Wednesday, June 3, 2020

Dollars and Sense Part I

It is important to explore "why" Columbia Association is currently experiencing a financial crisis. It is not helpful to assign blame today, but rather understand the contributing factors or history to improve our financial position. First, remember the thesis, operate and budget as a prudent household would: budget operations cautiously, manage capital expenditures judiciously, and plan for an economic downturn. Through a series of posts I will breakdown CA's financial problems for each of you to understand. I will only use information available to the public.No meaningful FY 2020 information is currently available. I am attempting to just present the facts, my comments will come much later. All numbers will be presented in thousands

Overall, Columbia Association appears to be profitable as can be seen from the Increase in Net Assets (Net Income):
 FY 2017  $5,102
 FY 2018  $4,258 
 FY 2019  $3,836

Further, CA, like most companies, generated cash from operations after non-cash expenses are added back to the Increase in Net Assets. Non-cash expenses are usually comprised primarily of depreciation, or the reduction of an asset over time due to wear and tear. CA's Cash Generated from Operations (in thousands) is: 
FY 2017   $15,232
FY 2018   $17,922
FY 2019   $14,361

CA then used the cash for debt service which averaged $1.5 million to $2 million annually and Capital Spending (in thousands) as follows:

FY 2017   ($12,281)
FY 2018   ($23,774)
FY 2019   ($20,275) 

The resulting Cash (Shortfall) Addition (in thousands) for each of these years was:

FY 2017     $1,450
FY 2018    ($7,682)
FY 2019    ($7,316)

And, the resulting short-term balance of the line of credit(in thousands) on April 30th of each of these fiscal year ends was:

FY  2017             0
FY  2018    $5,905
FY 2019    $11,001

This is only an overview of cash flow numbers. Do not jump to any conclusions. The current financial condition of  CA is the result of a multitude of factors.

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