مكتبة المحاسبة الإدارية

webmaster · 11 أبريل 2006

أخواني الكرام

تم بحمد الله رفع كتاب الأستاذ الدكتور / محمد شريف توفيق بعنوان إعداد القوائم المالية المخططة ( المتنبأ بها ) : قوائم الدخل و المركز المالي و الأرباح المحتجزة و التدفقات النقدية

و هذا الكتاب أحد الكتب المهمة في مجال أعداد القوائم المالية فجزى الله أستاذنا على هذا العمل القيم

يمكنكم أنزال الكتاب بالكامل من على الرابط التالي

http://www.infotechaccountants.com/pagesar/mngaccboksar.htm

أتمنى لكم التوفيق و السداد

Dr. Mohamed Sherif Tawfik · 11 أبريل 2006

خالص الشكر لادارة الموقع

Bishara · 3 أغسطس 2006

هذا ملف باللغة الأنجليزية عن قوانين النقدية

cashrules_857.rar

Bishara · 12 سبتمبر 2006

[align=left:56e8e7e6d5][Formula to calculate acid test ratio:

Acid Test Ratio = (cash + marketable securities + accounts receivable ) / current liabilities

Acid test ratio definition and explanation:

The acid test ratio is also known as the quick ratio.

The acid test ratio measures the immediate amount of cash available to satisfy short term debt.

Formula to calculate asset turnover ratio:

Asset Turnover Ratio = sales / fixed assets.

Asset turnover ratio definition and explanation:

A low asset turnover ratio means inefficient utilization or obsolescence of fixed assets, which may be caused by excess capacity or interruptions in the supply of raw materials.

Formula to calculate cash turnover ratio:

Cash Turnover = (cost of sales {excluding depreciation}) / cash.

Cash Turnover Ratio = (365 days)/ cash balance ratio.

Cash turnover ratio definition and explanation:

The cash turnover ratio indicates the number of times that cash turns over in a year.

The cash turnover ratio and cash balance ratio are included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Formula to calculate inventory conversion ratio:

Inventory Conversion Ratio = (sales x 0.5) / cost of sales.

Inventory conversion ratio definition and explanation:

The inventory conversion ratio indicates the extra amount of borrowing that is usually available upon the inventory being converted into receivables.

The inventory conversion ratio is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Formula to calculate inventory turnover ratio:

Inventory Turnover Ratio = cost of goods sold / average inventory.

Inventory turnover ratio definition and explanation:

The inventory turnover ratio measures the number of times a company sells its inventory during the year.

A high inventory turnover ratio indicated that the product is selling well.

Formula to calculate Accounts receivable turnover ratio:

Accounts Receivable Turnover Ratio = annual credit sales / average accounts receivable

Accounts Receivable turnover ratio definition and explanation:

This is the ratio of the number of times that accounts receivable amount is collected throughout the year.

A high accounts receivable turnover ratio indicates a tight credit policy.

Formula to calculate age of inventory ratio:

Age of Inventory = 365 days / inventory turnover ratio

Age of inventory ratio definition and explanation:

The Age of Inventory shows the number of days that inventory is held prior to being sold.

An increasing age of inventory ratio indicates a risk in the company's inability to sell its products. Individual inventory items should be examined for obsolete or overstocked items.

A decreasing age of inventory may represent under-investment in inventory.

Formula to calculate (average) collection period:

Collection Period = Accounts Receivable X 365 days

Credit Sales

Collection Period = 365 days

Accounts Receivable Turnover Ratio

The average collection period calculation uses the average accounts receivable over the sales period.

(Average) Collection Period definition and explanation:

The collection period or average collection period must be compared to competitors to see whether the credit given, and customer risk, is in line with the industry.

A high collection period shows a high cost in extending credit to customers.

Formula to calculate average inventory period:

Average Inventory Period = (inventory x 365 days) / cost of sales.

Average inventory period definition and explanation:

The average inventory period is also referred to as Days Inventory and Inventory Holding Period.

This ratio calculates the average time that inventory is held.

Individual inventories should be looked at to find areas where the inventory, and inventory holding period, can be reduced.

The average inventory period should be compared to competitors.

