in the fair value of UF’s investments, even though these changes are unrealized because UF has not sold the investments. Market interest rates fluctuate greatly from year to year, significantly impacting the University’s results each fiscal year (commonly abbreviated to “FY”).

Capital Assets

These make up another major portion of UF’s assets, and consists mainly of buildings, construction in progress, infrastructure and other improvements, furniture and equipment, library resources and computer software. However, unlike cash, capital assets cannot easily be spent and therefore cannot fund daily University operations.

Learn more about Capital Assets

There are two main categories of capital assets. Depreciable capital assets, such as buildings, computer software and equipment, will last for more than one fiscal year, but will not last indefinitely. This means that during each accounting period some of the cost of these assets is being used up, and this is reported as depreciation expense over the useful life of the asset. Nondepreciable capital assets, such as land, are assumed to last indefinitely and are not depreciated.

The vast majority (over 90%) of UF’s capital assets are depreciable.

Accounts Receivable

Accounts Receivable are payments owed to UF from various sources. These include grant and contract reimbursements, sales and services to students and third parties, student tuition and fees, and interest accrued on Loans and Notes Receivable. Unfortunately, not all of the payments owed to UF will be collected. Therefore, UF records the estimate of the amount that will not be collected as allowances for uncollectable receivables on the Statement of Net Position.

What makes up UF’s accounts receivable?

What are Auxiliary Enterprises?

Auxiliary Enterprises are self-supporting activities that charge students, faculty, and staff for their services. The general public may be served only incidentally by these enterprises. Think student dormitories, parking and transportation, etc.


Liabilities are claims on the University’s assets. Just like assets, liabilities can be current liabilities or noncurrent liabilities depending on when they are due.

Unearned Revenue

Unearned revenue is money that has come in to the University before the end of the fiscal year, for services that have yet to be provided. The University still has an obligation to fulfill in return for these payments, and therefore they are recorded as a liability. The majority of this liability is from sponsor payments for grants and contracts that are received before the research or work has been performed.

How can Student Tuition and Fees be unearned?

These are amounts paid for summer courses that have not ended by June 30th, the end of UF’s fiscal year.

Capital Improvement Debt Payable

Capital improvement debt is issued to build facilities for UF, such as parking garages or student housing. It is not used to pay for normal University operations. The debt is paid from the revenue specified in debt agreements.

Compensated Absences Payable

This liability, called compensated absences payable, is recorded based on UF’s policy for leave payout, and consists of the dollar value of the paid time off UF employees have earned but not yet used, including corresponding employer payroll taxes. The current part of the compensated absences liability is the amount UF expects to pay to employees in the upcoming fiscal year, based on the payouts over the last three years.


A UF employee that earns $50,000 annually has 40 hours (1 week) of unused annual leave as of June 30th. UF has accrued about $962 (plus amounts related to Medicare and Social Security taxes) in compensated absences. Sick leave is calculated differently, due to payout policies.

Ratio Analysis

It is important that the balance sheet shows both assets and liabilities as current and noncurrent, so that ratio analysis can be performed.

What is one type of ratio analysis?

One example is the current ratio, which compares current assets to current liabilities. This ratio can help determine if the University has the capability to pay debts as they are due. Therefore, a ratio greater than 1 is favorable because it is one indicator of financial health.

Net Position

Now we are going to combine everything discussed previously, and look at the overall Net Position of the University. In addition, Net Position is broken down into four categories so we will discuss each of those below.

How is this calculated? Net Position = (Assets + Deferred Outflows) – (Liabilities + Deferred Inflows)

Net Investment in Capital Assets

This amount is UF’s capital asset balance, after subtracting the debt that is associated with funding these capital assets. Net Investment in Capital Assets makes up the majority of UF’s total net position.

How is this calculated? Net Investment in Capital Assets = Capital Asset Balance – Debt Issued to Fund Capital Assets

Net Position Restricted for Nonexpendable Purposes

This is made up of endowments received as gifts where only the investment earnings on the gift can be spent, and then only on specific things. This balance is comprised of over 3,000 individual endowments. Each endowment fund has unique donor restrictions and the principal balance is an asset that must be retained permanently. This means the original funds and any additional principal cannot be withdrawn, spent or used in any way.


A donor gives $3 million to UF with the requirement that the University has to establish an endowment, invest the gift, and maintain the principal intact permanently. The donor stipulates that the investment income from the endowment must be spent on scholarships for low-income students majoring in health administration. These funds would be included in the net position restricted for nonexpendable purposes.

Net Position Restricted for Expendable Purposes

These funds are set aside for a specific period of time or until a certain event, as established by the University or a donor. However, funds can only be spent according to the established restrictions.


A donor gives $100,000 to UF with the requirement that the University has to invest the principal amount of the gift and spend the investment income on summer research grants for chemistry faculty. There is also a requirement that after the donor’s death the University should withdraw the principal and spend it, again on summer research grants for chemistry faculty. These funds would be included in the net position restricted for expendable purposes, as the principal can be spent but only according to the restrictions.

Statements of Revenues, Expenses and Changes in Net Position (Income Statement)

The next part of the Annual Financial Report is the Statements of Revenues, Expenses, and Changes in Net Position, also called the Income Statement. The Income Statement shows where UF gets its money (revenues) and how it spends its money (expenses). There are three separate sections of the Income Statement.

Operating Revenues and Expenses

Operating Revenue is the money UF makes when performing its primary missions: teaching, research, and public service. Operating Expenses are the costs that UF incurs through these activities.

Nonoperating Revenues and Expenses

This category is made up of revenues and expenses that are not directly related to UF’s primary mission. The biggest sources of Nonoperating Revenues are noncapital state appropriations, federal and state financial aid, investment income, and noncapital grants, contracts, and gifts. Nonoperating expenses mostly consist of investment expenses and interest on capital asset-related debt.

Other Revenues

The Other Revenues section is made up of capital state appropriations and capital gifts and grants. These are funds to be used only for the construction of buildings or other capital assets. Or, the gift might be a donation of actual capital property.

What’s the trend?

Other Revenues have steadily increased for UF over the past few years. The state of Florida and donors continue to demonstrate support for UF’s growth, preeminence initiative, and overall mission each year.


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