SUMMARY OF KEY FINANCIAL STATEMENT RATIOS
(Indicates Page in Text Where Ratio Is Initially Discussed)
PROFITABILITY RATIOS
Return on Assets (ROA)
Net Income Attributable to Common Shareholders þ ð1 � Tax RateÞðInterest ExpenseÞ þ Noncontrolling Interest in Earnings
¼
Average Total Assets
(Page 201)
Profit Margin for ROA
Net Income Attributable to Common Shareholders þ ð1 � Tax RateÞðInterest ExpenseÞ þ Noncontrolling Interest in Earnings
¼
Sales
(Page 206)
Sales
Total Assets Turnover ¼
(Page 206) Average Total Assets
Return on Common Equity (ROCE)
Net Income � Noncontrolling Interest in Earnings � Preferred Stock Dividends
¼
Average Common Shareholders’ Equity
(Page 207)
Net Income � Noncontrolling Interest in Earnings � Preferred Stock Dividends
Profit Margin for ROCE ¼
(Page 213) Sales
Average Total Assets
Capital Structure Leverage ¼
Average Common Shareholders’ Equity
(Page 213)
FINANCIAL FLEXIBILITY
ROCE ¼ Operating ROA þ (Leverage 3 Spread)
(Page 288)
Net Income Attributable to Common Shareholders þ ð1 � Tax RateÞðInterest ExpenseÞ þ Noncontrolling Interest in Earnings
Operating ROA ¼
(Page 288) Average Net Operating Assets
Average Financing Obligations
Leverage ¼
(Page 292) Average Common Shareholders’ Equity
Spread ¼ Operating ROA � Net Borrowing Rate
(Page 292)
Net Financing Expense (After Tax)
Net Borrowing Rate ¼
(Page 292) Average Financing Obligations
Copyright 2023 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
RISK RATIOS
Short-Term Liquidity Risk
Current Assets
Current Ratio ¼
(Page 295) Current Liabilities
Cash and Cash Equivalents þ Short-Term Investments þ Accounts Receivable
Quick Ratio ¼
(Page 296) Current Liabilities
Cash Flow from Operations
Operating Cash Flow to Current Liabilities Ratio ¼
(Page 297) Average Current Liabilities
Sales
Accounts Receivable Turnover ¼
(Page 297) Average Accounts Receivable
Cost of Goods Sold
Inventory Turnover ¼
(Page 297) Average Inventories
Purchases
Accounts Payable Turnover ¼
(Page 297) Average Accounts Payable
Long-Term Solvency Risk
Total Liabilities
Liabilities to Assets Ratio ¼
(Page 301) Total Assets
Total Liabilities
Liabilities to Shareholders’ Equity Ratio ¼
(Page 301) Total Shareholders’ Equity
Long-Term Debt
Long-Term Debt to Long-Term Capital Ratio ¼
Long-Term Debt þ Total Shareholders’ Equity
(Page 301)
Long-Term Debt
Long-Term Debt to Shareholders’ Equity Ratio ¼
(Page 301) Total Shareholders’ Equity
Interest Coverage Ratio (Net Income Basis)
Net Income þ Interest Expense þ Income Tax Expense þ Net Income Attributable to Noncontrolling Interests
¼
(Page 303) Interest Expense
Interest Coverage Ratio (Cash Flow Basis)
Cash Flow from Operations þ Cash Payments for Interest (including imputed interest) þ Cash Payments for Income Taxes
¼
(Page 303) Cash Payments for Interest
Cash Flow from Operations
Operating Cash Flow to Total Liabilities Ratio ¼
(Page 304) Average Total Liabilities
Copyright 2023 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
