© D.L. Crumbley
Assess Financial Health
Measures a government’s long-term financial viability by comparing the extent to which assets are financed by incurring long-term debt.
Measures the government’s ability to generate a stream of inflows sufficient to make interest payments.
Long-term Debt / Assets
Change in Net Assets + Interest Expense) / Interest Expense
Measures the extent to which current liabilities are covered by the more liquid current assets.
(Cash + Current Investments + Receivables) / Current Liabilities
Measures a government’s financial performance during the current fiscal year by comparing the change in the Net Assets derived from the Statement of Activities to the total net assets.
Measures the extent to which the cost of services are paid for out of general revenues.
Total Net Assets
(General Revenues + Transfers) / Expenses
Measures a government’s ability to provide basic government services
B.A. Chaney, D.M. Mead, and K.R. Schermann, “The New Governmental Reporting Model,” Journal of Governmental Management, Spring 2002, p. 29.