Q: Is it correct to say that if debt service is met under fund analysis, it would be even stronger under enterprise analysis?
A: Not necessarily. Some of the fund amounts may be actually greater than their cash counterparts and could lead to an inflated estimate of cash available for debt service. But funds flow statements, if properly adjusted and assessed, can usually indicate whether sufficient cash flow is available to service debt.
The key question is whether the "near cash" amounts in any funds account will turn out to be actual cash, such as property taxes due in the near term that may not actually materialize.
Course overview: Fund Accounting and Municipality Analysis: Part I of II