School of Social Science
Master in Business Administration
Postgraduate Dissertation
Financial analysis of Municipalities
The Case of the Municipality of Dion-Olympos
Voulgaris Athanasios
Supervisor: Dr. Nikolaos Tsangarakis
Patras, Greece, July 2020
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Financial analysis of Municipalities
The Case of the Municipality of Dion-Olympos
Voulgaris Athanasios
Supervising Committee
Supervisor: Co-Supervisor: Dr.Nikolaos Tsangarakis Dr.Timotheos Angelidis Professor Hellenic Open University Αssistant Proffessor Hellenic Open University
Patras, Greece, July 2020 Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Acknowledgments
Special thanks to my supervisor Mr. Nikolaos Tsangarakis for the guidance and insights he provided me with, during the preparation of my dissertation. I would like also to thank my wife Athina and my family and my friends providing me with unfailing support and continuous encouragement throughout my years of MBA Studies.
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Abstract
The financial analysis of the economic statements of the Local Government Organisation (O.T.A) plays a key role for the Municipal Council, in order to make financial decisions, regarding policy making for economics and also evaluating economic performance. In this dissertation we are going to refer to the financial analysis of the budget and the financial statements of the Municipality of Dion-Olympus, for the time period from 2016 to 2018, using financial ratios. The first part is about a theoretical depiction of the financial analysis, its value and purpose, as well as a brief reference to the regulation regarding the financial operation of Local Governments in Greece. The second part, through a case study, introduces firstly the financial statements of the Municipality of Dion-Olympus for the time period of 2016-2018, while, secondly, the financial ratios of the budget and the statements are being analyzed. Last but not least, at the end of the report, a comparative analysis of the ratios per citizen is presented, which were calculated in the previous module, using equivalent financial ratios per citizen, regarding other Municipalities of Pieria's Region, specifically the Municipality of Katerini and the Municipality of Pydna-Kolindros.
Keywords
Local Government Organisations, Financial Statement Analysis, Municipality of Dion-Olympos, Financial Ratios, Ratios per Citizen
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Xρηματοοικονομική Ανάλυση Δήμων
“Η περίπτωση του Δήμου Δίου-Ολύμπου”
Βούλγαρης Αθανάσιος
Περίληψη
Η χρηματοοικονομική ανάλυση των οικονομικών καταστάσεων των Οργανισμών Τοπικής Αυτοδιοίκησης (Ο.Τ.Α), αποτελεί ένα σημαντικό εργαλείο για την λήψη οικονομικών αποφάσεων από το Δημοτικό Συμβούλιο κατά το στάδιο χάραξη της οικονομικής πολιτικής και αξιολόγησης των οικονομικών επιδόσεων τους.
Στην παρούσα εργασία παρουσιάζεται η οικονομική ανάλυση των στοιχείων του προϋπολογισμού του απολογισμού και των οικονομικών καταστάσεων του Δήμου Δίου- Ολύμπου για την περίοδο από το 2016 έως 2016 με τη βοήθεια αριθμοδεικτών.
Στο πρώτο μέρος επιχειρείται μια θεωρητική αποτύπωση του περιεχομένου της χρηματοοικονομικής ανάλυσης, της αξίας και του σκοπού της καθώς και μια μικρή αναφορά στο πλαίσιο που διέπει την οικονομική λειτουργία των ΟΤΑ στην Ελλάδα.
Στο δεύτερο μέρος. υπό την μορφή μιας μελέτης περίπτωσης, αρχικά παρουσιάζονται οι οικονομικές καταστάσεις του Δήμου Δίου-Ολύμπου για την περίοδο 2016-2018 και στη συνέχεια αναλύονται οι αριθμοδείκτες προϋπολογισμού – απολογισμού των οικονομικών καταστάσεων του. Τέλος παρουσιάζεται μια συγκριτική ανάλυση των δείκτων άνα δημότη που υπολογίστηκαν στην προηγούμενη ενότητα με τους αντίστοιχους δείκτες ανά δημότη για τους υπόλοιπους Δήμους της Περιφερειακής Ενότητας Πιερίας και συγκεκριμένα για τον Δήμο Κατερίνης και τον Δήμο Πύδνας-Κολινδρού.
Λέξεις – Κλειδιά
Οργανισμοί Τοπικής Αυτοδιοίκησης, Χρηματοοικονομική Ανάλυση, Δήμος Δίου- Ολύμπου, Χρηματοοικονομικοί αριθμοδείκτες, Δείκτες ανά δημότη
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Table of Contents
Acknowledgments ...... iv Abstract ...... v Περίληψη...... vi Table of Contents ...... vii List of Figures ...... x ListofAbbreviations&Acronyms ...... xiii 1. Introduction ...... 1 2. Literature review on Financial Statement Analysis ...... 4 2.1Role of Financial Analysis Statement of Local Government ...... 4 2.2 Financial Statement Analysis Techniques ...... 6 2.3 Local Government Financial Key Performance Indicators ...... 6 2.4 Importance of Financial Ratios for Local Governments ...... 7 2.5 International Accounting Standards for Local Governments ...... 7 3.Methodology ...... 9 3.1 Liquidity Ratios ...... 9 3.2 Efficiency Ratios ...... 9 3.3 Capital Structure Ratios ...... 10 3.4 Activity Ratios ...... 11 3.4.1 Account Receivables Turnover Ratio ...... 12 3.4.2 Turnover receivables in days ...... 12 3.4.3 Turnover Assets Ratio ...... 12 3.5 Balance sheet structure ratios ...... 13 3.6 Income Statement Ratios ...... 13 4. Local Government Organisation's Bookkeeping System ...... 14 4.1. The institution of Local Government in Greece...... 14 4.2 The budget of Local GovernmentAuthorities ...... 15 4.3 Accounting Systems ...... 21 4.3.1. Cash register accounting system ...... 21 4.4. Framework for the Double-entry bookkeeping System ...... 23 4.5. Accounting Books of the Double Entry Accounting Method ...... 24 4.6 Economic Observatory LGO ...... 25 5. The Municipality of Dion-Olympos ...... 27 5.1 Overview ...... 27 5.2 Economic profile of the municipality of Dion-Olympos ...... 28 6. Results of ratio analysis ...... 30 6.1 Financial statement analysis of the municipality of Dion-Olympos ...... 30 6.1.1Data Evolution of the balance sheet of the Municipality of Dion-Olympos ...... 31 6.2Analysis of Assets Accounts ...... 34 6.2.1. Installation costs: ...... 34 6.2.2. Fixed Assets: ...... 35 6.2.3 Fixed Investment Securities ...... 38 6.2.4 Cash at bank and in hand ...... 39 6.2.5 Receivables (debtors) ...... 40
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
6.3Analysis of Equity and Liabilities ...... 42 6.3.1 Equity ...... 42 6.3.2 Revaluation reserves -Investment grants ...... 43 6.3.3 Investment subsidies ...... 43 6.3.4 Provision for Personnel Compensations ...... 43 6.3.5 Retained Earnings (Results Carried Forward) ...... 44 6.3.6 Long-term and Short-term Liabilities ...... 44 6.3.7Accrued expenses and Deferred Revenues (Suspense Accounts) ...... 46 6.4 Revenue Analysis ...... 47 6.5 Expenditure Analysis ...... 50 6.6 IncomestatementandAppropriationAccount ...... 52 6.7Analysis of net results after taxes ...... 53 6.8 Ratio analysis included in case study ...... 54 6.9 Liquidity Ratios ...... 56 6.9.1 Current Ratio ...... 56 6.9.2 Acid Ratio ...... 56 6.9.3 Cash Ratio ...... 57 6.9.4 Evolution of the Municipality's Liquidity Ratios ...... 57 6.10 Efficiency Ratio Analysis ...... 59 6.10.1 ReturnOnEquity (ROE) ...... 59 6.10.2 ReturnOnAssets (ROA) ...... 59 6.11 Capital Structure Ratios ...... 61 6.11.1 Liabilities / Total Assets: ...... 61 6.11.2 Liabilities / Equity ...... 62 6.12 Activity Ratios ...... 64 6.12.1 Account Receivables Turnover ratio ...... 64 6.12.2 Accounts Receivable Turnover (Days)-Average Collection Period ...... 65 6.12.3 Turnover Asset Ratio: ...... 65 6.12.4 Evolution of turnover ratios of the municipality of Dion-Olympos in the years 2016-2018...... 65 6.13 Balance Sheet Structure Ratios ...... 69 6.14 Income Statement Structure ratios ...... 74 6.15 Financial Ratios per Citizen ...... 79 6.15.1 Calculation types for Financial Ratios per Citizen ...... 80 7. Comparative analysis of Kallikratic Municipalities of Pieria ...... 90 7.1 Brief-Description of the Municipality of Katerini ...... 90 7.1.1 Economic profile of the Municipality of Katerini ...... 91 7.2Brief-Description of the Municipality of Pydna–Kolindrou ...... 92 7.3 Comparative Analysis based on ratios per Citizen ...... 94 7.3.1 Calculation of ratios per citizen for the Municipality of Katerini ...... 95 7.3.3 Calculation of ratios per citizen for the Municipality of Dion-Olympos ...... 97 7.5 Comparative Analysis of ratios per citizen for the three Municipalities of Pieria .... 98 7.5.1 Total Revenue per Citizen ...... 98 7.5.2 OwnRevenue/Citizen ...... 99 7.5.3 OperationalExpenses/Citizen ...... 100 7.5.4 Net Results per Citizen ...... 101
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7.5.5 Subsidies/Citizen ...... 102 7.5.6 Fixed Assets/Citizen ...... 103 7.5.7 Total Assets/Citizen ...... 104 7.5.8 OwnEquity/Citizen ...... 105 7.5. 9 Long-TermLiabilities /Citizen ...... 106 7.5.10 Short-Term Liabilities /Citizen ...... 107 8. Summary-Conclusions ...... 108 References ...... 111 APPENDIX A: INCOME STATEMENTS AND BALANCE SHEETS OF THE MUNICIPALITY OF DION-OLYMPOS 2016-2018 ...... 117
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
List of Figures
Figure 1: The map of Dion-Olympos ...... 28 Figure 2: The logo of the Municipality of Dion-Olympos ...... 28 Figure 3: List of financial ratios reported in the case study ...... 30 Figure 4:Methodology for calculating and presenting case study ratios...... 31 Figure 5: Preliminary Expenses for each year for Municipality of Dion-Olympos ...... 35 Figure 6:Evolutiongraphof the value of Fixed Assets of the Municipality Dion-Olympos 37 Figure 7: Evolution graph of the Fixed Investment Securities’ value of the Municipality of Dion-Olympos...... 39 Figure 8: Cash reserves graph for the Municipality of Dion-Olympos ...... 40 Figure 9:Third-party requirements graph for the Municipality of Dion-Olympos ...... 42 Figure 10:Short-term and Long-term liabilities Value Graph for each year for the Municipality of Dion-Olympοs ...... 46 Figure 11:Total Revenue per year for the Municipality of Dion-Olympos ...... 49 Figure 12:Participation (value) of regular and extraordinary income in total revenue for each year ...... 49 Figure 13:Participation (percentage) of regular and extraordinary income in total revenue for each year ...... 50 Figure 14:Graphical representation of the net result of each year for the Municipality of Dion-Olympos ...... 53 Figure 15:Diagrammatic Representation of the financial ratios of the case study...... 55 Figure 16:The evolution of the Current liquidity ratio of the Municipality of Dion- Olympos for the period 2016-2018 ...... 57 Figure 17:The current ratio change percentage of the Municipality of Dion-Olympos for the period 2016-2018 ...... 58 Figure 18:The Cash ratio evolution of the Municipality of Dion-Olympos for the period 2016-2018 ...... 58 Figure 19:The evolution of the ROE ratio for the Municipality of Dion-Olympos for the period 2016-2018 ...... 60 Figure 20:The evolution of the ROA ratio for the Municipality of Dion-Olympos for the period 2016-2018 ...... 61 Figure 21:Theevolution of theLiabilities/Equityratio of the Municipality of Dion-Olympus for the period 2016-2018 ...... 63 Figure 22:The evolution of the Liabilities/Equityratio of the Municipality of Dion- Olympos for the period 2016-2018 ...... 63 Figure 23:TheevolutionoftheEquity/TotalAssetsratio of the Municipality of Dion-Olympos for the period 2016-2018 ...... 64 Figure 24:TheevolutionoftheAccountReceivablesTurnoverRatioof the Municipality of Dion-Olympos for the period 2016-2018 ...... 66 Figure 25:The evolution of the AccountReceivablesTurnover (Days) Ratioof the Municipality of Dion-Olympos for the period 2016-2018 ...... 67 Figure 26:The evolution of the AssetTurnoverRatioof the Municipality of Dion-Olympos for the period 2016-2018 ...... 68 Figure 27:The evolution of the FixedAssetTurnoverRatioof the Municipality of Dion- Olympos for the period 2016-2018 ...... 68
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Figure 28:The evolution of the Current Assets/Total Assets Ratioof the Municipality of Dion-Olympos for the period 2016-2018 ...... 71 Figure 29:The evolution of the Fixed Assets/Total Assets Ratioof the Municipality of Dion-Olympos for the period 2016-2018 ...... 72 Figure 30:The evolution of the FixedAssets/Own Equity Ratioof the Municipality of Dion- Olympos for the period 2016-2018 ...... 72 Figure 31:The evolution of the Long-term Liabilities/Total Assets Ratioof the Municipality of Dion-Olympos for the period 2016-2018 ...... 73 Figure 32:The evolution of the Short--term Liabiliteis/Total Assets Ratioof the Municipality of Dion-Olympos for the period 2016-2018 ...... 73 Figure 33:Quota Percentage of GrantstoOperatingRevenue ...... 77 Figure 34:Quota Percentage of Own Revenue to total Operational Revenue ...... 78 Figure 35:Percentage of Administration Costs to total operating revenue ...... 78 Figure 36:QuotaPercentageCostof Goods sold to total Operating Revenue ...... 79 Figure 37:Own Funds Resources of the Municipality of Dion-Olympos ...... 81 Figure 38:Graphical Representation of operating revenue per Citizen for each year ...... 83 Figure 39:Graphical Representation of own revenue per citizen for each year ...... 83 Figure 40:Graphical Representation of operating expenses per Citizen for each year ...... 84 Figure 41:Graphical Representation of net result per citizen for each year ...... 85 Figure 42:Graphical Representation of subsidies per Citizen for each year ...... 85 Figure 43:Graphical Representation of the value of fixed assets per citizen for each year 86 Figure 44:Graphical Representation of the value of total assets per Citizen for each year 86 Figure 45:Graphical Representation of the value of own capital per citizen for each year 87 Figure 46:Graphic Representation of the corresponding amount per each citizen for all long-term liabilities for each year ...... 88 Figure 47:Graphical Representation of total revenue per citizen for each year ...... 88 Figure 48:Τhe official logo of Municipality of Katerini ...... 90 Figure 49:Map of Municipality of Katerini ...... 92 Figure 50:Τhe official logo of Municipality of Pydna-Kolindros ...... 93 Figure 51:ΜapofMunicipalityPydnas-Kolindrou ...... 94 Figure 52:Comparative Diagrammatic Representation of the Total Revenue ratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 98 Figure 53:Comparative Diagrammatic Representation of the Own Revenue ratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 99 Figure 54:Comparative Diagrammatic Representation of the Operating Expenses ratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 100 Figure 55:Comparative Diagrammatic Representation of the Net Result ratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 101 Figure 56:Comparative Diagrammatic Representation of the Subsidies ratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 102 Figure 57:Comparative Diagrammatic Representation of the Fixed assets ratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 103 Figure 58:Comparative Diagrammatic Representation of the Total assets ratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 104 Figure 59:Comparative Diagrammatic Representation of the Own Equity ratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 105
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Figure 60:Comparative Diagrammatic Representation of the Long-TermLiabilitiesratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 106 Figure 61:Comparative Diagrammatic Representation of the Short-TermLiabilitiesratio per citizen for the three Municipalities of the Regional Unit of Pieria ...... 107
List of Tables Table 1:Evolution of selected Balance elements for period 2016-2018 ...... 31 Table 2:A closer view of the balance sheet for each fiscal year ...... 34 Table 3:Installation costs for each year for Municipality of Dion-Olympos ...... 34 Table 4: Other formation expenses for each year for Municipality of Dion-Olympos ...... 36 Table 5:Value of Tangible Assets for each year for the Municipality of Dion-Olympos ... 37 Table 6:Fixed Investment Securities value for the Municipality of Dion-Olympos ...... 38 Table 7:Cash reserves analysis for the Municipality of Dion-Olympos ...... 39 Table 8:Third-party value claim for the Municipality of Dion-Olympos ...... 41 Table 9:Value of bad or disputed claims for the Municipality of Dion-Olympus ...... 42 Table 10:Donated Assets Value, acquired by the Municipality of Dion-Olympos ...... 43 Table 11:Investment Subsidies Value for the Municipality of Dion-Olympus ...... 43 Table 12:Surplus/deficit balance for the Municipality of Dion-Olympοs ...... 44 Table 13:Short-term and Long-term liabilities for the Municipality of Dion-Olympοs ..... 46 Table 14:Value of transitionalaccountsfor the Municipality of Dion-Olympοs ...... 47 Table 15:Analysis of regular and extraordinary revenues for the period 2016-2018 for the Municipality of Dion-Olympos ...... 49 Table 16:Analysis of operating and extraordinaryexpenses of the Municipality of Dion- Olympos for the period 2016-2018 ...... 51 Table 17:Net results for the Municipality of Dion-Olympos in the 2016-2018 period ...... 52 Table 18:Table of Net Results Disposal for the Municipality of Dion-Olympos in the 2016-2018 period ...... 53 Table 20:Liquidity ratios for the period 2016-2018 for the Municipality of Dion-Olympos ...... 57 Table 21:ROE and ROA values for each year for Municipality of Dion-Olympos ...... 60 Table 22:The evolution of the structural ratios of the Municipality of Dion-Olympos for the period 2016-2018 ...... 62 Table 23:The evolution of the activity ratios of the Municipality of Dion-Olympos for the period 2016-2018 ...... 66 Table 24:The evolution of the capital structure ratios of the Municipality of Dion-Olympos for the period 2016-2018 ...... 71 Table 25:Net Result Statement, concerning the revenue side for the period 2016-2018 for the Municipality of Dion-Olympos ...... 75 Table 26:Net Result Statement, concerning the revenue side for the period 2016-2018 for the Municipality of Dion-Olympos ...... 75 Table 27:Evolution of Income Statement Ratios for the period 2016-2018 for the Municipality of Dion-Olympos ...... 76 Table 28:Ratio Calculation per citizen for the Municipality of Dion-Olympos ...... 82 Table 29:Ratio Results per citizen for the case of the Municipality of Katerini ...... 95 Table 30:Ratio Results per citizen for the case of the Municipality of Pydna-Kolindros .. 96 Table 31:Ratio results per citizen for the case of the Municipality of Dion-Olympos ...... 97
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ListofAbbreviations&Acronyms
JDM=Joint Decision of Ministries
IAS=International Accounting Standards
IOBE=Foundation for Economic and Industrial Research
KEDE=Central Union of Municipalities
KPI= Key Performance Indicators
LGO(s)=Local Government Organisation(s)
SME=Small and Medium Enterprises
PATHE motorway=Patras Athens Thessaloniki Evzonoi motorway
PD=Presidential Decree
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
1. Introduction
The unprecedented financial crisis that emerged in Greece in 2010 was the beginning of a series of reforms aimed at rationalizing and cutting Greek state spending. That reform framework did not leave untouched the area of Local Government, where the foundations were laid for the creation of the necessary mechanisms for recording and supervising the economic functioning of the LGO throughout the country.
All the municipalities of the country faced particularly significant economic problems for the service of necessary infrastructure to the Municipalities due to the considerable reduction of the expenditure of the Central Authority and the rapid decrease in their state funding.
According to estimates by the KEDE, which is the most representative sector of the LGO to the central authority, the financing of the LGOs decreased by 1 billion in the period 2007- 2017 and, as a result, many Municipalities were unable to pay individuals and third parties.
State funding has been and continues to be, one of the most important sources of revenue for Local Government in supporting its operation towards its Citizens.
The inspection and monitoring of the preparation of local government budgets in accordance with the current legislative framework of the budgetary policy include the requirement for balanced budgets to be established by all LGO and their sectors.
Financial analysis is a tool to control the budgets of the Municipalities as well as all the legal entities that they have set up with the main aim of distinguishing divergences and implementing corrective actions on the part of the municipal administration bodies.
This thesis, through the case study of a Local Government Organisation such as the case of the Municipality of Dios-Olympos, attempts at analyzing the results of the published financial results for a reference period of three years, to study the economic performance of this Municipality, using appropriate ratios used by the financial analysis. At the same time, to draw broad-based conclusions on the economic performance of the Municipality selected for this study, a category of selected ratios is calculated according to the corresponding ratios of other Municipalities of the same Regional Unit, to reflect deviations and differences between the municipalities compared.
This thesis, through the case study of a Local Government Organisation such as the case of the Municipality of Dios-Olympos, attempts at analyzing the results of the published
1 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
financial results for a reference period of three years, to study the economic performance of this Municipality, using appropriate ratios used by the financial analysis. At the same time, to draw broad-based conclusions on the economic performance of the Municipality selected for this study, a category of ratios is calculated according to the corresponding ratios of other Municipalities of the same Regional Unit, to reflect deviations and differences between the municipalities compared.
An essential part of this work is the calculation of the ratios per citizen where the official data were used for the census of the permanent population of the Municipality of Dios-Olympos, according to the last national census of 2011.
Subsequently, in the form of a comparative analysis of the economic performance of the Municipality of Dios-Olympos, an attempt was made to compare the results of the ratios per citizen with the corresponding numbers per citizen for the other two municipalities of the same Regional Unit. The aim of the above analysis was a representative comparison of the economic performance of each Municipality of the Regional Unit of Pieria, and the observation of notable deviations between the results of the three Municipalities.
The dissertation is comprised of eight chapters:
The first chapter presents the new environment in which the Municipalities are called to operate as a consequence of the economic crisis that appeared in Greece after 2010 and led to drastic cuts in government funding towards all Public Organisations, including Local Governments. The content of Chapter 2 refers to the purpose and usefulness of financial analysis as a tool for decision making as well as monitoring the progress of the financial results of a company or organisation. Next, Chapter 3 refers to the categories of ratios used during the financial statement analysis as well.
