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<br /> <br />City of Centerville <br />May 3, 2007 <br />Page Fifteen <br /> <br />Current Ratio (Liquidity Ratio) <br /> <br />The current ratio is a comparison of a city's current assets to its current liabilities. The current ratio is an indication of a city's <br />ability to meet short-term debt obligations. Acceptable current ratios vary from industry to industry, but a current ratio between I <br />and 2 is considered standard. If a city's current assets are in this range, then it is generally considered to have good short-term <br />financial strength. If current liabilities exceed current assets (the current ratio is below I), then the city may have problems <br />meeting its short-term obligations. <br /> <br />35.0 <br /> <br />30.0 <br />25.0 <br /> <br />20.0 <br /> <br />15.0 <br /> <br />10.0 <br /> <br />5.0 <br /> <br /> 28.6 <br /> 21.5 <br />- <br /> 14.9 <br />- <br /> . . <br /> 6.0 5.7 <br /> <br />2004 <br /> <br />2005 <br /> <br />2006 <br /> <br />City ratio - Peer group average I <br /> <br />Debt-to-Assets Leverage Ratio (Solvency Ratio) <br /> <br />The debt-to-assets leverage ratio is a comparison of a city's total liabilities to its total assets or the percentage of total assets that <br />are provided by creditors. It indicates the degree to which the City's assets are financed through borrowings and other long-term <br />obligations (i.e. a ratio of 50 percent would indicate half of the assets are financing with outstanding debt). <br /> <br />36% <br /> <br />34% <br /> <br />32% <br />30% <br />28% <br />26% <br />24% <br />22% <br />20% , <br /> <br /> - - <br /> - - <br /> 34% 34% <br />- <br />- <br /> 29% <br />- <br /> 27% 27% <br />- <br /> <br />2004 <br /> <br />2005 <br /> <br />2006 <br /> <br />City ratio -Peer group average I <br /> <br />www.aemcpas.com <br /> <br />952.835.9090 . Fax 952.835.3261 <br />