Financial Ratio

1. Liquidity Ratios
2. Profitability Ratios
3. Activity Ratios
4. Leverage Ratios
5. Other Ratios

1. Liquidity Ratios
1-liquidity = cash = ability to pay
intrest,tax,devidant + ability for acusion
2- cash is very important than profit cash is
realizing profit
Current ratio Current assets Times
‫ كل‬LIABILITY L ‫ متغطي اد اية ب‬ASSETS Current liabilities

IS BETTER

very high may be no utilization of thr resourses

Quick (acid test) ratio Current asset – Inventory Times

Current liabilities
IS BETTER

Inventory to Working Capital Inventory Times

Current assets – Current liabilities

Cash ratio Cash + Cash equivalents Times

Cash equivalents=‫ييييييكات‬
‫ش‬ Current liabilities

2. Profitability Ratios
Return =net profit/ ****
Margin = ****/sales
 Net profit margin Net profit after taxes Percentage
Net sales

Gross profit margin Sales – Cost of goods sold Percentage

activity befor interest and tax Net sales

Return on investment (ROI) Net profit after taxes Percentage

Total assets

Return on equity (ROE) Net profit after taxes Percentage

shareholders' equity

Earnings per share (EPS) Net profit after taxes – Dollar Per Share
‫مكسب السهم‬ Preferred stock dividends
Average number of
common shares

3. Activity Ratios
Inventory turnover Net sales Times
Inventory
inventory =( inv 2006-inv 2007)/2 ‫فكيييم‬
‫ييلامخزن ييلييييا‬
‫ييييفييلاسنة‬

Days of inventory Inventory Days

Cost of goods sold / 365

Net working capital turnover Net sales Times

*-Net working capital\=current asset Net working capital
-current lia *-
short term

Asset turnover Sales Times

Total assets

Fixed asset turnover Sales Times

long term Fixed assets
 Average collection period Accounts receivable Days
lower is better Sales for year / 365

Accounts receivable turnover Annual credit sales Decimal

Accounts receivable

Accounts payable period Accounts payable Days

Cost of Sales for year / 365

Days of cash Cash Days

Net sales for year / 365

4. Leverage Ratios
Debt to asset ratio Total debt Percentage
Total assets

Debt to equity ratio (leverage) Total debt Percentage

Shareholders' equity

Long-term debt to capital structure Long–term debt Percentage

Shareholders' equity

Times interest earned Profit before taxes + Times

Interest charges
Interest charges

Coverage of fixed charges Profit before taxes + Times

Interest charges +
Lease charges
Interest charges +
Lease obligations

Current liabilities to equity Current liabilities Percentage

Shareholders' equity

5. Other Ratios
Price/earnings ratio Market price per share Times
 ‫تاخد ثمن السهم بعد كام مرة توزيع‬ Earnings per share

Dividend payout ratio Annual dividends per share Percentage

Annual earnings per share

Dividend Yeild on Common Stock Annual dividends per share Percentage

Current market price per share

Equity

prefeard common
‫له اولوية في توزيع الراباح‬

stock is partener
Bond : borowing from people may be increasing in price due to the effect of itrest cost is adebt without intrest

loane: borrowing from bank and it is constant

when inflation is high leverage is good choise

leasing is optimum to decreas the taxes

A short-term indicator of the company’s
ability to pay its short-term liabilities
from short-term assets; how
much of current assets are available to
cover each dollar of current liabilities.
Usually a high liquid ratios an indication that the firm is liquid and
has the ability to meet its current or liquid liabilities in time and on
the other hand a low liquidity ratio represents that the firm's
liquidity position is not good. As a convention, generally, a quick
ratio of "one to one" (1:1) is considered to be satisfactory.

Measures the company’s ability to pay

off its short-term obligations from
current assets, excluding inventories.

A measure of inventory balance;

measures the extent to which the
cushion of excess current assets over
current liabilities may be threatened
by unfavorable changes in inventory.

Measures the extent to which the

company’s capital is in cash or cash
equivalents; shows how much of the
current obligations can be paid from
cash or near-cash assets.
Shows how much after-tax profits are
generated by each dollar of sales.

Indicates the total margin available to

cover other expenses beyond cost of
goods sold, and still yield a profit.