Chapter 4 contains a reference to the New Architecture of the Local Government, while then a brief reference is presented to the dual entry bookkeeping system followed by the Local Government Organisations in accordance with the provisions of the legislation on Public Accounting.The next chapter refers to the social and economic background of the selected Municipality, while chapter 6 contains the results of the case study of Municipality selected.
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The next chapter compares the results of the calculation of the specific ratios per citizen with the corresponding ratios per citizen of the other Municipalities of the same Regional Unit. Finally, in chapter 8, the main conclusions on the results of the case study are summarized as well as general remarks on the financial performance of the the Municipality of Dion-Olympos.
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2. Literature review on Financial Statement Analysis
This chapter presents an analysis of the role of financial statements in the cases of LGOs based on relevant literature. The section examines the importance of the financial ratio analysis as a basis for the evaluation of the financial statements for the local government units while exploring the use key performance indicators (KPIs) in the assessment of the efficiency of the operations of the selected units.
2.1Role of Financial Analysis Statement of Local Government
The analysis of financial statements is important in answering a wide variety of strategic management questions such as is the organisation profitable, liquid or solvent? What is the financial position of the firm at any particular time? The analysis also provides a framework for the evaluation of the financial position of the organisation as compared to its peers while providing vital information on the most appropriate strategies and policies that can be used in readjusting the firm’s operations to obtain positive outcome (Robinson, 2020). Cohen, Costanzo, & Manes-Rossi (2017) assert that the analysis of the financial statements is critical in the identification of the early distress signs of the local governments that are facing crisis related to the external shocks. The financial position is also essential for informing the organisation’s management on the amount of debt as well as the long-term liabilities that can be afforded.
In the instances of the public companies, the financial statement informs the external stakeholders such as suppliers and shareholders of the efficiency of the firm’s operations. According to the study of Lara-Rubio et al (2017) the use of financial statement analysis is an appropriate methodology for the determination of the credit risk of the local authorities in various countries. On the other hand, Balaguer-Coll et al (2019) outline that financial statement analysis forms the basis for the determination of the efficiency and independence of the local authorities by the relevant stakeholders. The government also depends on the financial statements for tax computations as well as for the evaluation of the performance of the entities based on the revenue and expenditure (De Simone, Ege, &Stomberg, 2015). Accordingly, financial statement analysis is a critical process in any organisation since it provides a methodology for the determination of the financial performance of the entity. Local governments are expected to meet the increased demands for services in their localities and should therefore aim at proper utilization of resources (Brusca& Montesinos, 2016). The
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local authorities provide critical services to the residents in their jurisdictions such as the collection and disposal of wastes, provision of sewerage and water services, and lighting of the streets among others and therefore need for financial sustainability as outlined by Andrews (2015). Rodríguez Bolívar et al (2016) assert that the analysis of the financial performance of the local governments is vital for the evaluation of the unit’s contribution to sustainable development through the establishment of infrastructure with positive impacts to the citizens. Consequently, such authorities should ensure efficient utilization of the resources to enable the delivery of the specific services. Financial management is thus an important first step that is required for effective and efficient local service delivery since the resource allocation should be based on the appropriate management of the revenue and expenses (Maher, 2015). The management of the financial resources in the local governments require the use of appropriate systems to ensure accountability. The implementation of the financial statements in the local governments thus ensures accountability to the taxpayers and other stakeholder on how the public resources are used. The local governments’ incomes should be collected regularly under specific conditions as required by the law and the expenses spent efficiently. The revenue and expenses depend on the related healthy operation of budget, financial control, and accounting systems (Navarro-Galera et al., 2016). Financial statement analysis is therefore important in the presentation of data that is vital for the monitoring and evaluation of the financial performance such entities.
Financial statements provide necessary information for decision making as the performance of the management can be evaluated based on the indicators and ratios that are presented. Some of the major components of the financial statements of the local governments include cash flows, reserve positions, and comparison with the budgets (Fourie et al., 2015). Additionally, the analysis of the financial statements is a vital step that is part of the development planning processes. Similarly, the statements enable the LGOs to review, prioritize, and select capital projects based on a clear and transparent approach that includes all the relevant stakeholders. The analysis of financial statements is further vital for the protection of the local governments that are examples of public sector entities that are vulnerable to external and internal financial shocks. For instance, Kim & Warner (2016) assert that appropriate financial management is vital for the delivery of services by the local in cases such as recession.
5 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
2.2 Financial Statement Analysis Techniques
The important role played by financial statement analysis require the use of appropriate techniques to allow the acquisition of the relevant information that is required to assess the financial condition of the organisation being studied (Easton & Sommers, 2018). The main techniques that are used for the analysis of the financial statements include ratio analysis, vertical analysis, and horizontal analysis. The ratio analysis utilizes important ratio indicators to establish statistical relationships in the financial statements being examined. The horizontal technique entails the comparison of the values of the data across various years (Petersen, Plenborg, &Kinserdal, 2017). On the other hand, vertical analysis examines the impact of the line items on other parts of the business as well as the business’ proportions.
The mentioned techniques can be implemented to analyze financial statements of organisation such as balance sheet, cash flow statement, and income statement. The balance sheet is composed of the liabilities, shareholders' equity, and the organisation’s assets and is vital for the provision of the financial position of the entity at any given time (Easton & Sommers, 2018). The income statement highlights the organisation’s revenue against the expenses to establish a bottom line or a net income profit or loss. The analysis of the income statement entails the calculation of the net profit margin, operating profit margin, and gross profit margin. The profit margin is useful in determining the points at which the organisation’s costs are low or high. The cashflow statement shows the cash flows of the organisation from different activities such as investment, operation, and financing. According to Vermeer & Styles (2019) the local governments should use highlighted financial statements as a way of transparent financial reporting and for auditing purposes.
2.3 Local Government Financial Key Performance Indicators
According to Askounis et al (2016) local governments face numerous challenges that are related to the global economic crisis and hence the need for systematic methodology to measure the performances of such units through key performance indicators (KPIs). Similarly, Pallis, Liapis, & Spanos (2018) outline that KPIs are vital for the measuring of the financial strength and performance in the cases of Greek Municipalities. While the quality of services offered KPIs mainly measures the effectiveness of the operations and procedures of a local government, the financial KPIs primarily concern the efficiency of the generation and utilization of the revenue, management of the expenses while assessing the long-term benefits
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to the citizens. On the same note, the KPIs assess the efficiency of the utilization of the government funding and subsidies (Askounis et al., 2016).
The sources of revenues to the local authorities include property taxes, charges and fees, and transfers and funds from the main or regional governments (Askounis et al., 2016). The efficiency of the operational revenue should therefore be measured on the extent to which the specific authority can generate certain amount of money at any particular time. On the other hand, the KPI relating to the operating expenses measures the efficiency of the LGO towards the provision of the critical services to the citizens (Pallis, Liapis, & Spanos, 2018). Additionally, the KPIs of the operational expenses are aimed at minimization of unnecessary expenditure as well as the allocation of the financial resources to the most important elements in the organisation. The long-term benefits are evaluated on the basis ofthe sustainable utilization of the financial resources to develop impactful infrastructure to the citizens.
2.4 Importance of Financial Ratios for Local Governments
Financial ratios are vital for the evaluation of the financial condition of an organisation. According to Hruza (2015) the use of the financial ratios can enable the determination of the financial strength of public sector organisations such as municipalities in Greece. On the same note, Siahaan (2018) identifies the use of financial ratios as an effective approach for analyzing the financial performance of local governments. The financial ratios are therefore important as part of the approaches to improve the efficiencies, effectiveness, appropriateness and value for money of the services that are offered by the local government (Siahaan, 2018). Some of the major financial ratios that are used in the discussion of this case study include liquidity, efficiency, income statement, capital structure, balance sheet structure, and activity ratios.
2.5 International Accounting Standards for Local Governments
The International Accounting Standards (IASs) seek to ease the global comparison of business operations, foster global trade and investment, and increase trust and transparency in financial reporting (Maynard, 2017). In local governments, IASs are not only useful for standard setting but are also critical for the establishment of framework for auditing of the financial statements and accounting systems. Cohen (2015) outlines that different accounting and auditing standards are used in the Greek general government that comprises of central government, social security entities, and local governments. The local governments apply the 7 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
cash accounting system while seeking to comply the IASs. The instances of IASs adoption by the local governments include the presentation of the budget items on item by item basis as well as the use of the budgeting on a cash basis. Despite the attempts to use appropriate accounting and auditing the Greek public sector including local governments, Cohen & Karatzimas (2016) argue that there is lack of monitoring by external stakeholders such as lenders and politicians with the process mainly favoring the consultants and bureaucrats involved.
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3.Methodology
The current thesis is mainly depended on the secondary data for the analysis of the balance sheets of the Municipality of Dion-Olympus for a period of three consecutive years, gathered from the official published documents by Municipality of Dion-Olympus about the annual balance sheet and income statement for each year, respectively.
For the analysis of the balance sheets, the technique of Financial Ratio Analysis is applied in order to offer an insight into the financial status of the selected Municipality, regarding the liquidity,the efficiency ratios and other balance sheet structure ratios. Moreover, a theoretical background of the key financial ratios used in this study, is provided for a deeper understanding of the role of the financial ratio analysis.
3.1 Liquidity Ratios
The liquidity ratios are used to assess the organisation’s ability to repay its debts without resorting to external financing. Liquidity ratios are important for local governments in the determination whether such entities can repay their short-term liabilities without considering external capital (Hruza, 2015). Accordingly, the liquidity ratios are essential towards the determination of the debt profiles of the LGOs and hence critical in the establishing the extent of the problems in servicing debts of performing their statutory tasks in the medium term. The direct liquidity ratios such as the current and acid ratios entails the incorporation of the organisation’s current liabilities and assets in the calculation (Liscow, 2017). On the other hand, the indirect liquidity ratios,incorporate other elements of the organisation like revenue and sales. The operating cash flow ratio is vital in measuring the efficiency of the cash flows generated by the organisation in covering the current liabilities.
3.2 Efficiency Ratios
Efficiency ratios are used to assess the organisation’s ability to use its assets and manage its liabilities effectively in the current period or in the short term and are important for the local governments in the comparison of the output and input or the expense realization and income realization of the local unit (Hruza, 2015). The Return on Assets (ROA) is vital in demonstrating how profitable the organisation’s assets are in generating revenue (Liscow, 2017). The management of assets in the local authorities is important in highlighting how the municipalities can operate the infrastructure in the most effect way towards the provision of the most critical services within the specified jurisdictions. On the other hand, the Return on 9 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
equity (ROE) is a measure of the management’s ability to produce income from the available equity (Liscow, 2017). For the local governments, ROE is essential for the assessment of the authority’s ability to effectively utilize the funds available for efficient service delivery.
The capital employed is a financial ratio that shows the amount of capital that has been put to use in an investment. The capital employed is thus essential to the local governments in determining the proportion of revenues that is dedicated to the provision of the critical services such as waste management (Spearman, 2019). The surplus percentage is the difference between the local government revenue and the spending and is vital for the evaluation of the extent to which the utilize the available financial resources towards the accomplishment of the various objectives and for the provision of the critical services.
3.3 Capital Structure Ratios
Capital Structure Ratios are very significant determinants of leverage ratios during an economic crisis, according to a study by Balios (2016) and colleagues on SMEs in Greece. Similarly, capital structure ratios can help the local authorities determine their leverage ratios during the 2020 year of economic crisis. The ability of capital structure ratios to assist in determining leverage ratios is found on the fact that the impact of capital structures on leverage ratios do not change even during years of economic crisis (Balios et al., 2016). However, capital structure ratios on the financial statement analysis of LGOs depend on specific capital structure ratios such as liabilities, total assets, and total debt charge ratios. In essence, each capital structure ratio illustrates one dimension of the organisation's overall financial health. This dissertation explores some of these significant factors and how they influence LGOs financial statement analysis.
3.3.1 Liabilities/Total Funds Total funds are significant parts of the financial statement analysis of LGOs because they provide information about the authorities, financial position, performance, and cash flow. Such information is significant in helping the stakeholders of these local government units to make critical decisions on financial resources allocation (Palep& Healy, 2013). Another role of total funds in the financial statement analysis of local governments is to bring together the authority's financial resources to show the Total financial resources available for the body at the end of the year.
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3.3.2 Liabilities/Equity The role of Equity analysis in the analysis of Local Government Units' financial statement is to demonstrate, among others, the financial position of the authority compared to its peers. Information from the evaluation of the local government Units' liabilities helps in adjusting the authority's operations and policies to assist in strengthening their financial position (Hruza, 2015). Analysis of equity also helps in measuring the authority's profitability, earning potential, and the ability of the authority's management.
3.3.3 Equity/Total Assets The role of analyzing the Total Assets of a local government unit in their financial statement analysis includes helping in determining the amount of debt that the authority can afford (Siahaan, 2018). Local government units in Greece also require debts like many other organisations. The Total Assets analysis helps them determine the appropriate sources of debts and the amount of debts that they need. In essence, the role of Total Assets analysis in the financial statement analysis of a local government unit is to evaluate the liquidity status of the authority (Siahaan, 2018). Additionally, Total Assets analysis also helps determine how quickly a Local Government Unit's asset can be deployed to cover for the day-to-day need of the authority.
3.3.4 Total Debt Charge Ratio The role of analyzing the Total Debt Charge Ratio in the financial statement analysis of a Local Government Unit in Greece is to provide information about the organisation's current debt behavior and plan for future debt activities. In essence, the data can help Local Government Authorities determine whether to increase their future debt capacity or to reduce currently accumulated debts (Kablan, 2013). Additionally, analyzing the Total Debt Charge Ratio of a Local Government Units also helps determine the bad debt expenses that do not require overflow of liquidity.
3.4 Activity Ratios
Activity ratio analysis is fundamental in analyzing the financial statement of local government units because they help them make healthy expenditure decisions that maintain the healthy functioning of both accounting and budgeting (Kablan, 2013). Some of the most significant types of activity ratios include Account Receivable Turnover Ratios, Turnover Receivables in days, and Turnover Asset Ratios.
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3.4.1 Account Receivables Turnover Ratio
The role of analyzing Local Government Unit’s Account Receivable Turnover Ratios is to determine how well the authority collects and manages the collection of its receivables and money owed to its clients (Kablan, 2013). In essence, analysis of an authority's Account Receivable Turnover Ratio helps in showing how the Local Government Unit manages the credit it expends to its customers and how fast they collect them. The information on the credit collection of authority helps in determining the overall financial activity of the company. Account Receivable turnover ratios also measure how well a Local Government Authority is using its available assets. In essence, the ratio measures how well an authority collects its accounts receivable over a specific period.
3.4.2 Turnover receivables in days The turnover receivables ratio index measures how many average days a company takes to collect its receivables and credits. The ratio is very significant in the financial statement analysis of Local Governmental Units in Greece. It helps them determine how long it can take for their clients to pay their credits and for the authority to collect its receivables. Additionally, turnover receivables in days ratio also help local government to determine the financial positional the end of a fiscal year based on the credits they owe and the Turnover receivables in days ratio. However, most significant, the rate helps in determining an authority's strength in accounts receivables management.
3.4.3 Turnover Assets Ratio
The Turnover Assets Ratio's role in the financial statement analysis of a Local Governmental Unit is to measure the ability and efficiency of the authority's assets in generating revenue through sales. In essence, the ratio compares total revenue generated through sales to the total assets of the organisation (Jansen, Ramnath &Yohn, 2012). The turnover assets ratio is one of the most crucial activity ratios that provides a clear overview of the financial statement of a Local Governmental Authority. Turnover assets ratio appears in a Local governmental Authority's financial statement as a percentage of sales on the average total assets of the authority.
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3.5 Balance sheet structure ratios
Balance sheet structure ratios are useful for Local Government Authorities in analyzing and determining the efficiency of authority in revenue generation and the speed of its capacity in selling inventory. In essence, analyzing the balance sheet structure ratios in the financial statement analysis of local authorities in Greece helps determine the authority's solvency and leverage.
3.6 Income Statement Ratios
Local Government Units in Greece use the dual entry bookkeeping systems, which are very is useful in the practical analysis of their financial statements. The dual bookkeeping system helps them effectively compare their financial statements with those of other authorities. However, one major disadvantage of the dual book system is that it is unique to Local government Authorities in Greece and limits their ability to compare to Local government Units in other countries and the state government Authorities. However, the income statement ratio is a handy index in determining and analyzing the financial statements of local government units in Greece.
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4. Local Government Organisation's Bookkeeping System
This chapter initially provides a brief historical overview of all the administrative reforms operated by the Greek state in order to upgrade the role and the municipalities of local government organisations.
Furthermore, this chapter serves as a short introduction to the issue of double-entry bookkeeping system in local governments. Within its scope, the chapter is going to describe - in general terms -both institutional and regulatory frameworks governing the organisation of and supervision over local government finances. More specifically, it is going to provide a general overview of the process of drafting a local government-oriented budget on the basis of the double-entry bookkeeping system opted for by the local authorities, as well as deal with mechanisms of supervision over the finances of such local government by the central- state governance.
4.1. The institution of Local Government in Greece.
The institution of local government has existed for many years, with itsmain distinctive feature being a remarkably high degree of decentralization("Kallikratis Plan", 2020).The 2539/1997 Law on the Establishment of Primary Local Government that is also known as the Kapodistrias Program, initially solved the fragmentation problem, as -through the process of unification - 901 municipalities and 133 local communities were created. Thanks to the 3852/2010 Law on New Architecture of Local Government and Decentralized Administration - Kallikratis Program, their number was drastically reduced to 325 municipalities all over Greece.
According to Article 102 of the revised Constitution("The Constitution Of Greece", 2019):
• administration of local affairs is delegated to local governments of both first and second degree.
•local governments are granted administrative and financial autonomy.
• law may require the execution of projects, the provision of services, or exercising responsibilities of local governments, as well as either compulsory or voluntary associations of local governments being governed by elected bodies.
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• State supervises local self-government bodies, which is exclusively oriented towards the control over the legality of performed undertakings. The State is not allowed to obstruct their initiatives and limit their freedom to act.
• State shall take legislative, regulatory, and fiscal measures required to ensure the financial independence of such units, as well as resources necessary to accomplish goals of local governments, while at the same time ensuring a satisfactory transparency of management.
Responsibilities of the municipalities are determined by article 75 of 3463/2006 Law on Ratification of the Code of Municipalities and Communities.
The public accounting of the municipalities is primarily based on the 17-5/1959 Royal Decree on the Financial Administration and Accounting of the Municipalities and Communities.
The 315/99 Presidential Decree is the predominant legislative framework that regulates the Occupational Accounting Plan of first-degree LGOs and introduces the double-entry system on the part of the municipalities, replacing the single-entry system as the basis of the application of public accounting principles.
The introduction of the double-entry bookkeeping system enabled municipalities to determine their current financial situation, specify the value of their assets, as well as to show case all their short- and long-term liabilities to third parties. The single-entry system gave way to the Balance Sheet, the profit and loss account, and the availability of results(Alexopoulos, 2008).
4.2 The budget of Local GovernmentAuthorities
Budgeting is a fundamental concept of public accounting. “In particular, for local authorities, the budget is considered to be the administrative act by which revenue are determined and the expenses for a financial year are specified. They are classified in special capital accounts and articles (CAD income / expense code numbers)” (Rallis,2016).
Authorities governing the preparation of the budget of local authorities originate from authorities responsible for the preparation of the budget of the State and other public sector organisations. Key principles they have to comply with are as follows:(Rallis,2016):
• principle of publicity, on the basis of which processes of preparation, voting and execution of the budget should be published.
• principle of unity, according to which the budget should be uniform for each municipality. 15 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
• principle of universality, meaning that offsetting income and expenses is not allowed.
• principle of budget and credit specialization, in the case of which specific budget appropriations are used for specific purposes and cannot be utilized for any other purpose.
• principle of the finality of the budget and the prohibition of the transfer of credits, according to which after the approval of the budget, resources have to be used only for the purpose for which they have been registered.
• principle of accuracy, sincerity, and clarity, basing on which revenue and expenses should be recorded as accurately and honestly as possible so that the budget is not distorted.
• principle of Balance Sheet, in the case of which the budget should be balanced in terms of revenue and expenditure.
As for the duration of the budget, according to article 156 of 3463/2006 Law, the financial year – with regard to the management of municipalities and communities - begins on January 1st and ends on December 31stof the same year. In the case the budget has not been prepared or voted on by the end of the previous year, article 160 of 3463/2006 Law states that, “until the new budget starts to apply and however not later than the end of March of the following financial year, the budget for the year that has expired is valid only for the payment of a) the mandatory expenses referred to in paragraph 1 of Article 158. b) the expenses incurred for special purposes under a law, following funding decisions from the State Administration, as well as those carried out in the context of the implementation of approved projects or actions, which are co-financed by European Union resources.”
At the end of the quarter, it is not allowed to incur any expenses, except for those related to the remuneration of the staff and the payment of respective insurance contributions, to the detriment of the budget of the previous year.
When it comes to the content of the budget of municipalities, reference to said matter is made to article 155 of 3463/2006 Law, to the provisions of paragraph 9 of article 77 of 4172/2013 Law,and article 64 of 4270/2014 Law, according to which:
•all municipal revenue and expenditure are recorded in the budget.
• type of the budget of municipalities is determined by a joint decision of the Ministry of Interior and the Ministry of Finance.
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Initially, the Joint Decision of Ministries (JDM) 7028/2004 was issued, which determined a new type of budget of municipalities and has been considered valid for the preparation of budgets for 2005 and onwards. Afterwards,the above was modified with the later version of JDM’s, pursuant to the provisions of article 175 of 3463/2010Law, to complete the deficiencies and include new institutional changes that have occurred.
Specifically, the following were issued(Hellenic Agency for Local Development and Local Government, 2020):
• JDM 64871/2007 (Government Gazette 2253B / 26.11.2007) • JDM 70560/2009 (Government Gazette 2394B / 01.12.2009) • JDM 50698/2011 (Government Gazette 2832B / 14.12.2011) • JDM 47490/2012 (Government Gazette 3390B / 18.12.2012) • JDM 30842/2013 (Government Gazette 1896B / 01.08.2013) • JDM 29530/2014 (Government Gazette 2059B / 29.07.2014) • JDM 26945/2015 (Government Gazette 1621B / 31.07.2015) • JDM 23976/2016 (Government Gazette 2311B / 26.07.2016) • JDM 25595/2017 (Government Gazette 2658B / 28.07.2017) • JDM 38347/2018 (Government Gazette 3086B / 27.07.2018)
The budget structure is set out in the Joint Ministerial Decision (JMD). According to JMD 26945/2015, on the preparation of a budget for the year 2016, JMD 25595/2017, on the preparation of a budget for the year 2018 and JMD 38347/2018, on the preparation of a budget for the year 2019, the budget is divided into two parts. The first part includes revenue and the second part the expenses including the reserve.
