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what this really means
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Date Posted: 08:08 01/22/09 Thu
In reply to:
Private Sector Has Been Enduring for A Year!
's message, "Public Sector Soon to Feel Effects Of Recession;" on 20:30 01/19/09 Mon
“free cash” is NOT a measure of the money that Dracut has in the bank. Free cash is the portion of the General Fund balance that the state certifies as available for appropriation. So, free cash is more of a measure of equity or spendable assets, than of liquidity(the capacity to be converted easily and with minimum loss into cash).
for example, people know their own net worth. If you add all of your assets, house, car, investments, money in the bank, household furnishings, clothing, etc. and subtract everything that you owe such as mortgages, car loans and unpaid bills, the difference is your net worth.
The General Fund balance... (2 million)... is the town's equivalent of net worth. Just as you can’t go out and spend your net worth, the town can’t spend its fund balance.
2 million in free cash is just proof that the town manager's financial management is sound.
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the town has 2 million in free cash