| Abstract [eng] |
In order to fully examine the stability of municipal finances and assessment thereof the question arises how the municipal funds are essentially conditioned by the factors determining the instability. It is important to evaluate from the theoretical and practical aspect the stability of self-government finances when examining the relevance and applicability of the selected financial indicators in various models; to examine the existing relationships of financial stability between the budgets of municipalities and reveal the possibilities of improvement of the situation. For evaluation of financial stability, the foreign authors recommend the relative financial ratio analysis covering such financial indicators’ groups as: liquidity, autonomy, autonomy of municipality, operational effectiveness, efficiency of tax collection and solvency. In the USA, the Brown 10-point test recommended by a number of authors in their publications, is applied for the assessment of municipal stability. It is also recommended to use the statistical tools such as correlation and regression for valuation of financial stability. In their works, the authors carry out studies based on bankruptcy methods such as Altman Z-score for the determination of the probability of bankruptcy. One model cannot be used for assessment of financial stability. The empirical study of the master’s thesis has been carried out by selecting the data of consolidated annual financial statements of all 60 municipalities of Lithuania for the period of 2010 – 2015. The financial ratio analysis covering 5 financial ratio groups, i.e. liquidity, income-expenses, asset use (turnaround), solvency, financial leverage, helping in determining of the financial state and stability of municipality, has been performed taking into consideration the recommendations provided in foreign literature and financial statements of Lithuanian public sector. The author has also carried out the models of determination of Altman’s bankruptcy probability and Brown test models. |