Measures the rate of return on the total

assets utilized in the company; a measure
of management’s efficiency, it shows
the return on all the assets under its control
regardless of source of financing.

Measures the rate of return on the

book value of shareholkders’ total
investment in the company.

Shows the after-tax earnings generated

for each share of common stock.

Measures the number of times that

average inventory of finished goods

was turned over or sold during a

period of time, usually a year.

Measures the number of one day’s

worth of inventory that a company
has on hand at any given time.

Measures how effectively the net working

capital is used to generate sales.

Measures the utilization of all the company’s

assets; measures how many sales
are generated by each dollar of assets.

Measures the utilization of the company’s

fixed assets (i.e., plant and equipment);
measures how many sales are
generated by each dollar of fixed assets.

Indicates the average length of time in

days that a company must wait to collect
a sale after making it; may be
compared to the credit terms offered
by the company to its customers.

Indicates the number of times that

accounts receivable are cycled during
the period (usually a year).

Indicates the average length of time in

days that the company takes to pay its
credit purchases.

Indicates the number of days of cash

on hand, at present sales levels.

Measures the extent to which borrowed

funds have been used to
finance the company’s assets.

Measures the funds provided by creditors

versus the funds provided by
owners.

Measures the long-term component

of capital structure.

Indicates the ability of the company

to meet its annual interest costs.

A measure of the company’s ability to

meet all of its fixed-charge
obligations.

Measures the short-term financing

portion versus that provided by owners.

Shows the current market’s evaluation

 of a stock, based on its earnings;
shows how much the investor is willing
to pay for each dollar of earnings.

Indicates the percentage of profit that

is paid out as dividends.

Indicates the dividend rate of return

to common shareholders at the current

debt without intrest

Each pound of current liabilities is covered how many times by current assets
(2-4)
1. Income Statement

2005 2006
Sales 160123000 20
Cost of Goods Sold -148869000 -3
Gross Profit 11254000 17
Marketing & Sales Expenses -241000 -1
General & Administrative Expenses -19180000 -1
EBITDA -8167000 15
Depreciation -2
Amortization 1899000
EBIT -6268000 13
Interest Expense -210000
Net Operating Profit After Interest -6478000 13
Interest Income 8783000 8
Investment Income 2000 12
Provision for Doubtful Receivables
Provisions
Foreign Exchange Gain/Loss
Other Bank Charges -12615000 -3
Other Income (Expenses)
Net Profit Before Taxes -10308000 30
Tax Provision -5
Net Profit After Taxes -10308000 25

2.Statement of Changes In Shareholder`s Equity

2005 2006
Opening Balance -3465000 25
Net Profit for the Year -10308000 25
Shareholder Divideneds
Ending Balance -13773000 50
Number Of Outstanding Shares
Market Price
Divideneds
3.Statement of Balance Sheet
2005 2006
Assets
 Current Assets
Cash 28,894,000 10
Short-Term Investment 5
Account Receivable 8,772,000 12
Inventory 11,578,000 13
Prepaid Expenses 4
Other Current Asset 6
Total Current Assets 49,244,000 50
Property & Equipment 38,505,000 25
Accumlated Deprecition -5
Net Fixed Assets 38,505,000 20
Long Term Investments 136,378,000 10
Projects Under Construction 54,427,000 5
Other Non-Current Assets 15
Total Non-Current Assets 229,310,000 50
Total Assets 278,554,000 100

2005 2006
Liabilities
Current Liabilities
Bank Short-Term Borrowings 20
CPLTD 15
Accounts & Notes Payable 24,416,000
Accrued Expenses 5
Other Current Liabilities 28,128,000
Total Current Liabilities 52,544,000 40
Long Term Debt 172,049,000 10
Other Long Term Liabilities 57,426,000
Total Liabilities 282,019,000 50
Owners' Equity
Paid-in Capital 4562000 25
Legal Reserves -7846000
Other Reserves 19000
Retained Earnings(Last year) -200000
Profit For The Period 25
Total Equity -3465000 50
Total Liabilities & Equity 278,554,000 100
Check 0 0

