14.4 Ratios
К оглавлению1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1617 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
85 86 87 88 89 90 91 92 93 94 95 96 97
Problem. Given historical and forecasted financial statements for Cutting Edge B2B Inc., create the
historical and forecasted financial ratios.
Solution Strategy. Calculate the financial ratios by referencing the appropriate items on the Income
Statement or Balance Sheet.
FIGURE 14.7 Historical and Forecasted Financial Ratios for Cutting Edge B2B Inc.
How To Build Your Own Spreadsheet Model.
1. Open the Cash Flow Spreadsheet. Open the spreadsheet that you created for Corporate
Financial Planning - Cash Flow and immediately save the spreadsheet under a new name using
the File | Save As command.
2. Profitability. These three ratios indicate the ability of the firm to use its assets productively in
generating revenues.
o Return on Sales (ROS) = EBIT / Sales. Enter =C19/C13 in cell C140 and copy it across.
o Return on Assets (ROA) = EBIT / Average Total Assets = EBIT / ((Total Assets (t-1) +
Total Assets (t)) / 2). Enter =C19/((B43+C43)/2) in cell C141 and copy it across.
o Return on Equity (ROE) = Net Income / Average Total Shareholders Equity = Net
Income / ((Total Shareholders Equity (t-1) + Total Shareholders Equity (t)) / 2). Enter
=C23/((B57+C57)/2) in cell C142 and copy it across.
3. Asset Turnover. These three ratios indicate the degree of profitability of the company.
o Receivables Turnover = Sales / Average Receivables = Sales / ((Receivables (t-1) +
Receivables (t)) / 2). Enter =C13/((B35+C35)/2) in cell C145 and copy it across.
o Inventory Turnover = Cost of Goods Sold / Average Inventories = Sales / ((Inventories
(t-1) + Inventories (t)) / 2). Enter =C14/((B36+C36)/2) in cell C146 and copy it across.
o Asset Turnover = Sales / Average Total Assets = Sales / ((Total Assets (t-1) + Total
Assets (t)) / 2). Enter =C13/((B43+C43)/2) in cell C147 and copy it across.
4. Financial Leverage. These two ratios indicate the degree of burden of the company's debt.
o Debt = Total Debt / Total Assets = (Short-term Debt + Long-term Debt) / Total Assets.
Enter =(C48+C51)/C43 in cell C150 and copy it across.
o Times Interest Earned = EBIT / Interest Expense. Enter =C19/C21 in cell C151 and copy
it across.
5. Liquidity. These two ratios indicate the ability of the company to pay its bills and remain solvent.
o Current = Total Current Assets / Total Current Liabilities. Enter =C37/C49 in cell C154
and copy it across.
o Quick = (Cash and Equivalents + Receivables) / Total Current Liabilities. Enter
=(C34+C35)/C49 in cell C155 and copy it across.
6. Market Value. These two ratios indicate the market value of the firm relative to accounting
measures of firm value.
o Price To Earnings = (Market Price / Share) / Earnings Per Shares. Enter =C62/C25 in cell
C158 and copy it across.
o Market To Book = (Market Price / Share) / (Total Shareholders Equity / Shares
Outstanding). Enter =C62/(C57/C24) in cell C159 and copy it across.
The financial ratios are very useful in interpreting the financial condition of the firm.
Problem. Given historical and forecasted financial statements for Cutting Edge B2B Inc., create the
historical and forecasted financial ratios.
Solution Strategy. Calculate the financial ratios by referencing the appropriate items on the Income
Statement or Balance Sheet.
FIGURE 14.7 Historical and Forecasted Financial Ratios for Cutting Edge B2B Inc.
How To Build Your Own Spreadsheet Model.
1. Open the Cash Flow Spreadsheet. Open the spreadsheet that you created for Corporate
Financial Planning - Cash Flow and immediately save the spreadsheet under a new name using
the File | Save As command.
2. Profitability. These three ratios indicate the ability of the firm to use its assets productively in
generating revenues.
o Return on Sales (ROS) = EBIT / Sales. Enter =C19/C13 in cell C140 and copy it across.
o Return on Assets (ROA) = EBIT / Average Total Assets = EBIT / ((Total Assets (t-1) +
Total Assets (t)) / 2). Enter =C19/((B43+C43)/2) in cell C141 and copy it across.
o Return on Equity (ROE) = Net Income / Average Total Shareholders Equity = Net
Income / ((Total Shareholders Equity (t-1) + Total Shareholders Equity (t)) / 2). Enter
=C23/((B57+C57)/2) in cell C142 and copy it across.
3. Asset Turnover. These three ratios indicate the degree of profitability of the company.
o Receivables Turnover = Sales / Average Receivables = Sales / ((Receivables (t-1) +
Receivables (t)) / 2). Enter =C13/((B35+C35)/2) in cell C145 and copy it across.
o Inventory Turnover = Cost of Goods Sold / Average Inventories = Sales / ((Inventories
(t-1) + Inventories (t)) / 2). Enter =C14/((B36+C36)/2) in cell C146 and copy it across.
o Asset Turnover = Sales / Average Total Assets = Sales / ((Total Assets (t-1) + Total
Assets (t)) / 2). Enter =C13/((B43+C43)/2) in cell C147 and copy it across.
4. Financial Leverage. These two ratios indicate the degree of burden of the company's debt.
o Debt = Total Debt / Total Assets = (Short-term Debt + Long-term Debt) / Total Assets.
Enter =(C48+C51)/C43 in cell C150 and copy it across.
o Times Interest Earned = EBIT / Interest Expense. Enter =C19/C21 in cell C151 and copy
it across.
5. Liquidity. These two ratios indicate the ability of the company to pay its bills and remain solvent.
o Current = Total Current Assets / Total Current Liabilities. Enter =C37/C49 in cell C154
and copy it across.
o Quick = (Cash and Equivalents + Receivables) / Total Current Liabilities. Enter
=(C34+C35)/C49 in cell C155 and copy it across.
6. Market Value. These two ratios indicate the market value of the firm relative to accounting
measures of firm value.
o Price To Earnings = (Market Price / Share) / Earnings Per Shares. Enter =C62/C25 in cell
C158 and copy it across.
o Market To Book = (Market Price / Share) / (Total Shareholders Equity / Shares
Outstanding). Enter =C62/(C57/C24) in cell C159 and copy it across.
The financial ratios are very useful in interpreting the financial condition of the firm.