TABLA RESUMEN TODAS LAS RATIOS (2012)Resumen Inglés
Tabla resumen con la información de todas las ratios del curso y sus características.
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Name Formula Ideal Value Observations Current Ratio Quick Ratio Cash Ratio WC over Assets WC over CL Gearing ratio Self financing debt Distance from insolvence Quality of debt Interest over sales Average cost of debt Average cost of capital Fixed asset turnover Average age of fixed assets Current Assets turnover Stock turnover Debtors turnover Debtor collection per. Creditor Payment Ratio Debtor/Creditor Current Assets/S.T. Liabilities Cash+Debtors/S.T. Liabilities Cash and banks/S.T. Liabilities Working capital/Assets Working capital/Current Liabilities Debt capital/Equity+Debt capital Equity/Debt 1,5-‐2 1 0,3 0,5-‐1 0,4-‐0,6 0,7-‐1,5 Short term solvency and finding liquidity problems Acid test (to see how much of the CR are inventories) Taking the average for the year. Working Capital: Current Assets-‐Current Liabilities Business’ ability to meet its CL using working capital. If <0, ST solvency problems. >0,6, loosing financial flexibility/<0,4 not taking advantage of debt. How much is financed by firms’ resources Total Assets/Debt Capital 1 Current liabilities/Total debt Interest costs/Sales Low 0,04-‐0,05 As it decreases to 1, business moves towards insolvency. If <1, business is technically insolvent <0,04: they could be higher. >0,05 interest costs are too high Interest costs/Debt Should be compared with average cost of capital Interest costs+dividends/total debt+equity Sales/Fixed Assets Low High Acummulated depreciation/Annual depreciation charge Sales/Current Assets The larger the ratio, the greater the quantity of sales were generated by the utilization of fixed assets Management of fixed assets Sales/Stock Sales/Debtors High High The larger the ratio, the greater the quantity of sales were generated by the utilization of current assets Better if used: Cost of sales/Stock The higher the ratio, the more efficiently debts are being collected. (Sales/Debtors)*365 Low Include VAT. The lower the days, the quicker amounts are being collected (Creditors/Purchases)*365 High Trade creditors/Trade debtors VAT included. The larger this ratio is, the longer the business is taking to pays . If Creditors’ day > debtors’ day it means some free of interest way of financing. WC is tied up in debtors is financed by trade creditors High Sales Growth Sales per empl. Break-‐even point Break-‐even cover Effectiveness Productivity ROA ROA II Sales in year N/Sales in year N-‐1 Sales/Number of employees Fixed Costs/Contribution per unit (selling price-‐variable cost) Sales/Break-‐even High High Low Forecast (profits)/Actual (profits) (Results)/Expenses EBIT/Total Assets (Sales/Total Assets)*(EBIT/Sales) <=1 High High Profits, sales, production, customers…. Results, sales, customers… EBIT to know prof without taking into account interest costs. (ROA > Cost finan) First equation: Asset turnover Second Equation: Profit margin. ∆ ROA = ∆ Sales and/or ∆ Prices and/or ∇ assets and/or ∇ Costs. ROE Net profit/Equity High ROE II (Net profit/Sales) * (Sales/Assets) * (Assets/Equity) (Sales/Assets) * (EBIT/Sales) * (Assets/Equity) * (EBT/EBIT) * (Net profit/EBT) (EBT/EBIT)*(Assets/Equity) Compared with total return on total capital employed: (Net profit+interest)/(Equity+debt) < ROE (positive level of gearing) Margin. Assets turnover. Gearing. To increase ROE: increase profit margin, increase turnover of increase gearing. Turnover. Margin. Gearing. Fiscal effect. (Cash flow-‐divdends)/Sales High <1, debt increases profitability: good <1 debt decreases profitability: not good =1 doesn’t affect profitability. The growth in this ratio reflects a growth in the generation of funds from sales. Dividends/Net Profits (Net profit+Depreciation)/Loans Depends High Self financing gets small when pay-‐out is higher Most recent market price per share / Earnings per share Total dividends/Number of shares Earnings per share: net profit/number of shares If high: share is relatively expensive. Good time to sell. From shareholders point, this ratio should be higher Dividend per share/Most recent market price From de shareholder’s point, this ratio should be higher ROE III Financial leverage Self-‐financing generated Pay-‐out Repayment Capacity Price Earnings Ratio (P/E) Dividends per share Profits per share >1 High G and FE <1 >1 <1, sales are decreasing. The same with EBIT, EBT, PROFIT To see the efficiency of our employees. Need to know: p and q, fixed costs and variable costs. Firms have to sell that number in order not to have losses or profits. If the value is >1, firm is generating profits. Working capital Current assets-‐Current liabilities Cash Cycle Raw material days-‐ creditor days + productions days + finished goods days + debtor days Raw material (Stock of raw materials/Annual days purchases)*365 Production days (Work-‐in-‐progress/Annual production costs) * 365 Finished goods (Stock of finished goods/Annual cost of days sales) * 365 WC requirem. WC requirement/Sales PROBLEM MEASURES TO TAKE Positive Equity + LT liabilities – fixed assets or perm. Financing-‐fixed assets Creditor days are substracted because they represent a period during which the business obtains interest free credit from its suppliers. Low As low to reduce the likelihood of liquidity problems. Low liquidity Debt swaps. Improve cash and maturity cycle. Increase creditors days Not enough capital Sell Assets. Increase equity. Acquire grant aid. Reduce cost of debt Inefficient use of assets Increase turnover. Reduce maturity cycle Subcontract stages of the production cycle. Just in time inventory method. Increase in quality Credit management. Discounts for early payments. Customers vetting. Credit insurance. Factoring. Forfeiting Marketing plan. Improve products Expense reduction. Zero-‐based budget. Increase productivity -‐> Increase motivation. Reduce mistakes. Increase profits. Increase gearing (if positive effect). Increase assets turnover. Reduce interest costs. Increase ROA. Increase turnover. Reduce cost of debt. Increase ROE. Late payment debtors Insufficient sales Excessive expenses Insufficient return Negative leverage ...