4.Ratio Analysis

2005 2006

1. Liquidity Ratios
Current ratio 0.937195493 1.25
Quick (acid test) ratio 0.716846833 0.925
Inventory to Working Capital -3.50848485 1.3
Cash ratio 0.549901035 0.25
 2. Profitability Ratios
Net profit margin -0.06437551 1.25
Gross profit margin 0.07028347 0.85
Return on investment (ROI) -0.03700539 0.25
Return on equity (ROE) 2.974891775 0.5
Earnings per share (EPS) #DIV/0! #DIV/0!
3. Activity Ratios
Inventory turnover 13.82993609 1.5384615
Days of inventory 28.38717261 1581.6667
Net working capital turnover -48.5221212 2
Asset turnover 0.574836477 0.2
Fixed asset turnover 4.158498896 1
Average collection period 19.99575326 219
Accounts receivable turnover 18.25387597 1.6666667
Accounts payable period 59.8636385 0
Days of cash -11.4807126 1800.6667
4. Leverage Ratios
Debt to asset ratio 1.01243924 0.5
Debt to equity ratio -81.3907648 1
Long-term debt to capital structure -49.6533911 0.2
Times interest earned -29.847619 #DIV/0!
Coverage of fixed charges N/A N/A
Current liabilities to equity -15.1642136 0.8
5. Other Ratios
Price/earnings ratio #DIV/0! #DIV/0!
Dividend payout ratio 0 0
Retention rate 1 1
Growth Rate 2.974891775 0.5
 2007 2008
176896000 171652000
-144924000 -135856000
31972000 35796000
-6337000 -2212000
-18768000 -23903000
6867000 9681000

1249000 1243000
8116000 10924000
-8417000 -7071000
-301000 3853000
280000 282000

-21000 4135000

-21000 4135000

2007 2008
0 0
-21000 4135000

-21000 4135000

2007 2008
 0 0

0 0

0 0
0 0

2007 2008

0 0

0 0

-21000 4135000
-21000 4135000
-21,000 4,135,000
21,000 -4,135,000

2007 2008

#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
-0.00011871 0.024089437
0.180738965 0.208538205
#DIV/0! #DIV/0!
1 1
#DIV/0! #DIV/0!

#DIV/0! #DIV/0!
0 0
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
0 0
#DIV/0! #DIV/0!
0 0
0 0

#DIV/0! #DIV/0!
0 0
0 0
0.96423904 1.544901711
N/A N/A
0 0

#DIV/0! #DIV/0!
0 0
1 1
1 1
 1-Liquidity Ratios

optimum 1 2 3
Current asset
Current Ratio 1 0.937195 1.173849 0.938074
Current Liabilities

Measure the extent to which the claims of short-term creditors are covered by assets that can be q

Current asset - Inventory

Quick Ratio (acid test) 0.716847 0.98224 0.733693
Current Liabilities
Measure a company's ability to pay off the claims of short-term creditors without rely on thesale of its inventory
Inventory to Working Inventory
-3.508485 1.102157 -3.300429
Capital Current asset - Current Liabilities
Cash + Cash equivalent
Cash Ratio 0.549901 0.529998 0.446332
Current Liabilities

2-Profitability Ratio

1 2 3
Net profit after taxes
Net profit margin Net sales -7.88% 0.81% 2.03%

Gross profit margin

Gross Profit
(activity before interest 7.03% 18.07% 20.85%
Net Sales
and tax)
Return on investment Net profit after taxes
-4.53% 0.52% 1.19%
(ROI) Total assets
Net profit after taxes
Return on equity (ROE) 3.64 0.11 0.40
Shareholders' Equity
Net profit after Tax - preferred stock
Earnings per share
dividends #DIV/0! #DIV/0! #DIV/0!
(EPS)
Avg.# of common shares

3-Activity Ratios

1 2 3
COGS
Inventory Turnover 12.85792 14.11002 12.61899
Inventory

How effectively the company is manageing its assets"it is usefull when the co. car

Inventory
Days Of Inventory 28.38717 25.86814 28.92467
COGD/365
Net Working Capital Net Sales
-48.52212 18.98229 -52.6217
turnover Net working Capital
Net Sales
Assets turnover 0.574836 0.641076 0.586536
Total Assets
Net Sales
Fixed Assets turnover 4.158499 4.384148 3.852933
Fixed assets
Average collection Accounts receivable
1.987722 11.85194 32.18725
period "DSO" Net sales/365
Accounts Receivable Annual credit sales
183.6273 30.79666 11.3399
turnover Accounts receivable
Accounts payable Accounts Payable
55.65621 99.87484 112.01
period Net sales/365
Cash
Days of cash 65.8638 58.62004 49.99368
Net sales/365