The structure of the budget is specified in the Joint Ministerial Decision (JMD). According to JMD 26945/2015 on the Preparation of a Budget for the Year 2016, JMD 25595/2017 on the Preparation of a Budget for the Year 2018, and JMD 38347/2018, on the Preparation of a Budget for the Year 2019, the budget should be divided into two parts. The first part includes revenue and the second part covers expenses, including the reserve.
Budget revenue are divided into the following groups:
• regular revenue
• extra revenue
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• revenue from past financial years that are certified for the first time
• receipts of loans and receivables from past financial years
• receipts in favor of the State or third parties and refunds financial balance of previous year.
In the revenue category, there are two tables of recapitulations. The first table lists all revenue based on their origin and the second one includes only revenue intended for investment.
Budget expenses are divided into following funds:
• operating expenses
• investments
• payments relating to past financial years, other returns and forecasts
• reserve capital.
In the expenditure section of the budget, there are - as it is in the case of the revenue group - two tables for recapitalizing expenditure. In the first table, expenditure are classified by type, which helps to draw conclusions about financial condition and managerial efficiency. In the second table, the expenses are classified by service. Thanks to that, it becomes possible to divide the expenses between services.
The services to which budget expenditure are distributed are as follows:
• 00 General Services • 10 Financial and Administrative Services • 15 Culture, Sports and Social Policy Services • 20 Cleaning and Electric Lighting Services: • 25 Water, Irrigation and Sewerage Services • 30 Technical Works Service • 35 Green Service • 40 Town Planning Service • 45 Cemetery Service • 50 Municipality Police • 60 Social Policy Services • 61 Culture and Sports Services
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• 62 Cleaning and Electric Lighting Services • 63 Sewerage Irrigation Water Supply Services • 64 Service of Technical Works, Green and Urban Planning • 69 Other Services • 70 Other Services (can be analyzed in 70.01, 70.02 and so on)
Articles 159 and 162 of 3463/2006 Law refer to the preparation, voting, control of legality, and the publication of the budget of municipalities. It is worth noting that article 266 of 3852/2010 Law and article 77 of 4172/2013 Law were replaced by article 189 of 4555/2018 Klisthenis Program Law. Every year in July, by Joint Decision of the Ministries of Finance and Public, instructions are provided for the preparation, execution, and reform of the budget that are then presented to the representatives of individual municipalities. Maximum limits for the assessment of identical revenue of municipalities are determined basing on the revenue collected during the two previous years. The need to develop realistic budgets is emphasized, which is connected with recording only expenses that can be financed from the revenue that are forecasted to be collected. By the end of June, the city council sets the maximum expenditure for each community for the following year. The Community Council, or the President for a Community smaller than three hundred residents, submits a draft of expenditure to the Economic Committee, accompanied by an explanatory memorandum to be presented by 20th July.
At the same time, the Executive Committee submits a draft budget to the Economic Committee, which - till 5thSeptember -examines the draft and develops a draft budget. The Economic Committee is required to review the draft budget by 20thSeptember and ensure that it is incorporated into the Ministry of the Interior's electronic database so that the OECD's Financial Independence Observatory can provide an opinion on the drafting of a realistic and balanced budget.
After receiving the consent of the Observatory, the Municipal Council votes for the budget and the comprehensive action framework till 15thNovember,in accordance with Article 4 of 4111/2013 Law, during a special meeting and then - submits the relevant decision, in both printed and electronic form, with all the accompanying data on the budget to be controlled by the authority responsible for the supervision over a specific municipality.
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After the ratification of the budget, the municipality takes care of its integration in the electronic database of the Ministry of Interior. A summary of the financial situation of the budget, as voted by the Municipal Council, is posted on the official website of the municipality,as well as in the DIAVGEIA Program. It is also published in a daily or weekly local newspaper published within the borders of the municipality.If such does not exist, it is published in a newspaper issued within the borders of a prefecture to which the municipality belongs.
According to JMD’s that provide instructions for the preparation of the budget at the end of the financial year, the budget of municipalities must be reformed by the end of February by a decision of the Municipal Council. The assumptions on the basis of which municipalities have developed the budget are being re-examined by taking into account factual financial results and figures.
The reform of the budget, according to article 8 of the 17-5/1959 Law,can be carried out during the financial year with a decision of the Municipal Council. The reform may be connected with:
•revenue for which there were no resources in the initial budget or for the increase of budgeted revenue, the return of which during the year exceeds the amounts originally provided.
•registration of new credits deemed necessary or the reinforcement of credits deemed insufficient by the transfer of credits from the reserve or from code to code through the reserve.
• execution of new projects that were not foreseen by means of the simultaneous modification of the Technical Program.
After the decision to reform the budget is accepted, the entire budget is submitted to the authority responsible for the supervision over a given municipality. According to the Act no. 8/17515/29-4-2013, the Ministry of Interior determines the type of file to be submitted after the reforms.
As for the control over the execution of the budget, according to article 39 of 4257/2014 Law, the Financial Committee - after the suggestion of the head of the Financial Service of the Municipality and after the end of each quarter - submits a report to the Municipal Council on
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the results of the execution of the budget from the beginning of the financial year to the end of that quarter.
The report is submitted to the Municipal Council for approval within thirty days before the end of each quarter. If reports of second and third quarter show that the Economic Committee has recorded an overvalued revenue or revenue that is not expected to be collected by the end of the year, the City Council is required to reschedule the budget within fifteen days. In the case the report shows that no budget reform is required, it is then confirmed by the Municipal Council with its decision.
Decisions of the Municipal Council are submitted to the Auditor of Legality for audit. The report - after its development and the decision of the Municipal Council - is posted on the website of a particular municipality, as well as in the DIAVGEIA Program.
4.3 Accounting Systems
4.3.1. Cash register accounting system The cash register accounting system, or the single entry bookkeeping accounting system, is the oldest method of registering accounting documents and is characterized by simplified recording of financial events. The Greek public accounting includes the rules for managing the finances of each state organisation, which determine the limits of income and expenses, proceeding with the correct training and execution of the budget. The monitoring of revenue and expenditure is based on the Code of Income-Expenditure Classification, as set from the 496/7414 Legislative Decree (article 3, par. 2).
Basing on public accounting principles, the amount of money collected is an income and that the amount of money paid is an expense. Thus, every time a public organisation collects revenue, it issues a collection receipt including it in the Budget Revenue Code. Every time a public body pays a specific amount, a code number of expenses of its budget is updated.
Therefore, it turns out that “revenue” and “expenses” terms are completely different from the corresponding concepts developed by the Accounting Science. Indeed, while talking about revenue from the budget of a public body, it means any amount that is legally received and increases cash assets of the institution, while expense is considered to be each of its legal expenses. The very first observation that can be made is that the cash register accounting system is monographic, meaning that each accounting act is recorded in one form -either as
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input or as output. This is a very static method that does not allow public bodies to gather valuable information in order to conduct rational financial management.
4.3.2 Double-entry Accounting System
The double-entry accounting system is the method that records changes caused by accounting events in an organisation (public or private), setting in motion at least two accounts:
• one that changes incrementally (+) or derogatorily (-) and
• another one that changes inversely by exactly the same amount, (-) or (+).
In other words, each accounting event is recorded in two dimensions with the simultaneous movement of at least two accounts, one of which is being charged and the second one - credited. It is an accounting system that is valid all over the world, has been operating for many years, and grants unlimited possibilities for providing financial information to the management of an organisation.
Accounts of the double-entry system are included in the chart of accounts,also known as the Unified General Accounting Plan, which is defined by the P.D. 1123/1980. It was based on a French model.From 2006 onwards the design of the accounts has been observed, but the accounting practices of the International Financial Information Standards have also been followed for the preparation of the financial statements. All accounts are divided into substantive and class-based ones. The first ones are financial accounting circuits and accounting cost circuits. Class accounts are a special category of accounts, in the case of which useful pieces of information are being displayed and monitored, as well as events that create legal commitments without causing a direct quantitative change in the company's assets, with the possibility of doing so in the future(Nikolopoulos, 2004). Αny increase in the assets causes a corresponding decrease in other assets or a corresponding increase in the liabilities or equities. Furthermore, each decrease in assets causes a corresponding increase in other assets or a corresponding reduction in liabilities or equities.
The main disadvantage of the cash register accounting method is the fact that the focus is put on income, expenses, and difference between them (income minus expenses), which leads to inaccurate and time-consuming financial information for current financial use, since transactions are recorded only when cash is received or paid. At the end of the fiscal year, income or expenses that have not been certified, but also have not been paid or collected in the current year, close accounting and reopen in the new fiscal year until they are paid and 22 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
closed permanently. What is more, in the case of the specific method, there is no monitoring of fixed properties and their value which results in the lack of information on assets and liabilities of public bodies. Thus, significant costs such as depreciation are not recorded, leaving a significant source of wealth unexploited and devalued.
On the other hand, the double-entry method has a lot of advantages over its predecessor. Specifically, with the said method, correct financial information can be collected and correct balance sheets and usage results can be developed. Also, through analytical accounting, it is possible to accurately monitor costs and it is possible for the public body to specify and check its fixed data, requirements, rights, and obligations at all times. It is worth noting that the double-entry method allows for a more rational financial management while at the same time reducing operating costs, in particular by using a customized information system. Finally, it becomes clear that the double-entry system allows for full transparency, which has become necessary in the difficult days of fiscal discipline imposed by the unfavorable economic situation of the country.
4.4. Framework for the Double-entry bookkeeping System
In Greece, the transition from the cash register accounting method to the double-entry one began with the Presidential Decree 80/97 on the Application of the Branch Accounting Plan, but only for social security institutions. The 205/98 P.D. extended the application of the double-entry system to legal entities under public law, the 315/99 P.D. added local authorities of first degree to the list, and with the adoption of 146/03 P.D., the double-entry system began to be applied to public healthcare units(Rallis,2016).
All the aforementioned presidential decrees define the basic principles on which the double- entry method is based, which ensure the reliability of the content of the pieces of information provided. The key principles that are set forth are as follows:
•principle of autonomy; according to the principle, Analytical Accounting operates independently of General Accounting.
• principle of the aggregate accumulation of stocks, expenditure and revenue: relevant accounts of inventories and expenditure accept charges only, whereas accounts of revenue accept credits only without allowing for the transfer of funds during the year.
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• principle of compiling the General Utility account with accounting records: the General Utility account is developed after transferring the value of stocks, organic costs, and revenue by type to it.
•general principles of account keeping: said principles advocate the existence of a document (supporting document), i.e. the existence of a proof of entry, exit, collection, or payment in each and every case. Basing on such documents, income and expenses are accounted for.
•principles of computerized bookkeeping and data issuance: providers are given the opportunity of keeping their books and publishing their data digitally or of complying with General Accounting and publishing their data manually.
•processes of accounting for purchases and expenses: these are procedures that take place after the collection of legal documents stating the values of goods and services acquired by specific entities and aim at the issuance of the Certificate of Compensatory Registration.
•revenue accounting procedures: revenue of institutions is monitored by relevant accounts of a certain group.
•connection of General Accounting with the budget: a plan of the accounts has been designed, so that with the operation of the General Accounting obligations of the bodies for monitoring of their budget are enforced.
•census, assessment and balance sheet: the inventory of assets or exclusive uses and management of each entity, its various obligations, as well as the amount of money available. The inventory is kept by a specific committee formed by a decision of the Board of Directors of each body.
4.5. Accounting Books of the Double Entry Accounting Method
Accounting books are divided into those in which financial transactions kept in a calendar order and those in which transactions are recorded per account (universally). The diaries are divided into general and concentrative ones. The general diary specifies all the financial activities. In analytical calendars, only the similar entries (e.g.purchase record, sales record, record of various deeds, etc.) are kept. For balance sheet-based operations, a special balance sheet journal is used. For class registrations, it is suggested that a separate order record should be used, in which only such operations are included. The reason for the existence of the above reports is purely the controlling-oriented one, so that a volume of budget
24 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
registrations can be recorded and controlled better(Financial Data of Greek Municipalities, 2020).
•detailed trial balance: it includes the operations of a specific account, in calendar order.
• general ledger: it includes movements of primary accounts in calendar order.
•centralized calendar: it includes the movement of primary accounts.
•balance sheet: it indicates the balance of accounts in a period of time
•book of inventories and balances: at the end of the year, inventories are recorded at the beginning of the inventory and then the rest of assets or liabilities of the financial unit are specified. Afterwards the balance sheet, the account of the general utilization, the benefits of use, and the table of the distribution of results are provided.
•register of fixed assets: The said book monitors the fixed assets of a given entity. The fixed assets register must be capable of separating depreciation per grant entity, in case there are subsidized fixed assets. By keeping the register of fixed assets, order and control are possible, so that the assets available to the organisation are known and at the same time their change over time can be controlled. It is efficient and fast to monitor them whenever necessary, since there is a clear overview of the condition of fixed assets at any time.
4.6 Economic Observatory LGO
For the first time in the history of Local Government, a strict supervisory framework is established in the form of legislative requirements governing the economic functioning of LGO. The economic observatory LGO(Hellenic Agency for Local Development and Local Government, 2020) is the first organized and coordinated action of the Central Authority to supervise the finances of local government in our country more effectively. The economic observatory LGO was established under Article 4 of Law 4111/2013 with the primary objective of ensuring the financial autonomy of the LGO based on the content of the explanatory memorandum of the bill. Penalties In the event of failure on the part of each LGO to comply with the obligations arising from the existence of the economic observational LGO, financial penalties shall be imposed in the form of withholding of central autonomous resources toward LGOs.
25 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Financial Goals LGO Through the official hub of the Ministry of the Interior, each local government organisation ought to post financial data, concerning its goals per year.
26 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
5. The Municipality of Dion-Olympos
This chapter is a brief reference to the social-economic profile of the Municipality,which has been selected for our case study and in which a financial ratio analysis will be applied to next. 5.1 Overview
The Municipality of Dion and Olympos is part of the Region of Central Macedonia, located in the southern Regional Unit of Pieria. It was established on January 1st, 2011 as a result of the new structural division of the regional authority, based on the Kallikratis program and is a progression of the pre-existing municipalities of East Olympos, Dion, and Litochoro ("Dion- Olympos", 2020). The Municipality amounts to 495.3 sq. km of holdings, which corresponds to 32.64% of the total area of the Regional Unit of Pieria. The Municipality Headquarters are in Litochoro while its historical center is the Township of Dion. Litochoro is 92 km away from Thessaloniki, 65 km from Larissa, and 24 km from Katerini. The Municipality of Dion-Olympos includes 3 municipal units: • East Olympos Municipal Unit • Municipal Unit of Dion • Municipal Unit of Litochoro
Population data according to the results of the last census ("Dion-Olympos", 2020), the population of the Municipality of Dion-Olympos amounts to 25,668 permanent residents.
27 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Figure 1: The map of Dion-Olympos
Figure 2: The logo of the Municipality of Dion-Olympos
5.2 Economic profile of the municipality of Dion-Olympos
According to the division of Operational Planning, the entire employed population of the Municipality of Dion Olympos, could be classified by sector of economic activity (Primary, Secondary, Tertiary) as follows:
• 31.5% are employed in the primary sector, active in agriculture and livestock farming, mainly centered in the Municipal Unit of Dion. • 19.5% is employed in the secondary sector, in the coastal and lowland part of the Municipality. • 49.0% is employed in the tertiary sector which is the center of activity for the residents of the whole Municipality and the Units of Litochoro and East Olympos
28 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
The tertiary sector has considerable potential, given the relatively large number of enterprises, as can be derived from the data of the Business Register and the Chamber of Commerce.
Even though the Municipality has an institutionalized craft park, within the Municipality of Dion-Olympos, there is no concentration of industrial units aside from some small artisanship and industries that are within its borders, unlike the relatively large tourist units and notable tourist infrastructure in the southern part of the Municipality.
Meanwhile, at municipality level, there is no extensive development of an integrated service network (such as Bank branches) except for the Litochoro region.
Lastly, the primary sector is the main source of income mainly in the Municipal Unit of Dion, and has potential due to its fertile soil and the significant irrigation infrastructure.
An important feature of the area is the mythical mount of Olympos, the highest in Greece, which attracts many visitors during the summer as it is an international monument of natural beauty.
Among the strengths of the Municipality of Dion-Olympos are:
• The existence of a road connection with the PATHE motorway, as well as a rail link with the rest of Greece • Beachfront of about 32 km which has tourist exploitation potential. • It is a gateway to the Olympos peaks, attracting a great number of visitors without any notable tourist exploitation.
29 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
6. Results of ratio analysis
In this chapter, we will utilize official data from the published accounting statements of the Municipality of Dion-Olympos for the years 2016-20181. We are going to study those data’s change and calculate the ratios of profitability, liquidity, balance sheet structure, activity, capital structure, and income statement for the year-on-year results. The aim is to have a clear picture of the progress of the Municipality's finances during the period 2016-2018, interpreting the results of the numerical ratios.
6.1 Financial statement analysis of the municipality of Dion-Olympos
The financial analysis of the Municipality of Dion-Olympos’ statements required the use of financial ratios, taken from 6 main categories that will be described in detail in each section.
Figure 3: List of financial ratios reported in the case study
The calculation methodology is based on the IOBE study on municipal finances ("IOBE",2020).
1See Appendix A for Balance Sheets 2016-2018 30 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
The last section also shows the calculation of the ratios/resident based on the data obtained on the municipality’s economic figures.
Figure 4:Methodology for calculating and presenting case study ratios.
6.1.1 Data Evolution of the balance sheet of the Municipality of Dion-Olympos
The table 1 shows the evolution of the balance sheet data for the reporting period 2016-2018 according to the published balance sheets of the Municipality of Dion-Olympos, as approved by the relevant decisions of the Municipal Council and officially published on the website of Diavgeia, respecting the principle of transparency and publicity.
(All amounts are expressed in Euro (€)) 2016 2017 2018 Current Assets 6.183.858,76 9.564.754,2 7.966.633,5 Fixed Assets 99.991.570,15 98.543.542 96.302.238 Cash and Cash 3.075.626,25 2.754.122,1 1.857.258,4 equivalents Accounts Receivable 3.379.328,86 2.950.375 4.195.619,2 TotalAssets 109.629.601,3 108.490.677 105.286.451 TotalEquity 103.536.137 103.005.336 99.964.631 Long-term Liabilities 4.551.348,07 4.278.168,9 4.027.404,8 Short-term Liabilities 1.377.119,53 1.042.172,3 1.129.415 Own Revenue 5.702.830,09 5.450.363,7 5.765.955,5 Subsidies 4.239.137,66 3.862.006,2 4.272.714 Operational Revenue 9.941.967,75 9.312.369,8 10.038.669 Costs of Good Sold 7.961.592,87 8.751.308,9 10.159.518 Administrative 2.648.427,13 2.307.009,8 2.417.857,8 Expenses Operational Expenses 10.996.265,57 11.305.055 12.857.288 Net Income 313.708,26 136.548,71 -723.649,4
Table 1:Evolution of selected Balance elements for period 2016-2018
31 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
6.1.2 The evolution of the financial data of the municipality The table 2 shows the advancement of key balance sheet elementsfrom 2016 to 2018. Those data will initially be used to form a basic picture of the economic course of the municipality by studying their annual percentage changes, and then for the ratio determination.
BALANCE 31/12/2016 31/12/2017 31/12/2018 SHEET (All amounts are expressed in €) ASSETS Β. 378.546,12 382.381,13 336.356,37 ORGANISATION (FORMATION) EXPENSES C. FIXED ASSETS C.1 Intangible 911.649,46 868.072,61 757.181,95 Assets C.2 Tangible 91.548.453,64 90.120.566,59 88.573.773,67 Assets C.3 Fixed 7.531.466,85 7.554.902,84 7.571.282,84 Investment Securities TOTAL FIXED 99.991.570,15 98.543.542,04 96.902.238,46 ASSETS (C.1+C.2+C.3) D. CURRENT ASSETS D.1 Receivables 3.379.328,86 3.860.256,60 4.195.619,15 D2.Various 2.804.529,,90 2.950.375,50 1.913.755,97 receivables (Sundry debtors)
D.3 Cash and Cash 3.073.573,84 2.752.481,22 1.853.417,24
32 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Equivalents TOTAL CURRENT ASSETS (D.2+D.4) TOTAL ASSETS 9.259.485,01 9.564.754,18 7.966.633,49 (B+C+D) LIABILITIES AND EQUITIES A. EQUITY A.1 OWN 65.335.967,97 65.335.967,97 65.335.967,97 EQUITY A.2 Reserves from 37.906.444,63 37.296.647,23 35.041.966,06 value adjustments and Investment Grants for fixed assets B. PROVISIONS FOR LIABILITIES AND CHARGES B.1 Provisions for 165.000 165.000 165.000 retirement benefits C. LIABILITIES C.1 Long-Term 4.541.348,07 4.278.168,86 4.027.404,80 Liabilities C.2 Short-Term 1.377.119,53 1.042.172,32 1.129.415,03 Liabilities TOTAL 5.928.467,60 5.320.341,18 5.156.819,03 LIABILITIES(C.1 +C.2)
33 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
TOTAL 109.629.601,2 108.490.677,3 105.286.451,30 LIABILITIES 8 5 AND EQUITY
Table 2:A closer view of the balance sheet for each fiscal year
6.2Analysis of Assets Accounts
6.2.1. Installation costs:
The Asset accounts funds, mainly include the undepreciated value of the funds set aside by the Municipality for various project studies and software supply to support its operation. This category of costs also includes land reimbursement to citizens that provided the land.
The annual depreciation rate for this category is 10% with the exception of software for which the depreciation rate is increased to 20%.
Studying the reports of the chartered accountants for the periods 2016 to 2018, we can derive the following analysis of the undepreciated value of installation costs for each period.
31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Preliminary 378.546,12 382.381,13 336.356,37 Expenses
Table 3:Installation costs for each year for Municipality of Dion-Olympos
Based on the contents of the balance sheets for the period 2016-2018, the table 3 shows the total undepreciated value of installation costs as well as research and development costs for each year.
