ADM-626 – Public Budgeting and Financial Management
Topic 6 – Budget Justifications
Benchmark – Module 26
Summary:
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.
Directions: 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.
- 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.
- City A’s balance sheet is shown in Table 26.8. Calculate the following:
- current ratio
- working capital
- quick ratio
- the common-size ratios for cash, advance payments, receivables, and restricted assets.
- City B’s balance sheet is shown in Table 26.9. Calculate the following:
- current ratio
- working capital
- quick ratio
- 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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