Key Ratis Finance.docVIP

Key Liquidity and Solvency Ratios Net Working Capital (NWC) = Current Assets – Current Liabilities Current Ratio = Current Assets/Current Liabilities Quick Ratio = (Current Assets – Inventory)/Current Liabilities Days Inventory Held = Inventory/ (Avg Daily CGS) Days Sales Outstanding = (A/R)/ (Avg. Daily Sales) Operating Cycle = Days Inventory Held + Days Sales Outstanding Days in Payables = (A/P)/(Avg Daily CGS) Cash Conversion Cycle (CCC) = Operating Cycle – Days in Payables Working Capital Requirements (WCR/Sales) = [A/R + Inv+Prepaid Exp +Other CA] - [A/P+ accrued exp+other current liab] Net Liquid Balance (NLB) = (Cash and Equivalents) – (Notes Payable + Currently Maturing LT Debt) WCR/Sales = Working Capital Requirements/Sales CFFO = Cash Flow From Operations (from Statement of Cash Flows) Cash Conversion Efficiency = CFFO/Sales Operating Profit Margin = (Sales – CGS)/Sales Net Profit Margin = NI/Sales Current Liquidity Index = [Casht-1+ CFFO]/[Notes Payablet-1 + Current Maturing Debtt-1] Sustainable growth ratio (g) = [m * (1-d)*(1+D/E)]/ {[A/S – (m*(1-d)*(1+D/E)]} Where m = profit margin, d=payout ratio, A/S =Asset/Sales D/E = Debt/Equity Ratio Cash-Flow to Debt = OI after tax/(NFO) Cash-Turnover = 365/ Cash Conversion Cycle Defensive Interval or Time to Ruin ={ Cash + Short Term Investment}/{(CGS +SGA)/365} Times Interest Earned = OI before tax/Interest ExpenseRATIOS TO DESCRIBE COMMON EQUITY Dividend Payout = Cash Dividends/Comprehensive Income Total Payout Ratio = (Dividends + Stock Repurchases)/Comprehensive Income Retention Ratio = 1-Dividend Ratio Net Investment Rate = Net Transactions with shareholders/ Beginning bkvalue of CSE Growth rate of CSE = Change in CSE/Beginning CSE Growth rate of CSE = ROCE + Net investment rate BALANCE SHEET AND INCOME STATEMENT ITEMS Tax Benefit of Debt = Net Interest Expense * marginal tax rate After-tax net interest expense = Net interest expense*(1-marginal tax rate) Operating Profit Margin = OI (after tax)/S