## htnea2021009 - Section III presents a

## Source details

**Canonical URL:** [htnea2021009 - Section III presents a](https://www.imf.org/-/media/files/publications/howtonotes/2021/english/htnea2021009.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/howtonotes/2021/english/htnea2021009.pdf.md)
- [Structured JSON version](/-/media/files/publications/howtonotes/2021/english/htnea2021009.pdf.json)

---

### Key findings and purpose
- SOEs are government assets and part of government net worth and can number in the thousands; in some countries, SOEs comprise a third or more of the largest firms in several emerging markets.
- Many SOEs operate with systematic losses and carry significant liabilities; IMF (2020) found, for a sample of countries, that bailouts average 3 percent of GDP and can reach more than 10–15 percent of GDP in some cases.
- Analysis of fiscal risks from individual SOEs is generally underdeveloped; forward-looking risk assessments are rare or ad hoc.
- Purpose of the SOE risk assessment tool:
  - To help country authorities and IMF country teams assess fiscal risks from individual SOEs.
  - To provide inputs for annual budgets and medium-term fiscal planning, including estimates of possible transfers to and from SOEs to the budget and possible financing needs.
  - Main steps: collect financial information on SOEs and their relation to the government budget; benchmark against peers; conduct forward-looking analysis based on baseline forecasts and stress scenarios.

### SOEs’ link to public accounts: channels and fiscal impacts
- Net budgetary inflows = taxes + dividends + interest payments from the SOE − subsidies and transfers.
- Full contribution to the Public Sector Balance Sheet (PSBS) captures SOE effects on public net worth.
- Components of government–SOE links:
  - Revenue side: taxes and dividends.
  - Expenditure side: subsidies and transfers.
  - Government assets: loans to SOEs generate interest receipts.
  - Government liabilities: takeover of SOE debt triggers interest payments.
- Contingent liabilities:
  - Explicit contingent liabilities: formal legal contracts or commitments (example: debt guarantees).
  - Implicit contingent liabilities: expectation of government support absent a legal obligation.
  - Explicit contingent liabilities assumed by SOEs (for example, PPP contracts) can also be implicit contingent liabilities for the government.
- Indirect fiscal impacts:
  - Slowdown in SOE-driven public investment may produce multiplier effects on the real economy, prices, and public revenues.
  - SOE distress can lead to repricing or write-offs of equity and loans, negative valuation effects, and potential government assumption of SOE debt.
- Governance, financial, and operational vulnerabilities and external shocks affect fiscal outcomes depending on liquidity, solvency, exposure to international prices and exchange rates, market position, and perceived capacity to generate future incomes and honor obligations.

### Assessment approach and template mechanics
- Assessment requires standardized SOE financial information and medium-term business and financial plans; combines backward-looking and forward-looking analysis.
- Template primary components:
  - Benchmarking of SOE financial indicators to assess relative performance and main vulnerabilities.
  - Forward-looking analysis (baseline and stress scenarios) to quantify impacts on the SOE and public finances.
- Projection horizon and outputs:
  - Projects outstanding debt stock and its impact on public finances over a 6-year horizon.
  - Quantifies financial performance, debt projections, breakdown of net flows to the budget, and contribution to public sector net worth.
- Simplifications in the template:
  - Assumes company issues only long-term debt in the projection period.
  - Financing gaps are not financed by incurring arrears in the current version.
  - Multi-product SOEs and staff downsizing as a cost-reduction option are not considered.
  - Governance settings are not specifically analyzed beyond direct financial links.
  - Indirect fiscal costs and second-round effects (spillovers to financial sector or other SOEs) are not analyzed in the template.

### Inputs and required assumptions
- Core data required:
  - Past SOE financial statements: Income Statement and Balance Sheet.
  - Relevant medium-term macroeconomic and market-specific projections.
  - Parametric assumptions on macro influence, micro fundamentals, and relations with the public sector.
- Macroeconomic and market parameters include:
  - Domestic and world real GDP growth and inflation; exchange rates; short-term and long-term interest rates (local currency and FX).
  - Market-specific variables (optional): market-specific contribution to sales growth, oil prices, other commodity prices.
  - Structural parameters: share of sales in domestic and foreign markets; share of imported inputs; share of oil in inputs and sales.
  - Financial parameters: share of local-currency debt; average maturity; grace period; share of government-guaranteed debt; degree of variability of debt interest rates; crossholdings; government’s participation in SOE equity.
  - Sensitivity parameters: elasticity of sales to real and world real GDP growth; indexation of sale prices, wages; elasticity of purchased inputs to sales volume.
  - Policy parameters: CIT, sales tax, royalties, fee rates; dividend pay-out ratio; liquidity and leverage ratios that may trigger bailouts; share of bailouts to be accounted as deficit.
- Users define parameters based on past data, sectoral studies, or company-provided information; using ranges is recommended under uncertainty.

### Benchmarking features
- ORBIS database coverage: about 22,000 SOEs around the world.
- Benchmarking across approximately 80 sectors or sub-sectors and by income country group.
- Indicators expressed as ratios for comparability; some indicators in millions of US dollars.
- Benchmarks calculated as median, top 75th and bottom 25th percentiles for each indicator across countries by sub-sector.
- Indicator categories used:
  - Profitability (e.g., return on equity or assets).
  - Capital structure (e.g., leverage measured as non-current liabilities to total assets).
  - Liquidity (e.g., current ratio).
  - Operating efficiency (e.g., operating revenue per employee; labor cost per operating revenue).
- Caveats: pay attention to sample size, country comparability, regulatory differences, ongoing restructuring, and governance improvements.

### Forward-looking analysis: baseline and stress methodology
- Baseline scenario:
  - Calculates profitability, liquidity, solvency, and efficiency indicators for each projection year based on Income, Balance Sheet, and Cash Flows Statements over a 6-year period.
  - Macroeconomic developments affect SOE performance through parametric assumptions (e.g., sales volumes linked to GDP; prices linked to inflation and oil price for oil/gas companies).
  - End-of-year cash balances determined considering targeted liquidity ratios.
  - Any cash needs that cannot be met through borrowing because solvency thresholds (maximum leverage ratio) would be breached are assumed to be provided by the government as a capital injection.
- Stress scenario construction:
  - Considers deviations in macro projections and changes in parameters relative to baseline; parametric assumptions in stress equal baseline by default but can be modified.
  - Stress can include lower real GDP growth, changed share of imported inputs, different dividend pay-out rates or effective tax rates to allow buildup of cash.
  - Structural-parameter modifications across scenarios should be applied with care for interpretability and comparability.

