[...]... of Dollar Volume Assigned 16 1 16 2 16 4 16 5 16 6 16 7 16 9 17 0 17 2 17 3 17 4 17 5 17 7 17 8 17 9 18 1 ch00_4 711 .qxd 9 /13 /06 12 :35 PM Page xi Contents / xi Collection Effectiveness Index Percent of Cash Applied on Day of Receipt Unmatched Receipts Exposure Cost of Credit Earnings Rate on Invested Funds Brokerage Fee Percentage Borrowing Base Usage Percentage 10 18 2 18 3 18 4 18 5 18 6 18 7 18 8 Measurements for the Engineering... Stockholders’ Equity Preferred Stock to Total Stockholders’ Equity Issued Shares to Authorized Shares 10 7 10 7 10 8 11 0 11 1 11 3 11 4 11 6 11 7 11 8 11 9 7 Return on Investment Measurements Net Worth Book Value per Share Tangible Book Value Return on Assets Employed 12 3 12 3 12 5 12 6 12 7 ch00_4 711 .qxd 9 /13 /06 12 :35 PM Page x x / Contents Return on Infrastructure Employed Return on Operating Assets Return on Equity... Dividend Payout Ratio Dividend Yield Ratio 12 9 13 0 13 1 13 2 13 4 13 5 13 6 13 7 13 8 14 1 14 2 14 4 8 Market Performance Measurements Insider Stock Buy-Sell Ratio Market Value Added Enterprise Value/Earnings Ratio Stock Options to Common Shares Ratio Cost of Capital Sales to Stock Price Ratio Price/Earnings Ratio Capitalization Rate 14 7 14 7 14 9 15 1 15 2 15 4 15 6 15 7 15 8 9 Measurements for the Accounting/Finance... Total fixed assets Sales to equity ratio $12 ,500,000 $5,000,000 $350,000 $5,350,000 $2,500,000 2.3 :1 20 01 $14 ,000,000 $6,250,000 $350,000 $6,600,000 $2,600,000 2 .1: 1 2002 $15 ,500,000 $7,500,000 $350,000 $7,850,000 $2,600,000 2.0 :1 2003 $17 ,000,000 $8,750,000 $350,000 $9 ,10 0,000 $2,700,000 1. 9 :1 ch02_4 711 .qxd 9 /13 /06 12 :37 PM Page 11 Asset Utilization Measurements / 11 This table reveals that the company... Time from Design Inception to Production Percentage of Floor Space Utilization 19 1 19 1 19 3 19 4 19 5 19 6 19 8 19 8 11 Measurements for the Human Resources Department Employee Turnover Average Time to Hire Late Personnel Requisitions Ratio Intern Hiring Percentage Ratio of Support Staff to Total Staff 209 209 210 211 212 213 12 Measurements for the Logistics Department Production Schedule Accuracy Economic... Table 2 .1 Table 2 .1 Quarter 1 Revenue Accounts receivable Inventory Accounts payable Total working capital Sales to working capital ratio Quarter 2 Quarter 3 Quarter 4 $320,000 $10 7,000 $640,000 $53,000 $694,000 1: 0.54 $ 310 ,000 $10 3,000 $320,000 $52,000 $3 71, 000 1: 0.30 $290,000 $97,000 $320,000 $48,000 $369,000 1: 0.32 $280,000 $93,000 $320,000 $47,000 $366,000 1: 0.33 ch02_4 711 .qxd 9 /13 /06 12 :37 PM... and equity, earnings per share, economic value added, and return on dividends Chapter 8 addresses a company’s financial 1 ch 01_ 4 711 .qxd 9 /13 /06 12 :36 PM Page 2 2 / Business Ratios and Formulas market performance by describing such measurements as the price/earnings ratio, several variations on the stock options to common shares ratio, market value added, and the cost of capital Chapters 9 through 14 ... doubles, it is quite possible that the general and administrative expense does not have to double as well, since much of the existing infrastructure may be able to handle the additional growth Conversely, a significant drop in sales ch02_4 711 .qxd 9 /13 /06 12 :37 PM Page 10 10 / Business Ratios and Formulas volume may still require a company to leave much of its general and administrative expenses in place, due... ch00_4 711 .qxd 9 /13 /06 12 :35 PM Page xx ch 01_ 4 711 .qxd 9 /13 /06 12 :36 PM Page 1 1 Introduction E very department in every business produces some kind of information that can be used by its manager to measure performance This information may be related to operational considerations within the department, the financial condition of the entire company, or the performance of a company’s suppliers and customers... Demand Elasticity Days of Backlog 2 81 2 81 282 284 285 286 287 289 290 2 91 292 293 294 296 297 298 299 15 Measurement Analysis with an Electronic Spreadsheet Financial Statement Proportional Analysis Financial Statement Ratio Analysis Automated Ratio Result Analysis Leverage Analysis Trend Analysis Forecasting Cash Flow Analysis Capital Asset Analysis 3 01 302 303 306 307 309 311 314 316 ch00_4 711 .qxd . 9 /13 /06 12 :35 PM Page ii Business Ratios and Formulas SECOND EDITION ch00_4 711 .qxd 9 /13 /06 12 :35 PM Page i ch00_4 711 .qxd 9 /13 /06 12 :35 PM Page ii Business Ratios and Formulas A COMPREHENSIVE GUIDE SECOND. 10 7 Times Interest Earned 10 7 Debt Coverage Ratio 10 8 Asset Quality Index 11 0 Accruals to Assets Ratio 11 1 Times Preferred Dividend Earned 11 3 Debt to Equity Ratio 11 4 Funded Capital Ratio 11 6 Retained. Business Ratios and Formulas A COMPREHENSIVE GUIDE SECOND EDITION Steven M. Bragg John Wiley & Sons, Inc. ch00_4 711 .qxd 9 /13 /06 12 :35 PM Page iii ch00_4 711 .qxd 9 /13 /06 12 :35 PM Page ii Business