The average inventory period is included in the the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Formula to calculate average obligation period:

Average Obligation Period = accounts payable / average daily purchases.

Average obligation period definition and explantion:

The average obligation period ratio measures the extent to which accounts payable represents current obligations (rather than overdue ones).

The average obligation period ratio is included in the the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Formula to calculate bad debts ratio:

Bad Debts Ratio = bad debts / accounts receivable.

Bad debts ratio definition and explanation:

The bad debts ratio is an overall measure of the possibility of the business incurring bad debts.

The higher the bad debts ratio, the greater the cost of extending credit.

The bad debts ratio is included in the the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Formula to calculate breakeven point:

Breakeven Point = fixed costs / contribution margin.

Breakeven point definition and explanation:

The breakeven point is the point at which a business breaks even (incurs neither a profit nor a loss)

The breakeven point is the minimum amount of sales required to make a profit.

Increasing breakeven points (period to period) indicates an increase in the risk of losses.

The breakeven point is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Formula to calculate cash breakeven point:

Cash Breakeven Point = (fixed costs - depreciation) / contribution margin per unit.

Cash breakeven point definition and explanation:

The cash breakeven point indicates the minimum amount of sales required to contribute to a positive cash flow.

Formula to calculate cash dividend coverage ratio:

Cash Dividend Coverage = (cash flow from operations) / dividends.

Cash dividend coverage ratio definition and explanation:

The cash dividend coverage ratio reflects the company's ability to meet dividends from operating cash flow.

A cash dividend coverage ratio of less than 1:1 (100 %) indicates that dividends are draining more cash from the business than it is generating.

Formula to calculate cash maturity coverage ratio:

Cash Maturity Coverage = (cash flow from operations - dividends) / current portion of long term maturities.

Cash maturity coverage ratio definition and explanation:

The cash maturity coverage ratio indicates the ability to repay long term maturities as they mature.

The cash maturity coverage ratio indicates whether long term debt maturities are in time with operating cash flow

Formula to calculate cash reinvestment ratio:

Cash Reinvestment Ratio = increases in fixed assets and working capital / (net income + depreciation).

Cash reinvestment ratio definition and explanation:

This ratio indicates the degree to which net income is absorbed (reinvested) in the business.

A cash reinvestment ratio of greater than 1:1 (100%) indicates that more cash is being use4d in the business than being obtained

Formula to calculate cash turnover ratio:

Cash Turnover = (cost of sales {excluding depreciation}) / cash.

Cash Turnover Ratio = (365 days)/ cash balance ratio.

Cash turnover ratio definition and explanation:

The cash turnover ratio indicates the number of times that cash turns over in a year.

Formula to calculate collection period to payment period ratio:

Collection Period to Payment Period = collection period / payment period.

Collection period to payment period ratio explanation and definition:

The collection period to payment period above 1:1 (100%) indicates that suppliers are being paid more rapidly than the company is collecting from their customers

Formula to calculate days of liquidity:

Days of Liquidity = (quick assets x 365 days) / years cash expenses.

Days of liquidity definition and explanation:

The days of liquidity ratio indicates the number of days that highly liquid assets can support without further cash coming from cash sales or collection of receivables

Formula to calculate (average) collection period:

Collection Period = Accounts Receivable X 365 days

Credit Sales

Collection Period = 365 days

Accounts Receivable Turnover Ratio

The average collection period calculation uses the average accounts receivable over the sales period

Average) Collection Period definition and explanation:

The collection period or average collection period must be compared to competitors to see whether the credit given, and customer risk, is in line with the industry.

A high collection period shows a high cost in extending credit to customers

Formula to calculate (average) collection period:

Collection Period = Accounts Receivable X 365 days

Credit Sales

Collection Period = 365 days

Accounts Receivable Turnover Ratio

The average collection period calculation uses the average accounts receivable over the sales period.

(Average) Collection Period definition and explanation:

The collection period or average collection period must be compared to competitors to see whether the credit given, and customer risk, is in line with the industry.

Formula to calculate fixed charge coverage ratio:

Fixed Charge Coverage Ratio = (Net Income Before Interest and Taxes + interest + fixed costs) / fixed costs.

