In order to measure a government’s financial performance, the change in net position calculates measures the overall governmental condition including governmental activities and business-type activities (BTA), however excludes fiduciary activities or discretely presented component units (Reck, & Lowensohn 2016). Intrepid equity is a measure of whether or not the government has lived within its means for a given year (Reck, & Lowensohn 2016). Sales tax growth compares the local economy by comparing sales tax growth to the prior year. BTA self-sufficiency is the measure of how well the government’s activities are funded with current year funds, rather than prior year funds (Reck, & Lowensohn 2016).
Ratios are the concrete way to compare the financial performance and resources to utilization over a any period of time (Neil ,2014). Ratios can provide frequent amounts of information that can be used for detailed assess of the government position that can identify the trends that can affect any and all future fiscal years and annual budgets for companies to develop (Neil ,2014). The different kind of ratios that can be analyzed are unrestricted net position, capital asset position, debt to assets, current ratio, quick ratio, change in net position, interperiod equity, sales tax growth, BTA self-sufficiency, revenue dispersion, bonded debt per capita, available legal debt limit, property taxes per capita and the sales tax rate (Fisher, & Gordan, & Kraut 2010).
The unrestricted net position ratio measures the unrestricted net position of a government, or level of deficit. Capital asset position helps to understand the depreciable assets of a government and what may need to be replaced in terms of assets (Fisher, & Gordan, & Kraut 2010). Debt to assets calculates how much of the government’s assets have been paid through debt. Current ratio calculates how well the government can pay its short-term obligations as they become due (Fisher, & Gordan, & Kraut 2010). Quick ratio is a more conservative measurement of the government’s liquidity that focuses on unrestricted cash and cash ratio.
Finally, some of the ratios that were used for this report were the unrestricted net position, change in net position, revenue dispersion, capital asset position and intrepid equity. It was found that for the unrestricted net position that 2017 the City of Arborland was at 1.9, 2.19 for 2016 and 1.98 for 2015. This indicates a variable condition. For the change in net position the numbers remained steady over 2017, 2016 and 2015 at zero. For the revenue dispersion, 0.26 in 2017, 0.23 in 2016 and 0.22 in 2015 – these numbers indicate growth.
For the capital asset position in 2017 it was -2.5, in 2016 it was -2.07 and for 2015 it was -2. This indicates that the City of Arborland is moving towards requiring for some renewal of their assets. For the intrepid equity, these numbers showed very well. For 2017 it was 0.56, for 2016 it was 0.43 and for 2015 it was 0.42. The city is spending more money than its means since 2015; however, the condition of spending has not reached the crisis point as yet. It would be good for the City of Arborland to particularly look at these latter numbers in order to control their spending for 2018 and beyond.