34 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Organization(Preliminary Expenses) 500,000.00 € 450,000.00 € 400,000.00 € 378,546.12 € 336,356.57 € 350,000.00 € 318,084.47 € 300,000.00 € Organization(Preliminary Expenses) 250,000.00 € 200,000.00 € 31th December 31th December 31th December 2016 2017 2018 Year ended
Figure 5: Preliminary Expenses for each year for Municipality of Dion-Olympos
6.2.2. Fixed Assets:
Fixed Assets are the key component of the Asset Accounts, and is subject to depreciation with the exception of land. It is the sum of two sub-categories that will be analyzed further and include: • Intangible Assets • Tangible Assets
Intangible Assets Intangible fixed assets include all intangible resources owned by the Municipality. In essence, they are flat rates according to the accounting treatment they are flat, and their value could be assessed. In municipalities, they usually constitute royalties due to concession agreements as well as capital gains from the sale or merger of companies. Intangible fixed assets are subject to amortization of their value which can be accomplished either as a lump sum or in installments, based on the current tax legislation. The table 4 illustrates the amounts per year, based on the annual balance sheets.
35 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Other formation 911.649,66 866.072,61 757.181,95 expenses (R&D etc.)
Table 4: Other formation expenses for each year for Municipality of Dion-Olympos
TangibleAssets Tangible fixed assets are a group of elements that reflects the property status of the Municipality. They include all fixed assets such as land, land, buildings, means of transport, furniture, and other equipment, as well as shared facilities. In the tangible fixed assets category, we can include projects in progress as well as downpayments for asset acquisition or project constructions. The accounting illustration of the undepreciated value of the tangible fixed assets is shown in the table 5.
Tangible Assets 2016 2017 2018 Land 48.047.853,56 48.047.853,56 48.042.017,06 Squares, parks 912.518,37 845.578,41 815.600,41 Public roads 4.283.607,30 4.819.882,80 4.612.076,48 Pavements 677.264,41 616.338,85 570.886,31 Mines, quarries 3.814.105,60 3.814.105,59 3.814.105,59 Buildings - 25.671.932.57 24.444.150,55 23.274.699,91 Technical works Buildings 652.455,56 1.899.760,36 1.793.418,16 Public Use Public electric 1.297.156,32 761.786,53 754.586,96 lighting Machinery 641.133,26 581.540,39 615.760,44
36 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Vehicles 73.959,56 127.824,59 110.726,84 (transportation equipment) Furniture and 314.648,97 331.151,40 386.214,89 Fixture Payments on 1.361.170,26 1.064.819,19 1.232.538,51 account and tangible assets under construction Total 91.548.453,64 90.120.566,59 88.573.773,67 undepreciated Value Table 5:Value of Tangible Assets for each year for the Municipality of Dion-Olympos
The annual decrease in the value of fixed assets is incorporated into the operating costs by the depreciation method, where the total amount of depreciation is shown in the balance sheet results section.
Fixed Assets 99.99 100.00 € 98.54
99.00 € Millions 98.00 € 96.90 97.00 € Fixed Assets 96.00 € 95.00 € 31th 31th 31th December December December 2016 2017 2018 Year ended
Figure 6:Evolution graph of the value of Fixed Assets of the Municipality Dion-Olympos
37 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
6.2.3 Fixed Investment Securities
Fixed investment securities constitute the Municipality’s participation in the capital of charitable enterprises and non-profit organisations. From the chartered accountant’s detailed report for the year 2018, the municipality's participation rate in each business is shown in the table below with the value of the investment securities estimated at the initial acquisition price. Acquisition Value Percentage SYNETAIRISTIKI 3.815,11€ 8 shares TRAPEZA PIERIAS DEAL 6.900.000€ 100% DHKEDO 788.444,87€ 100% TOURIST 5000€ DEVELOPMENT ORGANISATION PIERIKI 2016 2017 2018 11.70% ANAPTYXIAKI 66.381,12€ 66.381,12€ 82.761,12€ Due Instalments 189.715€
Provisions for Devaluation PIERIKI 2016 2017 2018 ANAPTYXIAKI 42459,25€ 19023,26€ 19023,26€ 2016 2017 2018 TOTAL VALUE 7531466.85€ 7.554.902,84€ 7571282.84€
Table 6:Fixed Investment Securities value for the Municipality of Dion-Olympos
38 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Financial Assets
7.58 € 7.57 €
7.56 € Millions 7.55 € 7.57 € 7.54 € 7.55 € 7.53 € 7.53 € Financial Assets 7.52 € 7.51 € 31th 31th 31th December December December 2016 2017 2018 Year ended
Figure 7: Evolution graph of the Fixed Investment Securities’ value of the Municipality of Dion-Olympos.
6.2.4 Cash at bank and in hand
In this case, cash and cash equivalents on the balance sheets refer to the money in the Municipality's fund or bank deposits. They constitute the necessary financial resources to cover the operational and developmental costs of the Municipality through its economic function. The Municipality of Dion-Olympos collects its cash claims from its the citizens, funds that will later be credited to the bank Municipality’s accounts or transferred wirelessly via e-banking. Cash and cash equivalents are liquid assets and their risk of changing in value is relatively low. The table7 shows the analysis of the Municipality's cash and cash equivalents.
31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Cash on hand 2052,41 1640,86 3841,13 Bank Demand 3068063.69 2730991,46 1531526,90 Deposits Frozen Deposits 5510,75 21489,76 321890,34
Table 7:Cash reserves analysis for the Municipality of Dion-Olympos
39 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
The total cash available is presented in detail in the following figure 8 for each period. The available funds of the Asset accounts show a downward trend, compared to 2016 that has been selected as the starting period.
Cash & Cash equivalents
€3.08 €3.50 €2.75 €3.00 Cash & Cash equivalents
Millions €2.50 €1.86 €2.00 €1.50 €1.00 €0.50 €0.00 2016 2017 2018 YEAR ENDED 31st December
Figure 8: Cash reserves graph for the Municipality of Dion-Olympos
6.2.5 Receivables (debtors) Receivables are future promises of payment to the Municipality. They may include provision of services, sale of goods to the Citizens, as well as to other individuals or businesses. They are part of the current Assets due to the existence of a relevant obligation of debt to the Municipality through the process of revenue attestation, or constitute third-party obligations. The table 8 shows the total of third parties receivables, based on the chartered accountants’ reports for the period of 3 years as well as the formation of a provision of 455230,96€ for each year due to delays in the collection of those debts.
Receivables description 31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Customers and other 3.834.559,82 3860256,60 4650850,11 trade receivables (-)Less Provision for doubtful receivables 455.230,96
Customers and other 3.379.328.86 3.860.256,60 4.195.619.15
40 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
trade receivables after provision Undrawn loans 83.079,29 83.079,29 83.079,29 Receivables from loan 860.019,19 925.543,02 1.047.127.47 payments from DEYANO (Municipal water supply and sewerage company) Fixed advances 1.000 1.000 Receivables from other 36.232,47 36.232,47 36.232,47 charitable organisations (DEYDO) Advanced payments 1.016,37 for constructions Other 110.708 226.163 receivables(debtors) Vat Refund 335.891,25 277.733.01 297.727 Vat Returns 1.431.530,89 1.431.530.89 163.739,58 Advanced payment for 55.760,44 57.548,82 58.487,16 income tax
Table 8:Third-party value claim for the Municipality of Dion-Olympos
A significant part of the receivables in the debtors section for all the three reporting periods shows a relative delay in their collection, resulting in the formation of doubtful and contested receivables as stated in each year’s balance sheet, and shown in the table below:
41 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Receivables description 31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Doubtful – contested 844.769,04 844.769,04 844.769,04 trade and other receivables (debtors) Less:Provision 844.769,04 844.769,04 844.769,04 (allowance) for doubtful receivables
Table 9:Value of bad or disputed claims for the Municipality of Dion-Olympus
The figure 9 illustrates the evolution of the Municipality's requirements when exercising its economic activity, including the provision of services.
Receivables
€6.81 €7.00
€6.50 €6.18 €6.11 Millions €6.00 Receivables
€5.50 2016 2017 2018 YEAR ENDED 31st December
Figure 9:Third-party requirements graph for the Municipality of Dion-Olympos
6.3Analysis of Equity and Liabilities
6.3.1 Equity
The Municipality’s equity constitutes the sum of its capital, the sums deriving from the investments reevaluation, the donations to the Municipality as well as the previous financial year’s account balance. The capital of the Municipality amounts to € 65.335.967,97 and remains unchanged for the entire reference period. The results of the new Municipality based on the Kallikratis division from the fiscal year 2016 until 31/12/2018 amount to € 3.196.453,99, and are analyzed as follows:
42 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
• Fiscal year 2016: Surplus 293.721,08€ • Fiscal year 2017: Surplus 372.720,97€ • Fiscal year 2018: Deficit 413.332,56€
Next, we’re going to analyze the evolution of the balance sheet sizes for the Equity section for the fiscal years 2016 to 2018. 6.3.2 Revaluation reserves -Investment grants
The fixed asset register account includes the fixed asset sums (property, machinery, etc.) that have been offered to the Municipality without payment. They are shown in the table 10: 31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Donated Assets 2.340.228.39 2.340.228,39 2.340.228,39
Table 10:Donated Assets Value, acquired by the Municipality of Dion-Olympos
6.3.3 Investment subsidies
This fund of the passive balance sheet includes all the projects (execution of projects, studies, machinery acquisition, etc.) that are accounted for by the fixed assets of the Municipality. The value of investment grants is reduced at the end of each use, and after the deduction of the corresponding depreciation. The table 11 shows the amount of investment subsidies:
31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Investment 35.566.216.24 34.956.418,84 32.701.767.67 fSubsidies
Table 11:Investment Subsidies Value for the Municipality of Dion-Olympus
6.3.4 Provision for Personnel Compensations
Provisions for staff compensation for leaving the service include the amount of compensation to staff employed on an indefinite contract. Thοse provisions result from a calculation study, having taken into account the current legislative framework that governs the insurance legislation.
43 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
In order to calculate this sum we have to accept certain parameters and assumptions about the current situation. Consequently, it is imperative that each time this calculation is needed, a reassessment should be made, adapted to changes in consumer law, price indices, as well as in the remaining years from retirement. According to the Provision for Compensations section of the balance sheets, the amount provided for compensation of staff, in the event of a dismissal, has been calculated for all 3 uses at the amount of 165.000€ and remains unchanged for all 3 uses. 6.3.5 Retained Earnings (Results Carried Forward)
This account is sustained with the net result of the year (surplus or deficit). It includes the equity sums, resulting from the transfer of surplus or deficit from the assessments of the previous year. The table 12 shows the total of the specific account for each use. 31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Retained 293.721,08 372.720.97 -413.332,56 Earnings (Results carried forward)
Table 12:Surplus/deficit balance for the Municipality of Dion-Olympοs
6.3.6 Long-term and Short-term Liabilities
The accounts of the Municipality's liabilities include long-term and short-term liabilities. • Long-term Liabilities
Long-term liabilities include the amount of current loans that the Municipality has borrowed from banking institutions to finance its operational and developmental needs. • Short-term Liabilities
They constitute all Municipality’s obligations towards suppliers, the State, as well as the Social Security funds. Short-term Liabilities can be distinguished in the following categories: Suppliers: Includes the sum of all the recognized debts of the Municipality to suppliers
44 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Obligations from Taxes & Fees: This category includes the total amount to be attributed to the State, according to the provisions of the current legislation Obligations to Social Security funds: Includes the Municipality’s debts that arise from the application of insurance legislation for its staff Long-term liabilities payable in the next use: Includes loan installments to the banks that are due within the next financial year. Various Creditors: Includes various debts of the Municipality, not directly due and mainly concern staff remuneration, beneficiaries of guarantees, third parties reimbursements (Public), as well as subsequent years revenue. The table 13 contains the analysis of the short and long-term liabilities of the Municipality of Dion-Olympos for each financial year: 31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) Short-term Liabilities Accounts 543.489,42 279.136,26 442.189,27 Payable (Suppliers) Taxes-Duties 149.534,03 117.571,88 113.628,03 Payable Social Security 80.516,18 82.547,42 66.650,25 dues payable Other payables 311.164,32 273.566,05 250.974,16 (Loan installments paid at this year) Other payables 292.415,58 289.350,71 255.973,32 (Sundry Creditors)
Long-Term Liabilities Deposit & Loans 3.748.919,66 3.656.419,66 3.570.951,86
45 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Fund (TPD) Other Banks 802.428,41 621.749,20 456.452,94
Table 13:Short-term and Long-term liabilities for the Municipality of Dion-Olympοs
The figure 10 shows the evolution over time of long-term and short-term liabilities in the period 2016-2018.
€5.00 €4.55 €4.28 €4.50 €4.03
Millions €4.00 €3.50 €3.00 €2.50 Long-term Liabiltoies €2.00 €1.38 Short-term Liabilities €1.50 €1.04 €1.12 €1.00 €0.50 €0.00 2016 2017 2018 YEAR ENDED 31st December
Figure 10:Short-term and Long-term liabilities Value Graph for each year for the Municipality of Dion- Olympοs
6.3.7Accrued expenses and Deferred Revenue (Suspense Accounts)
Accrued expenses and Deferred Revenue usually include: a) The total amount paid within the financial year for expenses of the following use or uses. b) Accrued income that belongs accounting to the closed year (accrued), but has not been collected or registered because they’re not due yet by the Municipality. c) The total value of the purchases that has been invoiced but has not been received by the Municipality yet. d) The relevant value discounts for Municipality purchases during the financial year, but the discount value is yet to be credited to the accounts of the Municipality by the supplier.
On the contrary, transitional liabilities accounts usually include the following: a) The total revenue receivable corresponding to subsequent or subsequent use or uses. b) The costs belonging to the current use, but the Municipality has not paid them yet. Typical examples are primarily Public Utility (DECO) accounts of the last months
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(November-December) issued in the following year, as well as loan installments relating to the closed use and are paid the following year.
Transitional asset and liability accounts form a complete picture of the actual results of each financial year. They constitute the sum of every settlement entries/deletions for the correct representation of the revenue and expenses of each management year. Thus, accurate results are guaranteed for the balance sheet picture depiction, according to the autonomy principle for each management period. From the study of the financial statements of the Municipality of Dion-Olympos for the period 2016-2018, just for the fiscal year 2018 it can be observed the amount of 81222.98€ in the section Accrued expenses and Deferred Revenue, justified as revenue to be collected.
31/12/2016 31/12/2017 31/12/2018 (All amounts are expressed in €) ASSETS PREPAYMENTS AND ACCRUED REVENUE Earned Revenue - - 81.222,98€ Receivable
Table 14:Value of transitional accounts for the Municipality of Dion-Olympοs
6.4 Revenue Analysis
The table 15 shows the revenue breakdown according to the Certified Public Accountant’s report of the approved balance sheet for each of the financial years 2016 to 2018 ("Annual Report of Budget 2016 Municipality of Dion-Olympos", 2017;"Annual Report of Budget 2017 Municipality of Dion-Olympos", 2018; "Annual Report of Budget 2018 Municipality of Dion-Olympos", 2019). Revenue is divided into regular and extraordinary, with the regular revenue coming mainly from the fees and rights for the provision of services of general interest to the Citizens, taxes, fines, and surcharges, as well as the sums provided to the Municipalities by the State Budget to support their operation. On the other hand, extraordinary revenue mainly relates to revenue from previous financial years received in the current financial year, extraordinary grants from the State to cover
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operating costs as well as other income resulting from the disposal of assets or from loan collections the Municipality has contracted.
31/12/2016 31/12/2017 31/12/2018 A. Regular Revenue Sales of goods 4.905.519,58 4.628.720,71 5.081.270,29 and Services Taxes-fees- 744.840,53 737.009,59 629.213,80 charges Subsidies 4.239.137,66 3.862.006,16 3.728.437.87 Other Revenue 9.192,71 46.519,44 25.254,67 Interest revenue 43.277,27 38.113,91 30.216,71 Total Regular 9.941.967,75 9.312.369,81 9.494.393.34 Revenue B. Extraordinary Revenue Total 1.373.371,04 1.654.515,38 1.951.426,86 Extraordinary Revenue Revenue of past 436.178,40 668.741,94 418.217,65 financial years initially established Revenue of - 23.435,99 - provisions of past financial years Extraordinary 27.463,50 profit Total 1.809.549,44 2.346.693,31 2.397.108,01 Extraordinary Revenue
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Total Revenue 11.751.517.19 11.659.063.12 11.891.501.35 (A+B)
Table 15:Analysis of regular and extraordinary revenue for the period 2016-2018 for the Municipality of Dion-Olympos
Total Revenue
€13 €12.44 €12
Millions €12 €12 €11.75 €12 €11.66 €12 Total Revenue €11 €11 31th December 31th December 31th December 2016 2017 2018 Year ended
Figure 11:Total Revenue per year for the Municipality of Dion-Olympos
14.00 12.00 2.40 €
Millions 1.81 € 10.00 2.35 € 8.00 6.00 9.94 € 9.31 € 10.04 € Extraordinary Revenue 4.00 Regural Revenue 2.00 0.00 31th 31th 31th December December December 2016 2017 2018 Year ended
Figure 12:Participation (value) of regular and extraordinary income in total revenue for each year
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14.00 € 12.00 € 19,28%
Millions 15.40% 10.00 € 20,13% 8.00 € 6.00 € 84.60% 79.87% 80,72% Extraordinary Revenue 4.00 € Regural Revenue 2.00 € 0.00 € 31th 31th 31th December December December 2016 2017 2018 Year ended
Figure 13:Participation (percentage) of regular and extraordinary income in total revenue for each year
6.5 Expenditure Analysis
The table 16 shows the breakdown of expenditure according to the rapporteur's report of the approved balance sheet for each of the financial years 2016 to 2018. Costs are divided into operating expenditure and extraordinary and non-operating expenses. Operating expenditure involves the cost of provided services, including the investments (projects) implemented by the Municipality in the financial year in question, administrative costs, operating costs of public relations, capital costs that include the interest on repayment of the loans taken out by the Municipality. On the other hand, extraordinary and non-operating expenses include unplanned costs by the Municipality, payment of liabilities of past years, potential losses resulting from participating in the capital of other enterprises, as well as any other extraordinary expenditure.
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31/12/2016 31/12/2017 31/12/2018 A. Operating Expenditure Cost of Goods 7961.592.87 8.751.308,92 10.159.517,51 Sold Administration 2.648.427,13 2.307.009,79 24.178.578,80 expenses Public Relations 112.109,61 36.029,87 46.799,82 expenses Interest expense 274.135,96 248.820,02 233.112,75 A. Total 10.996.265,57 11.343.168,60 12.857.287,88 Operating Expenditure B. Extraordinary Revenue Extraordinary 117.173,60 54.813,82 42.781,59 and non-operating expenses Extraordinary 22.842,86 31.131,52 28.956,31 losses Payments 301.526,90 93.400,47 230.401,96 obligations of past years B. Total 441.543,36 179.345.81 302.139,86 Extraordinary Expenditure Total Expenditure 11437808.93 11522514,41 13.159.427,74 (A+B)
Table 16:Analysis of operating and extraordinaryexpenses of the Municipality of Dion-Olympos for the period 2016-2018
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6.6 Income statement and Appropriation Account
This section includes the financial results of the Municipality of Dion-Olympos for the 2016- 2018 study period.According to the statement of profit and loss included in the respective balance sheets, we note that the Municipality of Dion-Olympos shows a surplus for the fiscal years 2016 and 2017 as opposed to the last use of the reporting study (case study), where it a deficit is noted. 31/12/2016 31/12/2017 31/12/2018 A. Total Revenue 11.751.517,19 11.659.063,12 11.891.501,35 B. Total 11.437.808,93 11.522.514,41 13.159.427,74 Expenditure Surplus (Deficit) 313.708,26 136.548,71 (1.267.926,39)
Table 17:Net results for the Municipality of Dion-Olympos in the 2016-2018 period
The net results table is an accounting status showing pertinent to the disposal of profits at the end of the financial year. In other words, it is an analysis of the distribution of a company's profits to shareholders or the formation of a reserve in the event of non-distribution. The net results table also includes the payable tax amount the company is obligated under the relevant tax legislation. In the case of Local Government Organisations, which could be classified as non-profit organisations, the surplus resulting at the end of the financial year is transferred to the following financial year. In case of a deficit, its value is logistically deducted from the results of the previous financial year. The table 18 below shows the evolution of net results for the Municipality of Dion-Olympos for all the three financial reference years.
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31/12/2016 31/12/2017 31/12/2018 Net Results Before 313.708.26 136.548.71 (1.267.926,39) Taxes
Prior Years’ 35.773,26 293.721.08 372.720,97 Retained Earnings (Earnings brought forward) Income Tax 55.760.44 57.548.82 62.404,18 Income for 293.721,08 372.720.97 (957.609,60) appropriation (Profit carried forward)
Table 18:Table of Net Results Disposal for the Municipality of Dion-Olympos in the 2016-2018 period
6.7Analysis of net results after taxes
Studying the results of the Use of the Municipality of Dion-Olympos, we find the existence of a surplus for the years 2016 and 2017. More specifically for 2016 a surplus of 313708,26€. In 2017 the surplus is 136,548,71€ while, unlike the previous years, in 2018 the Municipality of Dion has a deficit of 723649,35€. The graph below shows the evolution over time of the net result for the fiscal years 2016 to 2018.