Fixed charge coverage ratio definition and explanation:

The fixed charge coverage ratio indicates the risk involved in ability to pay fixed costs when business activity

Formula to calculate margin of safety ratio:

Margin of Safety Ratio = (expected sales - breakeven sales) / breakeven sales.

Margin of safety ratio definition and explanation:

The margin of safety ratio shows the percent by which sales exceed the breakeven point

Revenue per employee (net sales per employee) = net sales / number of employees

This ratio indicate the average revenue generated per person employed.

The revenue per employee (or net sales per employee) ratio is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Formula to calculate number of days inventory:

Number of Days Inventory = 365 days / inventory turnover ratio.

Number of days inventory ratio definition and explanation:

The number of days inventory is also known as average inventory period and inventory holding period.

A high number of days inventory indicates that their is a lack of demand for the product being sold.

A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands.

Formula to calculate operating cycle:

Operating Cycle = age of inventory + collection period.

Operating cycle definition and explanation:

The operating cycle is the number of days from cash to inventory to accounts receivable to cash.

The operating cycle reveals how long cash is tied up in receivables and inventory.

A long operating cycle means that less cash is available to meet short term obligations.

Formula to calculate payment period:

Payment Period = (365 days x supplies payable) / inventory.

Payment period definition and explanation:

The payment period indicates the average period for paying debts related to inventory purchases.

Payment Period to Average Inventory Period = payment period / average inventory period

A payment period to average inventory period above 1:1 (100%) indicates that the inventory is sold before it is paid for (inventory does not need to be financed).

(the average inventory period is also known as the inventory holding period)

Formula to calculate payment period to operating cycle:

Payment Period to Operating Cycle = payment period / (average inventory period + collection period).

Payment period to operating cycle ratio definition and explanation:

A payment period to operating cycle ratio above 1:1 (100%) indicates that the inventory is sold and collected before it is paid for (inventory does not need to be financed).

Formula to calculate capital acquisition ratio:

Capital Acquisition Ratio = (cash flow from operations - dividends) / cash paid for acquisitions.

Capital acquisition ratio definition and explanation:

The capital acquisition ratio reflects the company's ability finance capital expenditures from internal sources.

A ratio of less than 1:1 (100 %) indicates that capital acquisitions are draining more cash from the business than it is generating.

Formula to calculate capital employment ratio:

Capital Employment Ratio = sales / (owners equity - non-operating assets).

Capital employment ratio definition and explanation:

The capital employment ratio shows the amount of sales which owner's investment in operations generates

Formula to calculate capital structure ratio:

Capital Structure Ratio = long term debt / (shareholders equity + long term debt).

Capital structure ratio definition and explanation:

The capital structure ratio shows the percent of long term financing represented by long term debt.

A capital structure ratio over 50% indicates that a company may be near their borrowing limit (often 65%).

Formula to calculate capital to non-current assets ratio:

Capital to Non-Current Assets Ratio = owners equity / non-current assets

Capital to non-current assets ratio definition and explanation:

A higher capital to non-current assets ratio indicates that it is easier to meet the business' debt and creditor commitments.

Formula to calculate debt to equity ratio (financial leverage ratio):

Debt to Equity Ratio = Short Term Debt + Long Term Debt

Total Shareholders Equity

Debt to equity ratio definition and explanation:

Debt to Equity Ratio is also referred to as Debt Ratio, Financial Leverage Ratio or Leverage Ratio.

The debt to equity (debt or financial leverage) ratio indicates the extent to which the business relies on debt financing.

Upper acceptable limit of the debt to equity (debt or financial leverage) ratio is usually 2:1, with no more than one-third of debt in long term.

A high financial leverage or debt to equity ratio indicates possible difficulty in paying interest and principal while obtaining more funding.

Formula to calculate defensive interval period:

Defensive Interval Period = (cash + marketable securities + accounts receivable) / average daily purchases.

Defensive interval period definition and explanation:

This ratio indicates how long a business can operate on its liquid assets without needing further revenues.

The defensive interval period reveals near-term liquidity as a basis to meet expenses

Formula to calculate equity multiplier ratio:

Equity Multiplier = total assets / shareholders equity.

Equity multiplier ratio definition and explanation:

The equity multiplier ratio discloses the amount of investment leverage.

