Ratio 1 Name & Formula:

Current Ratio = CR = CA/CL

1. What does this ratio tell you?

2. In general, would you like this ratio to be higher or lower? Why?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5. Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	2.6
Middle quartile	1.8
Lower quartile	1.4

6. What are some risks or concerns if this ratio is TOO LOW?

7. What are some actions that could INCREASE this ratio?

8. What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?

Ratio Analysis Activity

Ratio 2 days Cash on hand

1. What does this ratio tell you?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5. Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	n/a days
Middle quartile	n/a
Lower quartile	n/a

6. What are some risks or concerns if this ratio is TOO LOW?

7. What are some actions that could INCREASE this ratio?

8. What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?

Ratio 3

Days in Accounts Receivables

1. What does this ratio tell you?

2. In general, would you like this ratio to be higher or lower? Why?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5. Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	43 days
Middle quartile	31
Lower quartile	14

6. What are some risks or concerns if this ratio is TOO LOW?

7. What are some actions that could INCREASE this ratio?

8. What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?

Ratio 4

Debt to Equity

1. What does this ratio tell you?

2. In general, would you like this ratio to be higher or lower? Why?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5. Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	2.4
Middle quartile	0.78
Lower quartile	0.33

6. What are some risks or concerns if this ratio is TOO LOW?

7. What are some actions that could INCREASE this ratio?

8. What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?

Ratio 5 Name

Operating Profit Margin

1. What does this ratio tell you?

2. In general, would you like this ratio to be higher or lower? Why?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5. Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	n/a %, BUT Net PM = 4.9%
Middle quartile	n/a, BUT Net PM = 1.5%
Lower quartile	n/a, BUT Net PM = 0.5%

6. What are some risks or concerns if this ratio is TOO LOW?

7. What are some actions that could INCREASE this ratio?

8. What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?

Ratio 6

Net Profit Margin

Aka Return on Sales

1. What does this ratio tell you?

2. In general, would you like this ratio to be higher or lower? Why?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5. Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	4.9%
Middle quartile	1.5
Lower quartile	0.5

6. What are some risks or concerns if this ratio is TOO LOW?

7. What are some actions that could INCREASE this ratio?

8. What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?

Ratio Analysis Activity

Ratio 7 Name & Formula:

Return on Assets = net income / total assets

1. What does this ratio tell you?

2. In general, would you like this ratio to be higher or lower? Why?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5. Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	10%
Middle quartile	3.3
Lower quartile	1.3

6. What are some risks or concerns if this ratio is TOO LOW?

7. What are some actions that could INCREASE this ratio?

8. What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?

Ratio Analysis Activity

Ratio 8 Name & Formula:

Return on Equity = net income / total equity

1. What does this ratio tell you?

2. In general, would you like this ratio to be higher or lower? Why?

3. Compute this ratio for Year 2:

4. Trend Analysis: Compute this ratio for Year 1. Did the ratio get better or worse from year 1 to year 2?

5. Industry Analysis: Estimates of industry averages for this ratio: How does the ratio compare with the industry?

Upper quartile	12.5%
Middle quartile	5.2
Lower quartile	3.5

6. What are some risks or concerns if this ratio is TOO LOW?

7. What are some actions that could INCREASE this ratio?

8. What are some risks or concerns if this ratio is TOO HIGH?

9. What are some actions that could DECREASE this ratio?

10. Why would this ratio be commonly considered as a key ratio at your organization, and in organizations in general?

11. What actions and/or decisions (if any) in your operational area/unit could influence this ratio?