Net Results 400000 313708.26
200000 136548.71
0 2016 2017 2018 -200000 Balance
-400000
-600000
-800000 -723649.35
Figure 14:Graphical representation of the net result of each year for the Municipality of Dion-Olympos
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6.8 Ratio analysis included in case study
The use of ratios for the purposes of financial analysis is a widely popular method in the field of financial analysis. Financial ratios include elements of Assets or Liabilities and their result is easily comparable with the corresponding indicators of other companies / organisations as well as the previous financial years of the company / organisation. Usually most of the time they are just numerical quantities (e.g liquidity ratios) or percentages when used to express the proportion of certain amounts (e.g debt charge ratio). The calculation of the financial ratios and the subsequent analysis of their course, are important supporting material for the formation of the company's strategy in the financial part by the management team and the decision-making for the future course of the business. At the same time, for the companies / organisations especially those whose shares are traded on the stock exchange, the financial ratios are a pole of attraction for financial analysts and investors, in their attempt to obtain a comprehensive picture of the company's financial situation in the pursuit of dividends and overpayments. Despite the fact that financial ratios can be calculated relatively easily using elements of the balance sheet, they are often macroscopic elements of the company's financial situation, when individual conclusions are drawn without considering their time analysis in the financial course of the company / organisation and taken all the necessary accompanying elements that accompany the accounting statements. For the needs of the present case study, the following indicators were used, which fall into the following categories: a) Liquidity ratios b) Efficiency ratios c) Equity Structure ratios d) Activity ratios e) Balance Sheet structure ratios f) Income statement structure ratios
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Figure 15:Diagrammatic Representation of the financial ratios of the case study
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6.9 Liquidity Ratios
In the analysis of financial statements, the calculation of the liquidity ratios of an economic unit can give a complete picture of an economic unit’s ability to successfully cover with its short-term liabilities. In our case, it is a particularly important ratio that examines the possibility the Municipality’s response to short-term liabilities based on current assets. The higher the liquidity ratio prices are, the better the financial unit can respond to its short-term liabilities. Liquidity is a key point for the operation of the Municipality as it ensures the necessary conditions for the financial soundness of the Municipality, and its future trading relationship with suppliers. The most important liquidity ratios, along with their calculation type, are the following: 6.9.1 Current Ratio
The current liquidity ratio or indirect liquidity ratio otherwise, is a particularly popular ratio as it estimates the existing liquidity, taking into account the full value of the assets in circulation (Balance, Client Receivables, Inventories). For its calculation, we use the sum of the Current Assets as a numerator and the total short-term liabilities, adding the transitional liabilities accounts if there are any. Calculation type: 퐶푢푟푟푒푛푡퐴푠푠푒푡푠+푇푟푎푛푠𝑖푡𝑖표푛푎푙퐴푠푠푒푡푠퐴푐푐표푢푛푡푠 Indirect liquidity= 푆ℎ표푟푡−푡푒푟푚퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠+푇푟푎푛푠𝑖푡𝑖표푛푎푙퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠퐴푐푐표푢푛푡 6.9.2 Acid Ratio
Unlike the previous ratio, this one does not contain the stocks mainly because of the difficulty of directly liquidating them. In the case of the Municipality of Dion-Olympos and according to the official published financial statements, no inventories appear in any financial year. Therefore, the acid ratio is identical to the calculation index and there is no need to be calculated again. Calculation type: 퐶푢푟푟푒푛푡퐴푠푠푒푡푠−푆푡표푐푘푠+푇푟푎푛푠𝑖푡𝑖표푛푎푙퐴푠푠푒푡푠퐴푐푐표푢푛푡푠 Direct Liquidity = 푆ℎ표푟푡−푡푒푟푚퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠+푇푟푎푛푠𝑖푡𝑖표푛푎푙퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠퐴푐푐표푢푛푡
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6.9.3 Cash Ratio
The cash Ratio includes only the sum of the Municipality's assets, i.e. assets that are directly liquid and are an excellent indicator of the municipality's ability to respond to all short-term liabilities. Calculation type: 퐶푎푠ℎ 푎푛푑 퐶푎푠ℎ 푒푞푢𝑖푣푎푙푒푛푡푠 Cash ratio= 푆ℎ표푟푡 푇푒푟푚 퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠+푇푟푎푛푠𝑖푡𝑖표푛푎푙 퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠 퐴푐푐표푢푛푡
6.9.4 Evolution of the Municipality's Liquidity Ratios
The table 20 shows the evolution of the direct and cash liquidity ratios of the municipality of Dion-Olympos for the years 2016 to 2018.
Liquidity Ratios Year 2016 Year 2017 Year 2018 Current ratio 6,73 9.18 7.05
Cash ratio 2,23 2.64 1.64
Table 19:Liquidity ratios for the period 2016-2018 for the Municipality of Dion-Olympos
Current liquidity ratio 10 9.18 9 8 6.73 7.05 7 6 5 4 Indirect liquidity ratio 3 2 1 0 2016 2017 2018 Fiscal year
Figure 16:The evolution of the Current liquidity ratio of the Municipality of Dion-Olympos for the period 2016-2018
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10 9.18 40.00 9 +36.40% 30.00 8 7.05 6.73 7 20.00
6 10.00 5 Current liquidity ratio 4 0.00 Change 2016-2017 (%) 3 -10.00 2 -20.00 1 -23.20% 0 -30.00 Year Ended Year Ended Year Ended 2016 2017 2018
Figure 17:The current ratio change percentage of the Municipality of Dion-Olympos for the period 2016- 2018
The current liquidity ratio improved greatly in the transition from 2016 to 2017, which is mainly attributed to the decrease in the short-term liabilities of the Municipality of Dion- Olympos in the fiscal year 2017. In the year 2018 we have a marked decrease in the current liquidity ratio that returns close to the levels of the fiscal year 2016 due mainly to the decrease in current assets, resulting from a decrease in the municipality's cash flow in the fiscal year 2018.
Cash ratio 3 2.64 2.5 2.23
2 1.64 1.5 Cash ratio 1
0.5
0 2016 2017 2018 Fiscal year
Figure 18:The Cash ratio evolution of the Municipality of Dion-Olympos for the period 2016-2018
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Figure 18 shows the evolution of the cash flow ratio, the capacity of the Municipality of Dion-Olympos to cover its short-term liabilities. According to the Analysis of Financial Statements theory, the ratio value of is considered satisfactory if it is higher than one (1). Studying the diagram, we find that while the cash flow rate is improving in the period 2016- 2017 from 2.23 to 2.64, the cash liquidity ratio is declining to lower levels in 2018, due to a decrease in a large percentage of the cash flow of the Municipality of Dion-Olympos. In general, the higher the value of the cash flow ratio, the more increased is the city's ability to respond, based on all the funds to cover short-term claims. 6.10 Efficiency Ratio Analysis
The ability of a company or organisation to produce positive results in the course of its economic activities is a minor element for its survival. The existence of an economic surplus (profit) is a mainspring for the company or organisation, providing a source of financing for new development activities to increase the maximization of profit. In that context, the Efficiency ratios analyzed are: • Return on Equity (ROE) • Return on Assets (ROA)
6.10.1 Return On Equity (ROE)
This ratio reflects a company’s profit capacity and is a characteristic element of meeting the objective of the efficient exploitation of the capital, derived from the contribution of shareholders. In brief, it is a measure of the effectiveness of the use of the funds of a company or organisation. In the annual financial report, it is numbered among the most popular economic ratios. Calculation type: 푁푒푡 퐼푛푐표푚푒 Return on Equity (ROE)= 푂푤푛 퐸푞푢𝑖푡푦 6.10.2 Return On Assets (ROA)
The Return on assets ratio is a typical indicator of the degree of use of assets in achieving profitable results from a company or organisation. Calculation type: 푁푒푡 퐼푛푐표푚푒 ReturnOnAssets (ROA)= 푇표푡푎푙 퐴푠푠푒푡푠
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The table 21 shows the profitability of the Municipality of Dion-Olympos for the period 2016-2018. Efficiency ratios Year 2016 Year 2017 Year 2018 ROE 0.29 0.13 -0.69 ROA 0.54 0.36 -0.47
Table 20:ROE and ROA values for each year for Municipality of Dion-Olympos
Return on Equity (ROE) (%)
0.4 0.3
0.2 0.13
0 2016 2017 2018 Return on Equity (ROE) -0.2 Fiscal year (%)
-0.4
-0.6
-0.8 -0.72
Figure 19:The evolution of the ROE ratio for the Municipality of Dion-Olympos for the period 2016-2018
In equity, profitability ratios, we observe a continuous decline over the 2016-2018 financial years, especially, specifically from 0.30% in 2016 to 0.13% in 2017. For the fiscal year 2018, the capital profitability ratio records negative rates due to the 2018 fiscal year's deficit release and fluctuates in -0.72%. The calculation of this ratio reflects the conversion of the Municipality's funds into revenue (profits). It is a particularly important financial ratio with which we are able to establish the effectiveness of using assets to generate profit. Concerning the Local Authorities (OTA) this ratio generally receives low prices due to the emphasis put on the social sector, but it is still an important ratio of the proper economic operation and mission of each Municipality.
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Return on Assets (ROA) (%)
0.4 0.29
0.2 0.13
0 2016 2017 2018 Return on Assets (ROA) -0.2 Fiscal year (%)
-0.4
-0.6
-0.8 -0.69
Figure 20:The evolution of the ROA ratio for the Municipality of Dion-Olympos for the period 2016-2018
In the return of assets ratios for the financial years 2016-2018, we observe a similar fluctuation corresponding with the evolution of return of assets ratios (ROA), performing negatively in 2018 at -0.69%. This is due to the calculation method which, in the case of the return of assets ratio, corresponds to the total net profit through total assets for each year. Since the total liabilities represent a small percentage of the total assets, the difference in rates that results from the calculation of the ROE and ROA ratios is small.
6.11 Equity Structure Ratios The Equtity Structure Ratios reflect the Municipality’s degree of dependence on loans as well as assess the municipality's ability to meet its obligations. The calculation of these ratios is based on the structure of the data of the Municipality's Liabilities and examines the relationships between the Equity funds as well as the Foreign Funds that make up the Municipality’s obligations. More specifically, the following ratios are calculated and analyzed based on the financial statements data for the years 2016 to 2018:
6.11.1 Liabilities / Total Assets: The liabilities of each Municipality include the sum of the equity and the total liabilities of the municipality with both a long-term repayment option and to be paid within the year (short-term liabilities). The ratio Liabilities/Total Assets shows the participation percentage of the liabilities in the Municipality’s total assets.
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The Calculation Type is: 퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠 x 100% 푇표푡푎푙 퐴푠푠푒푡푠 6.11.2 Liabilities / Equity
The Liabilities/Equity ratio calculates the ratio of liabilities to the total equity of the Municipality. Liabilities include the sum of the long-term and short-term obligations of the Municipality, the total transitional liabilities accounts if any, and the total provisions shown in the balance sheet of each year. The calculation of this ratio provides an estimate of the degree of exposure of the Municipality to Bank Lending as well as to short-term liabilities. The Calculation Type is: 퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠 x 100% 퐸푞푢𝑖푡푦 6.11.2 Equity/Total Assets (Financial independence ratio)
The ratio of capital to total assets or financial independence ratio represents the percentage of capital coverage in the total asset value. The Calculation Type is:
퐸푞푢𝑖푡푦 푭풊풏풂풏풄풊풂풍 풊풏풅풆풑풆풏풅풆풏풄풆 풓풂풕풊풐 = * 100 % 푇표푡푎푙 퐴푠푠푒푡푠
Equity Structure Year 2016 Year 2017 Year 2018 Ratios Liabilities/Total 5.41 4.90 4.90 Assets Liabilities/Equity 5.73 5.17 5.16 Equity/Total 94.44 94.94 94.95 Assets
Table 21:The evolution of the structural ratios of the Municipality of Dion-Olympos for the period 2016- 2018
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Liabilities/Total Assets(%)
5.5 5.41 5.4 5.3 5.2 5.1 5 Liabilities/Total Assets 4.9 4.9 4.9 4.8 4.7 4.6 2016 2017 2018
Figure 21:The evolution of the Liabilities/Equity ratio of the Municipality of Dion-Olympus for the period 2016-2018
Based on the ratio results, we conclude that the Municipality of Dion-Olympos has reduced the loan charge ratio mainly for the fiscal year 2017 compared to that of 2016 and is not considered overly indebted.
Liabilities/Equity(%) 5.8 5.73 5.7 5.6 5.5 5.4 5.3 5.17 Liabilities/Equity 5.2 5.16 5.1 5 4.9 4.8 2016 2017 2018
Figure 22:The evolution of the Liabilities/Equity ratio of the Municipality of Dion-Olympos for the period 2016-2018
Based on the results of the Foreign Capital/Equity ratio, there is a decrease tendency in the participation of foreign funds, i.e. funds that include the provisions and liabilities of the Municipality against the Municipality. More specifically, initially, the figure for 2016 is
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5.73% to be reduced to 5.17% the following year, maintaining it at 5.16% in the last financial year. After meticulous examination of the balance sheet data mainly for the fiscal years 2016 and 2017, we observe that the downward trend corresponds to a decrease in long-term claims against the Municipality as well as a reduction in the total liabilities of suppliers. The Municipality of Dion-Olympos, appears to be consistent on long-term loan payments, having reduced to a satisfactory extent all short-term liabilities towards its suppliers.
Equity/Total Assets(%) 95 94.94 94.95 94.9 94.8 94.7 94.6 94.5 94.44 Equity/Total Assets 94.4 94.3 94.2 94.1 2016 2017 2018
Figure 23:The evolution of the Equity/Total Assets ratio of the Municipality of Dion-Olympos for the period 2016-2018
A reverse trajectory is followed as a result of the Equity Ratio on total Assets for the same years 2016-2018, with the figure from 94.44% in 2016, increasing and stabilizing for the next two years to 94.94% and 94.95% respectively.
6.12 Activity Ratios
Turnover ratios show how efficient a municipality is in managing and using its assets to collect operating revenue. 6.12.1 Account Receivables Turnover ratio
The Account receivables turnover ratio calculates how many times the receivables have been renewed in each financial year and provides an insight into the receivables of the Municipality's claims.
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The Calculation Type is:
푆푎푙푒푠 Account Receivables Turnover ratio= 푇표푡푎푙 푅푒푐푒𝑖푣푎푏푙푒푠
In order to ensure the necessary liquidity, the Municipality should examine the progress of this ratio and take all necessary measures that can bring about its immediate improvement.
6.12.2 Accounts Receivable Turnover (Days)-Average Collection Period
The Accounts Receivable Turnover Ratio expressed in days is a particularly important number that reflects the average required time for the Municipality claim collection. In fact, it is the quotient between the total of days of each year (365 days) divided by the turnover mentioned above. The Calculation Type is: 360 Turnover receivables in days = 퐴푐푐표푢푛푡 푅푒푐푒𝑖푣푎푏푙푒 푇푢푟푛표푣푒푟 푅푎푡𝑖표
6.12.3 Turnover Asset Ratio: The Turnover Asset Ratio is an estimate of the Municipality's use of Assets in relation to its total operating income. Provides an insight into the amount of operating income generated for each euro of assets. It is distinguished in a Fixed Asset ratio and Total Asset ratio and, in this instance, its calculation types are as follows:
푆푎푙푒푠(푇표푡푎푙 푅푒푣푒푛푢푒) Assets Turnover Ratio = 푇표푡푎푙퐴푠푠푒푡푠 & 푁푒푡 푆푎푙푒푠 Fixed Assets Turnover Ratio = 퐹𝑖푥푒푑퐴푠푠푒푡푠−퐴푐푐푢푚푢푙푎푡푒푑퐷푒푝푟푒푐𝑖푎푡𝑖표푛
6.12.4 Evolution of turnover ratios of the municipality of Dion-Olympos in the years 2016-2018. The table 23 shows the evolution of the turnover ratios of the Municipality of Dion-Olympos for the years 2016 to 2018.
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Year Activity Ratios 2016 2017 2018 Account Receivable 1,61 1,36 1,64 Turnover Account Receivable 223,6 264.71 219,51 Turnover (Days) Asset Turnover Ratio 0.09 0.085 0.095 Fixed Asset Turnover 0.099 0.094 0.1033 Ratio
Table 22:The evolution of the activity ratios of the Municipality of Dion-Olympos for the period 2016- 2018
Account Receivables Turnover ratio
1.80 1.61 1.64 1.60 1.36 1.40 1.20 1.00 0.80 Account Receivables 0.60 Turnover ratio 0.40 0.20 0.00 2016 2017 2018 Year
Figure 24:The evolution of the Account Receivables Turnover Ratio of the Municipality of Dion-Olympos for the period 2016-2018
Turnover ratios show a decline tendency in 2017. More specifically, while in fiscal year 2016, the turnover ratio stands at 1.61, in 2017 the ratio is down to 1.36%, falling at 15% compared to 2016. On the contrary, in 2018 it is slightly increased to 1.64, rising to better levels than 2016.
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Account Receivable Turnover (Days) 300 264.71 250 223.6 219.51 200
150 Account Receivable 100 Turnover (Days)
50
0 2016 2017 2018 Year
Figure 25:The evolution of the Account Receivables Turnover (Days) Ratio of the Municipality of Dion- Olympos for the period 2016-2018
From the table data and the corresponding graph for the average duration of receivables collection for the Municipality of Dion-Olympos for the fiscal years 2016-2018, we note that in 2016, the average duration of receivables corresponded to approximately 226.71 days, showing an increase in 2017 to 268.38 days before returning to slightly lower levels than the 1st reference year (2016) at 222.57 days. This is a tendency that seems to follow the evolution of the turnover requirements ratio for all reported financial years. The improvement of the ratio in the period 2017-2018, represents the capacity of the Municipality of Dion- Olympos to collect claims more quickly and at the same time reduce the likelihood of suffering financial losses from future bad receivables.
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Asset Turnover Ratio 0.096 0.095 0.094 0.092 0.09 0.09 0.088 0.086 0.085 Asset Turnover Ratio 0.084 0.082 0.08 2016 2017 2018 Fiscal year
Figure 26:The evolution of the Asset Turnover Ratio of the Municipality of Dion-Olympos for the period 2016-2018
From the results of the table 23 and the resulting figure 26, we find that the Asset Turnover Ratio moves at very low levels. During the fiscal year 2016, the ratio price is 0.09 to be slightly reduced by the end of 2017 at 0.085. On the other hand, for the last fiscal year of the 2016-2018 reporting period, we can observe an increase tendency with the Asset Turnover Ratio moving to 0.095. After all, in no case should the municipalities be considered economic units characterized by over-increased economic activities, but by very low results in turnover ratios.
Fixed Asset Turnover Ratio 0.104 0.1033 0.102 0.1 0.099 0.098 0.096 0.094 Fixed Asset Turnover 0.094 Ratio 0.092 0.09 0.088 2016 2017 2018 Fiscal year
Figure 27:The evolution of the Fixed Asset Turnover Ratio of the Municipality of Dion-Olympos for the period 2016-2018
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Similar results are noted by the Fixed Asset Turnover ratio for the fiscal years 2016-2018, with the highest rate of 0.1033 being recorded in the last financial year of the reporting period. The Fixed Asset Turnover ratio examines the relationship between the Fixed Assets and the Operating Revenue of the Municipality. It reflects the efficient use of fixed assets (real estate, facilities, machinery) to increase operating income.
6.13 Balance Sheet Structure Ratios
The balance sheet structure ratios reflect the structure of the total assets of the Municipality.
The main profitability ratios from the aspect of economic analysis generated by Local Authorities (OTA) are the following:
6.13.1Current Assets/Total Assets
As we know from the financial analysis, Total Assets is the sum of fixed assets and current assets.
The current assets ratio records the percentage (%) by which the Total Assets consists of items of current assets (Available Cash) and is the supplementary percentage of the previous fixed assets/total assets ratio.
The calculation type is:
퐶푢푟푟푒푛푡퐴푠푠푒푡푠 Current Assets/Total Assets ratio= 푥 100% 푇표푡푎푙퐴푠푠푒푡푠
6.13.2 Fixed Assets / Total Assets
This ratio actually relays the percentage (%) of fixed assets in terms of Total Assets. That is, the part of the Total Assets which represents the property image of the Municipality (Sports Facilities, Machinery, Buildings, etc.).
The calculation type is:
퐹𝑖푥푒푑퐴푠푠푒푡푠 FixedAssets/TotalAssetsratio= 푥 100% 푇표푡푎푙퐴푠푠푒푡푠
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6.13.3 Fixed Assets / Equity It represents the percentage (%) of the Fixed Assets in terms of all the Municipality’s equities.
The calculation type is:
퐹𝑖푥푒푑퐴푠푠푒푡푠 FixedAssets/OwnEquityratio= 푥 100% 푂푤푛퐸푞푢𝑖푡푦
6.13.4 Long-term Liabilities / Total Assets It represents the percentage (%) of long-term liabilities in respect of the total Assets of the Municipality.
The calculation type is:
퐿표푛𝑔−푡푒푟푚 퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠 Long-term Liabilities/TotalAssetsratio= 푥 100% 푇표푡푎푙퐴푠푠푒푡푠
6.13.5 Short-term Liabilities / Total Assets It represents the percentage (%) of short-term liabilities in respect of the total Assets of the Municipality.
The calculation type is:
푆ℎ표푟푡−푡푒푟푚 퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠 Short-term Liabilities/TotalAssetsratio= 푥 100% 푇표푡푎푙퐴푠푠푒푡푠
Capital Year Year Year Structure ended 31 ended 31 ended 31 Ratio December December December 2016 2017 2018 Current Assets 8.45 8.82 7.57 to Total Assets Fixed Assets to 91.21 90.83 92.04 Total Assets Fixed Assets to 96.58 95.67 96.94 Equity
Long-term 4.15 3.94 3.83 liabilities to
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Total Assets Short-term 1.26 0.96 1.07 Liabilities to Total Assets
Table 23:The evolution of the capital structure ratios of the Municipality of Dion-Olympos for the period 2016-2018
The table 24 shows the evolution of the previously discussed capital structure ratios for the Municipality of Dion-Olympos for the financial years 2016-2018.
Curent Assets/Total Assets (%) 9 8.82 8.8 8.6 8.45 8.4 8.2 8 7.8 7.57 Curent Assets/Total 7.6 Assets (%) 7.4 7.2 7 6.8 2016 2017 2018 Fiscal year
Figure 28:The evolution of the Current Assets/Total Assets Ratio of the Municipality of Dion-Olympos for the period 2016-2018
By calculating the analogy of current assets in total assets, we derive that the current asset percentage represents approximately 8.45% and 8.82% for the fiscal years 2016 and 2017, respectively. On the contrary, 2018 marked a considerable decline of 7.57% of the total Assets. From a careful examination of the published financial statements of the Municipality of Dion-Olympos, we see a notable decrease of funds in 2017. In particular, there was a decrease of about 32.5%, from the amount of 2,754,122,08€ to 1,857,258,37€, which resulted in a general decrease in the total of assets for the financial year 2018.
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Fixed Assets/Total Assets (%) 92.2 92.04 92 91.8 91.6 91.4 91.21 91.2 91 90.83 Fixed Assets/Total Assets 90.8 (%) 90.6 90.4 90.2 2016 2017 2018 Fiscal year
Figure 29:The evolution of the Fixed Assets/Total Assets Ratio of the Municipality of Dion-Olympos for the period 2016-2018
The analogy calculation of fixed assets in total assets is in essence the subtraction of the proportion of current assets to 1, i.e. its supplementary. From the table 24 we find that the percentage of fixed assets represents approximately 91.21% and 90.83% for the fiscal years 2016 and 2017, respectively. On the other hand, in 2018 due to the decrease in current assets there is recorded a marked increase, surpassing 92%.
