Financial Management Case: Financial Statement Analysis. (200 points)
In Weeks 8-9 we introduced financial statements and financial statement analysis. In this assignment you will review the Town of Chili, New York Basic Financial Statements for Fiscal Year Ended December 31, 2019 a copy is included below. The Town is in the southwest quadrant of Monroe County with a population of 28,625 in 2010.
Submit your response for the written part of assignment as a Word document to Part A of the assignment on the course Blackboard site. Make sure that you submit your response using the numbered sections in the assignment with the same bolded or italicized subtitles or headers. Please cover the points that you want to make, but be concise. You are welcome to make references to the course texts or other resources – that are valuable to help make or emphasize a point you want to make.
Read Through – Review of Financial Statements (120 points)
Read the following sections of the Chili financial report:
Independent Auditors Report (2-3)
Managements Discussion and Analysis (4-18)
Basic Financial Statements (pages 19-25)
Notes to Basic Financial Statements (pages 26-56)
Management Discussion and Statements. Review Chilis Management Discussion and (1) Statement of Net Position (balance sheet), (2) Statement of Activities (income statement), and (3) Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds.
In short paragraphs (up to 2 paragraphs per item) indicate your initial assessment of each of the following for Chili (you will calculate ratios later for comparison):
Liquidity availability of liquid assets to cover short term liabilities, etc.
Profitability the degree to which revenues exceed expenses and change from year to year, etc.
Solvency the ability of the Town of Chili generate enough resources to cover near term and long term liabilities? For example does long term debt seem high?
Items of Concern – Note if there are any particular items in the basic financial statements that raise a question or concern.
Notes to Financial Statements. List items from the notes to financial statements that raise a question or provide clarity and understanding to the basic financial statements. Describe why you are listing them. Include 3- 5 items in your list.
Calculate Financial Statement Ratios (80 points)
Using the chart below (which replicates portions of the: 10 Point Test Ratios for Overland Park, KS in FY2015 on page 88 in Kyoko and Marlowe). In the Ten Point Test EXCEL file (below) calculate as many of the ten ratios for which data is available for the Town of Chili. The Town of Chili has no enterprise funds so the Coverage 2 ratio cannot be calculated. After calculating the ratios use the table at the bottom (also in the EXCEL spreadsheet) to assign 10 Point Test values to each calculated ratio as indicated in Kioko and Marlowe on pages 88-92. Use the Score column in the Excel spreadsheet to record the assigned value (based on the quartile of the calculated ratio). On the spreadsheet briefly discuss how you would interpret the “Total” if all the data were available. Submit your Excel file to the drop box for Part B.
Short-Run Financial Position
(Unassigned General Fund Balance)/(General Fund Revenues)
(General Fund Cash + General Fund Investments )/(General Fund Liabilities)
Net Asset Growth
Change in Governmental Activities Net Position /Beginning Governmental Activities Net Position
(Net (Expense) Revenue for Governmental Activities/Total Governmental Activities Expenses) * -1
Primary Government Operating Grants / (Total Primary Government Revenues)
(Primary Government Liabilities)/(Total Primary Government Revenues)
(Primary Government Non-Current Liabilities)/Population
(Governmental Funds Principal and Interest on Long-Term Debt/General Fund Expenditures)
Enterprise Funds Operating Revenue/Enterprise Funds Interest Expense
Capital Asset Condition
(Ending Net Value of Primary Government Capital Assets Beginning Net Value) / (Beginning Net Value
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