### Liquidity and solvency operational rules
- Threshold metrics:
  - Quick liquidity ratio = (cash and deposits + receivables + other current liquid financial assets) / current liabilities.
  - Debt-to-equity ratio = total liabilities / shareholder’s equity.
- Policy for filling liquidity gaps:
  - End-year cash balances before new borrowing compared with target quick ratio floor to produce liquidity gap.
  - Company borrows to fill liquidity gap until debt-to-equity cap is reached.
  - When equity is negative, new borrowing is not allowed; residual liquidity gap beyond debt-to-equity ceiling is filled with capital injections.
- Guidance for setting thresholds includes factors such as strategic importance, market access expectations, government monitoring capacity, and fiscal space.

### Template outputs and government mapping
- Main outputs:
  - Projections for liquidity, solvency, and profitability indicators over the projection horizon.
  - Two cases:
    - (i) Use of capital injections by the government to meet liquidity and solvency thresholds.
    - (ii) Absence of capital injections so liquidity needs are exclusively filled by borrowing (leverage cap may be breached).
  - Counterfactual exercise indicating implications if the government does not provide financial support.
  - Aggregation across a portfolio of SOEs to assess net fiscal inflows and cross-subsidies.
- Mapping into Government Financial Statistics (GFS) and public accounts:
  - Produces an accrual statement of operations in simplified GFS format capturing operating balance, net transactions in non-financial assets, and resulting net lending/borrowing.
  - Estimates gross financing needs from net borrowing requirement and debt amortization schedule.
  - Produces a GFS-type balance sheet to calculate SOE contribution to net financial worth and public net worth.
- Net inflows to the budget computed in accrual terms and NPV of these flows estimated as percent of pre-shock GDP using baseline long-term interest rate projections (modifiable).

### Stress testing: channels, illustrative electricity SOE stress, and impacts
- Principal transmission channels for stress shocks:
  - Negative shocks to real GDP growth and inflation reduce gross sales and can reduce expenditure depending on indexation.
  - Weak indexation of regulated sales prices relative to costs increases financing needs.
  - Slower payments by buyers raise receivables and receivables at risk, widening liquidity gaps.
  - Exchange rate depreciation effects: (i) increase revenue of foreign sales in local currency; (ii) increase import costs in local currency; (iii) increase value of foreign-denominated assets and liabilities in local currency; (iv) increase interest and amortization payments of foreign-denominated debt; (v) reduce value in USD of new foreign borrowing for a given local-currency borrowing requirement.
  - Increase in medium- and long-term interest rates raises interest costs of domestic-currency debt.
  - Higher taxation or dividend payout ratios increase payments to government but could be offset by higher government transfers if SOE liquidity needs rise.
- Illustrative electricity SOE stress scenario (features and impacts):
  - Scenario features: negative growth shock in 2019 gradually reversed by 2024; temporary 20 percent depreciation between 2019 and 2020; inflation up; domestic and foreign interest rates increase.
  - Key impacts reported:
    - Profitability severely impaired; 90 percent of SOE’s sales are domestic and fall sharply.
    - Costs surge because of depreciation, more than offsetting fall in oil prices; low indexation of regulated domestic prices prevents pass-through of costs to sales prices.
    - Higher interest rates increase debt service; delinquency rates of receivables jump.
    - Absent capital injections, leverage rises to almost 4 (debt-to-equity ratio), with 50 percent of outstanding debt FX-denominated in 2019, potentially causing loss of market access.
    - Contribution to government budget becomes more negative: negative pre-tax profits mean no CIT until 2022; no dividends until 2023 and smaller thereafter.
    - Capital injections surge between 2019 and 2020; net present value of net inflows into the budget deteriorates from −0.1 percent to −0.3 percent of the pre-shock GDP.
  - Assumptions maintained in stress: liquidity and leverage thresholds maintained at 0.6 and 1.5, respectively, as in the baseline.

### Illustrative performance indicators (electricity SOE example; time columns: 2018 2019 2020 2021 2022 2023 2024)
- Profitability:
  - ROE: 15.5 2.1 −0.8 −1.0 −0.3 −0.3 0.2
  - ROA: 4.8 0.6 −0.2 −0.3 −0.1 −0.1 0.1
- Liquidity:
  - Current ratio: 1.3 1.5 1.3 1.6 1.4 1.5 1.5
  - Quick ratio: 0.1 0.6 0.6 0.6 0.6 0.6 0.6
- Solvency:
  - Debt to equity ratio: 2.2 2.5 2.5 2.3 2.2 2.0 1.9
  - Non-current liabilities to assets ratio: 0.5 0.5 0.5 0.5 0.5 0.5 0.5
- Efficiency:
  - Labor cost per operating revenue: 31.2 29.4 29.2 29.1 28.9 28.8 28.7
- Size:
  - Assets to GDP: 2.7 2.8 2.6 2.3 2.2 2.0 1.9
  - Liabilities to GDP: 1.8 1.7 1.6 1.3 1.2 1.0 0.9

### Financial statement framework, cash flows, and counterfactuals
- Cash-flow components:
  - Operating cash flows exclude non-cash items (depreciation and amortization and changes in receivables, payables, and inventories).
  - Non-operating cash flows comprise net cash inflows from investing and financing activities: net acquisition of assets, net borrowing, servicing of interest, distribution of dividends.
  - Capital injections are recorded as a separate item.
- Balance sheet assumptions (summary):
  - Current assets: cash holdings reflect cash balances from the cash flow statement; receivables and inventories are calculated as a ratio of sales, less receivable write-downs.
  - Non-current assets: property, plant and equipment, and investment property account for investment plans, revaluation effects, and depreciation.
  - Liabilities: debt dynamics governed by new borrowing and debt amortization profile.
  - Equity: reflects retained after-tax profits and any capital increases; other comprehensive income captures non-realized revaluation effects.
- Counterfactual without capital injections:
  - Liquidity gap entirely filled through borrowing (assumed domestic), grace period = one year, maturity same as when capital injections are present.
  - Counterfactual includes interest payments for additional borrowing using same effective interest rate as when injections are made.
  - Counterfactual is an approximation and does not compute effects such as higher spreads or shortening of debt life.