Fixed Assets/Own Equity (%) 97.5 96.94 97 96.58 96.5
96 Fixed Assets/Own Equity 95.67 (%) 95.5
95 2016 2017 2018 Fiscal year
Figure 30:The evolution of the FixedAssets/Own Equity Ratioof the Municipality of Dion-Olympos for the period 2016-2018
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Liquid assets are mainly financed from own funds, as is evident by the long-term reduction in fixed assets to own Equity funds.
Long-term Liabilities/Total Assets (%) 97.5 96.94 97 96.58 96.5
96 Long-term Liabilities/Total 95.67 Assets (%) 95.5
95 2016 2017 2018 Fiscal year
Figure 31:The evolution of the Long-term Liabilities/Total Assets Ratio of the Municipality of Dion- Olympos for the period 2016-2018
Short-term Liabilities/Total Assets (%)
1.4 1.26 1.2 1.07 0.96 1 0.8 0.6 Short-term Liabilities/Total Assets (%) 0.4 0.2 0 2016 2017 2018 Fiscal year
Figure 32:The evolution of the Short--term Liabilities/Total Assets Ratio of the Municipality of Dion- Olympos for the period 2016-2018
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6.14 Income Statement Structure ratios The income statement structure ratios refer to the relationships between revenue and expenses shown in the profit and loss statement for the Municipality of Dion-Olympus, according to the official published balance sheet for the 2016-2018 reporting period. This category of ratios analyses the analogy of each category of revenue or expenditure in total revenue or expenditure, respectively.
In our case study, analyzed the following ratios of the specific category are analyzed, which are:
Subsidies / Operational Revenue
Own Revenue / Operational Revenue
Operational Revenue / Operational Expenditure
Managing Expenses / Operational Expenditure
Cost of Goods Sold / Operational Expenditure
The Subsidies over Operational Revenue ratio calculates the percentage of the quota of Grants(Subsidies) over the total Operational revenue of the Municipality as opposed to the Own Revenue ratio over Operating revenue which refers to the percentage that occupies the own revenue of the Municipality on the total operating revenue.
The Operational revenue over Operational expenditure ratio reflects the extent to which the costs of the Municipality's revenue are covered. It shows the potential for profit in cases where the ratio is greater than the unit. On the contrary, the low rates of this particular ratio, show the Municipality’s inability to cover its operational costs.
Concerning the operational expenditure, the managing Expenses or administration costs over operating expenditure ratio include the percentage that operational expenditure occupies based on the profit and loss statement in total Operational revenue.
Finally, the Cost of Goods Sold over Operational Expenditure ratio calculates the percentage that occupies the cost of selling the goods on the total of the Operational Expenditure of the Municipality.
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For the calculation of the ratios for the revenue and expenditure category, the previous ratios are calculated according to the data in the following tables 25 and 26:
RESULTS BY USE (All amounts are expressed in €) PERCENTANGE CHANGE Desciption 2016 2017 2018 2016- 2017- 2017(%) 2018(% ) Turnover sales of 4905519.58 4628720.71 5081270 -5.64 9.78 goods and services Tax revenue 744840.53 737009.59 629213.8 -1.05 -14.63 Subsidies 4239137.66 3862006.16 4272715 -8.90 10.63 Other Revenue 9192.71 46519.44 46799.82 406.05 0.60 Interest and similar 43277.27 38113.91 30216.71 -11.93 -20.72 revenue Extra and non- 1373371.04 1654515.38 1951427 20.47 17.95 operating income Extra and non- 0 0 27463.5 N/E2 N/A operating profit Previous year's 436178.4 668741.94 418217.7 53.32 -37.46 revenue Table 24:Net Result Statement, concerning the revenue side for the period 2016-2018 for the Municipality of Dion-Olympos
RESULTS BY USE (All amounts are expressed in €) PERCENTANGE CHANGE Desciption 2016 2017 2018 2016- 2017- 2017(%) 2018(%) Cost of Goods Sold 7961592.87 8751308.92 10159518 9.92 16.09 Administrative 2648427.13 2307009.79 2417858 -12.89 4.80 expenses Selling Expenses 112109.61 36029.87 46799.82 -67.86 29.89 Interest expenses 274135.96 248820.02 233112.4 -9.23 -6.31 Extra and non- 117173.6 54813.82 42781.59 -53.22 -21.95 operating expenses Extra losses 22842.86 31131.52 28956.31 36.29 -6.99 Previous year's 301526.9 93400.47 230402 -69.02 146.68 expenses
Table 25:Net Result Statement, concerning the revenue side for the period 2016-2018 for the Municipality of Dion-Olympos
2N/E stands for Not Exist 75 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Calculation of the Net Result Structure Ratios
Ratio USE2016 USE2017 USE2018
Subsidies/ 42.64% 41.47% 42.56% Operational Revenue Own Revenue 57.36% 58.53% 57.44% /Operational Revenue Operational 90.41% 82.10% 94.62% Revenue / Operational Expenditure Managing 24.08% 20.34% 18.81% Expenses / Operational Expenditure Costs of Goods 72.4% 77.15% 79.02% Sold / Operational Expenditure
Table 26:Evolution of Income Statement Ratios for the period 2016-2018 for the Municipality of Dion- Olympos
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Subsidies/Operational Revenue (%) 42.8 42.64 42.56 42.6 42.4 42.2 42 41.8 41.6 41.47 Subsidies/Operational 41.4 Revenues (%) 41.2 41 40.8 2016 2017 2018 Fiscal year
Figure 33:Quota Percentage of GrantstoOperatingRevenue
Looking at the data sum in the table 27, which reflects the evolution over time of the government grants’ participation in the total operating income of the Municipality of Dion, we find that there is a general stabilizing tendency at 42% with the exception of 2017 where there is a relative decrease of about 2.7%. It is clear that the current Local Authorities continue to depend on the state budget’s grants as an economic entity with the percentage for the Municipality of Dion-Olympos reaching 42%. The municipalities, in addition to the regular grant from the state, often times receive an extra grant to cover overdue needs or to anticipate emergencies. Based on the published accounts, the Municipality of Dion received an extra grant of approximately 540,000€ for the fiscal year 2018 only for the purpose of dealing with the natural disaster of 15/11/2017, also mentioned as a note in the 2018 balance sheet.
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Own Revenue/Operational Revenue (%) 59 58.53 58.5
58 57.44 Own 57.5 57.36 Revenues/Operational 57 Revenues (%)
56.5 2016 2017 2018 Fiscal year
Figure 34:Quota Percentage of Own Revenue to total Operational Revenue
The own revenue continues to constitute the largest category of revenue for the Municipality of Dion-Olympos, contributing to a percentage ranging from 57.36% to 58.53% of the total operating income for the fiscal years 2016 and 2017.
In 2018 we have a slight drop due mainly to the fact that there was an increase to the state's credit toward the Municipality, with the aim of covering the emergencies created by the natural disaster of 2017.
Managing Expenses/Operation Expenditure (%) 30 24.08 25 20.34 18.81 20
15 Managing 10 Expenses/Operation Expenditure (%) 5 0 2016 2017 2018 Fiscal year
Figure 35:Percentage of Administration Costs to total operating revenue
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Regarding the participation percentage of administrative costs in the total operating expenses of the Municipality of Dion-Olympos, we see a steady decline with their initial percentage of 24.08% for the fiscal year 2016, reaching 18.81% in 2018. In the meantime, in 2017 it is moving to 20%.
Administrative expenses include all the Municipality’s costs, aiming at covering management and financial needs, for example salaries of staff and board members, etc.
Cost of Goods Sold/Operation Expenditure (%) 80 79.02 78 77.15 76
74 72.4 Cost of Goods 72 Sold/Operation Expenditure (%) 70 68 2016 2017 2018 Fiscal year
Figure 36:Quota Percentage Cost of Goods sold to total Operating Revenue
Regarding the participation rate of the cost of goods/services in the total operating costs of the Municipality of Dion-Olympos, we see a steady growth that from 72.4% in 2016 ends up at 79.02% for the last financial year. And in this instance, the cost of goods/services was burdened for the fiscal year 2018 with the amount of 938,000€ to deal with the natural disaster of 2017, something that is also listed in the notes of the 2018 financial statements.
6.15 Financial Ratios per Citizen
The calculation of the following ratios per Citizen are also important because they can provide us with a bigger picture, compared to other Municipalities of the Hellenic Territory.
According to the Competent Authorities, the main economic ratios per Citizen are as follows:
(a) operating revenue per Citizen
(b) own revenue per Citizen
(c) operating expenses per Citizen
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(d) result per Citizen (surplus or deficit)
(e) fixed assets per Citizen
(f) total assets per Citizen
(g) equity per Citizen
6.15.1 Calculation types for Financial Ratios per Citizen
For the calculation of the above ratios per Citizen, the following procedure was followed.
Revenue from own Sources: The own revenue from the Municipality comes from the sale of goods and services, from taxes, levies, and fines collected by the Municipality during the financial year as well as from its income (credit interest). In the above category of revenue, all the income derived from the exploitation of an asset of the Municipality must also be added.
Total Operating Income: Constitute the total revenue of the Municipality from own sources plus the sum of the regular grants it receives from the State.
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Figure 37:Own Funds Resources of the Municipality of Dion-Olympos
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Total operating expenses: They are the sum of data on the Balance Sheet such as Administrative Expenses, Public Relations Operating Expenses, Goods and Services Costs, Debt Interest together, and Other Related Expenses. The table 28 shows the calculation of the above numbers according to the data of the last official census for the Municipality of Dion-Olympos with a population of 25608 inhabitants.
Financial Ratios Year Year Year per Citizen ended 31 ended 31 ended 31 December December December 2016 2017 2018 (All amounts are expressed in €) Operation 385.64 361,32 389,91 revenue/Citizen Own 220,49 210,86 223,46 Revenue/Citizen Operational 417,40 432,22 497,71 Expenses/Citizen Net Results 12,22 5,32 -28,19 /Citizen Subsidies/Citizen 165,15 150,46 166,46 Fixed 3895,73 3839,16 3775,22 Assets/Citizen Total 4271.06 4226,69 4101,86
Assets/Citizen
Own 4033,67 4012,99 3894,52
Equity/Citizen
Long term 177,32 166,68 156,9
liabilities/Citizen
Total 457,83 454,23 483,5 Revenue/Citizen
Table 27:Ratio Calculation per citizen for the Municipality of Dion-Olympos
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Οperating Revenue/Citizen
395.00 € 389.91 € 390.00 € 385.64 € 385.00 € 380.00 € 375.00 € 370.00 € 365.00 € 361.32 € Οperating 360.00 € Revenue/Citizen 355.00 € 350.00 € 345.00 € 2016 2017 2018 Fiscal Year
Figure 38:Graphical Representation of operating revenue per Citizen for each year
From the data of the above chart, the Municipality of Dion-Olympos records operating revenue of 385.64€/citizen for the year 2016. The performance for 2017 moves to slightly lower levels to 361.32€/citizen. Finally, 2018 is the best year of the reporting period with the operating income/public ratio increasing to 389.91€, mainly attributed to an increase in state grants.
Own Revenue/Citizen 226 223.46 224 222 220.49 220 218 216 214 212 210.86 Own Revenue/Citizen 210 208 206 204 2016 2017 2018 Fiscal Year
Figure 39:Graphical Representation of own revenue per citizen for each year
The own revenue of each Municipality is an important factor in shaping its total expenditure for each municipal period and is a critical factor in the economic self-sufficiency of each Municipality. The attestation of fees and taxes in favour of the Municipality is the 83 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
responsibility of the financial service which should implement plans to increase the collection to improve the image of the relevant ratio and the transition to an autonomous economic environment.
From the calculation of the relevant ratio, the own revenue/citizen is set at 220.49€ for the year 2016, showing a relatively small decrease in the following year (2017) to 210.86€/citizen. In 2018 the financial service of the Municipality of Dion-Olympos records an increase of about 6%, with the own revenue/ citizen amounting to 223.46€.
Operational Expense/Citizen 520 497.71 500 480 460 440 432.22 417.4 Operating 420 Expense/Citizen 400 380 360 2016 2017 2018 Fiscal Year
Figure 40:Graphical Representation of operating expenses per Citizen for each year
The data of figure 40 above confirm an increasing tendency for each year for the operational expenses/citizen ratio. Taking 2016 as a starting point, the cost of operating expenses/citizens amounts to 417.4€, recording an increase of about 3.5% for the next period of 2017, amounting to 432.22€/citizen. This increase continues at a rate of 15.15% for the last year where operating expenses/Citizen now amount to 497.71€. As mentioned above, this kind of increase was caused at the aftermath of dealing with a natural disaster, leading to a dramatical increase in the cost of services provided per Citizen.
Figure 41 shows also the Net results/Citizen which have a negative value in the 2018 as compared to the other years which are positive.
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Net results/Citizen 15 €12,22 10 €5,32 5 0 -5 2016 2017 2018 -10 Fiscal year Net results/Citizen -15 -20 -25 -30 -€28,19 -35
Figure 41:Graphical Representation of net result per citizen for each year
Subsidies/Citizen €170 166,46 € 165,15 € €165
€160
€155 150,46 € Subsidies/Citizen €150
€145
€140 2016 2017 2018 Fiscal Year
Figure 42:Graphical Representation of subsidies per Citizen for each year
The State grant (Subsidies) is the second largest source of revenue for each municipality in addition to its own revenue. All municipalities of the Hellenic Territory have undergone significant restrictions on the amount of annual funding from the state to cover their operating costs. The Municipality of Dion-Olympos received the amount of 165.15€ in the form of a state grant for each Citizen for the year 2016. For the next fiscal year 2017, there is a decrease of around 9%, with the ratio shaping up to 150.46€. Finally, for the last period in 2018, the ratio stands at 166.46€, mainly affected by the state grant increase following the natural disasters of 2017.
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Fixed Assets/Citizen
€3,920 3.895,73 € €3,900 €3,880 €3,860 3.839,16 € €3,840 €3,820 €3,800 3.775,22 € €3,780 Fixed Assets/Citizen €3,760 €3,740 €3,720 €3,700 2016 2017 2018 Fiscal Year
Figure 43:Graphical Representation of the value of fixed assets per citizen for each year
The figures in the figure 43 confirm the decline trend in fixed assets/citizen for the entire 2016-2018 reference period. For the year 2016, which is the beginning of the study period, the total fixed assets/citizen amount to 3,895,73€. In 2017 and 2018 they show a continuous decrease, resulting in the fixed assets/citizen being at the level of 3,775.22€, with depreciation being the main cause of a decrease in the value of fixed assets.
Total assets/Citizen
4,300.00 € 4.271,06 € 4,250.00 € 4.226,69 €
4,200.00 €
4,150.00 € 4.101,86 € Total assets/Citizen 4,100.00 €
4,050.00 €
4,000.00 € 2016 2017 2018 Fiscal Year
Figure 44:Graphical Representation of the value of total assets per Citizen for each year
The total assets of each Municipality include all the financial resources and municipal property for the fulfilment of the operational objective of each municipality, essential for the
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provision of services toward its citizens. The total value of the Assets records a decrease for each year with a reference level 2016, where the relevant ratio amounts to 4,271,06€/citizen. In 2017 the ratio’s price is slightly lower to €4,226.69/citizen. Finally, for 2018 the price of the relevant ratio now stands at 4,101,86€/citizen, as a result of the reduction of fixed and Current assets, which are the two added units for the final export of the total Assets based on the Financial Analysis theory.
Own Capital/Citizen 4,050.00 € 4.033,67 € 4.012,99 € 4,000.00 €
3,950.00 € 3.894,52 € 3,900.00 € Own Capital/Citizen
3,850.00 €
3,800.00 € 2016 2017 2018 Fiscal Year
Figure 45:Graphical Representation of the value of own capital per citizen for each year
The total amount of the municipality's own funds and liabilities constitute the total liabilities of the Municipality. From the study of the financial statements for all 3 years (2016, 2017, 2018), we observe that the capital of the Municipality remains stable and amounts to 65,335,967,97€ for each year. The relevant equity/citizen ratio is solely affected by the investment total and the result carried over from the immediately preceding management period. For the year 2016, the price of the equity/citizen ratio is 4,033.67€ while the following year (2017) 4,012.99€. Finally, for the last management period, in 2018, the equity/public ratio is reduced to €3,894.52 mainly due to the previous financial year’s deficit and the total amount of the investment grants.
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Long-term Liabilities/Citizen 180.00 € 177.32 € 175.00 €
170.00 € 166.68 € 165.00 €
160.00 € 156.90 € Long-term Liabilities/Citizen 155.00 € 150.00 € 145.00 € 2016 2017 2018 Fiscal Year
Figure 46:Graphic Representation of the corresponding amount per each citizen for all long-term liabilities for each year
The long-term requirements of the Municipality of Dion-Olympos include all the long-term loans that the Municipality has made to serve its operational and investment needs. For each Citizen corresponds the amount of 177.32€ for 2016, with the following subsequent periods showing a steady decrease of about 6%, as a result of the gradual loans’ repayment. The price of the relevant ratio for the last year of reference is 156.90€/citizen.
Total Revenue/Citizen 490.00 € 483.50 € 485.00 € 480.00 € 475.00 € 470.00 € 465.00 € 457.83 € 460.00 € 454.23 € 455.00 € Total Revenue/Citizen 450.00 € 445.00 € 440.00 € 435.00 € 2016 2017 2018 Fiscal Year
Figure 47:Graphical Representation of total revenue per citizen for each year
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The total revenue of each Municipality is the sum of own revenue and operating income for each financial year. The total income/resident ratio is in essence the sum of Table 1 and Table 2. In the case of the Municipality of Dion-Olympos, the total revenue for the year 2016 was estimated at 457.83€ and shows a stabilization tendency in 2017 (454.23€). The exception is the last financial year of 2018, where there is an increase of about 5.6%, mainly as a result of the increase in the state grant toward the Municipality.
89 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
7. Comparative analysis of Kallikratic Municipalities of Pieria
In this chapter we will present a comparative analysis of the ratios per Citizen of the Municipality of Dion-Olympos that were calculated in the section with the ratios per Citizen to the corresponding ratios3 of the other Municipalities of the Regional Unit of Pieria, namely the Municipality of Katerini and the Municipality of Pydna-Kolindros.
7.1 Brief-Description of the Municipality of Katerini
The Municipality of Katerini, with its capital the city of Katerini, records the largest population of the Kalikratic Municipality of the Regional Unit of Pieria, the Region of Central Macedonia. With the implementation of the Kallikratis design in all Greek municipalities in 2010 Katerini was united with the former Kapodistrian municipalities of Korinos, Paralia, Pierion, and Petra, forming the largest municipality in population and size within the Regional Unit. Its population, according to the official census of the 2011, amounts to 85.851 inhabitants("Katerini", 2020). The Municipality of Katerini constitutes of 68.4% of the population of the Regional Unit of Pieria and includes: 6 Municipal Units 23 Local Townships
Figure 48:Τhe official logo of Municipality of Katerini
3 For the financial data of Municipality of Katerini and Pydna-Kolindros,check the appendix 90 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
7.1.1 Economic profile of the Municipality of Katerini The main source of income of the economically active population of the Municipality of Katerini is the tertiary service sector with 68.3%. Employees by sector of activity
The city of Katerini is the most important economic and commercial center of the entire Regional Unit of Pieria, with significant comparative advantages such as • Proximity to the metropolitan area of Thessaloniki (Distance 68 km). • Beach front of 45 kilometers. • High tourist infrastructure along the coastal front, especially in T.K. of Paralia which attracts thousands of tourists mainly from the other Balkan countries during the summer season. • Remarkable transport infrastructure due to the connection with the PATHE motorway. • Population(whole Municipality)=85.851 citizens ("Katerini", 2020).
91 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Figure 49:Map of Municipality of Katerini
7.2Brief-Description of the Municipality of Pydna–Kolindrou
The Municipality of Pydna–Kolindrou belongs to the Region of Central Macedonia and was established in 2011 according to the Kallikratis Planning. It is based in Aeginio with Kolindros taking the historical point of reference. It is consisted by the Municipal Units of Eginio, Kolindros, Methoni, and Pydna. It is the smallest municipality in population of the Regional Unit of Pieria.
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The Municipality of Pydna-Kolindros extends to an area of 341.2 sq. km and is located in the northern part of the Regional Unit of Pieria.Eginio is the most important economic and commercial center of the Municipality of Pydna-Kolindros and brings together the central services of the Municipality.
Figure 50:Τhe official logo of Municipality of Pydna-Kolindros
Economic profile of the Municipality of Pydna-Kolindros ("Pydna-Kolindros", 2020) In 2001, the Municipality of Pydna-Kolindros almost half of the population (49%) is active in the primary sector, followed by tertiary (31.3%) and finally the secondary sector (16.3%). Especially in the municipal units of Pydna-Kolindros the percentage of those involved in the primary sector is 60%. The citizens are employed in agriculture and especially the cultivation of grains, tobacco, and cherries mainly in the region of Kolindros. Among the main comparative advantages of the Municipality are: • The proximity to the metropolitan area of Thessaloniki (Distance less than 30km) • It is ideal for establishing craft industries, owing to the lower land value compared to the metropolitan area of Thessaloniki • The area of Makrygialos has been proposed in the past as a candidate area for the installation of a freight center, due to its proximity with the PATHE motorway, the main railway axis that connects Athens-Thessaloniki, and the fact that it is only 8 km away from EgnatiaOdos. • Every September, it attracts thousands of due to the fair(season market). • Populations=15.179("Pydna-Kolindros", 2020)
93 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Figure 51:Μap of Municipality Pydnas-Kolindrou
The Municipality of Pydna-Kolindros does not have developed tourist infrastructure with the bulk of hotels and rooms-to let to be concentrated mainly in Methoni and Makrygialos, as they tend to attract tourists from Thessaloniki and the surrounding prefectures.
7.3 Comparative Analysis based on ratios per Citizen The comparative analysis includes a comparison of the ratios per citizen as calculated according to the IOBE methodology for each municipality individually. The calculated ratios for each Municipality are as follows: Operation revenue per Citizen Own Revenue per Citizen Total operational expenses per Citizen Νet Results per Citizen Subsidies per Citizen Long-Term Liabilities per Citizen Fixed Assets per Citizen Total Assets per Citizen Total Revenue per Citizen In the case of the Municipality of Dion-Olympos, the ratios per citizen have been calculated in the section.
