FINANCIAL RATIOS FORMULA/COMPUTATION ANALYSIS

LIQUIDITY RATIO – measure firms ability to meet or pay short term obligation when it matures.

Current Ratio Current Asset 1,167,541 = 1.93 weak, rule of thumb is 2:1
Current Liabilities 606,444

Quick Asset Ratio Current Asset - Inventory

Current Liabilities

LEVERAGE RATIO – measure the extent to which a firm has been financed by debt

Debt to Total Asset Ratio Total Liabilities 2,100,226 = 0.65 highly leverage, therefore weak
Total Asset 3,247,430

Debt to Equity Ratio Total Liabilities 2,100,226 = 1.83 highly leverage, therefore weak
Total Stock Equity 1,147,204

PROFITABILITY RATIO – measures management’s overall effectiveness as shown by the returns on sales and
investment

Net Profit Margin Net Income 207,156 = 4.54% weak, not profitable
Sales 4,557,241

GROWTH RATIO – firm’s ability to maintain its economic position in the growth of the economy and industry

Sales Growth Current Sales – 1 (2001) 4,557,241 -1 = 7.97% slow growth, less than 10%
Previous Sales (2000) 4,220,976 for year 2001

Current Sales – 1 (2000) 4,220,976 – 1 = 6.30% slow growth, less than 10%
Previous Sales (1999) 3,970,924 for year 2000

Net Income Growth Current Net Income – 1 (2001) 207,156 – 1 = -38.08% negative growth, weak
Previous Net Income 2000) 334,543

Current Net Income – 1 (2000) 334,543 – 1 = -27.32% negative growth, weak

Previous Net Income (1999) 460,310