The Key Financial Indicators (KFIs) are compiled using information provided to HESA as part of the HESA Finance record.
The KFIs shown are a set of ratios extracted from the Finance record. They are not performance indicators and take no account of provider-level characteristics such as the range of subjects taught or the types of provision. No single indicator provides the overall health of the provider.
The KFI definitions below were implemented from the 2016/17 academic year onwards and cover the restated 2015/16 data.
Links to historical KFI definitions are shown at the end.
Surplus/(deficit) as a % of total income
Surplus refers to the excess of income over expenditure of a provider and Deficit occurs when a provider’s expenditure exceeds its income. Surplus/(Deficit) expressed as a percentage of total income indicates the provider’s operational profitability before exceptional gains/(losses) and taxes. It is calculated as follows:
Numerator Surplus/(deficit) before other gains/losses and share of surplus/(deficit) in joint ventures and associates
Denominator Income: Total income
Expressed as a percentage value
Staff costs as a % of total income
Staff costs are typically the largest regular expenditure for providers. When expressed as a percentage of income, it shows the provider’s management of this cost against their income.
Numerator Expenditure: Staff costs
Denominator Income: Total income
Expressed as a percentage value
Premises costs as a % of total costs
Similar to staff costs, providers often have significant fixed overhead costs related to their Estate. it shows the provider’s management of their estate cost with respect to its total cost.. It is calculated as follows:
Numerator Premises: Total premises, Other operating expenses
Denominator Expenditure: Total expenditure
Expressed as a percentage value
Unrestricted reserves as a % of total income
Unrestricted reserves is an accumulation of unrestricted funds in the Provider’s balance sheet and includes revaluation reserve. Unrestricted reserves are also known as General funds.
Numerator Unrestricted reserves: Income and expenditure reserve unrestricted
plus
Unrestricted reserves: Revaluation reserve
Denominator Income: Total income
Expressed as a percentage value
External borrowing as a % of total income
This measure intends to show the level of which provider’s funds are sourced from loans or similar means of borrowed money as an indicator of risk to a provider’s financial health.
Numerator
Creditors - amounts falling due within one year: Bank overdrafts
plus
Creditors - amounts falling due within one year: Bank loans and external borrowing
plus
Creditors - amounts falling due within one year: Obligations under finance leases and service concessions
plus
Creditors - amounts falling due within one year: Loans repayable to funding council
plus
Creditors: amounts falling due after more than one year: Bank loans and external borrowing
plus
Creditors: amounts falling due after more than one year: Obligations under finance leases and service concessions
plus
Creditors: amounts falling due after more than one year: Loans repayable to funding council
Denominator
Income: Total income
Expressed as a percentage value
Days ratio of total net assets to total expenditure
Net assets is the net total of the providers assets and liabilities. This ratio indicates the number of days the provider can sustain based on the current level of expenditure
Numerator Total net assets
Denominator Expenditure: Total expenditure
Ratio of current assets to current liabilities
This indicator shows the provider’s short-term liquidity.
Numerator Current assets: Total current assets
Denominator Creditors - amounts falling due within one year: Total creditors (amounts falling due within one year)
Net cash inflow from operating activities as a % of total income
An indicator of the income sourced from day-to-day running of the provider; its surplus, as a percentage of overall income including sources such as student fees, research grants etc.
Numerator Net cash inflow from operating activities
Denominator Income: Total income
Expressed as a percentage value
Net liquidity days
This is a view of how sustainable the provider would be when using the current cash or borrowings available. It is not an overall health of the provider or how many days a provider could sustain in current conditions, as there are many factors such as long-term income to account for.
Numerator
Current assets: Investments
plus
Current assets: Cash and cash equivalents
minus
Creditors: amounts falling due within one year: Bank overdrafts
Denominator
Expenditure: Total expenditure
minus
Expenditure: Depreciation
Additional KFIs from 2018/19 onwards
Some HE providers saw significant cost adjustments in both 2018/19 and 2019/20, relating to the accounting treatment for the value of pension schemes. This appears as a significant additional cost in 2018/19, which caused some providers to report deficits, and an opposite movement in 2019-20, which caused some providers to show unusually large surpluses. This additional cost is an accounting, non-cash, adjustment. It is not a typical annual operating expense/credit for these providers and therefore caution is advised in any interpretation of financial operating performance in 2018/19 and 2019/20. For this reason, additional versions of relevant KFIs with pension cost adjustments applied have been published to enable users to understand the impact of this accounting change.
Surplus/(deficit) excl. pension adjustment as a % of total income
Numerator Surplus/(deficit) before other gains/losses and share of surplus/(deficit) in joint ventures and associates
plus Changes to pension provisions/ pension adjustments
Denominator Income: Total income
Expressed as a percentage value
Staff costs excl. pension adjustment as a % of total income
Numerator Expenditure: Staff costs
minus Changes to pension provisions/ pension adjustments
Denominator Income: Total income
Expressed as a percentage value
Premises costs as a % of total costs excl. pension adjustment
Numerator Premises: Total premises, Other operating expenses
Denominator Expenditure: Total expenditure
minus Changes to pension provisions/ pension adjustments
Expressed as a percentage value
Days ratio of total net assets to total expenditure excl. pension adjustment
Numerator Total net assets
Denominator Expenditure: Total expenditure
minus Changes to pension provisions/ pension adjustments
Net liquidity days (excl. pension adjustment)
Numerator
Current assets: Investments
plus
Current assets: Cash and cash equivalents
minus
Creditors: amounts falling due within one year: Bank overdrafts
Denominator
Expenditure: Total expenditure
minus
Expenditure: Depreciation
minus
Changes to pension provisions/ pension adjustments
Debt service ratio
Numerator
Net cash inflow from operating activities
Denominator
Cash flows from financing activities: Interest paid
plus
Cash flows from financing activities: Interest element of finance lease and service concession payments
plus
Cash flows from financing activities: Repayments of amounts borrowed
plus
Cash flows from financing activities: Capital element of finance lease and service concession payments
Scotland, 2015/16 only:
General funds as a % of total income
Numerator
Providers in Scotland only: General fund teaching
plus
Providers in Scotland only: General fund research and knowledge exchange
Income: Total income
Expressed as a percentage value
