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 Receivable Average 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 Payable Cost 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 capital stock, 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)

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. 21. 22. 23. Gross Profit Margin = Gross Profit /Sales Operating Profit Margin = Operating Profit /Sales = EBIT/Sales Net Profit Margin = PM = Net Income Available to Common Stockholders/Sales Price-Volume Ratio Ratio = Contribution Marginn /Sales = (1 - VS/S) = (1 - vc) Basic Earning Power Ratio = Operating Income Return on Total Assets = EBIT/Total Assets (may be related to total tangible assets) Return on Total Assets = Net Income Available to Common Stockholders/Total Assets (may be related to total tangible assets) = ROA Return on Common Equity = Earnings Before Taxes - Taxes - Pref. Div. Common Equity = Net Income Availvable to Common Stockholders = ROE Common Equity 26 Return on Equity (Total) = Net Profit After Taxes(NPAT) Total Equity

24.

25.

26.

27.

Dividend Yield = Dividends per Share of Common Stock Market 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 Stock 29. 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 Price-Earnings Ratio = Market Price Per Common Share/E.P.S. Market/book Ratio = Market price per Share of Common/Book value per Share of Common Breakeven Quantity = Total Fixed Costs/(Price - Per Unit Variable Costs) Approximate Sales Volume Needed to Cover Operating = Total Fixed Costs

31. 32. 33. 34.

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1 - Total Variable Operating Costs Actual Sales SBE= FC/(1 - vc) where vc = vci/Si 35. Degree of Operating Leverage = Percentage Change in Operating Income Percentage Change in Units Sold (Sales) Degree of Operating Leverage = Contribution Margin _____ _____. Contribution Margin - Fixed Operating Costs = S - VS S - VS - FC 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 - I = EBIT __ . S - VC - FC - I = S - VC EBIT

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. 39. Margin of Safety = Operating Profit / Contribution Margin Dupont Financial Analysis (Two Forms, one with EBIT and one with NIACS EBIT______ = EBIT x Net Sales Total Assets Sales Total Assets = Margin x Turnover Net Profit After Taxes = Net Profit After Taxes x Sales___

Total Assets

Sales

Total Assets

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