### Outputs, charts and GFS mapping
- Output 1 – Performance (Baseline and Stress):
  - Summarizes indicators on profitability, liquidity, solvency, efficiency, and financial position.
  - Calculates productivity/efficiency ratios (operating revenue per employee; labor cost per operating revenue; average personnel cost per employee).
  - Common high-risk thresholds noted:
    - Profitability ratios: 0
    - Current ratio: 1.25
    - Quick ratio: 0.8
    - Interest coverage ratio: 1.2
    - Debt-to-equity: 1.5
    - Debt-to-assets: 0.75
    - Non-current liabilities to assets ratio: 0.5
  - Indicators projected in both situations: after capital injections and subsidies; counterfactual where bailouts are replaced by additional borrowing.
- Output 2 – Charts (Baseline and Stress):
  - Summary results presented via selectable charts; chart data in RAW CHARTS and RAW CHARTS (ST).
- Output 3 – Relations with the Government (Baseline and Stress):
  - Breaks down budgetary and balance-sheet ties between government and SOE.
  - Net inflows = taxes + dividends + interest payments − subsidies − transfers (accrual).
  - Dividends = net income after taxes × dividend pay-out ratio.
  - Capital transfers = share of capital injections non-commercially remunerated.
  - NPV of flows estimated as percent of pre-shock GDP; discount rates draw from baseline long-term interest rate projections (modifiable).
  - Displays stocks for outstanding government loans to the SOE, government equity in the SOE, and government-guaranteed debt (contingent liabilities).

### Annex: structure and projected ratios
- Annex inputs and worksheets:
  - Input 1–Basic, Input 2–Income Statement, Input 3–Balance Sheet, Input 4–Assumptions (baseline), Stress Test parallel worksheets.
  - Debt Projections (baseline and stress) import debt data, compute outstanding stocks = previous stocks + borrowing − amortizations, apportioned by currency per assumptions.
  - Interest payments computed via effective interest rates and interest-rate variability parameter.
- Annex Table 1.1 — Financial ratios projected by the template (definitions):
  - Profitability:
    - Return on equity (ROE) ≡ Net income / Equity
    - Return on assets (ROA) ≡ Net income / Assets
    - Operating return on assets (operating ROA) ≡ EBIT / Assets
  - Liquidity:
    - Current ratio ≡ Current assets / Current liabilities
    - Quick ratio ≡ (Cash + Receivables + Financial assets) / Current liabilities
    - Interest coverage ≡ EBIT / Interest payments
  - Leverage:
    - Debt to equity ratio ≡ Liabilities / Equity
    - Debt to assets ratio ≡ Liabilities / Assets
    - Non current liabilities to assets ratio ≡ Non current liabilities / Assets
  - Contribution to public net worth:
    - Contribution to public net financial worth ≡ Consolidated financial assets − Consolidated liabilities
    - Contribution to public net worth ≡ Non-financial assets + Contribution to public net financial worth

*Source: htnea2021009 - Section III presents a (International Monetary Fund | August 2021).*

### references.

### References

### Publication identifiers and ordering
- ISBN: 9781513591186 (paper)
- Subjects: LCSH: Risk assessment. | Government business enterprises. | Finance, Public.
- Classification: LCC HD61.B38 2021
- Publication orders may be placed online, by fax, or through the mail:
  - International Monetary Fund, Publication Services
  - PO Box 92780, Washington, DC 20090, U.S.A.
  - Tel.: (202) 623-7430 Fax: (202) 623-7201
  - Email: publications@imf.org
  - www.imf bookstore.org

### Disclaimer
- DISCLAIMER: Fiscal Affairs Department (FAD) How to Notes offer practical advice from IMF staff members to policymakers on important economic issues. The views expressed in FAD How to Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

### Contents and key introductory findings
- Table of contents entries (selected):
  - Introduction
  - SOE’s Link to Public Accounts
  - The Template: Overview
  - Inputs and Assumptions
  - Benchmarking
  - Forward-Looking Analysis: Baseline and Stress Scenarios
  - Annex 1: Structure of the Template: Inputs and Outputs
  - References
- Key concepts and findings from the Introduction:
  - SOEs are present in virtually every country and can number in the thousands; they are major players in domestic economies and in global markets.
  - In some countries, SOEs comprise a third or more of the largest firms in several emerging markets.
  - Many SOEs operate with systematic losses and carry significant liabilities.
  - IMF (2020) found, for a sample of countries, that bailouts average 3 percent of GDP and can reach more than 10–15 percent of GDP in some cases.
  - Analysis of fiscal risks from individual SOEs is generally underdeveloped; typical assessments focus on a few financial indicators from the most recent financial report and lack comparisons to peers.
  - Forward-looking risk assessments of SOEs are rare or ad hoc, often occurring only when the SOE is already requesting government support.
- Purpose and use of the SOE risk assessment tool described:
  - To help country authorities and IMF country teams assess fiscal risks from individual SOEs.
  - To provide inputs for annual budgets and medium-term fiscal planning, including estimates of possible transfers to and from SOEs to the budget and possible financing needs.
  - Main steps: collect financial information on SOEs and their relation to the government budget; benchmark against other SOEs in similar sectors; conduct forward-looking analysis based on baseline forecasts and stress scenarios to identify and analyze possible risks and their impact on government accounts.
- Additional notes:
  - This note accompanies Baum, Medas, Soler, and Sy (2020). The template can be found here https:// www .imf .org/ -/ media/ Files/ Publications/ WP/ 2020/ Datasets/ wp20213 .ashx.
  - Acknowledgments: The authors would like to thank Nikolay Gueorguiev, Catherine Pattillo, Carolina Renteria Rodriguez, and other IMF colleagues for excellent comments. The authors would also like to thank Eslem Imamoglu and Paulomi Mehta for excellent research assistance.

*International Monetary Fund | August 2021 — References*

### Section III presents a

### htnea2021009 - Section III presents a

### SOEs’ link to public accounts
- SOEs are government assets and part of government net worth; they generate a flow of net income to the government budget determined by their performance and financing structure.
- Net income components:
  - Revenue side: taxes and dividends.
  - Expenditure side: subsidies and transfers.
  - Government assets: loans to SOEs generate interest receipts.
  - Government liabilities: takeover of SOE debt triggers interest payments.
- Valuation effects on these assets and liabilities tend to be correlated with SOE performance.
- In the consolidated public sector, SOE liabilities lower public net worth and can drive financial sustainability outcomes.
- SOEs create contingent liabilities for central or subnational governments:
  - Explicit contingent liabilities: formal legal contracts or commitments (example: debt guarantees).
  - Implicit contingent liabilities: expectation of government support absent a legal obligation.
  - Explicit contingent liabilities assumed by SOEs (for example, PPP contracts) can also be implicit contingent liabilities for the government.
- Indirect fiscal impacts arise through macroeconomic and sectoral linkages:
  - Slowdown in SOE-driven public investment may produce multiplier effects on the real economy, prices, and public revenues.
  - SOE distress can lead to repricing or write-offs of equity and loans, negative valuation effects, and potential government assumption of SOE debt.
- Governance, financial, and operational vulnerabilities exacerbate fiscal risks; external shocks (macroeconomic or market-specific) affect fiscal outcomes depending on SOE liquidity, solvency, exposure to international prices and exchange rates, market position, and perceived capacity to generate future incomes and honor obligations.

