'Nonprofits' need surplus too

By definition profit refers to the difference between revenue and expenses. In for-profit organizations profit or surplus gives a return to the owners of the company and serves as a source of financing for capital acquisitions and working capital. Nonprofit organizations, which are not allowed a surplus, don't suffer on the first count because they have no owners. But they do suffer on the second count because, if expected to grow, they need to finance asset replacement and growth. In these days when funds for long-term debt are becoming scarcer, this author asserts, the need for regulators to allow 'nonprofits' to keep a surplus is increasing. In this article, he argues for a surplus and then discusses how managers and regulators can determine how much a nonprofit organization should be allowed. He presents a combination of a modified version of the return-on-asset pricing model used in for-profit organizations and a model for assessing working capital needs associated with growth.     

Forecasting derived product demand in commercial construction

This article presents a practical scheme for forecasting derived demand for an industrial product used in the nonresidential construction industry. The method proposed includes a basic product requirement model to be used in conjunction with lagged construction award data. Twelve-month moving averages are used to smooth the basic construction contract award data which is analyzed by construction type and by geographic region.The methodology described enables accurate product sales potential estimation, and when compared with smoothed historical sales data, provides a means of evaluating market penetration. Although the method presented is concerned primarily with forecasting in the relatively short term, the scheme may be extended to a medium term corresponding roughly to the construction cycle. The article deals with application to a specific industry segment. However, the forecasting and evaluation procedure is adaptable to other industrial products.