Financial Ratios Refesher

Agilecor 2001
Agilecor - Business Planning, Financial Management & Accounting Products & Services

1999

2000

2001

Comparative Balance Sheets

Cash Marketable securities Accounts receivable Inventory Total current assets Net fixed assets Total assets Accounts payable Accrued liabilities Notes payable Total current liabilities Long-term debt Common stock Retained earnings Total equity Total liabilities and equity 30 100 200 400 730 820 $ 1,550 $ 250 200 100 550 500 100 300 400 $ 1,450 $ 20 150 350 510 1,030 825 $ 1,855 $ 300 260 150 710 500 100 395 495 $ 1,705 $ 30 175 470 690 1,365 830 $ 2,195 $ 375 315 280 970 500 100 450 550 $ 2,020 $

Comparative Income Statements

Sales Cost of sales Gross profit Selling expenses General and admin expenses Operating profit Interest expense Pre-tax income Income taxes (40%) Net income $ 4,000 3,040 960 320 320 320 40 280 112 $ 168 $ 4,800 3,820 980 370 370 240 50 190 76 $ 114 $ 5,800 4,760 1,040 430 430 180 70 110 44 $ 66

Short term liquidity

Current ratio Measures the ability to pay current liabilities out of current assets. Current assets / Current liabilities = Current ratio Quick ratio (Acid Test) Measures the ability to pay current liabilities out of the most liquid of current assets. (Cash + Marketable secrities + Accounts receivable) / Current liabilities = Quick ratio Accounts receivable turnover Measures the ability to collect from customers. Annual net credit sales / Average net account receivables = Accounts receivable turnover Average collection period (Days Sales Outstanding) Measures the average number of day that it takes to collect accounts receivable. 365 days / Accounts receivable turnover = Average collection period (Days Sales Outstanding) Inventory turnover Measures the saleability of inventory. Indicates the number of time inventory is sold or "turned" per year. Cost of goods sold / Average inventory = Inventory turnover Days sales in inventory Measures inventory levels based on days sales. 365 days / Inventory turnover = Days sales in inventory Inventory to net working capital Inventory / Net working capital = Inventory to net working capital 730 550 1.33 1,030 710 1.45 1,365 970 1.41

30 100 200 550 0.60

20 150 350 710 0.73

30 175 470 970 0.70

4,000 200 20.00

4,800 275 17.45

5,800 410 14.15

365 20.00 18.25

365 17.45 20.91

365 14.15 25.80

3,040 400 7.60

3,820 455 8.40

4,760 600 7.93

365 7.60 48.03 400 180 2.22

365 8.40 43.48 510 320 1.59

365 7.93 46.01 690 395 1.75

Long term solvency

Debt ratio Indicates the percentage of assets financed with debt or liabilities Total liabilities 83471047.xls/Financial Ratios (c) Agilecor 2001 1,050 1,210 1/3 1,470

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Financial Ratios Refesher

Agilecor 2001
Agilecor - Business Planning, Financial Management & Accounting Products & Services

/ Total assets = Debt ratio Times interest earned - income (interest coverage) Measures the ability to pay interest out of profits. Net income before interest expense and taxes / Interest expense = Times interest earned - income (interest coverage) Times interest earned - cash flow (interest coverage) Measures the ability to pay interest out of cash flow. Cash flow from operations and interest / Interest expense = Times interest earned - cash flow (interest coverage) Total asstes to equity Total assets / Total stockholders equity = Total assets to equity Total liabilities to total assets Total liabilities / Total assets = Total liabilities to total assets Total liabilities to equity Total liabilities / Total stockholders equity = Total liabilities to equity Interest bearing debt to total assets Interest bearing debt / Total assets = Interest bearing debt to total assets Interest bearing debt to equity Interest bearing debt / Total equity = Interest bearing debt to equity Long term debt to long term capital Long term debt / (Long term debt + Total equity) = Long term debt to long term capital

1999 1,550 0.68

2000 1,855 0.65

2001 2,195 0.67

320 40 8.00

240 50 4.80

180 70 2.57

352 40 8.80 1,550 400 3.88 1,050 1,550 0.68 1,050 400 2.63 600 1,550 0.39 600 400 1.50 500 500 400 0.56

264 50 5.28 1,855 495 3.75 1,210 1,855 0.65 1,210 495 2.44 650 1,855 0.35 650 495 1.31 500 500 495 0.50

198 70 2.83 2,195 550 3.99 1,470 2,195 0.67 1,470 550 2.67 780 2,195 0.36 780 550 1.42 500 500 550 0.48

Profitability Ratios
Return on assets Measures the effectiveness of assets used to produce profits. Net income / Average total assets = Return on assets Return on equity Measures the profitibility of owners investments. Net income / Average stockholders equity = Return on equity Gross margin Gross profit / Sales = Gross margin % Operating margin Operating profit / Sales = Operating margin Profit margin Measures the % of each $1 of revenue that is left over as profit. Net income / Sales = Profit margin Total asset turnover Measures the efficiency of assets used to produce sales. Sales / Average total assets = Total asset turnover Fixed assets turnover Measures the efficiency of fixed assets used to produce sales. Sales / Average fixed assets = Fixed asset turnover Current asset turnover Sales / Average current assets = Current asset turnover DuPont Return on Investment Net income / Average total assets = Return on investment or Net profit margin 83471047.xls/Financial Ratios (c) Agilecor 2001 168 1,550 10.8% 114 1,703 6.7% 66 2,025 3.3%

168 400 42.0% 960 4,000 24.0% 320 4,000 8.0%

114 448 25.5% 980 4,800 20.4% 240 4,800 5.0%

66 523 12.6% 1,040 5,800 17.9% 180 5,800 3.1%

168 4,000 4.2%

114 4,800 2.4%

66 5,800 1.1%

4,000 1,550 2.58

4,800 1,703 2.82

5,800 2,025 2.86

4,000 820 4.88 4,000 730 5.48 168 1,550 10.8% 4.2%

4,800 823 5.84 4,800 880 5.45 114 1,703 6.7% 2.4%

5,800 828 7.01 5,800 1,198 4.84 66 2,025 3.3% 1.1%

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Financial Ratios Refesher

Agilecor 2001
Agilecor - Business Planning, Financial Management & Accounting Products & Services

/ Total asset turnover = Return on investment Modified DuPont - Return on Equity Net profit after tax / Average stockholders equity = Return on equity or Average total assets / Average equity = Equity mutliplier x ROI = Return on equity

1999 2.58 10.8% 168 400 42.0% 1,550 400 3.88 10.8% 42.0%

2000 2.82 6.7% 114 448 25.5% 1,703 448 3.80 6.7% 25.5%

2001 2.86 3.3% 66 523 12.6% 2,025 523 3.88 3.3% 12.6%

Other Ratios
Accounts payable turnover Total purchases / Average accounts payable = Accounts payable turnover Days purchases in accounts payable 365 days / Account payable turnover = Days purchases in accounts payable Days in Cash Operation Cycle Average collection period (Days Sales Outstanding) + Days sales in inventory - Days purchases in accounts payable = Days in Cash Operation Cycle 2,760 250 11.04 365 11.04 33.06 18.25 48.03 (33.06) 33.21 3,420 275 12.44 365 12.44 29.35 20.91 43.48 (29.35) 35.04 4,215 338 12.49 365 12.49 29.23 25.80 46.01 (29.23) 42.58

83471047.xls/Financial Ratios (c) Agilecor 2001

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