### Assessment approach and analytical tools
- Assessment requires standardized and comprehensive SOE financial information and medium-term business and financial plans, combining backward-looking and forward-looking analysis (current financial position, market dynamics, past distress episodes, scenario-design or sensitivity analysis).
- The template’s primary components:
  - Benchmarking of SOE financial indicators to assess relative performance and main vulnerabilities.
  - Forward-looking analysis (baseline and stress scenarios) to quantify impacts on the SOE and public finances.
- Projection horizon and outputs:
  - Projects outstanding debt stock and its impact on public finances over a 6-year horizon.
  - Quantifies financial performance, debt projections, breakdown of net flows to the budget, and contribution to public sector net worth.
- Uses macroeconomic projections (default: IMF’s World Economic Outlook) and allows user-defined macro and structural parameters.

### Template mechanics, scope, and simplifications
- The template builds on previous FAD work (reference to a 2008 Indonesia template) and recent fiscal stress test methodologies.
- Flexibility:
  - Tailors to commercial/operating structure, international linkages, financial objectives, and dividend policy of each SOE.
  - Can embed quasi-fiscal activities via price indexation where relevant.
  - Forecasting formulas can be adjusted for expected one-offs or longer time-series and past stress episodes.
- Simplifications made to operationalize projections:
  - Assumes company issues only long-term debt in the projection period.
  - Financing gaps are not financed by incurring arrears in the current version.
  - Multi-product SOEs and staff downsizing as a cost-reduction option are not considered.
  - Governance settings are not specifically analyzed beyond direct financial links.
  - Indirect fiscal costs and second-round effects (spillovers to financial sector or other SOEs) are not analyzed in the template; these may be captured by broader fiscal stress test tools.

### Inputs and assumptions required
- Core data required:
  - Past SOE financial statements: Income Statement and Balance Sheet.
  - Relevant medium-term macroeconomic and market-specific projections.
  - Parametric assumptions on macro influence, micro fundamentals, and relations with the public sector.
- Macroeconomic links and parameter types:
  - Automatic links (e.g., FX-denominated debt valuation depends on exchange rate).
  - Sensitivity parameters (e.g., sensitivity of sales volume to real GDP growth).
- Users define parameters based on past data, sectoral studies, or company-provided information; using ranges for parameters is recommended under uncertainty.
- Stress scenario construction:
  - Considers deviations in macro projections and changes in parameters relative to baseline.
  - By default, parametric assumptions in stress equal baseline but can be modified (examples: lower real GDP growth, changed share of imported inputs).
  - Dividend pay-out rates or effective tax rates can differ in stress to allow buildup of cash.
  - Structural-parameter modifications across scenarios should be applied with care for interpretability and comparability.

### Key macroeconomic, market, structural, financial, sensitivity, and policy parameters (Table 2)
- Macroeconomic variables: Domestic and world real GDP growth and inflation; exchange rates; short-term and long-term interest rates of local currency and FX-denominated debt.
- Market-specific variables (optional): Market-specific contribution to sales growth in volume; oil prices; prices of commodities other than oil.
- Structural parameters: Share of sales in domestic and foreign markets; share of imported inputs; share of oil in purchased inputs; share of oil and other commodities in sales.
- Financial parameters: Share of local-currency denominated debt; average maturity; grace period; share of government-guaranteed debt and debt lent by the government in debt by currency of denomination; degree of variability of debt interest rates; crossholdings of assets and liabilities within the public sector; government’s participation in the SOE’s equity; share of non-financial assets in other non-current assets.
- Sensitivity parameters: Elasticity of sales in volume to real and world real GDP growth; indexation of sale prices to domestic and foreign inflation; indexation of wages to domestic inflation; elasticity of purchased inputs to volume of sales.
- Policy parameters: CIT, sales tax, royalties, and fee rates; dividend pay-out ratio; values of liquidity and leverage ratios that may trigger bailouts; share of bailouts to be accounted as deficit.
- Business plans and asset revaluation (optional): Multi-annual investment in financial and non-financial assets; expected revaluation of financial and non-financial assets; expected realized capital gains and losses; employment, government subsidies; doubtful receivables; staff recruitment; government’s subsidies.

### Benchmarking
- Purpose: assess SOE relative performance against peers to diagnose efficiency and potential risks (e.g., high labor costs, excessive leverage).
- Indicator categories:
  - Profitability (e.g., return on equity or assets).
  - Capital structure (e.g., leverage measured as non-current liabilities to total assets).
  - Liquidity (e.g., current ratio).
  - Operating efficiency (e.g., operating revenue per employee; labor cost per operating revenue).
- Data source and coverage:
  - ORBIS database coverage: about 22,000 SOEs around the world.
  - Benchmarking across approximately 80 sectors or sub-sectors and by income country group.
  - Indicators are expressed as ratios for comparability; some indicators expressed in millions of US dollars (for example, operating revenue per employee).
  - Benchmarks calculated as median, top 75th and bottom 25th percentiles of the distribution for each indicator across countries by sub-sector.
  - Benchmarks allow comparison with last year and the average (last 2-years) of the benchmarked SOE.
- Sample-size and comparability caveats: attention needed to sample size, comparability of countries, regulatory differences, ongoing restructuring, and governance improvements.

### Forward-looking analysis: baseline and stress scenarios
- Baseline scenario construction:
  - Calculates profitability, liquidity, solvency, and efficiency indicators for each projection year based on Income, Balance Sheet, and Cash Flows Statements over a 6-year period.
  - Financial statements follow broadly an IFRS structure with low disaggregation.
  - Macroeconomic developments affect SOE performance through parametric assumptions (e.g., sales volumes linked to domestic and international GDP, prices linked to inflation and oil price for oil/gas companies).
  - Interest income and expense linked to domestic and international interest rates.
  - Tax rates and dividend payout ratio set by the user.
  - End-of-year cash balances determined considering targeted liquidity ratios.
  - Any cash needs that cannot be met through borrowing because solvency thresholds (maximum leverage ratio) would be breached are assumed to be provided by the government as a capital injection.
- Financial statements structure (as described):
  - Income Statement: operating revenue primarily from sales sensitive to GDP, market factors, inflation, and exchange rate; operating expenses determined by sensitivity of personnel costs to inflation, staff recruitment, elasticity of input demand, input prices, and exchange rate; other operating expenses linked to inflation; non-operating income includes capital transfers from government (endogenously determined), interest/dividend incomes on prior-year financial assets, and other non-operating revenues linked to inflation, realized capital gains, and receivable write-downs when applicable.
  - Cash Flow Statement: operating cash flows derived by adjusting operating profit (continuation of structure described in source).