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7.3.1 Calculation of ratios per citizen for the Municipality of Katerini The table 29 includes all the indicators per inhabitant of the previous section for the case of the Municipality of Katerini as calculated according to the available data from the balance sheets of the last 3 reference years and according to the latest official census of 15.179 citizens of the Municipality of Pinda-Kolindros("Pydna-Kolindros", 2020).
MUNICIPALITYOFKATERINI FinancialRatios per Citizen Yearended Yearended 31 Yearended 31 31 December December December 2016 2017 2018 Operation revenue/Citizen 365.63 356.42 368.48 OwnRevenue/Citizen 100.77 98.87 100.36 OperationalExpenses/Citizen 421.80 438.12 469.94 Surplus/Deficit/Citizen 6.41 2.17 -34.06 Subsidies/Citizen 264.86 257.55 268.12 FixedAssets/Citizen 2634.77 2627.89 2614.89 TotalAssets/Citizen 3026.40 3031.83 3017.15 OwnEquity/Citizen 2800.67 2802.13 2831.67 Long-Liabilities/Citizen 120.42 105.01 89.15 Short-termLiabilities/Citizen 104.22 123.60 95.24 TotalRevenue/Citizen 435.47 453.54 443.59 Table 28:Ratio Results per citizen for the case of the Municipality of Katerini
7.3.2 Calculation of ratios per citizen for the Municipality of Pydnas-Kolindrou
The table 30 contains the whole set of ratios per citizen of the previous section for the case of the Municipality of Pydna-Kolindros as they were calculated according to the available data from the balance sheets of the last three reference years, and according to the latest official census of the Municipality of Pyndas-Kolindros, from where the population originates.
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MUNICIPALITY OF PYDNA-KOLINDROS PYDNAS- KOLINDROU FinancialRatios per Citizen Yearended 31 Yearended 31 Yearended December December 31 December 2016 2017 2018 (All amounts are expressed in €) Operation revenue/Citizen 368.40 344.64 351.91 OwnRevenue/Citizen 224.28 216.86 239.52 OperationalExpenses/Citizen 416.15 436.04 480.11 Surplus/Deficit/Citizen -45.89 -32.86 -39.37 Subsidies/Citizen 127.78 127.78 127.63
FixedAssets/Citizen 2403.22 2322.69 2280.05 TotalAssets/Citizen 2730.05 2655.16 2531.90 OwnEquity/Citizen 2597.64 2547.71 2428.70 Long-Liabilities/Citizen 19.23 14.83 11.28 Short-termLiabilities/Citizen 105.81 100.68 84.22
TotalRevenue/Citizen 424.15 422.55 516.54
Table 29:Ratio Results per citizen for the case of the Municipality of Pydna-Kolindros
96 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
7.3.3 Calculation of ratios per citizen for the Municipality of Dion-Olympos
Finally, the table 31 contains the total of the ratios per citizen of the previous section for the case of the Municipality of Dion-Olympos as they were calculates according to the available data from the balance sheets of the last three reference years and according to the last official census of the Municipality of Dios-Olympus, where the population is originating.
MUNICIPALITY OF DION-OLYMPOS Financial Ratios per Citizen Year ended Year ended Year ended 31 31 December 31 December 2017 December 2016 2018 (All amounts are expressed in €) Operation revenue/Citizen 385.64 361.32 389.91
Own Revenue/Citizen 220.49 210.86 223.46 Operational Expenses/Citizen 417.4 432.22 497.71 Net Results /Citizen 12.22 5.32 -28.19 Subsidies/Citizen 165.15 150.46 166.46 Fixed Assets/Citizen 3895.73 3839.16 3775.22 Total Assets/Citizen 4271.06 4226.69 4101.86 Own Equity/Citizen 4033.67 4012.99 3894.52 Long term liabilities/Citizen 177.32 166.68 156.9 Short-term liabilities/Citizen 53.78 40.70 44.10 Total Revenue/Citizen 457.83 454.23 483.5
Table 30:Ratio results per citizen for the case of the Municipality of Dion-Olympos
97 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
7.5 Comparative Analysis of ratios per citizen for the three Municipalities of Pieria The purpose of this section is to present the ratios per citizen in the form of graphs and to analyse the results for each ratio per inhabitant calculated in the previous section.
7.5.1 Total Revenue per Citizen
€389.91 €390.00 €385.64
€380.00
€368.40 €368.48 €370.00 €365.63 €361.32 €356.42 €360.00 DION-OLYMPOS €351.91 KATERINI €350.00 €344.64 PYDNAS-KOLINDROU
€340.00
€330.00
€320.00 Year ended 31 Year ended 31 Year ended 31 December 2016 December 2017 December 2018
Figure 52:Comparative Diagrammatic Representation of the Total Revenue ratio per citizen for the three Municipalities of the Regional Unit of Pieria
The Municipality of Dion-Olympos is the Municipality with the best performance in all 3 uses of the operating revenue/citizen, with the last use of 2018 exhibiting its best performance. Additionally,from the quantitative figures, we see a simultaneous decline in operating income/ citizen for the fiscal year 2017, in all 3 reference municipalities. The largest decline of 6.3% was recorded in Municipality of Dion-Olympos. The Municipality of Katerini, which has the biggest population density of the region, ranks second. With a small difference follows the Municipality of Pydna-Kolindros that records the lowest performance with the exception of 2016 where it shows marginally better sizes than the Municipality of Katerini.
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7.5.2 Own Revenue/Citizen
€239.52 €250.00 €220.49€224.28 €223.46 €210.86€216.86
€200.00
€150.00 DION-OLYMPOS 100.77 98.87 100.36 KATERINI €100.00 PYDNAS-KOLINDROU
€50.00
€0.00 Year ended 31 Year ended 31 Year ended 31 December 2016 December 2017 December 2018
Figure 53:Comparative Diagrammatic Representation of the Own Revenue ratio per citizen for the three Municipalities of the Regional Unit of Pieria
In the part of the ratio that records the course of own revenue/citizen, the Municipality of Pydna-Kolindros outperforms the other municipalities of Pieria with the ratio of own revenue recording a local maximum of 239.52€ in the last financial year of 2018. On the other hand, the difference of about 52% of the total own revenue of the Municipality of Katerini is apparent, compared to the other Municipalities. Notably, there is an inversely proportional relationship between the population of each Municipality and the own revenue ratio. That is mainly attributed to the decline in collectability when the population increases.
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7.5.3 Operational Expenses/Citizen
480.11 Year ended 31 December 2018 469.94 497.71
436.04 PYDNAS-KOLINDROU Year ended 31 December 2017 438.12 KATERINI 432.22 DION-OLYMPOS
416.15 Year ended 31 December 2016 421.8 417.4
€350 €400 €450 €500 €550
Figure 54:Comparative Diagrammatic Representation of the Operating Expenses ratio per citizen for the three Municipalities of the Regional Unit of Pieria
The ratio of operational expenses per Citizen appears lower in the case of the Municipality of Katerini, which compared to the rest, has the largest population municipality. By observing the relevant graph, we find that the fiscal year 2018 is the when there is an increase in operational costs per Citizen for all 3 municipalities with the highest growth rate of 13.15% to be recorded by the Municipality of Dion-Olympos, followed by the Municipality of Pydna- Kolindros. In the previous years (2016, 2017), all 3 Municipalities recorded similar figures in expenditure per Citizen, with the Municipality of Katerini showing marginally higher figures of approximately 421€ /Citizen.
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7.5.4 Net Results per Citizen
-39.37 -34.06 Year ended 31 December 2018 -28.19
-32.86 PYDNAS-KOLINDROU 2.17 Year ended 31 December 2017 KATERINI 5.32 DION-OLYMPOS
-45.89 6.41 Year ended 31 December 2016 12.22
-€50 -€40 -€30 -€20 -€10 €0 €10 €20
Figure 55:Comparative Diagrammatic Representation of the Net Result ratio per citizen for the three Municipalities of the Regional Unit of Pieria
The 2018 financial year finds all 3 municipalities in the region to have a deficit with the Municipality of Pydna-Kolindros recording the highest. More specifically, for the fiscal year 2018, the Municipality of Pydna-Kolindros has a deficit of 39.37€ per Citizen compared to the Municipalities of Katerini and Municipality of Dion-Olympos that have a deficit of 34.06€ and 28.19€ respectively. 2016 and 2017 they close with a surplus for the Municipalities of Dion-Olympos and Katerini, with the former Municipality recording the best performance in the year 2016, with net results amounting to 12.22€ per Citizen, and followed by the Municipality of Katerini with 6.41€. On the other hand, in 2016, the Municipality of Pydna-Kolindros recorded the worst performance with the deficit/citizen corresponding to the amount of 45.89€ per Citizen.
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7.5.5 Subsidies/Citizen
€127.63 Year ended 31 December 2018 €268.12 €166.46
€127.78 PYDNAS-KOLINDROU Year ended 31 December 2017 €257.55 KATERINI €150.46 DION-OLYMPOS
€127.78 Year ended 31 December 2016 €264.86 €165.15
€0 €50 €100 €150 €200 €250 €300
Figure 56:Comparative Diagrammatic Representation of the Subsidies ratio per citizen for the three Municipalities of the Regional Unit of Pieria
The Municipality of Katerini gets the largest amount of state grants attributable to each Municipality with a difference of up to 52% compared to the other Municipalities for the fiscal year 2016. Having received state grants corresponding to approximately 263€ (on average) for each use, the Municipality of Katerini is firmly in the first place with the Municipality of Dion-Olympos following with 160€ (on average), and the Municipality of Pydna-Kolindros with 127€. From the study of the quantitative data related to the part of the State aid to the Municipalities, we find that in this case, there is a similar relationship between the population of each Municipality and the amount of the state grant it receives. The Municipality of Pydna-Kolindros is the Municipality with the smallest variations in the amount of grants for each use, corresponding to about 127€. 2017 is the year in which the lowest performance is recorded for the Municipalities of Katerini and Dion-Olympos.
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7.5.6 Fixed Assets/Citizen
€2,280.05 Year ended 31 December 2018 €2,614.89 €3,775.22
€2,322.69 PYDNAS-KOLINDROU Year ended 31 December 2017 €2,627.89 KATERINI €3,839.16 DION-OLYMPOS
€2,403.22 Year ended 31 December 2016 €2,634.77 €3,895.73
€0 €1,000 €2,000 €3,000 €4,000 €5,000
Figure 57:Comparative Diagrammatic Representation of the Fixed assets ratio per citizen for the three Municipalities of the Regional Unit of Pieria
Fixed assets are a key component of the assets and, in the case of municipalities, represents more than 90% of the composition of the balance sheet for each financial year. Fixed assets are the total assets available to the Municipality after the equivalent depreciation has been subtracted from the data for each financial year. The Municipality of Dion-Olympos ranks first compared to the other Municipalities, with the ratio of fixed assets per Citizen exceeding 3895 €/citizen in the last year. From the graph above we find that the value of fixed assets appears higher in the use of 2018 for all 3 municipalities. The Municipality of Katerini in this particular ratio records the second best performance with its ratio exceeding the level of 2600€ for all uses.
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7.5.7 Total Assets/Citizen
2531.9 Year ended 31 December 2018 3017.15 4101.86
2655.16 PYDNAS-KOLINDROU Year ended 31 December 2017 3031.83 KATERINI 4226.69 DION-OLYMPOS
2730.05 Year ended 31 December 2016 3026.4 4271.06
€0 €1,000€2,000€3,000€4,000€5,000
Figure 58:Comparative Diagrammatic Representation of the Total assets ratio per citizen for the three Municipalities of the Regional Unit of Pieria
The Total Asset ratio per Citizen follows the ratio of fixed assets per Citizen, having already introduced in the previous section. Fixed assets are the key components of the total Assets. The Municipality of Dion-Olympos ranks first among the other 3 Municipalities of the regional unit of Pieria with the total assets being fixed at about 4.200€ (on average) for each year, and not showing signs of downward tendency over the three years, with 2018 showing the lowest economic figures in terms of total assets. The Municipality of Katerini then follows with its total assets per Citizen moving around the level of 3.024€ showing an increasing trend between the fiscal years 2016 and 2017. At the bottom of this classification is the Municipality of Pydna-Kolindros with total assets (on average) of 2.638€ per Citizen throughout the reference period, and following a downward path similar with that of the Municipality of Dion-Olympos.
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7.5.8 OwnEquity/Citizen
2428.7 Year ended 31 December 2018 2831.67 3894.52
2547.71 PYDNAS-KOLINDROU Year ended 31 December 2017 2802.13 KATERINI 4012.99 DION-OLYMPOS
2597.64 Year ended 31 December 2016 2800.67 4033.67
€0 €1,000€2,000€3,000€4,000€5,000
Figure 59:Comparative Diagrammatic Representation of the Own Equity ratio per citizen for the three Municipalities of the Regional Unit of Pieria
The Municipality of Dion-Olympos is the largest Municipality in the amount of capital per Citizen up to 55%, higher than that of the Municipality of Pydna-Kolindros. Despite being the largest municipality in the region of Pieria, it is ranked second with the total of own funds/citizens amounting to 2831.67€ in the last use of 2018. With the exception of the Municipality of Katerini, the other Municipalities record a decrease in total equity with the Municipality of Pydna-Kolindrosshowing the largest decrease of 6.5% cumulatively for all 3 years.
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7.5. 9 Long-TermLiabilities /Citizen
11.28 Year ended 31 December 2018 89.15 156.9
14.83 PYDNAS-KOLINDROU Year ended 31 December 2017 105.01 KATERINI 166.68 DION-OLYMPOS
19.23 Year ended 31 December 2016 120.42 177.32
€0 €50 €100 €150 €200
Figure 60:Comparative Diagrammatic Representation of the Long-Term Liabilities ratio per citizen for the three Municipalities of the Regional Unit of Pieria
Concerning the long-term liabilities, looking at the graph above, we note that the Municipality of Pydna-Kolindros appears to be the least indebted municipality of the Regional Unit of Pieria. Its debt is only 11.28€/citizen in the fiscal year 2018 as opposed to the Municipality of Dion-Olympos which has a long-term borrowing of 156.9€/citizen in the last financial year. The Municipality of Katerini has managed to reduce the debt/citizen below the limit of 100€ (89.15€/citizen), as it is formed in the last year. From the data collected by all 3 Municipalities of the Regional Unit of Pieria, we see a decline in the amount of long-term liabilities per Citizen, which is attributed to the fact that all 3 municipalities have not increased their borrowing for the period of 3 years and that their debt is repaid according to plan.
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7.5.10 Short-Term Liabilities /Citizen
84.22 Year ended 31 December 2018 95.24 44.1
100.68 PYDNAS-KOLINDROU Year ended 31 December 2017 123.6 KATERINI 40.7 DION-OLYMPOS
105.81 Year ended 31 December 2016 104.22 53.78
£0 £20 £40 £60 £80 £100£120£140
Figure 61:Comparative Diagrammatic Representation of the Short-Term Liabilitiesratio per citizen for the three Municipalities of the Regional Unit of Pieria
The Municipality of Dion-Olympos has the lowest short-term debt per Citizen, compared to the other 2 municipalities of the Regional Unit of Pieria. The best performance of short-term liabilities per Citizen was recorded in the fiscal year 2017 (40.77€). On the contrary, the Municipality of Katerini has relatively high numbers that exceed the amount of 120€ per Citizen in the fiscal year 2017. We also note that in the last use of 2018 there is an increase in the Municipalities of Dion-Olympos and Pydna-Kolindros.
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8. Summary-Conclusions
Kallikratis was considered to be the next step of a reform in the Public Administration that began shortly before the 21st century in Greece, aiming to create influential Municipalities that will be able to exercise all their responsibilities in an effective and sustainable way, assigned by the Government.
Municipalities are now considered to be independent functional economic entities, focusing on Citizens, while their goal is to utilize the resources of the region and seek opportunities through this process, improving the standards of living, through the implementation of Integrated Action Plans, which aim to find the capabilities of each Municipality, to identify weaknesses and propose methods of development, resulting in a positive economic impact on the local population. Using ratios in financial analysis is a very useful tool, in order to measure the efficiency of Municipalities and evaluate the current status, as well as solve financial problems.
The analysis of financial statements is a tool for short-term and long-term decision making, through the study of the accountancy information they contain.
For the first time, the Greek State lays the foundation so as to organize the operation of supporting mechanisms and establish procedures, as well as execute Local Government Organisation's budget, in order to reduce the deficit, while improving the financial status of each Municipality, creating the appropriate framework for an accurate and correct presentation of the financial status in Local Organisations.
Local Government Organisations monitor the execution of budgets and the financial development of each local authority, as well as legal entities. At the same time, each Local Government Organisation is obliged to send and post publicly, data regarding the execution of the budget within the frameworks of transparency.
The analysis of revenue of the Municipality of Dion-Olympus confirms the strong bond of dependence, between the Municipality and the Governmental funds, in order to cover its operational and emergency needs.
The increase in regular revenue of the Municipality of Dion, in combination with the reduction of receivables from third parties, via the implementation of a program, concerning the collection of previous debts, could reduce the percentage of dependence of the 108 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Municipality by governmental funds, while it could also stimulate regular revenues by providing a flexibility margin for the implementation of developmental policies, which will lead do a socio-economic benefit for the local population.
Reviewing the balance sheets for the time period of 2016-2018, we reach to the conclusion that there was a decrease in cash liquidity of the Municipality, mainly in the period of 2018.
On the contrary, profitability ratios are quite different, since they decrease compared to the initial reference period in the balance sheet of 2016.
The activity ratios on the other hand indicate fluctuations between the three-year period.
At the same time, the financial data's development of the Municipality of Dion-Olympus has a positive impact on the reduction of long-term receivables for the entire period of 2016- 2018, which assists the Municipality to pay the debt towards Third Parties. There is also a decrease in the ratio of Foreign and Equity Assets, while the latter have increased during the reviewed time period.
The comparative analysis with other Kallikratis' Municipalities in the Region of Pieria and specifically the Municipality of Katerini and the Municipality of Pydna-Kolindros, shows that the Municipality of Dion Olympus achieves a better performance in total revenue per Citizen, as well as in own total revenue per Citizen.
Regarding the revenues from governmental funds, the Municipality of Dion-Olympus has relatively low inflows, when compared to the Municipality of Katerini, resulting in the subsidies' distribution model, which mainly is in favor of Municipalities with a larger population, without emphasizing on the local characteristics of the economy.
On the other hand, when compared to the positive performance in revenues, we notice that the Municipality of Dion Olympus has relatively high operating costs per citizen, mainly in 2016, but this situation improves significantly in 2018.
The Municipality of Dion-Olympus has the highest value of assets per Citizen, comparing it to the other Municipalities of the Pieria's Region.
When reaching to long-term liabilities, the Municipality of Dion Olympus appears to be relatively debt-ridden per Citizen, when compared to other Municipalities, though this isn't part of short-term liabilities.
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To sum up, the surplus has followed a positive direction continuously in 2016-2017, but has stopped in the fiscal year of 2018, where the net results per citizen show negative results.
