The role of composite financial index in measuring the financial health of higher education

Abstract

Purpose: This research aims to measuring the financial health of state universities in indonesia with the composite financial index. Methodology/approach: Descriptive research with a quantitative approach. Data analysis with a description of the variables primary reserve ratio, net operating revenue ratio, return on net assets ratio, viability ratio, and calculating the composite financial index (CFI) score to determine the financial health of higher education institutions. Findings: CFI can measure the health of universities. In 2020, 20.8% of PTN had strong financial health, 33.3% had stable financial health, and 45.8% had weak financial health. In 2021, 16.7% of PTN had strong financial health, 41.7% had stable financial health, and 41.7% had weak financial health, while in 2022, 12.5% ​​of PTN had strong financial health, 37.5% had stable financial health, and 50% had weak financial health. PTN-BH has relatively stronger financial health than PTN-BLU. Practical and Theoretical contribution/Originality: Universities with weak financial health need to diversify sources of income, increase operational surpluses so that net assets increase each year, increase efficiency so that operational expenses decrease, and form endowment funds. Research Limitation: Data on PTN financial reports as a whole has not been obtained during the research period because data collection only uses documentation from the PTN website, on the one hand, not all PTNs present financial reports on the website. Therefore, for further research, data collection can be carried out by observation.

Keywords

• Composite Financial Index
• Financial Health
• State University