*Source: htnea2021009 - Section III presents a (IMF How To Note section content).*

### 1. ROA Using Net Income1. Non-current

### 1. ROA Using Net Income1. Non-current

### Financial statement framework and mapping to public accounts
- Cash-flow components:
  - Operating cash flows exclude non-cash items (that is, depreciation and amortization and changes in receivables, payables, and inventories).
  - Non-operating cash flows comprise net cash inflows from investing activities and financing activities, principally net acquisition of assets, net borrowing, servicing of interest and distribution of dividends.
  - Capital injections are recorded as a separate item.
- Balance sheet assumptions (Table 5 summary):
  - Current assets: Cash holdings reflect cash balances from the cash flow statement; receivables and inventories are calculated as a ratio of sales, less receivable write-downs.
  - Non-current assets: Property, plant and equipment, and investment property take into account investment plans, adjusted by revaluation effects and depreciation of the capital stock.
  - Liabilities: Debt dynamics governed by new borrowing and the debt amortization profile; payables proxied as a stable ratio of purchases of goods and services; benefit and retirement obligations grow in line with personal expenses; other non-current assets and liabilities assumed constant.
  - Equity: Reflects retained after-tax profits and any capital increases; other comprehensive income captures non-realized revaluation effects on assets and liabilities.
- Mapping into Government Financial Statistics (GFS):
  - Provides an accrual statement of operations in simplified GFS format capturing operating balance, net transactions in non-financial assets, and resulting net lending/borrowing.
  - Estimates gross financing needs from net borrowing requirement and debt amortization schedule.
  - Produces a GFS-type balance sheet to calculate SOE contribution to net financial worth and public net worth.

### Fiscal links between SOEs and the government
- Two key measures estimated by the template:
  - Net budgetary inflows = taxes + dividends + interest payments from the SOE − subsidies and transfers to the SOE.
  - Full contribution to the Public Sector Balance Sheet (PSBS): how SOE operations affect net worth of the entire public sector.
- Budget revenue projections derived from Income Statement and debt projections:
  - Corporate income and sales taxes and royalties and fees are calculated by applying tax rates to respective bases (pre-tax earnings for corporate income; gross sales for sales tax and fees; net sales minus production costs for royalties).
  - Dividends = exogenous payout ratio applied to after-tax profits (if positive).
  - Interest payments = endogenous effective interest rate applied to outstanding stock of government loans to the SOE.
- Budget outflows (bailouts) assumptions:
  - Subsidies compensate for operating losses and are an expense for the government.
  - Capital transfers/injections address liquidity needs that cannot be met through additional borrowing without breaching the leverage threshold.
  - Capital transfers are assumed for simplicity to take the form of equity purchases and are fully disbursed in cash; capital injections are recorded as transfers (and higher deficit) when not expected to have a reasonable rate of return (GFSM 2014).
  - User can enter share of injections recorded “above the line”; if remunerated at or above market rates they are reported as increase in government’s financial assets.

### Operational rules for liquidity and solvency thresholds
- Threshold metrics:
  - Quick liquidity ratio (cash and deposits + receivables + other current liquid financial assets) / current liabilities.
  - Debt-to-equity ratio = total liabilities / shareholder’s equity.
- Policy for filling liquidity gaps:
  - End-year cash balances before new borrowing compared with target quick ratio floor to produce liquidity gap.
  - Company borrows to fill liquidity gap until debt-to-equity cap is reached.
  - When equity is negative, new borrowing is not allowed; residual liquidity gap beyond debt-to-equity ceiling is filled with capital injections.
- Guidance on setting thresholds (examples of when to lower leverage cap / increase liquidity floor):
  - (i) Greater strategic importance of SOE for government.
  - (ii) Expected disruption of market access during financial distress.
  - (iii) Government capacity to monitor managerial performance and mitigate moral hazard is high.
  - (iv) Government fiscal space to undertake deficit-generating transfers.

### Main outputs of the template
- Projections for liquidity, solvency, and profitability indicators over the projection horizon.
- Two cases are produced:
  - (i) Use of capital injections by the government, if necessary, to meet liquidity and solvency thresholds.
  - (ii) Absence of capital injections, so liquidity needs are exclusively filled by borrowing (liquidity floor is always met; leverage cap may be breached in the second case).
- Counterfactual exercise indicates implications if the government does not provide financial support.
- Template can aggregate analysis across a portfolio of SOEs to assess net fiscal inflows and cross-subsidies.

### Illustrative example: electricity SOE projections and interpretation
- Scenario notes:
  - Floor of the liquidity ratio set at 0.6 in 2019.
  - Initial profitability decline in 2019 with ROA close to zero due mainly to reversal of exceptional profits in 2018.
  - Debt amortization increases sharply in 2019; coupled with lower operating cash flow, cash balances are depleted causing an overdraft.
  - Meeting liquidity floor in 2019 requires additional borrowing, reflected by jump in debt-to-equity and debt-to-GDP ratios; quick ratio reaches floor of 0.6.
  - After 2019, profitability gradually improves allowing debt-to-equity to decline gradually; assets to GDP and liabilities decline over time reflecting lower gross financing needs.
- Capital injection implication:
  - Given initial debt-to-equity higher than leverage ceiling of 1.5, the liquidity gap in 2019 must be filled with capital injections.
  - Under the baseline, government transfers are more than 0.3 percent of GDP in 2019.
  - Transfers raise apparent profitability and net financial worth of the company becomes positive.
  - Without transfers, SOE net contribution to the budget in 2019 would have been positive due to indirect tax revenues but at cost of weaker profitability, liquidity, and net financial worth.
  - From 2020 onward, liquidity needs can be met by additional borrowing without breaching leverage cap.
  - Public net worth would be impacted negatively by the potential cost of government capital injections (not shown in chart).

