dUE 10/26

Using the table and chart of the Measures of Solvency data you computed for Bay City, Texas, analyze the degree of solvency of Bay City, Texas.

· Develop a paragraph introduction to the table and chart, present the data in a table and chart using the attached table and chart formatting conventions Present an accurately computed and professionally table and chart. (The worksheet is interactive and arranged with the correct formatting. Thus, you probably will only need to copy and pasted them as a picture.)

· Analyze the table and chart. (Tables/charts are necessary but not sufficient for a sound analysis . An analysis is not just repeating what is in the chart.

· Focus on Analyzing the Research Questions but do not focus on dollar amounts, emphasize the ratios.

1) Research Question: How do the data for each ratio compare to the cutoff points? For example, what does the ratio tell you about the city’s fiscal solvency? (The ratio should be greater than 1.50.)

2) Research Question: What are the relationships of each ratio to each other? How does each ratio relate to the city’s solvency?

How to Interpret ratios :

· For Current Liabilities Ratio = Current Assets/Current Liabilities: The ratio should be greater than 1.50. When the Current Liabilities Ratio is greater than 1.00, it shows the financial stability of an organization over the next fiscal year. For example, if the Current Liabilities Ratio was at 1.84, the ratio of 1.84 means that the City has 1.84 times more current assets than liabilities. When the Current Liabilities Ratio is greater than 1.00, it tells the financial stability of an organization over the next fiscal year is sound. When the Current Liabilities Ratio is less than 1.00, it tells the financial stability of an organization over the next fiscal year is unsound. As a rule of thumb, a ratio of 1.50 or less means a lower ability to obtain additional financing or higher interest charged for any financing obtained.

· For Operating Ratio = Total Revenues/Total Expenses: The ratio should be greater than 1.50. When the Operating Ratio is greater than 1.00, it shows the financial stability of an organization over the next fiscal year. For example, if the Operating Ratio was at 1.84, the ratio of 1.84 means that the city has 1.84 times more current revenues than expenditures. When the Operating Ratio is greater than 1.00, it tells the financial stability of an organization over the next fiscal year is sound. When the Operating Ratio is less than 1.00, it tells the financial stability of an organization over the next fiscal year is unsound. As a rule of thumb, a ratio of 1.50 or less means a lower ability to obtain additional financing or higher interest charged for any financing obtained.

Solvency Methods and Techniques and Why They Are Important for Government

· Discuss and evaluate solvency methods and techniques and why they are important for governments. What are their advantages and disadvantages?

· Hint: Solvency ratios are extremely useful in helping analyze a government’s ability to meet its long-term obligations. However, like most financial ratios, they must be used in the context of an overall analysis.

· Refer to Assignment Resources: Website: What is Solvency? and Website: Solvency Ratios Measure Financial Risk.

What is Solvency and How it Solves Financial Issues

· Discuss and evaluate what solvency is and how it solves financial issues?

· Refer to Assignment Resource: Website: What Solvency is and How it Solves your Financial Woes.

Solvency vs Liquidity

· Discuss differences between Solvency vs Liquidity.

· Refer to Assignment Resource: What is Solvency vs Liquidity?

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The text of this research paper must be 8-10 pages (not including title page, reference page, and any appendices). This paper must be in current APA format with 1-inch margins and 12-pt Times New Roman font. You must also include a title page and reference page. You must include citations to a sufficient number of appropriate professional, scholarly, or other appropriate sources to fully support your assertions and conclusions (which will likely require more than the minimum number of citations); each paper must include a minimum of 5 sources, not including the course textbooks, assigned readings, and the Bible.

Plagiarism in any form is strictly prohibited and may result in failure of the assignment, failure of the course, and/or removal from the program. It is your responsibility to ensure that you fully understand what constitutes the various forms of plagiarism and to avoid all forms of plagiarism.

Note: Your assignment will be checked for originality via the Turnitin plagiarism tool.

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Using the table and chart of the Measures of Solvency data you computed for Bay City, Texas, analyze the degree of solvency of Bay City, Texas.

· Develop a paragraph introduction to the table and chart, present the data in a table and chart using the attached table and chart formatting conventions Present an accurately computed and professionally table and chart. (The worksheet is interactive and arranged with the correct formatting. Thus, you probably will only need to copy and pasted them as a picture.)

· Analyze the table and chart. (Tables/charts are necessary but not sufficient for a sound analysis . An analysis is not just repeating what is in the chart.

· Focus on Analyzing the Research Questions but do not focus on dollar amounts, emphasize the ratios.

1) Research Question: How do the data for each ratio compare to the cutoff points? For example, what does the ratio tell you about the city’s fiscal solvency? (The ratio should be greater than 1.50.)

2) Research Question: What are the relationships of each ratio to each other? How does each ratio relate to the city’s solvency?

How to Interpret ratios :

· For Current Liabilities Ratio = Current Assets/Current Liabilities: The ratio should be greater than 1.50. When the Current Liabilities Ratio is greater than 1.00, it shows the financial stability of an organization over the next fiscal year. For example, if the Current Liabilities Ratio was at 1.84, the ratio of 1.84 means that the City has 1.84 times more current assets than liabilities. When the Current Liabilities Ratio is greater than 1.00, it tells the financial stability of an organization over the next fiscal year is sound. When the Current Liabilities Ratio is less than 1.00, it tells the financial stability of an organization over the next fiscal year is unsound. As a rule of thumb, a ratio of 1.50 or less means a lower ability to obtain additional financing or higher interest charged for any financing obtained.

· For Operating Ratio = Total Revenues/Total Expenses: The ratio should be greater than 1.50. When the Operating Ratio is greater than 1.00, it shows the financial stability of an organization over the next fiscal year. For example, if the Operating Ratio was at 1.84, the ratio of 1.84 means that the city has 1.84 times more current revenues than expenditures. When the Operating Ratio is greater than 1.00, it tells the financial stability of an organization over the next fiscal year is sound. When the Operating Ratio is less than 1.00, it tells the financial stability of an organization over the next fiscal year is unsound. As a rule of thumb, a ratio of 1.50 or less means a lower ability to obtain additional financing or higher interest charged for any financing obtained.

Solvency Methods and Techniques and Why They Are Important for Government

· Discuss and evaluate solvency methods and techniques and why they are important for governments. What are their advantages and disadvantages?

· Hint: Solvency ratios are extremely useful in helping analyze a government’s ability to meet its long-term obligations. However, like most financial ratios, they must be used in the context of an overall analysis.

· Refer to Assignment Resources: Website: What is Solvency? and Website: Solvency Ratios Measure Financial Risk.

What is Solvency and How it Solves Financial Issues

· Discuss and evaluate what solvency is and how it solves financial issues?

· Refer to Assignment Resource: Website: What Solvency is and How it Solves your Financial Woes.

Solvency vs Liquidity

· Discuss differences between Solvency vs Liquidity.

· Refer to Assignment Resource: What is Solvency vs Liquidity?

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