4.1 ERMUSR 05-14-2024 - Laserfiche WebLink

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Management's Discussion and Analysis This section of the Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota annual financial report presents our analysis of the Utilities' financial performance during the fiscal year that ended December 31, 2023. Please read it in conjunction with the financial statements which follow this section. Financial Highlights • The assets and deferred outflows of resources of the Utilities exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $81,701,248 (net position). Net Position increased by $3,829,883 or 4.9 percent. The increase is mainly due to revenues in excess of expenses during the year. • The Utilities' cash balance at the close of the current fiscal year was $27,554,752. • Electric usage overall was down an average of 1.2 percent from the prior year. Residential usage increased 1.6 percent, Commercial usage increased 6.8 percent, and Industrial usage decreased 3.8 percent. • Water usage overall was up an average of 18.4 percent from the prior year. Residential usage increased 15.0 percent, and Commercial usage increased 22.3 percent. Overview of the Financial Statements This annual report consists of three parts: Management's Discussion and Analysis, Financial Statements, and Supplementary Information. The Financial Statements also include notes that explain in more detail some of the information in the financial statements. Required Financial Statements The financial statements of the Utilities report information about the Utilities using accounting methods similar to those used by the private sector. These statements offer short-term and long-term financial information about its activities. The Statement of Net Position includes all of the Utilities' assets and liabilities and provides information about the nature and amounts of investments in resources (assets) and the obligations to Utilities' creditors (liabilities). It also provides the basis for computing rate of return, evaluating the capital structure of the Utilities and assessing the liquidity and financial flexibility of the Utilities. All of the current year's revenues and expenses are accounted for in the Statements of Revenues, Expenses and Changes in Net Position. This statement measures the success of the Utilities' operations over the past year and can be used to determine whether the Utilities has successfully recovered all its costs through its user fees and other charges, profitability, and credit worthiness. The final required financial statement is the Statements of Cash Flows. The primary purpose of this statement is to provide information about the Utilities' cash receipts and cash payments during the reporting period. The statement reports cash receipts, cash payments and net changes in cash resulting from operations, investing and financing activities and provides answers to such questions as where cash came from, what was cash used for and what was the change in the cash balance during the reporting period. 15 80