Board of Visitors minutes April 7, 2006 | ||
Debt Capitalization Percentage
This ratio measures what percentage of University capital comes from debt. A university that relies too heavily on debt capital may risk being over-leveraged and potentially reduce its access to capital markets. Conversely, a university that does not strategically utilize debt as a source of capital may not be optimizing its funding mix, thereby sacrificing access to low-cost funding to invest in mission objectives.
AGGREGATE DEBT
TOTAL NET ASSETS +
AGGREGATE DEBT < 20%
Use of Ratios in Managing University Credit Ratings
Both the Viability and Debt Capitalization Ratios include any component unit (University-related Foundation) balances as disclosed in the University’s financial statements.
The ratios and limits are not intended to track a specific rating, but rather to help the University maintain a competitive financial profile, funding for facilities needs and reserves, and compliance with Commonwealth debt
The Debt Policy is shared with external credit analysts and other parties in order to provide them with background on the University’s philosophy on debt and management’s assessment of debt capacity and affordability.
Board of Visitors minutes April 7, 2006 | ||