Ratio Analysis Sample

The following ratios are from the accompaning balance sheet and income statement of ABC Corporation. This company is not in the meat packing industry. It is simply being used to show where the numbers come from in making these calculations.

Ratio Analysis Sample Worksheet
                                                                           

Year
1996
(in 000's)

Year
1997

Year
1998

Industry
Standard

1. Current Ratio              Current Assets/
Current Liabilties  

  650/   
    325      

    2.0  

   2.7   

        1.3       

2. Quick Ratio    Cash + Accts Receivable/
Current Liabilities

   325/ 
  325 

1.0

1.6

0.9

3. Debt to Equity      Total Liabilities/
Equity                          

925/
1,075   

  0.9  

 0.6  

   2.4        

4. Gross Profit Ratio 
(margin)                              		 Gross Profit/
Sales                                           

 960/
 2,400    

40%

  42%  

    18.10%  

5. Operating Ratio Income from Operations/
Sales

600/
2,400

25%

27%

    2.10%   

6. Pretax Ratio Pretax Profit/
Sales

440/
2,400

   18%   

   23%   

 
1.60%
 

7. Sales to Assets Sales/
Total Assets                		  2,400/
 2,000    

1.2

  1.1  

     4.4       

8. Return on assets Pretax Profit/
Total Assets

440/
2,000

22%

26%

3.80%

9. Return onquity Pretax Profit/
Equity                               

440/
1,750

41%

41%

7.40%

10. Inventory Turnover Cost of Goods Sold/
Inventory

1,440/
300

  22X 

26X

21.9X

11. Inventory Turnover
Days		 365/
Inventory Turnover

365/
4.8

  76
days    

89
days

17
days

12. Accounts
Receivable Turnover		 Sales/Accts Receivable

2,400/
200

12.0X

10.8X

21.9X

13. Collection Period 365/
A/R Turnover

365/
12

30
days

34
days

17
days

14. Accounts
Payable Turnover		 Cost of Goods Sold/
Accts Payable

1,440/
300

22X

26X

36.3

15. Accounts
Payable Days		 365/
A/P Turnover

365/
18.7

20
days

20
days

10
days