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See Assignment on page 3 of the Module 26 Governmental Financial Statements Cheat Sheet & Assignment LA4. Use the University of Maine Systems Annual Financial Report for Fiscal Year 2018 to complete the assignment.

University of Maine Systems Annual Financial Report for Fiscal Year 2018 - download below:

https://bb.courses.maine.edu/bbcswebdav/pid-4651778-dt-content-rid-12625543_2/courses/1920.UMS01-S.40927./Final-Annual-Financial-Report.103118.pdf

(LA4) Module 26 Government Financial Statements Cheat Sheet

Governments: 3 basic categories of funds

1. Government Funds (5 categories):
   1. General Funds used for day to day operations
   2. Debt Service Funds track principal & interest payments on debt
   3. Special Revenue Funds used for a designated purpose of government
   4. Capital Funds track transactions related to capital projects
   5. Other Government Funds miscellaneous items that do not fit in the other categories

2. Proprietary Funds track transactions related to activities that are run like a business.

3. Fiduciary Funds track transactions in which government acts as a trustee.

Statement of Net Position(Balance Sheet)

• Reports all resources of the government entity at the end of the fiscal year (moment in time)

• Assets = Liabilities + Net Position

Statement of Revenues, Expenditures & Changes in Net Position(Income Statement)

• Reports all revenues and expenditures for the year for Government Funds

• Net Position of Governmental Activitieson the Statement of Net Position = Net Position of Governmental Activitieson the Statement of Revenues, Expenditures and Changes in Net Position

Current Assets: Cash, Accounts Receivable, Marketable Securities, Prepaid Expenses

Current Liabilities: Accounts Payable, Salaries Payable

Component Unit(definition): a legally separate organization for which the elected officials of the primary government are financially accountable. A component unit may be a governmental organization (except those that meet the definition of a primary government), a nonprofit corporation, or a for-profit corporation. For example, the University of Maine Foundation (a nonprofit corporation) is a component unit of the University of Maine System and the University of Maine System (a governmental organization) is a component unit of the State of Maine.

Ratio Analysis

for the General Fund

Liquidity - use the Balance Sheet

Can the Government pay off current liabilities with current assets and remain liquid?

Current Ratio = Current Assets/Current Liabilities

Benchmark > 1

Solvency - use the Balance Sheet

Can the Government pay off its long-term debts?

Debt to Asset Ratio = Total Liabilities/Total Assets

Benchmark = or < 0.6

Profitability - use the Income Statement

Do operating results indicate the institution is living within available resources?

Profit Margin Ratio = Surplus*/Operating Revenues

*Surplus = Income (Loss) Before Other Changes in Net Position

Benchmark > 0

Sustainability (alternate ratio) - use the Balance Sheet & the Income Statement

Are resources sufficient and flexible enough to support the mission?

Primary Reserve Ratio = Expendable Net Position*/Total Operating Expenses

*Expendable Net Position = Unrestricted Net Position + Restricted Expendable Net Position

Benchmark = or > 0.40

Assignment LA4

• See the University of Maine System Annual Financial Report:

• Statement of Net Position (Balance Sheet) on page 35; and

• Statement of Revenues, Expenses & Changes in Net Position (Income Statement) on page 37.

• Using the ratios for Liquidity, Solvency, Profitability and Sustainability listed on the prior page, perform a Ratio Analysis for FY2017 and FY2018 for the University of Maine System.

• Provide a brief analysis for each ratio commenting on whether the University of Maine System achieves the benchmark and note whether the trend from FY2017 to FY2018 is somewhat consistent, worsening or improving.

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