### Stress testing: channels and effects
- Principal transmission channels for stress shocks:
  - Negative shocks to real GDP growth and inflation reduce gross sales; a negative shock to domestic inflation reduces value of sales and reduces expenditure on goods, services, and wages depending on indexation.
  - Negative shocks to indexation of sales prices to inflation increase financing needs (regulated prices weakly indexed while costs fully pass through).
  - Negative shock to household and corporate liquidity slows payments by buyers, increasing receivables to gross sales and receivables at risk; cash flows deteriorate and liquidity gap widens.
  - Exchange rate depreciation versus the USD effects: (i) increase revenue of foreign sales in local currency; (ii) higher import costs in local currency; (iii) increase value of foreign-denominated assets and liabilities in local currency; (iv) increase interest and amortization payments of foreign-denominated debt; (v) reduce value in USD of new foreign borrowing for a given local-currency borrowing requirement.
  - Increase in medium- and long-term interest rates raises interest costs of domestic-currency debt.
  - Higher taxation or dividend payout ratios increase payments to government but could be offset by higher government transfers if SOE liquidity needs rise.
- Stress scenario for the electricity SOE:
  - Shock features: negative growth shock in 2019 gradually reversed by 2024; temporary 20 percent depreciation between 2019 and 2020; inflation up; domestic and foreign interest rates increase.
  - Impacts:
    - Profitability severely impaired; 90 percent of SOE’s sales are domestic and fall sharply.
    - Costs surge because of depreciation, more than offsetting fall in oil prices; low indexation of regulated domestic prices prevents pass-through of costs to sales prices, squeezing profits.
    - Higher interest rates increase debt service; delinquency rates of receivables jump.
    - ROA turns negative; operating cash flow hurt.
    - Absent capital injections, leverage rises to unsustainable levels: borrowing to fill liquidity gaps plus negative valuation of FX-denominated debt (50 percent of outstanding debt in 2019) would increase debt-to-equity ratio to almost 4, potentially causing loss of market access.
    - Interest payments rise, preventing ROA recovery.
    - Contribution to government budget becomes more negative: negative pre-tax profits mean no CIT until 2022; lower sales tax payments due to fall in gross sales; no dividends until 2023 and smaller thereafter.
    - Capital injections surge between 2019 and 2020 because starting high leverage limits borrowing.
    - Net present value of net inflows into the budget deteriorates from −0.1 percent to −0.3 percent of the pre-shock GDP.
  - Assumptions maintained in stress scenario:
    - Liquidity and leverage thresholds maintained at 0.6 and 1.5, respectively, as in the baseline scenario.

### Selected SOE performance indicators (Table 6; excluding transfers)
- Profitability:
  - ROE: 15.5 2.1 −0.8 −1.0 −0.3 −0.3 0.2
  - ROA: 4.8 0.6 −0.2 −0.3 −0.1 −0.1 0.1
- Liquidity:
  - Current ratio: 1.3 1.5 1.3 1.6 1.4 1.5 1.5
  - Quick ratio: 0.1 0.6 0.6 0.6 0.6 0.6 0.6
- Solvency:
  - Debt to equity ratio: 2.2 2.5 2.5 2.3 2.2 2.0 1.9
  - Non-current liabilities to assets ratio: 0.5 0.5 0.5 0.5 0.5 0.5 0.5
- Efficiency:
  - Labor cost per operating revenue: 31.2 29.4 29.2 29.1 28.9 28.8 28.7
- Size:
  - Assets to GDP: 2.7 2.8 2.6 2.3 2.2 2.0 1.9
  - Liabilities to GDP: 1.8 1.7 1.6 1.3 1.2 1.0 0.9
- Time columns correspond to: 2018 2019 2020 2021 2022 2023 2024

*_Source: htnea2021009 - 1. ROA Using Net Income1. Non-current (International Monetary Fund | August 2021)_*

### 1. ROA

### 1. ROA

### Key indicators and chart elements (as presented)
- Indicators shown: "1. ROA", "2. Operating ROA", "3. Gross Financing Needs (LC billion)", "4. Interest Payments (LC billion)", "5. Debt-to-Equity Ratio", "6. Contribution to Public Net Financial Worth (LC billion)".
- Chart axes and tick values reproduced exactly where visible:
  - ROA axis ticks: 0, 2, 4, 6, 8, 10
  - Operating ROA axis ticks: 0, 1, 2, 3, 4, 5
  - Debt-to-Equity Ratio axis ticks: –6, –4, –2, 0, 2, 4, 6
  - Gross Financing Needs (LC billion) axis ticks: 0, 12, 18, 24 (and lower ticks 6, 0, 4, 8, 12 unclear ordering in source)
  - Interest Payments (LC billion) axis ticks: 0, 4, 8, 12, 16 (and additional ticks 24, 6, 0, 12, 18 in source)
  - Contribution to Public Net Financial Worth (LC billion) axis ticks: –100, –80, –60, –40, –20, 0
  - Other numeric ticks visible: 14
- Year sequences printed in figures (verbatim):
  - 2018 19 20 21 22 23 24
  - 2018 19 20 21 22 23 24 (repeated across multiple panels)
  - 2019 20 21 22 23 24 (appears in some panels)

### Figure 6 — Breakdown of the SOE’s Contribution to the Budget
- Components labeled in the figure:
  - 1. Taxes Paid
  - 2. Dividends
  - 3. Capital Injections
  - 4. Net Flows to Budget
- Numeric axis ticks and values shown in the figure:
  - Left-side axis ticks: 0, 5, 10, 15, 20, 25, 30, 35
  - Right-side small axis ticks: 0, 0.2, 0.4, 0.6, 0.8, 1
  - Negative axis ticks: –10, –20, –30, –40
- Year sequences printed in the figure (verbatim):
  - 2018 19 20 21 22 23 24
  - 2018 19 20 21 22 23 24
  - 2018 19 20 21 22 23 24
- Legend entries reproduced exactly: Taxes Dividends Transfers Net inows
- Caption: "Figure 6. Breakdown of the SOE’s Contribution to the Budget"
- Source note in figure: "Source: Authors’ calculations."

### Figure 7 — NPV of SOE Net Contribution to the Budget
- Numeric axis ticks and values shown in the figure:
  - Vertical ticks: –40, –30, –20, –10, 0, 10, 20
- Legend entries printed: NPV Budget Flows; Baseline Stress
- Caption: "Figure 7. NPV of SOE Net Contribution to the Budget"
- Source note in figure: "Source: Authors’ calculations."

### Contextual and publication markers (verbatim)
- "FISCAL AFFAIRS DEPARTMENT HOW TO NOTES"
- "International Monetary Fund | August 2021"
- Page markers and numbering visible: 14, 15
- Document title line (from page footer/header): "HOW TO ASSESS FISCAL RISkS FROM STATE-OWNED ENTERPRISES: BENCHMARkINg AND STRESS TESTINg"
- Additional visible numeric labels: 24, 6, 0, 12, 18, 16, 4, 8, 12, 35, 5, 1

*Source: htnea2021009 - 1. ROA (Source PDF filename: htnea2021009 - 1. ROA)*

### ANNEX 1. STRUCTURE OF THE TEMPLATE:

### ANNEX 1. STRUCTURE OF THE TEMPLATE: INPUTS AND OUTPUTS

### Inputs — Basic setup and financial statements
- Input 1–Basic
  - Enter: main country and sector of operation of the SOE, and last year of observed financial data.
  - Default: template generates projections from the next year onwards.
  - User must verify formulas are in place for all projection years across the template.
- Input 2–Income Statement
  - User enters available observations from the Income Statement for at least the last two years.
- Input 3–Balance Sheet
  - User enters available observations from the Balance Sheet for at least the last two years.