Formula to calculate financial leverage ratio:

Financial Leverage Ratio = total debt / shareholders equity.

Financial leverage ratio definition and explanation:

The financial leverage ratio is also referred to as the debt to equity ratio.

The financial leverage ratio indicates the extent to which the business relies on debt financing.

Upper acceptable limit of the financial leverage ratio is usually 2:1, with no more than one-third of debt in long term.

A high financial leverage ratio indicates possible difficulty in paying interest and principal while obtaining more funding.

Formula to calculate fixed assets to short term debt ratio:

Fixed Assets to Short Term Debt = fixed assets / (accounts payable + current portion of long term debt).

Fixed assets to short term debt ratio definition and explanation:

The fixed assets to short term debt ratio can indicate dangerous financial policies due to business vulnerability in a tight money market.

A low fixed assets to short term debt ratio indicates the return on fixed assets may not be realized before long term liabilities mature.

Fixed costs to total assets = fixed costs / total assets

An increase in the fixed costs to total assets ratio may indicate higher fixed charges, possibly resulting in greater instability in operations and earnings.

The fixed costs to total assets ratio is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio

Formula to calculate fixed coverage ratio:

Fixed coverage = earnings before interest and taxes / fixed charges before taxes.

Fixed coverage ratio definition and explanation:

The fixed coverage ratio indicates the ability of a business to pay fixed charges (fixed costs) when business activity falls.

Formula to calculate debt to equity ratio (financial leverage ratio):

Debt to Equity Ratio = Short Term Debt + Long Term Debt

Total Shareholders Equity

Debt to equity ratio definition and explanation:

Debt to Equity Ratio is also referred to as Debt Ratio, Financial Leverage Ratio or Leverage Ratio.

The debt to equity (debt or financial leverage) ratio indicates the extent to which the business relies on debt financing.

Upper acceptable limit of the debt to equity (debt or financial leverage) ratio is usually 2:1, with no more than one-third of debt in long term.

A high financial leverage or debt to equity ratio indicates possible difficulty in paying interest and principal while obtaining more funding.

Formula to calculate interest coverage ratio:

Interest Coverage Ratio = (net income + interest) / interest.

Interest coverage ratio definition and explanation:

The interest coverage ratio is also referred to as the times interest earned ratio.

The interest coverage ratio indicates the extent of which earnings are available to meet interest payments.

A lower interest coverage ratio means less earnings are available to meet interest payments and that the business is more vulnerable to increases in interest rates.

Formula to calculate gearing ratio:

Gearing Ratio = long term debt / shareholders equity.

Gearing ratio (long term debt to shareholders equity) definition and explanation:

The long term debt to shareholders equity ratio is also referred to as the gearing ratio.

A high gearing ratio is unfavourable because it indicates possible difficulty in meeting long term debt obligations

Non-Current Assets to Non-Current Liabilities = non-current assets / non-current liabilities

This ratio indicates protection (collateral) for long term creditors.

A lower ratio means that there is a lower amount of assets backing long term debt.

Formula to calculate operating leverage:

Operating Leverage = percent change in EBIT / percent change in sales.

Operating leverage definition and explanation:

The operating leverage reflects the extent to which a change in sales affects earnings.

A high operating leverage ratio, with a highly elastic product demand, will cause sharp earnings fluctuations.

Retained Earnings to Total Assets = retained earnings / total assets

This ratio indicates the extent to which assets have been paid for by company profits.

A retained earnings to total assets ratio near 1:1 (100%) indicates that growth has been financed through profits, not increased debt.

A low ratio indicates that growth may not be sustainable as it is financed from increasing debt, instead of reinvesting profits.

Short Term Debt to Depreciation = current portion of long term debt / depreciation

A short term debt to depreciation ratio of close to 1:1 (100%) indicates that the repayment of long term debt is inj line with the life of the assets.

This ratio should be in line with inflation in fixed asset prices

Short Term Debt to Liabilities = (accounts payable + current portion of long term debt) / (accounts payable + long term debt)

This ratio indicates liquidity.

A higher ratio means less liquidity.

Formula to calculate short to long term debt:

Short Term Debt to Long Term Debt = current portion of long term debt / long term debt.

