The ratio unrestricted net assets as a percent of operating expenses is helpful in determining if the not-for-profit organization can cover its debt service expense.

Question

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The ratio unrestricted net assets as a percent of operating expenses is not directly related to debt service expenses. It mainly reflects the organization's financial stability and ability to cover future operating expenses. Other ratios such as debt service coverage ratio or debt-to-equity ratio are more suitable for assessing the organization's ability to cover debt service expenses.

The Ratio Unrestricted Net Assets as a Percent of Operating