### Inputs — Assumptions and Benchmarking
- Input 4–Assumptions (baseline scenario)
  - Calculates by default macroeconomic projections drawing on the IMF’s World Economic Outlook (WEO); user may replace with other projections.
  - Interest rates of assets and liabilities are not provided and must be entered by the user.
  - Worksheet automatically calculates:
    - Growth in the volume of sales in domestic and foreign prices (used to project gross sales).
    - Share of domestic to total sales in local currency (sales tax base) applied in the Income Statement.
  - Debt-structure assumptions:
    - Model new borrowings with combinations of grace periods and maturities.
    - Grace periods and maturities can differ for local- and foreign-currency borrowings.
    - Can set different shares of government loans and government-guaranteed debt for pre-existing debt and new borrowings.
  - Investment assumptions:
    - Reflect business plans or subject to sensitivity exercises.
    - Purchases of fixed assets can be one-off or spread over periods (turnkey projects or PPPs).
  - Consistency checks recommended (e.g., capacity expansion → higher elasticity of sales to GDP; exchange rate movements → revaluation effects).
- Benchmarking
  - Automatically compares SOE profitability, liquidity, leverage, and efficiency to SOEs in same sector across whole sample and sub-set by income group (if available).

### Stress Test
- Stress Test worksheet parallels Inputs 1–4 for a stress scenario.
- User defines stress scenario by entering deviations from baseline of macroeconomic and market-specific variables, by year.
  - Deviations are additive, except shock on level of receivables and their share to materialize, which are multiplicative.
- User should consider first- and second-round effects when sizing shocks (example: revenue drop → higher risk premium → higher interest rates; exchange rate depreciation + foreign investor holdings → additional rate increase).
- Parametric assumptions and business plans default to baseline but can be modified for stress scenario.
- Worksheet computes sales volume growth, domestic and foreign price developments, and share of domestic to total sales in the stress scenario.

### Debt Projections (Baseline and Stress)
- Debt Projections (baseline)
  - Imports debt data and parameters from Input 2, Input 3 and Input 4-Assumptions.
  - Outstanding stocks by type = previous stocks + borrowing − amortizations.
  - Borrowing imported from Cash Flow Statement and apportioned between FX and local-currency debt according to parametric assumptions.
  - Borrowing in foreign currency obtained as a share of total borrowing in local currency, converted at period exchange rates.
  - Amortizations:
    - For first projection year, amortizations given by observed data on current liabilities in Input 3.
    - Calculated based on average maturity and grace periods assumptions.
    - Uniform amortization assumptions for local-currency and FX debt may reduce accuracy when instruments are heterogeneous; user may replace formulas with instrument-level amortization sums.
  - Interest payments:
    - Calculated by applying an effective interest rate to the stock of debt outstanding by end of last year.
    - Effective interest rate projected as a linear combination of last year’s effective interest rate and the interest rate of marginal borrowing entered in Assumptions.
    - The parameter capturing interest-rate variability is entered in Assumptions and is a weighted average for the whole stock of debt.
  - Government-guaranteed debt and government loans amortizations and interest payments derived by applying their share in total domestic debt (from Assumptions) to domestic debt amortizations and interest payments.
  - FX-denominated amortizations and interest calculated in currency of denomination and converted to local currency at average and end-of-year exchange rates entered in Assumptions.
- Debt Projections (Stress)
  - Analogous worksheet to baseline Debt Projections but for the stress scenario.

### Income Statement (Baseline and Stress)
- Worksheets import data from other worksheets and calculate main components of net income (pre- and after-income taxes) and dividends to the government (based on after-tax profits).
- Line items projected by growing last observed values according to rates in Input_5 Assumptions and Stress Test.
- Operating revenues:
  - Gross sales determined by combining volume growth and price changes in domestic and foreign markets, expressed in local currency.
  - Net sales = gross revenues − sale taxes.
  - Other revenues indexed to domestic inflation; may be linked to gross sales growth if activities are correlated.
  - Subsidies entered exogenously in Input 5 Assumptions and Stress Test.
- Operating expenses:
  - Personnel expenses grow with inflation (adjusted by indexation degree) and employment plans.
  - Cost of goods and services linked to volume of inputs and prices in domestic and foreign markets.
  - Other operating expenses indexed to inflation; can include contract-specific items (e.g., PPP availability payments).
- Non-operating revenues:
  - Interest receipts = short and long-term interest rates (domestic and foreign) applied to asset holdings.
  - Dividends indexed to nominal GDP growth.
  - Capital transfers determined in Cash Flow Statements.
  - Other revenues = inflation-linked component + realized capital gains (entered exogenously).
- Non-operating expenses:
  - Mainly interest payments (imported from Input 4_Debt and Debt Stress).
  - Other expenses symmetric to other non-operating revenues; include receivable write-downs and potential contingent-liability realizations.
- CIT paid = exogenous rate applied to pre-tax profit after excluding subsidies and capital transfers (assumed tax-exempt by default; user may modify).
- Handling outliers:
  - If at least three or four years of past observations exist, user may adjust first-year projection to avoid carrying anomalies (e.g., link to value preceding outlier or average of last 3–4 years).

### Cash Flow Statement (Baseline and Stress)
- Three blocks:
  - Calculation of end-year cash balances:
    - Aggregate operating, investment and financial cash flows, plus capital injections, to last year’s cash balance.
    - Operating cash flows adjust operating revenues and costs by receivables, payables, inventory changes, depreciation, and income taxes.
    - Investment cash flows reflect net transactions in property, plant and equipment and investment property.
    - Financial cash flows stem from changes in stock of debt, net interest and dividend payments.
  - Calculation of borrowing and capital injections:
    - Template estimates equity and cash balances before new borrowing and capital injections and computes liquidity gap to liquidity target.
    - Overdrafts are ruled out by formula.
    - Determines level of cash balances needed to reach targeted quick ratio and the liquidity gap.
    - Quantifies share of borrowing and capital injections to fill liquidity gap while complying with leverage cap.
    - Liquidity gap is first filled with borrowing and residually with capital injections.
    - Estimates amount of injections needed to address guaranteed debt service, assuming these needs are first met by capital injections.
  - Estimation of counterfactual without capital injections:
    - Liquidity gap entirely filled through borrowing (assumed domestic), grace period = one year, maturity same as when capital injections are present.
    - Counterfactual includes interest payments for additional borrowing using same effective interest rate as when injections are made.
    - Liquidity needs adjusted by higher current long-term liabilities without injections, annual additional amortization, and incremental interest payments.
    - Note: counterfactual is an approximation and does not compute effects such as higher spreads or shortening of debt life.

