Menahga entity in good financial shape
Menahga's Greenwood Connections has had a healthy financial year.
This year's net assets totaled more than $2.6 million, according to Eide Bailly's audit report.
The Greenwood Connections Advisory Board met with the Menahga City Council Tuesday night to review the 2009 audit.
Bradley DeJong of Eide Bailly presented the audit and said it has been "a very positive year for the organization."
Green Pine Acres - one of four service divisions Greenwood Connections operates - experienced an increase in census of 1,483 resident days from 2008 to 2009, which is a major factor for an increase in resident service revenue for the year of more than $600,000, according to the audit report.
Greenwood Connections' net assets increased over the past two years by about $592,000 or 28 percent.
The audit report gives partial credit for the increase this year to the de-licensing of 10 beds the council approved in October 2008.
Total operating revenue for Greenwood Connections was almost $5 million in 2009, compared to about $4.2 million in 2008.
"This increase in operating revenue is due to increasing census and bed closure rate adjustments provided by the state," the audit report states.
Because the facility has $2.6 million in reserves, board member Jim Kangas asked if paying off some debt would be a good idea. Greenwood Connections carries about $2.1 million in long-term debt.
"We have a surplus of cash now," Kangas said, "is there anything wrong with paying off some of the debt?"
DeJong said he wouldn't suggest using up extra money in the dismal current economy.
"We don't know what the state is doing," he said. "Right now, I don't know that I feel comfortable with that."
Greenwood Connections Administrator Clair Erickson agreed and said having the reserves to fall back on is better than borrowing.
"The last position you want to be in is going out and borrowing money for cash flow," he said.
What the money could be used for is future investments in an expansion project, DeJong said.
He presented the long-term debt to equity ratio, which measures the relative importance of long-term debt in the organization's permanent capital structure.
Organizations with high values of this ratio have relied on debt as opposed to equity to finance their assets.
According to the report, Greenwood Connections' long-term debt to equity ratio has decreased steadily since 2006, with a 0.8 ratio this year.
"What that tells me is that you're keeping your net assets even ... and paying off your debt," DeJong said, adding that it also shows potential for future investments.
The Greenwood Connections and the council approved the Eide Bailly audit as presented.
In other business:
-The council and the board finalized the purchase agreement of 3-acres of property owned by Mike Markkula for $84,000. The Greenwood Connections building surrounds that property and the board previously recommended purchasing it so the land would be available if the city decides to expand the facility.