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Financial Analysis. Government’s economic condition Financial position Ability and willingness to meet commitments Satisfy financial obligations See table.

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Presentation on theme: "Financial Analysis. Government’s economic condition Financial position Ability and willingness to meet commitments Satisfy financial obligations See table."— Presentation transcript:

1 Financial Analysis

2 Government’s economic condition Financial position Ability and willingness to meet commitments Satisfy financial obligations See table 15-1

3 Financial Analysis Fiscal Capacity Trend Liquidity Solvency Funding

4 Fiscal Capacity Ability to command resources Look at demographics Leadership characteristics Wealth of citizens Mix of business vs. homeowners Fiscal effort – Per capita revenue from gov’t sources Median family income

5 Financial Analysis Must always be compared to something – Prior years – Other similar governments – To rule of thumb measures Census – Economic Analysis – Labor Statistics – stats.bis.gov

6 Operating information Surpluses or deficits Intergovernmental revenue/total operating revenue – How dependent is the government on others Restricted revenue/total revenue – How flexible can the government be in the revenue they get Property tax revenue/total – Most governments get the majority of their funds from property tax Discretionary expenditures/total expenditures – Addresses the ability to cut expenditures

7 Trend Analysis Surpluses/deficits over the years Increases in surpluses and deficits Population trends Additional businesses Common Sizing Percentage change over years Percent distribution

8 Liquidity Measures the ability to pay current bills Current ratio – Current assets Current liabilities Quick ratio – Cash + cash equivalents Current Liabilities Acceptable levels??

9 Solvency Measures the ability to pay L/T debt Leverage – L/T Debt (info from Gov’t-wide) Assets Coverage – DS Expend GF + DS Expenditures

10 Funding Property tax per capita Property tax per $1K of assessed value Debt per capita Debt margin Expenditure per capita Other revenues/ total revenues


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