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116 Postgraduate Dissertation Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
APPENDIX A: INCOME STATEMENTS AND BALANCE SHEETS OF THE MUNICIPALITY OF DION-OLYMPOS 2016-2018
∆ΗΜΟΣ ∆ΙΟΥ - ΟΛΥΜΠΟΥ ΝΟΜΟΥ ΠΙΕΡΙΑΣ ΙΣΟΛΟΓΙΣΜΟΣ ΤΗΣ 31ης ∆ΕΚΕΜΒΡΙΟΥ 2016 6η ∆ΗΜΟΤΙΚΗ ΧΡΗΣΗ (1 ΙΑΝΟΥΑΡΙΟΥ - 31 ∆ΕΚΕΜΒΡΙΟΥ 2016) ΠΟΣΑ ΣΕ ΕΥΡΩ ΕΝΕΡΓΗΤΙΚΟ ΠΑΘΗΤΙΚΟ Ποσά Ποσά κλειόµενης προηγούµενης Ποσά Ποσά χρήσεως 2016 χρήσεως 2015 Αξία Αναπόσβεστη Αξία Αναπόσβεστη κλειόµενης προηγούµενης κτήσεως Αποσβέσεις αξία κτήσεως Αποσβέσεις αξία χρήσεως 2016 χρήσεως 2015 Β. ΕΞΟ∆Α ΕΓΚΑΤΑΣΤΑΣΕΩΣ Α. Ι∆ΙΑ ΚΕΦΑΛΑΙΑ 4.Λοιπά έξοδα εγκαταστάσεως 615.206,35 236.660,23 378.546,12 511.060,00 192.975,53 318.084,47 Ι. Κεφάλαιο 65.335.967,97 65.335.967,97 Γ. ΠΑΓΙΟ ΕΝΕΡΓΗΤΙΚΟ ΙΙ.∆ιαφορές αναπροσαρµογής και Ι.Ασώµατες ακινητοποιήσεις επιχορηγήσεις 1.Έξοδα ερευνών και επενδύσεων - ∆ωρεές αναπτύξεως 2.350.793,19 1.439.143,53 911.649,66 2.162.613,16 1.316.062,62 846.550,54 παγίων 3.∆ωρεές Παγίων 2.340.228,39 2.340.228,39 4.Επιχορηγήσεις ΙΙ.Ενσώµατες ακινητοποιήσεις επενδύσεων 35.566.216,24 36.160.545,81 1.Γήπεδα-Οικόπεδα 48.047.853,56 - 48.047.853,56 48.047.853,56 - 48.047.853,56 37.906.444,63 38.500.774,20 1α.Πλατείες-Πάρκα-Παιδότοποι κοιν.χρήσεως 3.318.499,48 2.405.981,11 912.518,37 3.283.724,12 2.339.933,34 943.790,78 1β. Οδοί - Οδοστρώµατα κοινής χρήσεως 14.464.301,79 10.180.694,49 4.283.607,30 14.464.301,79 9.828.592,28 4.635.709,51 ΙV.Αποτελέσµατα εις νέο Υπόλοιπο πλεονάσµατος/ελλείµµατος 1γ. Πεζοδρόµια κοινής χρήσεως 2.225.228,89 1.547.964,48 677.264,41 2.165.033,90 1.488.368,81 676.665,09 εις νέο 293.721,08 35.773,26 2. Ορυχεία, Μεταλλεία, Σύνολο ιδίων Λατοµεία κεφαλαίων (ΑΙ+ΑΙΙ+ΑΙV) 103.536.133,68 103.872.515,43 Αγροί, Φυτείες, ∆άση 3.814.105,60 - 3.814.105,60 3.814.105,60 - 3.814.105,60 3.Κτίρια και τεχνικά έργα 44.246.718,32 18.574.785,75 25.671.932,57 30.953.984,12 17.611.685,09 13.342.299,03 3α. Κτιριακές εγκαταστάσεις κοινής χρήσης 2.658.558,12 652.455,56 2.006.102,56 2.658.558,12 546.113,36 2.112.444,76 3β.Εγκαταστάσεις Ηλεκτροφωτισµού κοινής χρήσεως 2.049.760,01 1.297.156,32 752.603,69 2.028.011,48 1.232.838,65 795.172,83 3γ.Λοιπές µόνιµες εγκαταστάσεις κοινής χρήσεως 6.574.113,40 3.582.559,87 2.991.553,53 6.536.780,67 3.357.888,40 3.178.892,27
117 Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
4. Μηχανήµατα - Τεχνικές Εγκαταστάσεις & Λοιπός Μηχανολογικός εξοπλισµός 2.735.244,86 2.094.111,60 641.133,26 2.641.756,98 1.982.597,34 659.159,64 5.Μεταφορικά µέσα 688.214,30 614.254,74 73.959,56 688.214,30 599.043,06 89.171,24 Β. ΠΡΟΒΛΕΨΕΙΣ
118 Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
1. Προβλέψεις για 6.Έπιπλα και λοιπός εξοπλισµός 2.208.689,94 1.894.040,97 314.648,97 2.084.441,85 1.835.005,02 249.436,83 αποζηµίωση προσωπικού λόγω εξόδου από τη 7.Ακινητοποιήσεις υπό εκτέλεση υπηρεσία 165.000,00 165.000,00 και προκαταβολές 1.361.170,26 - 1.361.170,26 14.194.173,72 - 14.194.173,72 134.392.458,53 42.844.004,89 91.548.453,64 133.560.940,21 40.822.065,35 92.738.874,86 Σύνολο ακινητοποιήσεων (ΓΙ+ΓΙΙ) 136.743.251,72 44.283.148,42 92.460.103,30 135.723.553,37 42.138.127,97 93.585.425,40 Γ. ΥΠΟΧΡΕΩΣΕΙΣ ΙΙΙ.Τίτλοι πάγιας επένδευσης& Ι.Μακροπρόθεσµες άλλες µακροπρόθεσµες υποχρεώσεις χρηµατοοικονοµικές απαιτήσεις 2.∆άνεια Τραπεζών 4.551.348,07 4.661.671,90 1.Τίτλοι πάγιας επένδυσης 7.763.641,10 7.758.641,10 ΙΙ.Βραχυπρόθεσµες Mείον: Οφειλόµενες δόσεις 189.715,00 189.715,00 υποχρεώσεις Προβλέψεις για υποτίµηση 42.459,25 7.531.466,85 42.459,25 7.526.466,85 1.Προµηθευτές 543.489,42 1.019.781,67 5.Υποχρεώσεις από 7.531.466,85 7.526.466,85 φόρους & τέλη 149.534,03 111.240,95 Σύνολο πάγιου ενεργητικού 6.Ασφαλιστικοί (ΓΙΙ+ΓΙΙΙ) 99.991.570,15 101.111.892,25 οργανισµοί 80.516,18 66.394,61 7.Μακροπρόθεσµες υποχρεώσεις πληρωτέες ∆.ΚΥΚΛΟΦΟΡΟΥΝ ΕΝΕΡΓΗΤΙΚΟ στην επόµενη χρήση 311.164,32 508.365,68 ΙΙ.Απαιτήσεις 8.Πιστωτές διάφοροι 292.415,58 314.482,67 1.Απαιτήσεις από πώληση αγαθών & υπηρεσιών 3.834.559,82 3.707.653,35 1.377.119,53 2.020.265,58 Μείον: Προβλέψεις επισφαλών Σύνολο υποχρεώσεων πελατών 455.230,96 3.379.328,86 455.230,96 3.252.422,39 (ΓΙ+ΓΙΙ) 5.928.467,60 6.681.937,48 5. Χρεώστες ∆ιάφοροι 2.804.529,90 2.728.369,70 10. Επισφαλείς-Επίδικες απαιτήσεις και χρεώστες 844.769,04 844.769,04 Μείον: Προβλέψεις 844.769,04 0,00 844.769,04 0,00 6.183.858,76 5.980.792,09 IV.∆ιαθέσιµα 1.Ταµείο 2.052,41 17.571,94 3.Καταθέσεις όψεως και προθεσµίας 3.073.573,84 3.291.112,16 3.075.626,25 3.308.684,10 Σύνολο κυκλοφορούντος ενεργητικού (∆ΙΙ+∆ΙV) 9.259.485,01 9.289.476,19 ΓΕΝΙΚΟ ΣΥΝΟΛΟ ΓΕΝΙΚΟ ΣΥΝΟΛΟ ΕΝΕΡΓΗΤΙΚΟΥ (Β+Γ+∆) 109.629.601,28 110.719.452,91 ΠΑΘΗΤΙΚΟΥ (Α+Β+Γ) 109.629.601,28 110.719.452,91
119 Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
ΚΑΤΑΣΤΑΣΗ ΛΟΓΑΡΙΑΣΜΟΥ ΑΠΟΤΕΛΕΣΜΑΤΩΝ ΧΡΗΣΕΩΣ ΠΙΝΑΚΑΣ ∆ΙΑΘΕΣΕΩΣ ΑΠΟΤΕΛΕΣΜΑΤΩΝ 31ης ∆ΕΚΕΜΒΡΙΟΥ 2016 (1 ΙΑΝΟΥΑΡΙΟΥ - 31 ∆ΕΚΕΜΒΡΙΟΥ 2016) Ποσά Ποσά Ποσά κλειόµενης χρήσεως 2016 Ποσά προηγούµενης χρήσεως 2015 κλειόµενης προηγούµενης Ι. Αποτελέσµαταεκµεταλλεύσεως χρήσεως 2015 χρήσεως 2014 1.Έσοδα από πώληση αγαθών & υπηρεσιών 4.905.519,58 4.528.640,83 2.Έσοδα από φόρους-εισφορές- Καθαρά αποτελέσµατα πρόστιµα-προσαυξήσεις 744.840,53 676.070,65 (Πλεόνασµα) χρήσεως 313.708,26 560.353,91 3.Τακτικές επιχορηγήσεις από κρατικό προϋπολογισµό 4.239.137,66 9.889.497,77 3.899.746,13 9.104.457,61 (+) Υπόλοιπο αποτελεσµάτων (πλεονασµάτων/ελλειµµάτων) Μείον: Κόστος αγαθών & υπηρεσιών 7.961.592,87 7.789.685,94 προηγ.χρήσεων 35.773,26 -468.864,97 Μικτά αποτελέσµατα (πλεόνασµα) εκµεταλλεύσεως 1.927.904,90 1.314.771,67 Σύνολο 349.481,52 91.488,94 Πλέον: Άλλα έσοδα εκµεταλλεύσεως 9.192,71 15.183,02 Σύνολο 1.937.097,61 1.329.954,69 Μείον: Φόρος εισοδήµατος -55.760,44 -55.715,68 Μείον: Πλεόνασµα εις νέον 293.721,08 35.773,26 1.Έξοδα διοικητικής λειτουργίας 2.648.427,13 2.340.520,55 3.Έξοδα λειτουργίας δηµοσίων σχέσεων 112.109,61 2.760.536,74 51.834,01 2.392.354,56 Μερικά αποτελέσµατα (έλλειµµα) εκµεταλλεύσεως -823.439,13 -1.062.399,87 Πλέον: 4.Πιστωτικοί τόκοι & συναφή έσοδα 43.277,27 29.086,22 Μείον: 3.Χρεωστικοί τόκοι & συναφή έξοδα 274.135,96 -230.858,69 335.457,68 -306.371,46 Ολικά αποτελέσµατα (έλλειµµα) - εκµεταλλεύσεως 1.054.297,82 -1.368.771,33 ΙΙ.Πλέον: Έκτακτα αποτελέσµατα 1.Έκτακτα & ανόργανα έσοδα 1.373.371,04 1.187.445,09 2. Έκτακτα κέρδη - - 3. Έσοδα προηγούµενων χρήσεων 436.178,40 837.055,09 1.809.549,44 2.024.500,18 Μείον:
120 Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
1.Έκτακτα και ανόργανα έξοδα 117.173,60 64.361,43 2.Έκτακτες Ζηµίες 22.842,86 0,00 3.Έξοδα προηγούµενων χρήσεων 301.526,90 31.013,51 4.Προβλέψεις για έκτακτους κινδύνους - 441.543,36 1.368.006,08 - 95.374,94 1.929.125,24 Οργανικά & έκτακτα αποτελέσµατα (πλεόνασµα ) 313.708,26 560.353,91 Μείον: Σύνολο αποσβέσεων πάγιων στοιχείων 2.188.705,15 2.361.906,12 Μείον : Οι από αυτές ενσωµατωµένες στο λειτουργικό κόστος 2.188.705,15 - 2.361.906,12 - ΚΑΘΑΡΑ ΑΠΟΤΕΛΕΣΜΑΤΑ (Πλεόνασµα) ΧΡΗΣΕΩΣ 313.708,26 560.353,91
121 Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
∆ΗΜΟΣ ∆ΙΟΥ - ΟΛΥΜΠΟΥ ΝΟΜΟΥ ΠΙΕΡΙΑΣ ΙΣΟΛΟΓΙΣΜΟΣ ΤΗΣ 31ης ∆ΕΚΕΜΒΡΙΟΥ 2017 7η ∆ΗΜΟΤΙΚΗ ΧΡΗΣΗ (1 ΙΑΝΟΥΑΡΙΟΥ - 31 ∆ΕΚΕΜΒΡΙΟΥ 2017) ΠΟΣΑ ΣΕ ΕΥΡΩ ΕΝΕΡΓΗΤΙΚΟ ΠΑΘΗΤΙΚΟ Ποσά Ποσά κλειόµενης προηγούµενης Ποσά Ποσά χρήσεως 2017 χρήσεως2016 Αξία Αναπόσβεστη Αξία Αναπόσβεστη κλειόµενης προηγούµενης κτήσεως Αποσβέσεις αξία κτήσεως Αποσβέσεις αξία χρήσεως 2017 χρήσεως 2016 Β. ΕΞΟ∆Α ΕΓΚΑΤΑΣΤΑΣΕΩΣ Α. Ι∆ΙΑ ΚΕΦΑΛΑΙΑ 4.Λοιπά έξοδα εγκαταστάσεως 673.083,36 290.702,23 382.381,13 615.206,35 236.660,23 378.546,12 Ι. Κεφάλαιο 65.335.967,97 65.335.967,97
Γ. ΠΑΓΙΟ ΕΝΕΡΓΗΤΙΚΟ ΙΙ.∆ιαφορέςαναπροσαρµο γής και Ι.Ασώµατες ακινητοποιήσεις επιχορηγήσεις επενδύσεων - ∆ωρεές 1.Έξοδα ερευνών και αναπτύξεως 2.434.513,15 1.566.440,54 868.072,61 2.350.793,19 1.439.143,53 911.649,66 παγίων 3.∆ωρεές Παγίων 2.340.228,39 2.340.228,39 4.Επιχορηγήσεις ΙΙ.Ενσώµατες ακινητοποιήσεις επενδύσεων 34.956.418,84 35.566.216,24 1.Γήπεδα-Οικόπεδα 48.047.853,56 - 48.047.853,56 48.047.853,56 - 48.047.853,56 37.296.647,23 37.906.444,63 1α.Πλατείες-Πάρκα-Παιδότοποι κοιν.χρήσεως 3.318.499,48 2.472.921,07 845.578,41 3.318.499,48 2.405.981,11 912.518,37 1β. Οδοί - Οδοστρώµατα κοινής ΙV.Αποτελέσµατα εις χρήσεως 15.326.861,73 10.506.978,93 4.819.882,80 14.464.301,79 10.180.694,49 4.283.607,30 νέο Υπόλοιπο 1γ. Πεζοδρόµια κοινής χρήσεως 2.225.228,89 1.608.890,04 616.338,85 2.225.228,89 1.547.964,48 677.264,41 πλεονάσµατος εις νέο 372.720,97 293.721,08 Σύνολο ιδίων κεφαλαίων 2. Ορυχεία, Μεταλλεία, Λατοµεία (ΑΙ+ΑΙΙ+ΑΙV) 103.005.336,17 103.536.133,68 Αγροί, Φυτείες, ∆άση 3.814.105,59 - 3.814.105,59 3.814.105,60 - 3.814.105,60 3.Κτίρια και τεχνικά έργα 44.484.870,19 20.040.719,64 24.444.150,55 44.246.718,32 18.574.785,75 25.671.932,57 3α. Κτιριακές εγκαταστάσεις κοινής χρήσης 2.658.558,12 758.797,76 1.899.760,36 2.658.558,12 652.455,56 2.006.102,56 3β.Εγκαταστάσεις Ηλεκτροφωτισµού κοινής χρήσεως 2.123.672,89 1.361.886,36 761.786,53 2.049.760,01 1.297.156,32 752.603,69 3γ.Λοιπές µόνιµες εγκαταστάσεις κοινής χρήσεως 6.574.113,40 3.808.339,03 2.765.774,37 6.574.113,40 3.582.559,87 2.991.553,53 4. Μηχανήµατα - Τεχνικές Εγκαταστάσεις & Λοιπός
122 Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
Μηχανολογικός εξοπλισµός 2.770.496,22 2.188.955,83 581.540,39 2.735.244,86 2.094.111,60 641.133,26
123 Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
5.Μεταφορικά µέσα 762.490,30 634.665,71 127.824,59 688.214,30 614.254,74 73.959,56 Β. ΠΡΟΒΛΕΨΕΙΣ 1. Προβλέψεις για 6.Έπιπλα και λοιπός εξοπλισµός 2.287.972,26 1.956.820,86 331.151,40 2.208.689,94 1.894.040,97 314.648,97 αποζηµίωση προσωπικού λόγω εξόδου από τη 7.Ακινητοποιήσεις υπό εκτέλεση υπηρεσία 165.000,00 165.000,00 και προκαταβολές 1.064.819,19 - 1.064.819,19 1.361.170,26 - 1.361.170,26 135.459.541,82 45.338.975,23 90.120.566,59 134.392.458,53 42.844.004,89 91.548.453,64 Σύνολο ακινητοποιήσεων (ΓΙ+ΓΙΙ) 137.894.054,97 46.905.415,77 90.988.639,20 136.743.251,72 44.283.148,42 92.460.103,30 Γ. ΥΠΟΧΡΕΩΣΕΙΣ ΙΙΙ.Τίτλοι πάγιας επένδευσης& άλλες Ι.Μακροπρόθεσµες µακροπρόθεσµες υποχρεώσεις χρηµατοοικονοµικές απαιτήσεις 2.∆άνεια Τραπεζών 4.278.168,86 4.551.348,07 1.Τίτλοι πάγιας επένδυσης 7.763.641,10 7.763.641,10 ΙΙ.Βραχυπρόθεσµες Mείον: Οφειλόµενες δόσεις 189.715,00 189.715,00 υποχρεώσεις Προβλέψεις για υποτίµηση 19.023,26 7.554.902,84 42.459,25 7.531.466,85 1.Προµηθευτές 279.136,26 543.489,42 5.Υποχρεώσεις από 7.554.902,84 7.531.466,85 φόρους & τέλη 117.571,88 149.534,03 Σύνολο πάγιου ενεργητικού 6.Ασφαλιστικοί (ΓΙΙ+ΓΙΙΙ) 98.543.542,04 99.991.570,15 οργανισµοί 82.547,42 80.516,18 7.Μακροπρόθεσµες υποχρεώσεις πληρωτέες ∆.ΚΥΚΛΟΦΟΡΟΥΝ στην επόµενη ΕΝΕΡΓΗΤΙΚΟ χρήση 273.566,05 311.164,32 ΙΙ.Απαιτήσεις 8.Πιστωτές διάφοροι 289.350,71 292.415,58 1.Απαιτήσεις από πώληση αγαθών & υπηρεσιών 4.315.487,56 3.834.559,82 1.042.172,32 1.377.119,53 Μείον: Προβλέψεις επισφαλών Σύνολο υποχρεώσεων πελατών 455.230,96 3.860.256,60 455.230,96 3.379.328,86 (ΓΙ+ΓΙΙ) 5.320.341,18 5.928.467,60 5. Χρεώστες ∆ιάφοροι 2.950.375,50 2.804.529,90 10. Επισφαλείς-Επίδικες απαιτήσεις και χρεώστες 844.769,04 844.769,04 Μείον: Προβλέψεις 844.769,04 0,00 844.769,04 0,00 6.810.632,10 6.183.858,76 IV.∆ιαθέσιµα 1.Ταµείο 1.640,86 2.052,41 3.Καταθέσεις όψεως και προθεσµίας 2.752.481,22 3.073.573,84 2.754.122,08 3.075.626,25 Σύνολο κυκλοφορούντος ενεργητικού (∆ΙΙ+∆ΙV) 9.564.754,18 9.259.485,01
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ΓΕΝΙΚΟ ΣΥΝΟΛΟ ΓΕΝΙΚΟ ΣΥΝΟΛΟ ΕΝΕΡΓΗΤΙΚΟΥ (Β+Γ+∆) 108.490.677,35 109.629.601,28 ΠΑΘΗΤΙΚΟΥ (Α+Β+Γ) 108.490.677,35 109.629.601,28
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Voulgaris Athanasios: Financial Analysis of Municipalities The Case of the Municipality of Dion-Olympos
ΚΑΤΑΣΤΑΣΗ ΛΟΓΑΡΙΑΣΜΟΥ ΑΠΟΤΕΛΕΣΜΑΤΩΝ ΧΡΗΣΕΩΣ ΠΙΝΑΚΑΣ ∆ΙΑΘΕΣΕΩΣ ΑΠΟΤΕΛΕΣΜΑΤΩΝ
31ης ∆ΕΚΕΜΒΡΙΟΥ 2017 (1 ΙΑΝΟΥΑΡΙΟΥ - 31 ∆ΕΚΕΜΒΡΙΟΥ 2017) Ποσά Ποσά
Ποσά κλειόµενης χρήσεως 2017 Ποσά προηγούµενης χρήσεως 2016 κλειόµενης προηγούµενης Ι. Αποτελέσµαταεκµεταλλεύσεως χρήσεως 2017 χρήσεως 2016 1.Έσοδα από πώληση αγαθών & υπηρεσιών 4.628.720,71 4.905.519,58 2.Έσοδα από φόρους-εισφορές-πρόστιµα- Καθαράαποτελέσµατα προσαυξήσεις 737.009,59 744.840,53 (Πλεόνασµα)χρήσεως 136.548,71 313.708,26 3.Τακτικές επιχορηγήσεις από κρατικό προϋπολογισµό 3.862.006,16 9.227.736,46 4.239.137,66 9.889.497,77 (+) Υπόλοιπο αποτελεσµάτων (πλεονασµάτων) Μείον: Κόστος αγαθών & υπηρεσιών 8.751.308,92 7.961.592,87 προηγ.χρήσεων 293.721,08 35.773,26 Μικτά αποτελέσµατα (πλεόνασµα) εκµεταλλεύσεως 476.427,54 1.927.904,90 Σύνολο 430.269,79 349.481,52 Πλέον: Άλλα έσοδα εκµεταλλεύσεως 46.519,44 9.192,71 Σύνολο 522.946,98 1.937.097,61 Μείον: Φόρος εισοδήµατος -57.548,82 -55.760,44 Μείον: Πλεόνασµα εις νέον 372.720,97 293.721,08 1.Έξοδα διοικητικής λειτουργίας 2.307.009,79 2.648.427,13 3.Έξοδα λειτουργίας δηµοσίων σχέσεων 36.029,87 2.343.039,66 112.109,61 2.760.536,74 Μερικά αποτελέσµατα (έλλειµµα) εκµεταλλεύσεως -1.820.092,68 -823.439,13 Πλέον: 4.Πιστωτικοί τόκοι & συναφή έσοδα 38.113,91 43.277,27 Μείον: 3.Χρεωστικοί τόκοι & συναφή έξοδα 248.820,02 -210.706,11 274.135,96 -230.858,69 Ολικά αποτελέσµατα (έλλειµµα) εκµεταλλεύσεως -2.030.798,79 -1.054.297,82 ΙΙ.Πλέον: Έκτακτα αποτελέσµατα 1.Έκτακτα & ανόργανα έσοδα 1.654.515,38 1.373.371,04 2. Έκτακτα κέρδη - 3. Έσοδα προηγούµενων χρήσεων 668.741,94 436.178,40 4.Έσοδα από προβλέψεις προηγούµενων χρήσεων 23.435,99 2.346.693,31 1.809.549,44 Μείον: 1.Έκτακτα και ανόργανα έξοδα 54.813,82 117.173,60 2.Έκτακτες Ζηµίες 31.131,52 22.842,86
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3.Έξοδα προηγούµενων χρήσεων 93.400,47 301.526,90 4.Προβλέψεις για έκτακτους κινδύνους - 179.345,81 2.167.347,50 - 441.543,36 1.368.006,08 Οργανικά & έκτακτα αποτελέσµατα (πλεόνασµα ) 136.548,71 313.708,26 Μείον: Σύνολο αποσβέσεων πάγιων στοιχείων 2.676.309,38 2.188.705,15 Μείον : Οι από αυτές ενσωµατωµένες στο λειτουργικό κόστος 2.676.309,38 - 2.188.705,15 - ΚΑΘΑΡΑ ΑΠΟΤΕΛΕΣΜΑΤΑ (Πλεόνασµα) ΧΡΗΣΕΩΣ 136.548,71 313.708,26
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Voulgaris Athanasios: Financial Statement Analysis Case Study: Municipality of Dion-Olympos
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Author’sStatement: I hereby expressly declare that, according to the article 8 of Law 1559/1986, this dissertation is solely the product of my personal work, does not infringe any intellectual property, personality and personal data rights of third parties, does not contain works/contributions from third parties for which the permission of the authors/beneficiaries is required, is not the product of partial or total plagiarism, and that the sources used are limited to the literature references alone and meet the rules of scientific citations.
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