Prudential Financial Standards
How your organisation stacks up
If you are a private training establishment (PTE), the New Zealand Tertiary Education Commission (TEC) will assess your financial viability each year under its Prudential Financial Standards framework. This process helps to ensure that your organisation remains financially sustainable and able to continue supporting its learners and programmes.
The TEC’s Core Calculation Ratios:
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(Total Equity – Intangible Assets) / Total Revenue
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(Liquidity + Approved Funds) / Cash Outflow
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Current Assets / Current Liabilities
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Net Surplus / Total Revenue.
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Cash Inflow / Cash Outflow
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Total Borrowings / (Borrowings + NTA)
These ratios are assessed using your most recent financial statements, as well as your forecast for the next financial year ahead.
The TEC uses Prudential Financial Standards broadly to ensure the stability of New Zealand's tertiary education sector, to protect student interests and to safeguard public funding by enforcing common benchmarks for the PTE sector. TEC funding decisions are also a major outcome of these evaluations, and all funded PTE's must submit their calculations and accompanying financial information within five [5] months of their financial year end.
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