Multiyear Plans and Analysis - Essay Example

We analyze data as revealed by the City of Charlottesville 2009, 2010 Financial Ratios and also carry out ratio analysis that helps us discover more information about the business (Gibson, 2012). We compare the City of Charlottesville’s 2009 and 2010 performance using relevant ratios. Liquidity measures, or short-term solvency measures -measure the ability of the city to meet its short-term debt obligations. These ratios majorly focus on current assets and current liabilities (Denise, 2013).

The current ratio shows how many times the current liabilities are included with the current assets. Higher ratios are recommended. The city retained its current rate for the two years under study. The ratios are above one which is a good indication of the city’s ability to pay its short-term obligation. The working capital is the difference between a company’s current assets and its current liabilities. A higher amount is required as it shows the excess of assets after accounting for all liabilities.

The city’s performance in 2010 is hence more preferred as compared to that of 2009. Long term solvency measures the city’s ability to meet its long-term debt obligations. Debt ratio indicates the ratio of total liabilities to total assets. A lower percentage is more preferred (Denise, 2013). In 2009, 39% of every dollar of the city’s asset was debt while the ratio was 38% in 2010. 2010 is hence more preferable to 2009. The profit margin indicates that the city is not generating income.

Its expenditure is higher than its income. From a dollar in revenue the city is making 11 cents loss. The city’s management is hence not useful in converting the available assets into sales. They should hence come up with new policies of raising revenue that will help the adequately meet their expenses. Days payable ratio are the number of days it takes a city to pay their creditors. The longer the period, the better