Measures of Financial Sustainability

The following ratios are designed to provide a measure of the performance of Council against key financial sustainability criteria.

Ratio What the ratio provides

Operating surplus ratio

Asset sustainability ratio

An indication of the extent to which revenues raised cover operational expenses only or are available for capital funding purposes or other purposes. Net result (excluding capital items) divided by total operating revenue (excluding capital items) -1% between 0% and 10%

An approximation of the extent to which the infrastructure assets managed by Council are being replaced as they reach the end of their useful lives. Capital expenditure on the replacement of assets (renewals) divided by depreciation expense 74% greater than 90%

Net financial liabilities ratio

An indicator of the extent to which the net financial liabilities of Council can be serviced by its operating revenues.

How the ratio is calculated Actual result Target result

Total liabilities less current assets divided by total operating revenue (excluding capital items) -28% not greater than 60%

The operating surplus ratio has improved compared to the budgeted ratio as a result of a reduced operating deficit. The asset sustainability ratio is less than the budgeted ratio due to funded capital works for new and upgraded assets. The net financial liabilities ratio has improved due to a greater than anticipated current assets balance. This ratio indicates that Council is in a very healthy position to service its existing liabilities.

Further information

Further detail can be found in Council’s financial statements which are included at the end of this Annual Report.