Short to long term debt definition and explanation:

The short to long term debt ratio can indicate if a business is vulnerable to a money market squeeze

Net Income Increases to Pay Increases = change in net income / change in salaries, wages and benefits

This ratio shows whether net income is increasing faster than wages (in dollar terms).

A ratio of less than 1:1 (100%) indicates that profitability increases are less than the increases in wages.

A recurring ratio of less than 1:1 (100%) indicates eroding profits and is a cause for concern.

Profits per Employee (Net Income per Employee) = net income / number of employees

This ratio indicate the average profit generated per person employed.

Formula to calculate net income to assets ratio:

Net Income to Assets = net profit before taxes / total assets.

Net income to assets ratio definition and explanation:

The net income to assets ratio is also referred to as the return on assets ratio.

Net Income to Fixed Charges = net income / fixed charges

The ratio of net income to fixed charges is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Net Income to Fixed Charges = net income / fixed charges

The ratio of net income to fixed charges is included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Non-operating Income to Net Income = non-operating income / net income

Increasing ratios may indicate changes in accounting made to boost profits.

Increasing ratios may mean that the business is moving away from its core business

Operating Income to Wages and Salaries = operating income / (salaries + wages + benefits)

This ratio shows the relationship between operating income and amount of wages and salaries paid.

A declining trend indicates a narrowing of margins and is a cause for concern.

Percent change in operating income vs. sales volume = % change in operating income / % change in sales volume

An increase may indicate higher fixed charges.

Formula to calculate cash ratio:

Cash Ratio = (cash + marketable securities) / current liabilities.

Cash ratio definition and explanation:

The cash ratio (cash and marketable securities to current liabilities ratio) measures the immediate amount of cash available to satisfy short term debt

Cash Ratio = (cash + marketable securities) / current liabilities

The cash ratio (cash and marketable securities to current liabilities ratio) measures the immediate amount of cash available to satisfy short term debt.

Formula to calculate cash debt coverage ratio:

Cash Debt Coverage = (cash flow from operations - dividends) / total debt.

Cash debt coverage ratio definition and explanation:

The cash debt coverage ratio shows the percent of debt that current cash flow can retire.

A cash debt coverage ratio of 1:1 (100%) or greater shows that the company can repay all debt within one year

Formula to calculate current ratio:

Current ratio = current assets / current liabilities.

Current ratio definition and explanation:

The current ratio is used to evaluate the liquidity, or ability to meet short term debts.

High current ratios are needed for companies that have difficulty borrowing on short term notice.

The generally acceptable current ratio is 2:1

The minimum acceptable current ratio is 1:1

Formula to calculate gearing ratio:

Gearing Ratio = long term debt / shareholders equity.

Gearing ratio (long term debt to shareholders equity) definition and explanation:

The long term debt to shareholders equity ratio is also referred to as the gearing ratio.

A high gearing ratio is unfavourable because it indicates possible difficulty in meeting long term debt obligation

Formula to calculate quick assets:

Quick Assets = cash + marketable securities + accounts receivable.

Quick assets definition and explanation:

Quick assets are the amount of assets that can be quickly converted to cash.

Quick assets are used to determine the quick ratio and days of liquidity ratio.

Formula to calculate quick ratio:

Quick ratio = (cash + marketable securities + accounts receivable) / current liabilities.

Quick ratio definition and explanation:

The quick ratio is used to evaluate liquidity.

Higher quick ratios are needed when a company has difficulty borrowing on short term notice

Formula to calculate working capital:

Working Capital = current assets - current liabilities.

Working capital definition and explanation:

Working capital is the liquid reserve available to satisfy contingencies and uncertainties.

A high working capital balance is needed if the business is unable to borrow on short notice

Working Capital from Operations to Total Liabilities = working capital provided from operations / current liabilities

This ratio measures the degree by which internally generated working capital is available to satisfy obligations.

Working Capital Provided by Net Income = net income - depreciation

A high ratio indicates that a company's liquidity position is improved because net profits result in liquid funds.

Formula to calculate cash debt coverage ratio:

Cash Debt Coverage = (cash flow from operations - dividends) / total debt.

Cash debt coverage ratio definition and explanation:

The cash debt coverage ratio shows the percent of debt that current cash flow can retire.

