available for normal Municipal operational expenditure but rather no other revenue reserved for Grant related streams. expenditure. The municipality is The Ratio is used to assess the below the Municipality’s or Municipal Entity’s required norm; ability to pay back its Short-term 5 Current Ratio 1.5 - 2:1 0.80 this highlights Liabilities (Debt and Payables) with its serous financial Short-term Assets (Cash, Inventory, challenges for the Receivables). municipality. Net Operating The Ratio assesses the extent to which = or > 6 Surplus the Municipality generates Operating 15% 0% Margin Surpluses. The revenue base This Ratio measures the overall of the municipality revenue growth. In addition, this ratio has grown by Revenue 7 will assist in determining if the 7% 23% 23%; this is Growth (%) increase in Expenditure will be funded however inclusive by an increase in Revenue base or by of grants funding some other means. received. Remuneration The ratio measures the extent of as % of Total 25% - 8 Remuneration to Total Operating 27% Operating 40% Expenditure. Expenditure Due to cash flow Creditors This ratio indicates the average problems, 124.8 9 payment number of days taken for Trade 30 days creditors cannot days period Creditors to be paid. be paid on a timeous basis. Contracted This ratio measures the extent to Services % which the municipalities resources are 2% - 10 of committed towards contracted 2% 5% Operating services to perform Municipal related Expenditure functions. As the The Ratio measures the extent to municipality does which the municipality’s Total Capital not have 11 Expenditure is funded through None 71% dependency alternative cash Internally Generated Funds and flow streams Borrowings. added with the low
available for normal Municipal operational expenditure but rather reserved for Grant related expenditure. no other revenue streams. 5 Current Ratio The Ratio is used to assess the Municipality’s or Municipal Entity’s ability to pay back its Short-term Liabilities (Debt and Payables) with its Short-term Assets (Cash, Inventory, Receivables). 1.5 - 2:1 0.80 The municipality is below the required norm; this highlights serous financial challenges for the municipality. 6 Net Operating Surplus Margin The Ratio assesses the extent to which the Municipality generates Operating Surpluses. = or > 0% 15% 7 Revenue Growth (%) This Ratio measures the overall revenue growth. In addition, this ratio will assist in determining if the increase in Expenditure will be funded by an increase in Revenue base or by some other means. 7% 23% The revenue base of the municipality has grown by 23%; this is however inclusive of grants funding received. 8 Remuneration as % of Total Operating Expenditure The ratio measures the extent of Remuneration to Total Operating Expenditure. 25% - 40% 27% 9 Creditors payment period This ratio indicates the average number of days taken for Trade Creditors to be paid. 30 days 124.8 days Due to cash flow problems, creditors cannot be paid on a timeous basis. 10 Contracted Services % of Operating Expenditure This ratio measures the extent to which the municipalities resources are committed towards contracted services to perform Municipal related functions. 2% - 5% 2% 11 dependency The Ratio measures the extent to which the municipality’s Total Capital Expenditure is funded through Internally Generated Funds and Borrowings. None 71% As the municipality does not have alternative cash flow streams added with the low
2015-16-Draft-IDP.docx