Riverside
Stats
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 Dennis Waterman President & CEO |
Financial Analysis Information Sheet
PCI Will Help You Know Your Business Better
Ratio And Percentages
Each category of ratios provides a different and useful prospective
on the economic health of your company.
Solvency Ratios | Leverage
Ratios | Profitability
Ratios
Efficiency Ratios |
Expenses to Sales Percentages
Solvency Ratios - Measures the ability of your company to survive in the short term. The risk is high if your company does not have enough current assets, such as cash or receivables, to pay current bills. The ratios in this category are:
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Current Ratio - Measures current assets to current liabilities and indicates your company's ability to pay current creditors. Quick Ratio - The Acid Test - Measures the ability to pay debts in a hurry. Liquidation Ratio - The most severe measure of your company's ability to survive a crisis. Total Liabilities to Net Worth - Measures the amount of funds supplied by the owners to capital provided by creditors. Net Sales to Working Capital - Another means to evaluate your company's health. Coverage Ratio - Measures the number of times interest expense can be paid out of earning before taxes. |
Leverage Ratios - Indicates how your company's assets are financed - by borrowing or by the owners' equity. The ratios include:
Debt Ratio - Expresses total liabilities as a percentage of total assets. The ratio shows what portion of the business assets are financed by debt as opposed to earnings or stockholders contributions.
Return of Equity - The ratio is an indicator of your company's use of its invested capital.
Return of Equity Before Interest - How much of your company's worth is being fueled with borrowed funds.
Profit Margin Before Federal Income Tax (FIT) - Shows the role that sales played in your company's profitability.
Profit Margin After FIT - Shows the effect of taxes.
Profitability Ratios - An important measure of your company's performance and its economic good health. The ratios are:
Return on Growth profit - Gives an idea of the spread between net profit and gross profit.
Gross Profit to Sales - Gross Margin is often used to determine how well your company can weather tough times.
Operating Expense to Sales - Another indicator of the relationship between gross margin and sales.
Operating Margin - Useful in evaluating management's skill in minimizing operating expenses.
Efficiency Ratios - Measure of management's ability to control expenses. The ratios covered are:
Turnover of Assets - An indication of the productivity of your business.
Income Tax Rate Ratio - Determines the amount of government taxes taken out of profits.
Expenses to Gross Profit - Means of analyzing your company that has reached peak sales and must cut expenses to remain competitive.
Depreciation Expense Ratio - Indication if there is enough sales to cover this often very significant overhead item.
Days Sales in Inventory - Shows what the sales department can rely on in terms of inventory.
Expenses to Sales Percentages - Often useful to compare each item of your company's expenses to sales.
Cost of Sales and Operations - Direct costs incurred in producing goods or providing services.
Advertising - Must be reasonably related to the trade or business and include the cost of promotion and publicity.
Depletion, Deprecation and Amortization
Taxes Paid - Ordinary state and local taxes.
Interest Paid - Expenses paid on business indebtedness.
Officers' Compensation - Includes salaries, wages, stock bonuses, bonds and other forms of compensation paid to officers for personal services rendered.
Other Costs - Expenses not specified above.