Annual Debt Payment: The dollar amount that must be paid each year towards retiring existing debt.
Annual Operating Expenses: Total annual cost of operating and maintaining the water or wastewater utility service. This does not include savings or future draws from capital savings accounts.
Asset: A component of a facility with an independent physical and functional identity and age (e.g., pump, motor, sedimentation tank, main).
Asset Category: Where the asset best fits within your system (e.g., source water, distribution or collection), for organizational purposes.
Asset Inventory: A list of assets with details about each (installation date, original cost, condition and such). Also known as an asset register.
Asset Management: A process for maintaining a desired level of customer service at the best appropriate cost.
Asset Name: The name of the technology or equipment that is used for your system to properly function (for example, “5th Street Pumping Station”). (see Asset, above)
Asset Status: This is how your utility views an asset. Assets can be active (most assets), not in use or a future investment. You would designate an asset a future investment if you would like it added to your capital improvement plan.
Asset Type: The asset’s functional purpose for a specific asset category (for example, intake structure, pumping station, transmission main, storage tank and the like).
Associated Asset: Assets that are directly related toa primary asset's function.
Associated Location: A location that complements an associated asset.
Capital Improvement (Expense): Funds required for the future purchase, repair or alteration to or for an asset, structure or major pieces of equipment.
Capital Improvement Program (CIP) Plan: A plan that projects and assesses which projects (including asset improvements, repairs, replacements and such) need to be completed in the future.
Capital Reserve Contribution: Funds set aside to fund capital improvements (i.e., future purchase, repair or alteration to or for an asset, structure or major pieces of equipment).
Cash On Hand: The amount of cash that is available to the system within a 24-hour period.
Condition: The current condition, in your opinion, of an asset according to its age and physical functionality (ranging from poor to excellent).
Consequence of Failure: The real or hypothetical results associated with the failure of an asset.
Debt Payment: The dollar amount that must be paid each year toward paying down or retiring existing debt.
Debt Ratio: The debt ratio measures the amount of debt being used by the organization. A ratio of 0.6 means that 60 percent of operations have been financed with debt and the remaining 40 percent has been financed by equity.
Debt Ratio = Total Liabilities/Total Assets
Emergency Reserve Contribution: Funds set aside for unexpected repairs and replacements. CUPSS recommends that utilities work toward an emergency reserve balance of 25 percent of its annual operating expenses.
Expected Useful Life: The average amount of time, in years, that a system or component is estimated to function when installed new.
Expense: Money spent by a utility to continue its ongoing operations.
Expense Ratio: The expense ratio measures the amount of operating expenses compared to total expenses. A high ratio indicates that most expenditures are for operations—leaving the remaining balance for nonoperating costs (such as debt service, capital improvements and such). If the nonoperating balance is small, the utility is not likely to meet all of its capital-related expenses, which could cause the system to deteriorate more rapidly.
Expense Ratio = Operating Expense/Total Expense
Growth: The amount, as a percent, a community's demand for water or wastewater treatment has increased or decreased. This value will be used to adjust future revenues and expenses.
Inflation: The anticipated rate of increase in the price level of goods and services.
Interest Rate: A rate that is charged or paid for the use of money. Note: Do not include a percentage sign when entering a number in this field on the "My Financial Check Up" report.
Level of Service: Describes the characteristics of system performance such as “how much,” “of what nature” and “how frequently,” with regard to the system’s service.
Liabilities: The financial obligations for which the utility is responsible.
Maintained According to Factory Recommendation: The frequency of routine maintenance as recommended by the manufacturer.
Operating Expenses: Total annual cost of operating and maintaining the water or wastewater utility service. This does not include savings or future funds withdrawal from capital savings accounts. Operating expenses include maintenance, equipment, salaries, wages, benefits, supplies, chemicals, contracts, utilities, monitoring, testing, emergency, rent, mortgage, insurance, services, training costs, billing costs, fees and security costs.
Operating Ratio: The operating ratio demonstrates the relationship between operating revenues and operating expenses. A high ratio indicates that the organization has operating efficiency by keeping expenses low relative to revenue.
Operating Ratio = Operating Revenue/Operating Expense
Original Cost: The amount paid for the initial purchase of an asset.
Probability Of Failure: The chance an asset will fail according to its percent of effective life consumed and redundancy.
Redundancy: Spare assets that have the ability to do the same job, if a failure of the primary asset were to occur.
Replacement Cost: How much will it cost to replace the asset, if required today?
Revenue: Funds earned by the system through the sale of water or by other means.
Revenue Surplus/Deficit: The difference between the total cost of doing business and the funds received from fees, loans and grants, and interest earned from any accounts. If the result is greater than zero, the utility is taking in enough money to fully recover its costs and have a surplus. If the result is less than zero, the utility will not cover all costs and therefore will have a deficit.
Risk: The potential for realization of unwanted adverse consequences or events.
Routine Maintenance Cost: How much does it cost for a single routine maintenance activity to be performed on the asset?
Sales Ratio: The sales ratio measures the percentage of total revenue that is made up of sales from operations. A low ratio indicates that the organization is overly reliant on outside funding.
Sales Ratio = Sales/Total Revenue
Savings Withdrawal: A fixed amount of money removed from the utility's account to help pay for capital improvement items or other planned or unplanned maintenance.
Total Annual Cost Of Doing Business: The total annual operating expenses plus the required total annual contributions to reserve funds.
Training Costs: Costs associated with continued education, conferences, and certifications for supporting staff. This could include travel, paid hours during training, food and lodging.
Utilities: An expense for services such as gas, electricity, telephone, water and sewer that are provided to your facility for normal use.