3. Ratios Analysis of Municipalities Financial Statements

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3. Ratios Analysis of Municipalities Financial Statements “School of Social Science ” “DISSERTATION” Master in Business Administration (MBA) “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on Municipalities. Case study: Municipality of Patra” “Louiza Vasileiou” Supervisor: TSEKREKOS ANDRIANOS Patra July,2020 ΕΛΛΗΝΙΚΟ ΑΝΟΙΚΤΟ ΠΑΝΕΠΙΣΤΗΜΙΟ ΣΧΟΛΗ ΚΟΙΝΩΝΙΚΩΝ ΕΠΙΣΤΗΜΩΝ ΔΙΠΛΩΜΑΤΙΚΗ ΕΡΓΑΣΙΑ Πρόγραμμα Μεταπτυχιακών σπουδών στην Διοίκηση Επιχειρήσεων (MBA) Οικονομική Ανάλυση των Δήμων του Νομού Αχαΐας. Οι επιπτώσεις της οικονομικής κρίσης στους Δήμους. Η περίπτωση του Δήμου Πατρέων. “Λουΐζα Βασιλείου ” Επιβλέπων: ΤΣΕΚΡΕΚΟΣ ΑΝΔΡΙΑΝΟΣ Πάτρα Ιούλιος,2020 Theses / Dissertations remain the intellectual property of students (“authors/creators”), but in the context of open access policy they grant to the HOU a non-exclusive license to use the right of reproduction, customisation, public lending, presentation to an audience and digital dissemination thereof internationally, in electronic form and by any means for teaching and research purposes, for no fee and throughout the duration of intellectual property rights. Free access to the full text for studying and reading does not in any way mean that the author/creator shall allocate his/her intellectual property rights, nor shall he/she allow the reproduction, republication, copy, storage, sale, commercial use, transmission, distribution, publication, execution, downloading, uploading, translating, modifying in any way, of any part or summary of the dissertation, without the explicit prior written consent of the author/creator. Creators retain all their moral and property rights. “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on Municipalities. Case study: Municipality of Patra” “Louiza Vasileiou” Supervising Committee Supervisor: Co-Supervisor: “Andrianos Tsekrekos” “Konstantinos Tolikas” Patra, Greece, July,2020 Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on Municipalities. Case study: Municipality of Patra” Feeling the deep obligation to address my acknowledgements to all those who contributed in various ways and helped in the implementation of this dissertation that follows, I would like to thank in particular: First of all, I thank kindly the Supervising Professor of the present work Mr. Tsekrekos Andrianos for constructive cooperation, and his immediate response at all stages. Also, I consider it necessary to address my thanks, to all the Human Scientific Resources of the University and individually to each Professor throughout the study in this Postgraduate Program, because from each of their Lectures, I gained scientific knowledge and was led to fulfilling a personal goal of my self-completion .Through this journey of knowledge I gained great experiences. In addition, I would like to thank specific individuals with their institutional status who contributed to the completion of the research part of this paper. Finally, I have to thank my family for the understanding, tolerance, and "endurance" they showed in my decision to be ranked in the "second" hierarchical priority until the completion of my postgraduate studies. v Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on Municipalities. Case study: Municipality of Patra” Abstract The present work concerns the analysis of the financial data of the five Municipalities of the Prefecture of Achaia for the years 2014 to 2018. Municipalities are non-profit organizations. Their purpose is to provide services to citizens to cover their needs and add value to their lives. Therefore evaluating Municipalities’ financial condition refers to examine if they can meet these obligations now and in the future. Also, the Municipalities have to serve citizens with different demographic, sociocultural, and socioeconomic characteristics and operate in different geomorphologic conditions and this is something that one must take into account especially in economic crisis conditions. The main concern of the work was to present the institutional framework in which the Municipalities move, the adversities they faced in the conditions of the economic crisis, and to evaluate these organizations financially. This evaluation was made using ratios such as activity, profitability, liquidity, and financial structure. In addition, the Z-score model of Altman was used to determine whether there is credit risk for the organizations under consideration. The data that was analyzed, come from the financial statements of the municipalities (Balance Sheet & Income Statement). The Municipality of Patra was also selected as the largest Municipality of the Prefecture and as a metropolitan Municipality