Informational value of economic condition ratios of local government units

The Impact of the COVID-19 Pandemic on Financial Condition and Mortality in Polish Regions

“…Researchers most often rely on, for example, the indicators proposed by the Ministry of Finance. In view of the differentiation between the concepts of financial condition and financial situation, they supplement the indicators proposed by the Ministry with additional metrics [3,10,[33][34][35][36]. The most frequently applied indicators to assess LAU's financial condition include the growth rate of income and expenses of LAUs in connection with the evaluation of the budget balances and with the operating result and the result of assets-related activities.…”

“…Among the concepts, the one that deserves attention is the approach taken by the Regional Accounting Chamber which in its analysis of threats to LAU's financial management applies 9 criteria selected on the basis of indicators related to debt and financial results (total liabilities to income ratio, accumulated debt to income ratio, presence of payables due, individual debt repayment ratio, current expenses and debt to current income ratio, share of operating surplus/deficit in total income, lack of funds to cover an operating deficit, funds to be carried forward to next year's budget based on LAU's budget implementation balance sheet for the previous year, budget result to income ratio) [34]. Based on the outcome of LAU's credibility evaluation carried out by means of discriminant analysis methods, Adamczyk & Dawidowicz [3] pointed out that indicators of the greatest importance are those which in their structure comprise categories such as total income value, level of own income, operating surplus value, debt level, and debt service cost. Additionally, their research has shown that more diverse sets of indicators should be applied when analyzing the financial condition of bigger LAUs, e.g., cities with poviat (second-tier of local government administration in Poland) rights: or voivodeships (regions).…”

“…An important issue in LAU evaluation is its financial condition understood as the self-government's ability to balance the recurring expenses with recurring sources of income while fulfilling the statutory tasks stipulated by the legal regulations. Other definitions of financial conditions take into account the possibility of financing the services on a continuous basis, the complexity of healthy finance, the ability to pay liabilities, and keeping the current level of services while maintaining the resistance to changes taking place over time [3]. The terms 'financial condition' and 'financial situation' are used interchangeably and defined in different ways [1,[4][5][6][7][8][9][10].…”

Changes in the Financial Situation of Municipalities Without Poviat Rights in Poland in the Years 2010-2021

“…those that testify to its development. The notion of the financial situation (condition) of a local government unit deserves special attention, interpreted as the ability of the local government to balance recurring expenditure needs with recurring sources of income, while at the same time realising tasks arising from the law, which are intended to further multiply income and maximise public utility for its residents (Mrówczyńska-Kamińska, Kucharczyk, Średzińska, 2011;Adamczyk, Dawidowicz, 2016;Ociepa-Kicińska, Gorzałczyńska-Koczkodaj, Brzozowska, Pluskota, 2022).…”

“…When defining the financial situation (condition) of a local government unit, the following are most often emphasised: the ability to finance services on a continuous basis, the comprehensiveness of sound finances, the ability to repay liabilities, and the maintenance of the current level of services with resilience to the risks of changes over time. It seems that the most pertinent interpretation of the financial position (condition) of a local government unit refers to its ability to meet its financial obligations on time and to maintain services provided to the community (Filipiak, 2009;Dylewski, Filipiak, Gorzałczyńska-Koczkodaj;, Filipiak, 2011Wiśniewski, 2011;Kopyściański, Rólczyński 2014;Zawora, 2015;Adamczyk, Dawidowicz, 2016;Kotowska, 2016;Natrini, Taufiq Ritonga 2017, Ociepa-Kicińska, Gorzałczyńska-Koczkodaj, Brzozowska, Pluskota, 2022.…”