A cash debt coverage ratio of 1:1 (100%) or greater shows that the company can repay all debt within one year

Formulas to calculate cash return on assets ratio:

Cash Return on Assets (excluding interest) = (cash flows from operations before interest and taxes) / total assets.

Cash Return on Assets (including interest) = (cash flow from operations) / total assets.

Cash return on assets definition and explanation:

A higher cash return on assets ratio indicates a greater cash return.

Formula to calculate cash return to shareholders ratio:

Cash Return to Shareholders = cash flow from operations / shareholders equity

Cash return to shareholders ratio definition and explanation:

The cash return to shareholders ratio indicates a return earned by shareholders.

Formulas to calculate contribution margin and contribution margin ratio:

Contribution Margin = sales - variable costs.

Contribution Margin Ratio = (sales - variable costs)/sales.

Contribution margin and contribution margin ratio definition and explanation:

Contribution margin is the amount generated by sales to cover fixed costs.

The contribution margin ratio indicates the percent of sales available to cover fixed costs and profits

Current Return on Training and Development = increase in productivity and knowledge contribution / training costs

This ratio is a general indicator of the current return on training and development.

Formula to calculate gross margin ratio:

Gross Profit Margin Ratio = gross profit / sales.

Gross margin ratio definition and explanation:

Gross profit margin ratio is also called gross margin ratio.

To calculate gross profit subtract cost of sales (variable costs) from sales. (i.e. gross profit = sales - cost of sales)

Formulas to calculate profit margin ratios:

Net Profit Margin Ratio (After Tax Margin Ratio) = net profit after tax / sales.

Pretax Margin Ratio = net profit before taxes / sales.

Operating Profit Margin (Operating Margin) = net income before interest and taxes / sales.

Profit Margin Ratios definitions and explanations:

These three profit margin ratios state how much profit the company makes for every dollar of sales.

The net profit margin ratio is the most commonly used profit margin ratio.

Formula to calculate return on assets:

Return on Assets = net profit before taxes / total assets.

Return on assets ratio definition and explanation:

The return on assets ratio provides a standard for evaluating how efficiently financial management employs the average dollar invested in the firm's assets, whether the dollar came from investors or creditors.

A low return on assets ratio indicates that the earnings are low for the amount of assets.

The return on assets ratio measures how efficiently profits are being generated from the assets employed.

A low return on assets ratio compared to industry averages indicates inefficient use of business assets.

Formula to calculate return on investment:

Return on Investment Ratio = net profits before tax / shareholders equity.

Return on investment definition and explanation:

The return on investment ratio provides a standard return on investor's equity.

The return on investment ratio is also referred to as return on investment or ROI.

Return on Investment is a key ratios for investor

Formula to calculate times interest earned:

Times Interest Earned Ratio = (net income + interest) / interest.

Times interest earned definition and explanation:

The times interest earned ratio indicates the extent of which earnings are available to meet interest payments.

A lower times interest earned ratio means less earnings are available to meet interest payments and that the business is more vulnerable to increases in interest rates

Cash Flow from Operations to Net Income = (cash flow from operations) / net income

The cash flow from operations to net incomes ratio indicates the extent to which net income generates cash in a business.

A decline in the cash flow from operations to net income ratio indicates a cash flow problem.

Cash Flow from Investing to Operating and Financing = cash flows from investing / (cash flows fro operations + cash flows from financing)

This ratio compares the funds needed for investment to the funds obtained from financing and operations

Cash Flow for Investing vs. Financing = (net cash flows - current portion of long term debt) / (net cash flows from operating and financing activities)

The cash flow for investing vs. financing compares funds needed for investment to the funds obtained from financing and operations.

Cash Flow from Sales to Total Sales = (cash flow from operations - dividends) / total sales

The cash flow from sales to sales ratio indicates the degree to which sales generate cash retained by the business.

A positive cash flow from sales to sales ratio means that sales are generating cash flow.

Formula to calculate cash flow coverage ratio:

Cash Flow Coverage Ratio = net income + depreciation and amortization/total debt payments.

Cash flow coverage ratio definition and explanation:

The cash flow coverage ratio indicates the ability to make interest and principal payments as they become due.