for further analysis of revenues and expenditures -again in the same five years- with the use of indicators related to the structure of revenues and expenditures. The first Chapter presents their institutional framework, jurisdictions, and the impact of the financial crisis on them. The financial administration and management is the second Chapter followed by ratios analysis of their financial statements in the third Chapter and the revenue and expenses analysis by ratios for the Municipality of Patra in the fourth Chapter while the conclusion is available in chapter 5. Keywords Municipalities, financial condition, economic analysis, financial ratios. vi Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on Municipalities. Case study: Municipality of Patra” Περίληψη Η παρούσα εργασία αφορά την ανάλυση των οικονομικών δεδομένων των πέντε Δήμων του Νομού Αχαΐας για τα έτη 2014 έως 2018. Οι δήμοι είναι μη κερδοσκοπικοί οργανισμοί. Σκοπός τους είναι να παρέχουν υπηρεσίες στους πολίτες για να καλύψουν τις ανάγκες τους και να προσθέσουν αξία στη ζωή τους. Επομένως, η αξιολόγηση της οικονομικής τους κατάστασης έχει να κάνει με το εάν μπορούν να εκπληρώσουν αυτές τις υποχρεώσεις τώρα και στο μέλλον. Επίσης, οι Δήμοι πρέπει να εξυπηρετούν πολίτες με διαφορετικά δημογραφικά, κοινωνικά, πολιτισμικά και οικονομικά χαρακτηριστικά και να λειτουργούν σε διαφορετικές γεωμορφολογικές συνθήκες και αυτό είναι κάτι που πρέπει κανείς να λάβει υπόψη ειδικά σε συνθήκες οικονομικής κρίσης. Το κύριο μέλημα της εργασίας ήταν να παρουσιάσει το θεσμικό πλαίσιο στο οποίο κινούνται οι Δήμοι, τις αντιξοότητες που αντιμετώπισαν στις συνθήκες της οικονομικής κρίσης και να αξιολογήσει οικονομικά αυτούς τους οργανισμούς. Αυτή η αξιολόγηση πραγματοποιήθηκε χρησιμοποιώντας δείκτες δραστηριότητας, κερδοφορίας, ρευστότητας και χρηματοοικονομικής δομής. Επιπλέον, το μοντέλο Z-score του Altman χρησιμοποιήθηκε για να προσδιοριστεί εάν υπάρχει πιστωτικός κίνδυνος για τους υπό εξέταση οργανισμούς. Τα δεδομένα που αναλύθηκαν προέρχονται από τις οικονομικές καταστάσεις των δήμων (Ισολογισμός & Αποτελέσματα χρήσης). Ο Δήμος Πατρέων επιλέχθηκε επίσης ως ο μεγαλύτερος Δήμος του Νομού και ως μητροπολιτικός Δήμος για περαιτέρω ανάλυση των εσόδων και δαπανών - και πάλι τα ίδια πέντε χρόνια - με τη χρήση δεικτών που σχετίζονται με τη διάρθρωση των εσόδων και των δαπανών. Το πρώτο κεφάλαιο παρουσιάζει το θεσμικό πλαίσιο των Δήμων, τις δικαιοδοσίες και τον αντίκτυπο της χρηματοπιστωτικής κρίσης. Η οικονομική διαχείριση είναι το δεύτερο κεφάλαιο ακολουθούμενο από ανάλυση δεικτών των οικονομικών τους καταστάσεων στο τρίτο κεφάλαιο και ανάλυση εσόδων και εξόδων με δείκτες για τον Δήμο Πατρέων στο τέταρτο κεφάλαιο, ενώ το συμπέρασμα είναι διαθέσιμο στο κεφάλαιο 5. Λέξεις – Κλειδιά Δήμοι, οικονομική κατάσταση, οικονομική ανάλυση, χρηματοοικονομικοί δείκτες. vii Louiza Vasileiou, “Economic analysis of Municipalities belonging in the prefecture of Achaia. The implications of the economic crisis on Municipalities. Case study: Municipality of Patra” Table of Contents Abstract ................................................................................................................................ vi Περίληψη............................................................................................................................. vii Table of Contents ............................................................................................................... viii List of Figures ....................................................................................................................... x List of Tables ........................................................................................................................ xi List of Graphs ...................................................................................................................... xii List of Abbreviations & Acronyms .................................................................................... xiii 1. Municipalities in Greece ................................................................................................... 1 1.1 The institutional framework ................................................................................... 1 1.1.1 Historical review .................................................................................................. 1 1.1.2 Legal basis ............................................................................................................ 3 1.1.3 Structure of first and second level Local Authorities and Decentralized Administration Authorities. ..........................................................................................
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