(25/6/2018) Fremantle in good financial health
The latest update on the state government’s MyCouncil website has shown the City of Fremantle is in good financial health, with a Financial Health Indicator (FHI) score of 87 for the 2016-17 financial year.
The FHI is a measurement of a local government’s overall financial health, calculated from seven financial ratios that local governments are required to calculate annually. An FHI result of 70 and above indicates sound financial health.
City of Fremantle chief executive officer Philip St John said he was pleased the City’s FHI had recovered from the low score of 42 in 2015-16.
“The City always maintained the lower score was caused by a combination of factors, including a change in accounting methodology used by the City to simplify the way overhead costs are recorded,” Mr St John said.
“This change artificially inflated the year-on-year operating expenditure in 2015-16.
“As the MyCouncil website states, the FHI is one factor to consider in assessing overall financial performance and the results are best viewed as a trend over time.
“So while the FHI is not the be-all and end-all in measuring a local government’s financial management and can fluctuate from year to year, it’s pleasing to see the City’s FHI normalise to its healthy long-term trend.”
The City of Fremantle’s FHI score was 79 for the 2014-15 financial year, fell to 42 in 2015-16 before recovering to 87 in 2016-17.
The City scored ten out of ten in four of the seven FHI ratios - Own Source Revenue Coverage, which measures the City’s ability to cover its operating costs through revenue it generates itself, Operating Surplus, which measures the City’s ability to cover operational costs and have money left over for capital projects, Asset Consumption, which compares the age of the City’s assets with their replacement cost and Debt Service Cover, which measures the City’s ability to repay its debt.
For more information on the City of Fremantle’s FHI visit the MyCouncil website.