Financia Ratio Analysis Summary.xls

Financial Ratios Profitability Measurement of the client s ability to earn money Profit margin on sales Gross margin Return on assets Return on common stockholders equity EPS P E Ratio Payout Ratio Activity Efficiency Ratios Measurement of how efficient the client use the assets Receivable Turnover Ratio Inventory Turnover Ratio Asset Turnover Ratio Number of days supply in average inventory Number of days sales in average receivables Length of Operating Cycle Coverage Ratios Measurment of the degree of risk for long term creditors and investors Debt to equity ratio Debt to total assets Times interest earned Cash debt coverage ratio Book Value per share Liquidity Ratios Measureme nt of client s ability to pay short term liabilities Working Capital Current Ratio Acid test Ratio Quick Ratio Current cash debt coverage ratio Calculation Formula Net income Net sales Net income Average total assets Net income minus preferred dividends Average common stockholders equity Net income minus preferred dividends Weighted average shares outstanding Market price of stock EPS Cash dividends Net income Net credit sales Average trade receivables net Cos of goods sold Average inventory Net Sales Average total assets 360 Inventory Turnover ratio 360 Receivable Turnover ratio Number of days supply in average inventory Number of days sales in average receivables Total debt stockholder s equity Total debt total assets EBIT Interest expenses Net cash provided by operating activities Average total liabilities Common stockholders equity outstanding shares Current Assets Current Liabilities Current Assets Current Liabilities Cash Marketable Securities AR net Current Liabilities Net cash provided by operating activities Average current liabilities Use of the Financial Ratio Net income generated by each dollar of sales Overal profitability of the assets Profitability of owner s investment Net income earned on each share of common stock Measure the ratio of the market price per share to EPS Measure the of earnings distributed as cash dividends Used to measure the turnover of the receivables Used to measure the turnover of the inventory Used to measure the efficiency of assets to generate the sales Measure number of days required to sell inventory Measure number of days required to collect receivables Show the client s ability to sustain the losses of the total assets provided by the creditors ability to meet interest payments as they become due Measure the client s ability to repay the total liabilities in a given year from its operations Measure the amount each share would receive if the company is sold at the amounts reported on the balance sheet Used to measure the client s solvency Used to measure liquidity ability to pay short term debt Used to measure liquidity ability to pay short term debt Used to measure client s ability to pay current liabiliites by using the cash from its operation Example 1Amount Cash100 AR100 Inventories600 Trading Securities150 PPE180 Total assets1130 AP60 Current portion of note payable240 Long term portion of note payable400 Common stockholders equity430 Total Liabiliites1130 Current Assets 950 Quick Assets 350 Current Liabiliites 300 Current Ratio 3 17 Quick Ratio 1 17 Example 2 Inventoy 1 1 2010200 Inventory 12 31 2010300 Sales in 2010900 Purchases in 2010600 COGS500 Inventory Tunover2 Number of days sales in aver