Question: The following data comes from the 2015 financial statements of the Village of Matthews. Although presented in summarized format, the balance sheet debits and credits are equal and the operating statement information is complete.
General Fund - Balance Sheet Elements
Cash $1,200,000
Short-term investments 405,000
Property taxes receivable - delinquent 282,000
Due from other funds 58,000
Accounts payable and other accrued liabilities 900,000
Assigned fund balance 90,000
Unassigned fund balance 935,000
General Fund - Operating Statement Elements
Revenues, including property taxes of $6,125,000 $8,350,000
Expenditures (total) 7,510,000
Transfer to Debt Service Fund 400,000
Excess of revenues and other sources over expenditures
and other uses 440,000
Debt Service Fund - Balance Sheet Elements
Cash and cash equivalents 230,000
Restricted fund balance 230,000
Debt Service Fund - Operating Statement Elements
Debt service expenditures:
Principal 100,000
Interest 200,000
Operating transfer from General Fund 400,000
Excess of revenues and other sources over
expenditures and other uses 100,000
Required: Calculate the following ratios for the Village of Matthews:
a. Current ratio - General Fund
b. Quick ratio - General Fund
c. Budgetary cushion for the General Fund (Assume all unassigned & assigned fund balance is available.
d. Debt service burden
e. Excess of revenues and other sources over expenditures and other uses, as a percentage of revenues - Combined, General Fund and Debt Service Fund (Hint: Use the General Fund revenues for the denominator.)
f. Explain your results, describing what the outcome of each ratio means.