Financial Ratios - Year 1
Prepared By: Company Name:
Sam Miller Aviator Inc
Ratios Year One Year Two Year Three  Industry Norms[1] Notes
Liquidity          
Current Ratio 8.8[2] 12.7 16.1    
Quick Ratio 6.9[3] 11.4 15.2    
Safety          
Debt to Equity Ratio 0.1[4] 0.1 0.1    
Debt-Service Coverage Ratio - DSCR 5.0[5] 5.1 5.2    
Profitability          
Sales Growth  0.0%[6] 10.0% 10.0%    
COGS to Sales 64.9%[7] 64.9% 64.9%    
Gross Profit Margin 35.1%[8] 35.1% 35.1%    
SG&A to Sales 3.9%[9] 3.7% 3.6%    
Net Profit Margin 18.2%[10] 18.5% 18.7%    
Return on Equity (ROE) 48.1%[11] 36.1% 29.9%    
Return on Assets 43.7%[12] 33.6% 28.2%    
Owner's Compensation to Sales 0.1%[13] 0.1% 0.1%    
Efficiency          
Days in Receivables 24.0[14] 24.0 24.0    
Accounts Receivable Turnover 15.0[15] 15.0 15.0    
Days in Inventory 22.6[16] 20.9 19.0    
Inventory Turnover 15.9[17] 17.5 19.2    
Sales to Total Assets 2.4[18] 1.8 1.5    
[1]

With some research, you can find industry norms for each ratio. The Risk Management Association provides Annual Statement Studies with this information, for a fee. Visit your local library to see if they have a free copy you can use. You can also refer to trade magazines or other sources of industry data, such as www.bizstats.com or  http://biz.yahoo.com/p/industries.html. You may need to use a mix of sources, as one source may not provide all of the data. Speak with your mentor to ensure that the industry norms you are using are relevant to your business.

Leave this column blank if you do not have the industry information.
[2]
An indication of a company's ability to meet short-term debt obligations.
[3]
The ratio between all assets quickly convertible into cash and current liabilities. Measures a company's liquidity. Also called acid-test ratio.
[4]
This ratio expresses the relationship between capital contributed by creditors and that contributed by owners.
[5]
This ratio indicates how well your cash flow covers debt and the capability of the business to take on additional debt.
[6]
This ratio calculates the percentage of increase (or decrease) in sales between the current year and the previous year.
[7]
The percentage of sales used to pay for the COGS (expenses which directly vary with sales) is expressed in this ratio.
[8]
This ratio indicates how much profit is earned on your products without consideration of indirect costs, selling and administration costs.
[9]
This ratio measures the percentage of selling, general and administrative costs to your amount of sales.
[10]
Net profit margin shows how much profit comes from every dollar of sales.
[11]
Return on equity determines the rate of return on your investment in the business.  As an owner or shareholder this is one of the most important ratios as it shows the hard fact about the business - are you making enough of a profit to compensate you for the risk of being in business?
[12]
This ratio measures how effectively assets are used to generate a return.
[13]
This ratio measures the owner's compensation as a percentage of sales.
[14]
Days in receivable calculates the average number of days it takes to collect your account receivable (number of days of sales in receivables).
[15]
This ratio tells you the number of times accounts receivable turnover during the year.
[16]
This ratio shows the average number of days it will take to sell your inventory.
[17]
This ratio calculates the number of times inventory is turned over (or sold) during the year.
[18]
This ratio indicates how efficiently your business generates sales on every dollar of assets.