2005 MWMC Financial Plan - Laserfiche WebLink

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The resulting ratio comparisons are presented in the table below. FISCAL YEAR EST IMATED F UTURE FINANCIAL IzATlvs Debt Operating Net Take Debt Service Service Debt Ratio Ratio Down Safety Margin Covers e FYD4 81.4% 38.3% 38.3% N/A 2.0°k FY05 78.1 % 40.1 % 39.0% 36.6 3.6% X06 76.1 % 41.0% 38.9% 19.4 5.1 FY07 74.9% 41.7% 38.7% 13.6 6.3% FY08 73.8% 41.9% 37.9°10 10.5 7.1% f=Y09 72.8% 41.6% 36.7% 8.5 7.6% FY70 71.9% 41.8% 36.1% 7.3 8.6% FY11 71.1% 41.8% 35.3°k 6.4 9.5% FY12 69.5% 43.5% 36.4% 6.1 1D.2°k FY13 68.9% 44.1% 36.5% 5.8 10.9% MOODY'S 1999 NATIONAL SEWER MEDIAN 59.3% 46.8% 15.2% 1.9 33.1°k MOODY'S 1999 NATIONAL SEWER STANDARD DEVIATION 18.4% 16.8% 16.9% 1.9 22.2% ce~r_G _ p~ ~ ~S nr MINUS ONE STANDARD DEVIATION 77.7 - 40.9 63.6 - 30.0 321 - (1.7) 3.8 - 0.0 55.3 -10.9 When comparing MWMC's projected ratios to the national median, it is clear MWMC's projected debt level is still comparatively very low over the 10 years. The strong influence of the outstanding debt level is clearly illustrated by the significant shifts shown in each ratio as additional debt is incurred annually. Note that in the tenth year, MWMC's Debt Ratio (the level of debt as a percentage of the utility's total net fixed asset value) is still only one-third the national median. A summary assessment of the ratio comparisons shows that: • Operating Ratio - MWMC's Operating Ratio remains higher than the national median throughout the scenario. This indicates MWMC is conservative in setting rates adequate to cover operating expenses,. without generating excess revenue. It should also be noted that MWMC adequately funds reserves, and this aspect is not explicitly revealed by this ratio. Credit rating agencies look for adequate revenues primarily to fully cover operating needs and secondarily address debt service requirements. Accordingly, MWMC should keep in mind potential future debt service requirements adding to revenue requirements without infringing on the ability to comfortably meet operating requirements: • Net Take Down - Of these five ratios, the Net Take Down ratio is perhaps the least influenced by MWMC's relatively low level of debt. Because of this, MWMC's net take down ratio is more closely aligned with the national median than any of the other ratios. The ratio is an indicator of the proportion of revenue remaining after all operating and maintenance expenses are deducted from gross revenues. MWMC's ratio increases over the 14-year horizon as the additional revenue realized from the debt proceeds is factored into the ratio. • Debt Service Safety Margin - MW1vIC's debt service safety margin is well above the national median, primarily due to the assumed low level of debt. This indicates to the credit rating agencies that MWMC has more than adequate capacity to shoulder the level of debt assumed. A large "safety margin" exists to cover all requirements, even if there is a drop in revenue. 2005 MWMC Financial Plan - Appendix I Page 27