Using ratios to conduct financial analysis must be done with care. One year's worth of data is worth little; establishing a trend line over a period of years is the most useful approach. Using ratio analysis, we can examine liquidity, solvency, intergenerational equity, and revenue diversification. All of these factors can come together to provide a picture of the fiscal health of a government entity.

 Go to https://study.sagepub.com/chen2e to access the tables and data for Module 26. Using the information from the zip file answer the following prompts.

1.     Use the financial statements from Charlottesville, Virginia, to conduct your own analysis. The statement from the year 2013 is in Tables 26.2 and 26.3; the statement from 2012 is provided in Tables 26.6 and 26.7. Statements from two years are provided to allow a comparison between years. 

Use the format in Table 26.6 and add an additional column for FY2012 so that the ratios can be compared side by side.

 

 

 

 

  
 
 
 

2.     City A's balance sheet is shown in Table 26.8. Calculate the following: 

a.      current ratio

b.     working capital

c.      quick ratio

d.     the common-size ratios for cash, advance payments, receivables, and restricted assets.

3.     City B's balance sheet is shown in Table 26.9. Calculate the following:

a.      current ratio

b.     working capital

c.      quick ratio

d.     the common-size ratios for cash, advance payments, receivables, and restricted assets.

This benchmark assignment assesses the following programmatic competency: 2.2: Analyze a budget and balance the sources and uses of funds.

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people in understanding financial statements. One of the most powerful tools is ratio analysis, whic ments contain a lot of data and words we don't use every day. However, tools have been created to It can be difficult to understand what is important in these financial statements. After all, financial sta City of Charlottesville, Virginia: Statement of Financial Position (Balance Sheet), NALYSIS TABLE 26.2 Government Funds Capital Projects Fund Debt Service Fund General Social Services Fund Other Gov't Fund Fund Assets: Cash & Cash Equivalents Investments Interest receivable Accounts receivable, net Taxes receivable, net Special assesments receivable Due from other governments (note 7) Due from other funds (note 8) Loans receivable (note 5) $ 18,737,769 $ 11,605,320 $ 12,201,576 14,818,113 71,632 283,472 29,142,873 Total $77,878 $1,122,150 $ 43,744,693 14,818,113 5,830 71,632 304,490 29,142,873 15.188 2,967,586 3,372,154 3,997 4,532,258 512,808 3,997 13,375,679 3,372,154 2,314,601 7,714,966 107,148,232 5,363,027 1,100,000 1,214,601 69,393,599 17,241,575 12,201,576 596,516 Total Assets Liabilities & Fund Balances Liabilities: Accounts Payable Accrued liabilities Due to other governments Due to other funds (note 8) Deferred Revenue 920,469 2,594,499 4,594,182 22,317 179,381 382.480 1,241,084 1,211,471 3,227,952 5,919,448 4.045.754 1,211,471 3.263.068 27,972,383 30,790 35,116 27,972,383 31,487,351 30,790 Total Liabilities Fund Balances: Nonspendable Restricted Committed Assigned Unassigned 4,594,182 236,814 6.062,987 42,412,124 545,723 6,737,955 3,633,160 26,989,410 1,100,000 8,950,111 2,597,282 172,501 176,222 1,272,501 10,031,758 21,506,023 4,936,416 26,989,410 359,702 12,170,786 1,303,256 12,170,786 64,736, 108 1,651,979 $7,714,966 107,148,232 Total Fund Balances 12,647,393 37,906,248 Total Liabilities & Fund Balances $ 69,393,599 $ 17,241,575 $12,201,576 359,702 $ 596,516 Total Fund Balances Capital assets Property taxes receivable OPEB asset Internal Service funds Accrued interest payable Unamortized premium on bonds Bonds & Notes Payable Deferred amount of refunding Compensated absences Net Position of Government Activities 64,736,108 202,407,200 544,516 708,822 11,775,338 (873,896 (4,170,431 (79,149,240 (1,006,410) (2,044,825) $ 192,927,182 are Ratio Analysis mat tems people in understanding financial statements. One of the most powerful tools is ratio analysis, whic ments contain a lot of data and words we don't use every day. However, tools have been created to It can be difficult to understand what is important in these financial statements. After all, financial sta City of Charlottesville, Virginia: Statement of Financial Position (Balance Sheet), NALYSIS TABLE 26.2 Government Funds Capital Projects Fund Debt Service Fund General Social Services Fund Other Gov't Fund Fund Assets: Cash & Cash Equivalents Investments Interest receivable Accounts receivable, net Taxes receivable, net Special assesments receivable Due from other governments (note 7) Due from other funds (note 8) Loans receivable (note 5) $ 18,737,769 $ 11,605,320 $ 12,201,576 14,818,113 71,632 283,472 29,142,873 Total $77,878 $1,122,150 $ 43,744,693 14,818,113 5,830 71,632 304,490 29,142,873 15.188 2,967,586 3,372,154 3,997 4,532,258 512,808 3,997 13,375,679 3,372,154 2,314,601 7,714,966 107,148,232 5,363,027 1,100,000 1,214,601 69,393,599 17,241,575 12,201,576 596,516 Total Assets Liabilities & Fund Balances Liabilities: Accounts Payable Accrued liabilities Due to other governments Due to other funds (note 8) Deferred Revenue 920,469 2,594,499 4,594,182 22,317 179,381 382.480 1,241,084 1,211,471 3,227,952 5,919,448 4.045.754 1,211,471 3.263.068 27,972,383 30,790 35,116 27,972,383 31,487,351 30,790 Total Liabilities Fund Balances: Nonspendable Restricted Committed Assigned Unassigned 4,594,182 236,814 6.062,987 42,412,124 545,723 6,737,955 3,633,160 26,989,410 1,100,000 8,950,111 2,597,282 172,501 176,222 1,272,501 10,031,758 21,506,023 4,936,416 26,989,410 359,702 12,170,786 1,303,256 12,170,786 64,736, 108 1,651,979 $7,714,966 107,148,232 Total Fund Balances 12,647,393 37,906,248 Total Liabilities & Fund Balances $ 69,393,599 $ 17,241,575 $12,201,576 359,702 $ 596,516 Total Fund Balances Capital assets Property taxes receivable OPEB asset Internal Service funds Accrued interest payable Unamortized premium on bonds Bonds & Notes Payable Deferred amount of refunding Compensated absences Net Position of Government Activities 64,736,108 202,407,200 544,516 708,822 11,775,338 (873,896 (4,170,431 (79,149,240 (1,006,410) (2,044,825) $ 192,927,182 are Ratio Analysis mat tems

Answer rating: 100% (QA)

Requirement 1Use the financial statements from Charlottesville Virginia to conduct your own analysis ... View the full answer