Calculate the current ratio, Finance Basics

For each of the financial statement ratios listed below calculate the ratio for the current year and for the prior year. (Note that in most textbooks, some of the ratios call for averaging the beginning and ending balances. However, for this project, use only the year's ending balances.) After calculating the ratio, compare your calculations with the industry ratio as shown in Money central's "Key Ratios" under "Financial Results".  Note that there are six or seven groups of ratios in which these ratios might be contained:

a.   Current Ratio

b.   Inventory turnover  (not applicable to service companies)          

c.   Debt to Equity ratio (Total liabilities divided by Total equity)

d.   Net Profit Margin (Net Income as a percentage of Sales)

e.   Return on Equity

f.   Price earnings ratio (P/E Ratio)  [Divide the current market price from a recent newspaper listing by the "basic" earnings-per-share shown on the most recent year's income statement.]

Note: The Price/Earnings Ratio (PE Ratio) changes daily with the stock price.                             


Posted Date: 2/25/2013 4:50:55 AM | Location : United States

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