PUBPOL 522 – AUTUMN 2022
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FINANCIAL STATEMENT ANALYSIS
DJE MUNICIPAL ADVISORS
For this assignment, you’ll play a credit analyst role at DJE Municipal Advisors, a small boutique firm based in
Seattle, Washington. DJE Municipal Advisors hopes to build a substantial presence in the financial services
industry as the premier municipal advisory firm. You recently joined DJE as a credit analyst, having graduated
from the University of Washington with a Master’s in Public Administration (MPA). The position is the perfect
opportunity to put to the test the skills you acquired in the program.
In the coming weeks, you will be expected to brief the senior credit analyst in your team on a major U.S. city’s
financial condition. DJE hopes to provide municipal advisory services to these governments as they prepare to
issue municipal securities1 in the next twelve to twenty-four months. Your analysis will provide the team with
all the relevant background information.
The following cities will seek bids for municipal advisory services in the coming months:
– City of Bellevue, Washington (Section A & B only)
– City of Tacoma, Washington (Section C only)
You will need to prepare a single-page report summarizing the city government's financial condition.2 Your
discussion should provide an assessment of the city’s
– Strengths and weaknesses. What do the government's recent financial statements tell us about the
organization's liquidity, profitability, and solvency? Does it appear to have financial policies to guide future
decisions? Does it have sufficient financial reserves? Does it have a diversified revenue portfolio? Does it
have a lot of debt, pension liabilities, or other long-term obligations? What impact has the COVID-19
pandemic had on its revenues, expenditures, and unassigned fund balance? Is the city reporting a negative
unrestricted net position? Has it ever reported a negative unassigned fund balance?
– Resiliency to changes in the economy, policy, or environment. For example, how would lower
than expected revenues, higher than expected expenditures, shifts in federal or state policy, growth in
liabilities including recent and frequent use of long-term debt, or changes in the underlying economic
environment impact your organization's liquidity, profitability, or solvency position?
DJE Municipal Advisors prides itself on the quality and thoroughness of its research. To that end, you'll need
to provide an evaluation of the organization's financial position and operational performance using meaningful
industry metrics. You will also need to contextualize your findings. It is safe to assume that other team
members are unfamiliar with the government's operations or financial condition. There is no standard format
or outline your report should follow or a comprehensive list of analyses it must contain, as DJE has yet to
establish a format or structure for its reports. This presents you with an opportunity to develop an assessment
protocol. You hope to take this responsibility in addition to your current role at DJE.
1 A municipal security is a bond issued by the government or a governmental agency to finance capital improvements. State and
local governments can issue two types of bonds – general obligation bonds, backed by their taxing authority, or revenue bonds
supported by specific revenue streams, e.g., revenues from utilities.
2 Your analysis should be limited to information reported in the government’s financial statements and any other publicly
available information. You do not need to and are strongly discouraged from contacting any of the organizations listed in this
assignment.
Daniel J. Evans School of Public Policy & Governance
PUBPOL 522 – AUTUMN 2022
2
INSTRUCTIONS
Your one-page memo (save your file as Last Name_FSA.docx, no PDF documents) is due no later than 5:00 pm,
Friday, Nov 4th.3 You’ll also be expected to submit supporting documentation in a Microsoft Excel
spreadsheet (save your file as Last Name_ FSA.xlsx).
We will grade your assignment using the following broad criteria:
– Accuracy - 25%: How accurate are your calculations of financial ratios? Did errors in the data
collected or computations have a material effect on financial condition estimates?
– Analysis - 50%: Did you appropriately interpret ratios and other relevant financial information?
Are your findings supported by facts drawn from the financial statements? Do the facts support
your conclusions? Were any relevant facts omitted that could have informed your judgment?
– Presentation - 25%: Is the memo clear and easy to follow? Are the discussion and any
supporting material well-organized and understandable? Are there helpful and memorable
descriptions of the government and critical findings?