Fin 370 Week 1 Industry Ratios And Financial Ratio Analysis
Industry Averages and Financial Ratios Paper
Bryan Sawyer, Frank Figueroa, Jaime Sandez, Lesley Gonzalez
Finance for Business/FIN 370
May 12, 2015
Instructor: John Kadlec
Instructions:
Find a publicly-traded company using a financial information website. Some example companies include the following:
Safeway Inc.
The Boeing Company
General Motors Company
Intel Corporation
Microsoft Corporation
Exxon Mobil Corporation
Watch the Industry Averages and Financial Ratios video and use the industry classification from the financial services website to locate the company 's SIC code on the U.S. Department of Labor 's website.
Find the industry ratios for the company using the Dun &
Bradstreet® Key Business Ratios link in the Week 2 Electronic …show more content…
Accounts Receivable ÷ Sales x 365 Days
• Sales to Inventory Ratio provides a yardstick for comparing stock-to-sales ratios of a business with others in the same industry. A high ratio may indicate that sales are being lost because of low inventory and/or customers are buying elsewhere. A low ratio may indicate that inventories are obsolete or stagnant. Annual Net Sale ÷ Inventory
• Assets to Sales Ratio shows how efficiently a business is usingits assets to generate revenue. A high ratio may indicate the business is not aggressive or that its assts are not fully used. A low ratio may indicate a company is selling more than can safely fulfilled by its assets. Total Assets ÷ Net Sales
• Sales to Net Working Capital Ratio shows the number of times working capital turns over annually in relation to net sales. A high turnover rate may indicate that the business relies heavily on credit. Sales ÷ Net Working …show more content…
A low percentage may indicate a healthy ratio. A high percentage may indicate that the business may be using suppliers to help finance its operation. Accounts Payable ÷ Net Sales Profitability Ratios Profitability ratios measure how well a company is performing by analyzing how profit was earned relative to sales, total assets and net worth. D&B uses three key financial business ratios to measure a company’s efficiency:
• Return on Sales (Profit Margin) Ratio measures the profits after taxes on the year’s sales. The higher the ratio, the better prepared the business is to handle downtrends brought on by adverse conditions. Net Profit After Taxes ÷ Net Sales
• Return on Assets (ROA) Ratio shows the after tax earnings of assets and is an indicator of how profitable a company is. Return on assets ratio is the key indicator of the profitability of a company. It matches net profits after taxes with the assets used to earn such profits. A high percentage rated indicates the company is well run and has a healthy return on assets. Net Profit After Taxes ÷ Total Assets
• Return on Net Worth Ratio measure the ability of a company’s management to realize an adequate return on the capital invested by the owners in the company. Net Profit After Taxes ÷ Net
Bryan Sawyer, Frank Figueroa, Jaime Sandez, Lesley Gonzalez
Finance for Business/FIN 370
May 12, 2015
Instructor: John Kadlec
Instructions:
Find a publicly-traded company using a financial information website. Some example companies include the following:
Safeway Inc.
The Boeing Company
General Motors Company
Intel Corporation
Microsoft Corporation
Exxon Mobil Corporation
Watch the Industry Averages and Financial Ratios video and use the industry classification from the financial services website to locate the company 's SIC code on the U.S. Department of Labor 's website.
Find the industry ratios for the company using the Dun &
Bradstreet® Key Business Ratios link in the Week 2 Electronic …show more content…
Accounts Receivable ÷ Sales x 365 Days
• Sales to Inventory Ratio provides a yardstick for comparing stock-to-sales ratios of a business with others in the same industry. A high ratio may indicate that sales are being lost because of low inventory and/or customers are buying elsewhere. A low ratio may indicate that inventories are obsolete or stagnant. Annual Net Sale ÷ Inventory
• Assets to Sales Ratio shows how efficiently a business is usingits assets to generate revenue. A high ratio may indicate the business is not aggressive or that its assts are not fully used. A low ratio may indicate a company is selling more than can safely fulfilled by its assets. Total Assets ÷ Net Sales
• Sales to Net Working Capital Ratio shows the number of times working capital turns over annually in relation to net sales. A high turnover rate may indicate that the business relies heavily on credit. Sales ÷ Net Working …show more content…
A low percentage may indicate a healthy ratio. A high percentage may indicate that the business may be using suppliers to help finance its operation. Accounts Payable ÷ Net Sales Profitability Ratios Profitability ratios measure how well a company is performing by analyzing how profit was earned relative to sales, total assets and net worth. D&B uses three key financial business ratios to measure a company’s efficiency:
• Return on Sales (Profit Margin) Ratio measures the profits after taxes on the year’s sales. The higher the ratio, the better prepared the business is to handle downtrends brought on by adverse conditions. Net Profit After Taxes ÷ Net Sales
• Return on Assets (ROA) Ratio shows the after tax earnings of assets and is an indicator of how profitable a company is. Return on assets ratio is the key indicator of the profitability of a company. It matches net profits after taxes with the assets used to earn such profits. A high percentage rated indicates the company is well run and has a healthy return on assets. Net Profit After Taxes ÷ Total Assets
• Return on Net Worth Ratio measure the ability of a company’s management to realize an adequate return on the capital invested by the owners in the company. Net Profit After Taxes ÷ Net