New Zealand Gazette – 2004 – No. 11

Page 264

✨ Financial Risk Assessment Criteria

NEW ZEALAND GAZETTE

No. 11

No.	Criteria	Relevance of Criteria to Level of Risk
		1
9.	Operating Cash Receipts is less than 111% of Operating Cash Payments.	●
10.	The Liquid Funds Ratio is less than 12.0%.	●

Financial ratios calculated by reference to any Reforecast of an institution for the financial year current as at the time of assessment

| 11. | Operating Surplus/Deficit is negative or less than 3.0% of Total Revenue. | ● | | |
| 12. | If the institution is, at the time of assessment, party to an Approved Borrowing Agreement which specifies a Minimum Required Interest Cover Ratio, the interest cover ratio calculated in accordance with that Approved Borrowing Agreement and on the basis of that Reforecast is less than 1.25 times that Minimum Required Interest Cover Ratio. |
| | If the institution is not, at the time of assessment, party to an Approved Borrowing Agreement which specifies a Minimum Required Interest Cover Ratio, the Default Interest Cover Ratio is less than 3.0. | ● | | |
| 13. | If the institution is, at the time of assessment, party to an Approved Borrowing Agreement which specifies a Maximum Permitted Debt/Equity Ratio and/or a Maximum Permitted Liabilities to Assets Ratio, the debt/equity ratio calculated in accordance with that Approved Borrowing Agreement and on the basis of that Reforecast is more than 0.75 times that Maximum Permitted Debt/Equity Ratio and/or the liabilities to assets ratio calculated in accordance with that Approved Borrowing Agreement and on the basis of that Reforecast is more than 0.75 times that Maximum Permitted Liabilities to Assets Ratio. |
| | If the institution is not, at the time of assessment, party to an Approved Borrowing Agreement which specifies a Maximum Permitted Debt/Equity Ratio and/or a Maximum Permitted Liabilities to Assets Ratio, the Default Debt/Equity Ratio is greater than 20%. | ● | | |
| 14. | Operating Cash Receipts is less than 111% of Operating Cash Payments. | ● | | |
| 15. | The Liquidity Ratio is less than 12.0%. | ● | | |

Trends in financial ratio risk criteria calculated by reference to audited group financial statements of an institution for the five completed financial years immediately preceding the time of assessment

| 16. | There is an unfavourable trend in the ratio of Operating Surplus/Deficit to Total Revenue. | ● | | |
| 17. | If the institution is, at the time of assessment, party to an Approved Borrowing Agreement which specifies a Minimum Required Interest Cover Ratio, there is an unfavourable trend in the interest cover ratio calculated in accordance with that Approved Borrowing Agreement and on the basis of those financial statements. |
| | If the institution is not, at the time of assessment, party to an Approved Borrowing Agreement which specifies a Minimum Required Interest Cover Ratio, there is an unfavourable trend in the Default Interest Cover Ratio. | ● | | |
| 18. | If the institution is, at the time of assessment, party to an Approved Borrowing Agreement which specifies a Maximum Permitted Debt/Equity Ratio and/or a Maximum Permitted Liabilities to Assets Ratio, there is an unfavourable trend in the debt/equity ratio calculated in accordance with that Approved Borrowing Agreement and on the basis of those financial statements and/or there is an unfavourable trend in the liabilities to assets ratio calculated in accordance with that Approved Borrowing Agreement and on the basis of those financial statements. |
| | If the institution is not, at the time of assessment, party to an Approved Borrowing Agreement which specifies a Maximum Permitted Debt/Equity Ratio and/or a Maximum Permitted Liabilities to Assets Ratio, there is an unfavourable trend in the Default Debt/Equity Ratio. | ● | | |
| 19. | There is an unfavourable trend in the ratio of Operating Cash Receipts to Operating Cash Payments. | ● | | |
| 20. | There is an unfavourable trend in the Liquid Funds Ratio. | ● | | |

Audit reports

| 21. | The latest audited group financial statements of an institution have been prepared on the assumption that the institution is not a going concern or the latest audit report for an institution (as at the time of assessment) is qualified on the grounds of failure to meet the going concern test. | | | ● |

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