4-Leverage Ratio

1 2 3
Total Debt
Debt to assets Ratio 1.012439 0.951286 0.945174
Total Assets
Total Debt
Debt to equity Ratio -81.39076 19.5279 31.52599
Shareholders' equity
EBIT
Times-covered Ratio <1 -0.713651 1.128193 1.686324
Total Interest charges
Long term debt to Long-term Debt
-49.65339 11.33016 19.71427
capital structure Shareholders' equity
Profit before Tax+Interst Charges
Time interest earned 0.713651 -1.128193 -1.686324
Interest charges
Profit before Tax+Interst Charges+
Coverage of fixed
lease charges
charges
Interest charges+lease charges
Current liabilities to Current Liabilities
-15.16421 3.987799 6.003647
equity Shareholders' equity

5-Other Ratio

1 2 3
Market Price/share
PE Ratio #DIV/0! #DIV/0! #DIV/0!
Earning per share(EPS)
Annual Dividends per share
Divided payout Ratio 0 0 0
Annual earning per share
Annual Dividends per share
Dividend yield #DIV/0! #DIV/0! #DIV/0!
Current Market price per share
Dividends
0 0 0
Dividend payout ratio Net profit after tax

Retention rate 1 1 1

3.640115 0.107127 0.397424

Growth Rate
Cash flow position is simply cash received minus cash distributed. The net cash flow can be taken from a company's statem
future investments without having borrowing money from bankers or investors. this is desirable because the co. avoid th
means that a co. has to turn to external sources to fund future investments. Generally, companies in strong-growth indus
investment needs are substantial), whereas successful companies based in mature industries gener
A company's internally generated cash flow is calculated by adding back its depreciation provision to profit after interst, ta
new-investment expenditures, the co. has little choice but to borrow funds to make up the shortfall or to curtail investmen
build up its liquidity(that is through inv. in financial assets) or to repay existin
 1 2 3

Total Current Asset 49244000 62923000 49414000 Times

red by assets that can be quickly covered into cash. At least 1

Total Current Liabilities 52544000 53604000 52676000 Times

on thesale of its inventory "it practice when the sale of inventory is difficult"

Inventory 11578000 10271000 10766000 Times

Cash + Cash Equivalent 28894000 28410000 23511000 Times

1 2 3

Net Profit after tax -12613000 1440000 3487000 %

Net Sales 160123000 176896000 171652000 %

Gross profit 11254000 31972000 35796000 %

Total Assets 278554000 275936000 292654000 %

Shareholders' Equity -3465000 13442000 8774000 $/share

Preferred stock dividends 0 0 0

Avg. # of common shares

1 2 3

Inventory 11578000 10271000 10766000 Decimal

is usefull when the co. carrying excess stock"

COGS 148869000 144924000 135856000 Days

Net working capital -3300000 9319000 -3262000 Decimal

Total assets 278554000 275936000 292654000 Decimal

Fixed assets"property&equip" 38505000 40349000 44551000 Decimal

Accounts Receivable 872000 5744000 15137000 Days

Annual credit sales 160123000 176896000 171652000 Decimal

Accounts Payable 24416000 48404000 52676000 Days

Cash 28894000 28410000 23511000 Days

1 2 3

Total Liabilities 282019000 262494000 276609000 %

Long-term Debt 172049000 152300000 172973000 %

If its less than 1, then the co. is unable to meet its interest cost

EBIT -6268000 9496000 11924000 %

Interest expenses 8783000 8417000 7071000 Decimal

Decimal

1 2 3

Market Price/share Decimal

Dividends
 n from a company's statement of cash flow. A strong position cash flow enables a company to fund
e because the co. avoid the need to pay out interest or dividends. a weak or negative cash flow
nies in strong-growth industries often find themselves in a poor cashflow position (because their
in mature industries generally find themselves in a strong cash flow position.
ion to profit after interst, taxes, and dividend payments. if this fig. is insufficient to cover proposed
tfall or to curtail investments. if this fig. exceeds proposed new inv., the co. can use the excess to
assets) or to repay existing loans ahed of schedule.