Service Charge: Public Financial Management and Budgeting Coursework

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Current ratio

The table presented below shows the calculation of current ratios for a period of seven years.

Governmental activitiesBusiness-type activitiesTotal
2008
Current assets5,954,0762,037,7817,941,901
Current liabilities596,736134,321731,057
Current ratio101511
2009
Current assets5,954,3862,185,1888,139,574
Current liabilities627,50691,430718,936
Current ratio92411
2010
Current assets5,051,2121,873,8686,925,080
Current liabilities713,074253,121966,195
Current ratio777
2011
Current assets4,882,6951,622,6086,505,303
Current liabilities419,755149,493569,248
Current ratio121111
2012
Current assets4,595,0602,031,7776,626,837
Current liabilities567,689155,435723,124
Current ratio8139
2013
Current assets4,389,3912,088,0686,477,459
Current liabilities583,58777,155660,742
Current ratio82710
2014
Current assets4,211,0432,341,9266,552,969
Current liabilities645,24568,773714,018
Current ratio7349

(Source of data – City of Bishop 1)

The graph presented below shows the trend of the current ratio for a period of seven years.

Current ratios

Discussion of the current ratio

The information in the table and graph above shows that the current ratio for the organization fluctuated during the period. The business-type activities segment had the highest value of current ratios during the period. The values of ratios for this segment were more volatile than that of governmental activities (McCarthy, Shelmon, and Mattie 141). This can be attributed to the volatile business environment. The graph also shows that governmental activities have a higher impact on the overall current ratio for the company as compared to business-type activities (Weikart, Chen and Sermier 98). This can be attributed to the high volume of governmental activities. Further, the results show that the entity has high values of current ratios. This can be attributed to the nature of business. The values indicate that the company is in a position to settle short-term obligations using current assets with ease. The analysis shows that the City of Bishop has a sound liquidity position. It also indicates that the company is efficient in managing working capital (Brigham and Michael 254).

Service charge ratio

The table presented below shows the calculation of service charge ratios for various functions at the City of Bishop.

Charge for serviceExpenseService charge ratio
2008
Water1,107,643700,6811.58
Sewer695,946645,7641.08
Mobile home park91,981124,4980.74
2009
Water1,151,176733,1011.57
Sewer763,010625,3541.22
Mobile home park92,048103,7390.89
2010
Water1,161,200711,5981.63
Sewer748,950646,4731.16
Mobile home park92,884101,7340.91
2011
Water1,155,649735,6541.57
Sewer970,556696,6561.39
Mobile home park92,507106,1540.87
2012
Water1,167,074808,4321.44
Sewer1,013,096752,1951.35
Mobile home park85,319119,7670.71
2013
Water1,158,225855,0261.35
Sewer1,088,169778,6451.40
Mobile home park94,160139,3280.68
2014
Water1,245,947855,0861.46
Sewer1,125,365815,3021.38
Mobile home park128,912207,7570.62

(Source of data – City of Bishop 1)

The graph presented below shows the trend of the service charge ratios for the three functions.

Service charge ratios

Discussion of service charge ratios

The values estimated in the table above and the graph above show that there was a general decline in the service charge ratio for both water and Mobile Home Park. In the case of Sewer, there was a general increase in the values of the service charge ratio. The trend of the values reported above can be attributed to the changes in the values of both the expenses and the charge for the services (Finkler, Purtell, Calabrese, and Smith 352). Finally, it can be observed that Water had the highest values of the service charge ratio, while Mobile Home Park had the least value. This trend is consistent across the industry (McMillan 198; City of Bishop 1).

References

Brigham, Eugene and Ehrhardt Michael. Financial Management Theory and Practice, USA: South-Western Cengage Learning, 2009. Print.

City of Bishop. Financial Statements. 2015. Web.

Finkler, Steven, Robert Purtell, Thad Calabrese and Daniel Smith. Financial Management for Public Health, and Not-for-Profit Organizations, USA: Pearson Education, In., 2013. Print.

McCarthy, John, Nancy Shelmon and John Mattie. Financial and Accounting Guide for Not-for-Profit Organizations, USA: John Wiley & Sons, Inc., 2012. Print.

McMillan, Edward. Not-for-Profit Budgeting for Nonprofit Organizations, USA: John Wiley & Sons, Inc., 2010. Print.

Weikart, Lynne, Greg Chen and Ed Sermier. Budgeting and Financial Management for Nonprofit Organizations: Using Money to Drive Mission Success, USA: Sage Publications, 2012. Print.

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