Annual Report 2004-2005 - City of Vincent

NOTES TO AND FORMING PARTS OF THE FINANCIAL STATEMENTS
Notes to and forming parts of the Financial Statements
for the year ended 30 June 2005
Credit Risk
Credit Risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Council. The
Council has adopted the policy of only dealing with credit-worthy counterparties, and obtaining sufficient collateral or other security where
appropriate, as a means of mitigating the risk of financial loss from defaults. The Council measures credit risk on a fair value basis.
The Council does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics.
Net Fair Value
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net fair
values, determined in accordance with the accounting policies disclosed in Note 1 to the accounts.
25 REMUNERATION OF AUDITORS
2003/04 2004/05
$ $
9,100 Auditing the Financial Report 6,300
$9,100 $6,300
26 STOCK
2003/04 2004/05
$ $
80,624 Stock held at the Depot 79,973
143,512 Retail Stock – Beatty Park 122,245
$224,136 $202,218
27 FINANCIAL RATIOS OF THE ACCOUNTS
2003 2004 2005
a) Current Ratio
(current assets minus restricted assets)
(current liabilities minus liabilities associated with restricted assets)
1.71:1 1.06:1 1.19:1
Purpose: To assess ability to meet current commitments.
b) Debt Ratio
total liabilities
total assets
2.86% 10.87% 11.43%
Purpose: To identify the exposure of the Town to debt, and as an indicator of the solvency of the Town.
c) Outstanding Rates Ratio
rates outstanding
rates collectable
Purpose: To assess rate collection.
3.67% 3.42% 2.21%
104
TOWN OF VINCENT _ A NNUAL R EPORT 2004-2005