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COMMON RATIOS FOR FINANCIAL ANALYSIS (Revised 7/98)

1. Current Ratio = Current Assets / Current Liabilities

2. Acid Test Ratio = Quick Ratio= Quick Assets / Current Liabilities

= (Current Assets - Inventories) / Current Liabilities

3. Total Asset Turnover = Sales/Total Assets

4. Tangible Asset Turnover = Sales / Total Tangible Assets= Sales / (Total Assets - Intangible Assets)

5. Accounts Receivable Turnover = Net Credit Sales / Accounts Receivable

6. Inventory Turnover = Cost of Goods Sold / Inventory ; can also be = Sales/ Inventory

7. Fixed Asset Turnover = Sales / Net Fixed Assets

8. Days Sales Outstanding = Average Collection Period = Notes and Accounts ReceivableAverage Daily Credit Sales

9. Average Daily Credit Sales = Credit Sales / Number of Days often assume 360 days to year.

10. Days Purchases Outstanding =Average Payment Period = Accounts Payable .Credit Purchases Per Day

sometimes use = Accounts PayableCost of Goods Sold Per Day

11. Total Debt to Total Assets - Total Debt / Total Assets(called the debt ratio)

12. Total Debt to Tangible Assets = Total Debt / Total Tangible Assets

13. Total Debt to Net Worth = Total Debt / Net Worth

14. Total Debt to Tangible Net Worth = Total Debt / (Net Worth - Intangible Assets)

15. Equity Multiplier = Total Assets / Common Equity where common equity equals the sum of capitalstock, paid-in-excess of par and retained earnings.

16. Capitalization Ratio = Total Debt / (Total Debt + Preferred + Common Equiity)

17. Times Interest Earned=

Earnings Before Interest and Taxes(EBIT)Interest Charges

18. Fixed Financial Charge Coverage

= EBIT and Lease Payments____________________________________________________________Interest + Lease Payments+ Preferred Dividends (tax adjusted)+Sinking Fund Payments (tax adjusted)

Preferred Dividends (tax Adjusted) = (Preferred Dividends)/(1-t)

Sinking Fund (tax adjusted) = (Sinking fund)/(1-t)

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19. Cash Flow Overall Coverage Ratio

= Net Operating Income+Lease Expense + Depreciation ___________________________.Interest+Lease Expense+Preferred Dividends (tax adjusted) + Sinking Fund Payments (tax adjusted)

20. Gross Profit Margin = Gross Profit /Sales

21. Operating Profit Margin = Operating Profit /Sales = EBIT/Sales

22. Net Profit Margin = PM = Net Income Available to Common Stockholders/Sales

23. Price-Volume Ratio Ratio = Contribution Marginn /Sales= (1 - VS/S) = (1 - vc)

24. Basic Earning Power Ratio = Operating Income Return on Total Assets= EBIT/Total Assets(may be related to total tangible assets)

25. Return on Total Assets = Net Income Available to Common Stockholders/Total Assets(may be related to total tangible assets) = ROA

26. Return on Common Equity = Earnings Before Taxes - Taxes - Pref. Div.Common Equity

=Net Income Availvable to Common Stockholders = ROECommon Equity

26 Return on Equity (Total) = Net Profit After Taxes(NPAT)Total Equity

27. Dividend Yield = Dividends per Share of Common StockMarket Price per Share of Common Stock

28. Earnings Per Share of Common Stock= Earnings before Taxes -Taxes - Preferred Dividends .

Number of Outstanding Shares of Common Stock29. Earnings Yield = Earnings Per Share of Common Stock .

Market Price Per Share of Common Stock

30. Payout Ratio = Cash Dividends Paid to Common ________ .Earnings Before Taxes - Taxes - Preferred Dividends

31. Price-Earnings Ratio = Market Price Per Common Share/E.P.S.

32. Market/book Ratio = Market price per Share of Common/Book value per Share of Common

33. Breakeven Quantity = Total Fixed Costs/(Price - Per Unit Variable Costs)

34. Approximate Sales VolumeNeeded to Cover Operating = Total Fixed Costs ______ .

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1 - Total Variable Operating CostsActual Sales

SBE= FC/(1 - vc) where vc = vci/Si

35. Degree of Operating Leverage = Percentage Change in Operating IncomePercentage Change in Units Sold (Sales)

Degree of Operating Leverage = Contribution Margin _____ _____.Contribution Margin - Fixed Operating Costs

= S - VS = S - VCS - VS - FC EBIT

Degree of Operating Leverage = Q(p - v) __.Q(p - v) - FC

Degree of Operating Leverage = Q .(Q - QBE)

36. Degree of Financial Leverage=

Percentage Change in E.P.S__________.Percentage Change in Operating Income

Degree of Financial Leverage = EBIT = EBIT __ .EBIT - I S - VC - FC - I

Degree of Financial Leverage = Operating Profit _________________________ x (1 - t)Net Profit After Taxes and Preferred Dividends 1

37. Degree of Total Leverage = Percentage Change in E.P.S. ____ .Percentage Change in Units Sold (Sales)

Degree of Total Leverage = S - VC __ .S - VC - FC - I

Degree of Total Leverage = Contribution Margin x (1 - t)Earnings Available 1

Degree of Total Leverage = DOL x DFL

38. Margin of Safety = Operating Profit / Contribution Margin

39. Dupont Financial Analysis (Two Forms, one with EBIT and one with NIACS

EBIT______= EBIT x Net SalesTotal Assets Sales Total Assets

= Margin x Turnover

Net Profit After Taxes = Net Profit After Taxes x Sales___

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Total Assets Sales Total Assets

= Margin x Turnover(may be related to total tangible assets)