### Balance Sheet (Baseline and Stress)
- Two blocks:
  1. Simplified IFRS-format balance sheet where projections are made.
  2. Mapping of IFRS balance sheet into GFSM 2014.
- High-turnover balance-sheet items linked to Income Statement:
  - Receivables and inventories linked by stable ratios to gross sales.
  - Payables linked by ratio to cost of goods and services.
  - Defined benefit liabilities linked to wage bill.
- Cash balances imported from Cash Flows and Cash Flows Stress.
- Long-term liabilities and current long-term liabilities imported from Input 4_Debt; current long-term liabilities = next period’s amortizations.
- FX-amortizing debt valued in local currency at end-of-period exchange rate.
- Fixed and financial assets follow accumulation equations:
  - End-period stock = prior-period stock (less depreciation for fixed assets) + net acquisitions (entered by user in Assumptions).
- Revaluation effects (entered in Assumptions and Stress Tests) apply to receivables, fixed assets, financial assets:
  - Receivables: stock of doubtful receivables estimated every period; value of receivables adjusted by changes in this stock.
    - In baseline, provision for doubtful receivables entered in Assumptions.
    - In stress, doubtful receivables generated by shock on expected share of receivables to materialize.
    - Parameter interpretation: values lower than one denote increasing balance in the stock; values higher than one imply decreasing doubtful receivables.
  - Fixed assets: revaluation effect adds to undepreciated stock at end of previous period.
  - Financial assets: similar to fixed assets, with depreciation = zero.
  - Revaluations should consider developments in assets denominated in local and foreign currency and exchange rate movements.
- Other current and non-current assets and liabilities held constant at last observed value.
- Shareholder’s equity components:
  - Shareholder’s capital fed by capital injections.
  - Accumulated gains imported from Income Statement.
  - Accumulated Comprehensive Income captures unrealized valuation effects including exchange rate changes.
- Mapping IFRS → GFS:
  - Equity calculated residually = assets − liabilities (possible if equity fully government-owned or shares not traded).
  - Simplifying assumptions: assets at market prices on books; face and market value of debt equal.
  - Other non-current IFRS assets apportioned into financial and non-financial GFS components via coefficient in Assumptions.
  - SOE assets and liabilities mapped to GFS and consolidated across public-sector units via coefficients in Assumptions (held constant).
  - Government initial share of equity entered by user; tool recalculates each period considering capital injections.

### GFS (Baseline and Stress)
- Fully automatic; three blocks:
  - Calculation of borrowing needs:
    - Revenues and expenses in accrual terms linked to Income Statement.
    - Net transactions of non-financial assets = acquisitions − divestments (entered in Assumptions/Stress Test), assumed fully paid in year accrued.
  - Net transactions in financial assets and liabilities:
    - Difference matches lending capacity/borrowing needs; reflect stock changes projected in Balance Sheet.
    - Unrealized valuation effects and asset write-downs removed above and below the line (appear in Statement of Other Changes in Assets and Liabilities in GFS).
  - Derivation of gross financing needs in the absence of capital injections.

### Outputs — Performance, Charts, and Relations with Government
- Output 1–Performance (Baseline and Stress)
  - Summarizes main financial and economic indicators on profitability, liquidity, solvency, efficiency, and financial position.
  - Calculates productivity and efficiency ratios:
    - Operating revenue per employee, labor cost per operating revenue, average personnel cost per employee.
  - SOE size indicators:
    - Number of employees, total assets in local currency, assets and liabilities to GDP.
  - Common high-risk thresholds noted:
    - Profitability ratios: 0
    - Current ratio: 1.25
    - Quick ratio: 0.8
    - Interest coverage ratio: 1.2
    - Debt-to-equity: 1.5
    - Debt-to-assets: 0.75
    - Non-current liabilities to assets ratio: 0.5
  - Indicators projected in each scenario in two situations:
    - After capital injections and subsidies.
    - Counterfactual where bailouts are replaced by additional borrowing (see Cash Flows description).
- Output 2–Charts (Baseline and Stress)
  - Summary results presented via selectable charts.
  - Chart data located in worksheets named RAW CHARTS and RAW CHARTS (ST) for user modification.
- Output 3–Relations with the Government (Baseline and Stress)
  - Breaks down budgetary and balance-sheet ties between government and SOE.
  - Calculates net inflows into the budget in accrual for each projection year in both scenarios:
    - Net inflows = taxes + dividends + interest payments − subsidies − transfers.
    - Taxes from Income Statement.
    - Dividends = net income after taxes × dividend pay-out ratio (entered in Assumptions).
    - Subsidies entered exogenously in Assumptions.
    - Capital transfers = share of capital injections non-commercially remunerated.
    - NPV of these flows estimated as percent of pre-shock GDP; discount rates draw from baseline long-term interest rate projections (modifiable).
  - Displays stocks for:
    - Outstanding government loans to the SOE (government asset, consolidated).
    - Government equity in the SOE (government asset, consolidated).
    - Government-guaranteed debt (contingent liability for general government).

*Source: ANNEX 1. STRUCTURE OF THE TEMPLATE: INPUTS AND OUTPUTS*

### Annex Table 1.1. Financial Ratios Projected by the Template

### Annex Table 1.1. Financial Ratios Projected by the Template

### Profitability
- Return on equity (ROE) ≡   
  Net income

  _

  Equity
- Return on assets (ROA) ≡     
  Net income

  _

  Assets
- Operating return on assets (operating ROA) ≡     
  EBIT

  _

  Assets

### Liquidity
- Current ratio ≡     
  Current assets

  __

  Current liabilities
- Quick ratio ≡     
  Cash 1 Receivables 1 Financial assets

  ___

  Current liabilities
- Interest coverage ≡     
  EBIT

  __

  Interest payments

### Leverage
- Debt to equity ratio ≡   
  Liabilities

  _

  Equity
- Debt to assets ratio ≡   
  Liabilities

  _

  Assets
- Non current liabilities to assets ratio ≡     
  Non current liabilites

  __

  Assets

### Contribution to public net worth
- Contribution to public net financial worth ≡ Consolidated financial assets – Consolidated liabilities
- Contribution to public net worth ≡ Non-financial assets + Contribution to public net financial worth

*Annex Table 1.1. Financial Ratios Projected by the Template (from the source PDF).*

---


_Source: https://www.imf.org/-/media/files/publications/howtonotes/2021/english/htnea2021009.pdf_