A cash flow coverage ratio of less than one indicates bankruptcy within two years.

Cash Flow to Long Term Debt = cash flow / long term debt

The cash flow to long term debt ratio appraises the adequacy of available funds to pay obligations.

Cash Flow from Operations to Current Portion of LTD = cash flow from operations / current portion of long term debt

This ratio indicates the ability to retire debt as currently structured.

A ratio of less than 1:1 (100%) indicates that debt is structured to be repaid quicker than the company has the ability to.

Formula to calculate net cash flows for investing:

Net Cash Flow for Investing = (purchase of fixed assets and securities) / net cash flows from financing activities.

Net cash flows for investing ratio definition and explanation:

The net cash flows for investing ratio determines the adequacy of debt and equity issuances

Operations Cash Flow to Current Liabilities = cash flow from operations / current liabilities

If the operations cash flow to current liabilities ratio keeps increasing, it may indicate that cash inflows are increasing and need to be invested

Operations Cash Flow Plus Fixed Charges to Fixed Charges= (cash flow from operations + fixed cost) / fixed costs

This ratio indicates the risk involved when business activity, and ability to pay fixed costs, falls.

Operations Cash Flow Plus Interest to Interest = (cash flow from operations + interest) / interest

This ratio indicates the cash actually available to meet interest charges.

A ratio of less than 1:1 (100%) indicates insufficient cash flow is being generated to meet current interest payments

Sales to Accounts Payable = Sales / accounts payable

A high sales to accounts payable ratio indicates the inability to obtain short-term credit on the form of cost-free funds to finance sales growth.

Sales to Break-even (or Breakeven) Point = sales / break-even point

This ratio reflects the extent to which profits are not vulnerable to a decline in sales.

A sales to breakeven point ratio near 1:0 (100%) means that the company is quite vulnerable to economic declines.

A ratio below 1:1 (100%) indicates that the company's sales are inadequate to cover fixed costs.

Sales to Cash = sales / cash

This is sometimes referred to as a cash turnover ratio.

A high sales to cash ratio may indicate a cash shortage.

A low ratio many reflect the holding of idle and unnecessary cash balances.

Sales to Current Assets = sales / current assets

A high sales to current assets ratio indicates deficient working capital.

Formula to calculate sales to fixed assets ratio:

Sales to Fixed Assets = sales / fixed assets.

Sales to fixed assets ratio definition and explanation:

The sales to fixed assets ratio is often called the asset turnover ratio.

Sales to Net Income = sales / net income

A declining ratio is a cause for concern.

Sales to Total Assets = sales / total assets

A low ratio indicates that the total assets of the business are not providing adequate revenue.

Sales to Working Capital = sales / working capital

A high ratio may indicate inadequate working capital, which reflects negatively on liquidity.

Net Income to Assets = net income / total assets

This ratio indicates the before tax return on investment

Change in Employment = increase/(decrease) in the number of employees

This ratio shows how many more (fewer) employees the company has than the previous year.

Fixed Labour to Total Labour = fixed labour costs (including benefits) / total labour costs (including benefits)

Shows the extent to which labour costs are fixed.

A low percent is preferred, especially in industries with volatile demands or seasonality.

Labour Cost to Net Income = (salaries, wages and benefits) / net income

This ratio measures the extent to which labour costs number of employees x average wage and benefit per employee) affect net income.

This ratio indicates the extent to which a reduction in unproductive labour (as a percent of total labour costs) may increase net income

Labour Cost to Sales = (salaries, wages and benefits) / sales

This ratio indicates the extent to which labour costs must be absorbed into sales prices.

Labour Cost to Total Costs = (salaries, wages and benefits) / total costs

This ratio measures the extent to which labour is a cost factor

Percent Change in People Employed = (( the change in the number of employees) / number of employees in previous year) x 100%

This ratio shows the percent growth in number of employees

Percent Increase in Wages or Salaries per Employee = ((current year average wage and benefit per employee - previous year average wage and benefit per employee)/ previous year average wage and benefit per employee) x 100%

This ratio indicates the percent increase in the average annual income (including benefits) per employee.

discretionary costs = advertising + research and development + training + repairs and maintenance costs

discretionary costs as a percent of sales = (discretionary costs / sales) x 100%

A decreasing trends indicate profit may have come from reductions in discretionary costs which may negatively affect future profits.

Formula to calculate equipment replacement ratio:

Equipment Replacement Ratio = change in undepreciated assets / depreciation.

Equipment replacement ratio definition and explanation:

The equipment replacement ratio indicates whether the company is spending sufficient funds on replacing asse

Formula to calculate equipment upkeep ratio:

Equipment Upkeep Ratio = equipment repairs and replacement costs / total revenues.

Equipment upkeep ratio definition and explanation:

A decline in the equipment upkeep ratio indicates eroding revenues.

Formula to calculate fixed charge coverage ratio:

Fixed Charge Coverage Ratio = (Net Income Before Interest and Taxes + interest + fixed costs) / fixed costs.

Fixed charge coverage ratio definition and explanation:

The fixed charge coverage ratio indicates the risk involved in ability to pay fixed costs when business activity falls.

Fixed costs (excluding labour) per employee = fixed costs - fixed labour costs / number of employees

The fixed costs (excluding labour) per employee ratio shows the overhead factor (excluding labour) that each employee carries.

Fixed costs to total assets = fixed costs / total assets

An increase in the fixed costs to total assets ratio may indicate higher fixed charges, possibly resulting in greater instability in operations and earnings.

Long Term Return on Training and Development = increase in productivity and knowledge assets / training costs

This ratio is a general indicator of the long term return on training and development.

An average of several years' ratios should be used to compensate for training and development cost fluctuations

Office repairs and supplies per employee = office repairs and supplies / number of employees

This ratio shows the cost of office repairs and supplies per employee.

This is one factor that may be taken into consideration when planning staff reductions, or budget planning.

Percent Growth in Productivity and Knowledge Assets = growth in productivity and knowledge assets / previous year productivity and knowledge assets

This ratio indicates the rate of growth or decline in the quality of employees.

Phone costs per employee = phone costs / number of employees

This ratio shows the cost of telephone charges per employee.

This is one factor that may be taken into consideration when planning staff reductions, or budget planning.

Productivity and Knowledge Assets = productivity and knowledge contribution x 6

This ratio indicates the amount of assets residing in the knowledge and skills of employees.

Productivity and Knowledge Contributed per Employee = productivity and knowledge contribution / number of employees

This ratio indicates the average amount of excess net income that each employee adds through experience, training, productivity and creativity.

Productivity and Knowledge Contribution = net income - normal return on investment

This ratio shows the amount of net income that comes from employees (versus capital).

In a competitive environment, margins and profits will be forced to yield normal returns for shareholders. This ratio indicates the contribution of the company being run better or smarter than normal.

Repairs and Maintenance to Associated Assets = repairs and maintenance / fixed assets

A decreasing trend may indicate a company's failure to maintain capital facilities.

Training Costs per Employee = training costs / number of employees

This ratio shows the average amount spent on training each employee in the period.

A decline may indicate future declines in productivity.

An increase may indicate and increase in employee turnover

Percent Export Revenues = (export revenue x 100%) / total revenue

The percent export revenue indicates the sales volume risk associated with currency risks.

Percent Unstable Foreign Assets = (assets in politically unstable countries x 100%) / total assets

The percent unstable foreign assets indicates the amount of assets at risk because of political instability of the country (ies) of origin

Percent Unstable Foreign Earnings = (earnings from politically unstable countries x 100%) / net earnings

The percent unstable foreign earnings indicates the amount of earnings at risk because of political instability of the country (ies) of origin.

Average Wage and Benefit per Employee = (salaries + wages + benefits) / number of employees

This ratio indicates the average cost (excluding overhead allocations) of each person employed.

Fixed costs per employee = fixed costs / number of employees

This ratio shows the overhead factor that each employee carries.

Fixed costs (excluding labour) per employee = fixed costs - fixed labour costs / number of employees

The fixed costs (excluding labour) per employee ratio shows the overhead factor (excluding labour) that each employee carries.

Increase in Wages or Salaries per Employee = current year average wage and benefit per employee - previous year average wage and benefit per employee

This ratio indicates the dollar amount of increase in the average annual income (including benefits) per employee