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Nittoc Construction Co., Ltd.

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Nittoc Construction Co., Ltd. Financial Snapshot

Operating Performance
Fast Facts
14-14, 8-Chome, Ginza, Chuo-Ku, 104 The company reported revenue of US$587 million
Headquarters Address
0061,Japan during the fiscal year 2014 (2014). The company's
revenue declined at a compounded rate of 3.15%
Telephone + 81 3 35429120
during 2010–2014, with an annual growth of 7.54%
over 2013. In 2014, the company recorded an
Fax + 81 3 35429133 operating margin of 5.30%, as against 4.57% in 2013.

Website www.nittoc.co.jp
Revenue and Margins
Ticker Symbol, Stock Exchange 1929, Tokyo Stock Exchange

Number of Employees 841

Fiscal Year End March

Revenue (in US$ million) 587

Return on Equity

The company recorded a return on equity (ROE) of


10.16% for the fiscal year 2014, as compared to its
peers, Maeda Corporation (Ticker: 1824), Kajima
Corporation (Ticker: 1812) and Shimizu Corporation
(Ticker: 1803), which recorded ROEs of 7.45%,
5.64% and 3.81% respectively. Furthermore, the
company reported an operating margin of 5.30% in
2014.

Return on Equity

Liquidity Position

The company reported a current ratio of 1.65 in 2014,


as compared to its peers, Maeda Corporation, Kajima
Corporation and Shimizu Corporation, which recorded
current ratios of 1.21, 1.10 and 1.20 respectively. As
of March 2014, the company recorded cash and
short-term investments of worth US$126 million,
against US$0 million current debt. The company
reported a debt to equity ratio of 0.10 in 2014 as
compared to its peers, Maeda Corporation, Kajima
Corporation and Shimizu Corporation, which recorded
debt to equity ratios of 0.76, 1.21 and 0.92
respectively.

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TABLE OF CONTENTS

1 Nittoc Construction Co., Ltd. - Business Analysis ................................................................................ 5


1.1 Nittoc Construction Co., Ltd. - Company Overview ...............................................................................................5
1.2 Nittoc Construction Co., Ltd. - Major Products and Services .................................................................................6
2 Nittoc Construction Co., Ltd. - Analysis of Key Performance Indicators ............................................ 7
2.1 Nittoc Construction Co., Ltd. - Five Year Snapshot: Overview of Financial and Operational Performance
Indicators .............................................................................................................................................................................7
2.2 Nittoc Construction Co., Ltd. - Key Financial Performance Indicators .................................................................10
2.2.1 Nittoc Construction Co., Ltd. - Revenue and Operating Profit .........................................................................10
2.2.2 Nittoc Construction Co., Ltd. - Asset and Liabilities .........................................................................................11
2.2.3 Nittoc Construction Co., Ltd. - Operational Efficiency .....................................................................................12
2.2.4 Nittoc Construction Co., Ltd. - Solvency ..........................................................................................................13
2.2.5 Nittoc Construction Co., Ltd. - Valuation..........................................................................................................14
2.3 Nittoc Construction Co., Ltd. - Competitive Benchmarking ..................................................................................15
2.3.1 Nittoc Construction Co., Ltd. - Market Capitalization .......................................................................................16
2.3.2 Nittoc Construction Co., Ltd. - Efficiency .........................................................................................................17
2.3.3 Nittoc Construction Co., Ltd. - Turnover – Inventory and Asset ......................................................................18
2.3.4 Nittoc Construction Co., Ltd. - Liquidity ...........................................................................................................19
3 Nittoc Construction Co., Ltd. - Key Employees ................................................................................... 20
4 Nittoc Construction Co., Ltd. - Locations and Subsidiaries ............................................................... 21
4.1 Nittoc Construction Co., Ltd. - Head Office ..........................................................................................................21
4.2 Nittoc Construction Co., Ltd. - Other Locations and Subsidiaries ........................................................................21
5 Appendix ................................................................................................................................................ 22
5.1 Methodology .........................................................................................................................................................22
5.2 Ratio Definitions ...................................................................................................................................................22
5.3 Disclaimer.............................................................................................................................................................26

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List of Tables

Table 1: Nittoc Construction Co., Ltd. - Major Products and Services ...................................................................................6
Table 2: Nittoc Construction Co., Ltd. - Key Ratios - Annual .................................................................................................7
Table 3: Nittoc Construction Co., Ltd. - Key Ratios - Interim .................................................................................................9
Table 4: Nittoc Construction Co., Ltd. - Key Capital Market Indicators ..................................................................................9
Table 5: Nittoc Construction Co., Ltd. - Key Employees ......................................................................................................20
Table 6: Nittoc Construction Co., Ltd. - Subsidiaries............................................................................................................21
Table 7: Nittoc Construction Co., Ltd. - Locations ................................................................................................................21

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List of Figures

Figure 1: Nittoc Construction Co., Ltd. - Revenue and Operating Profit ..............................................................................10
Figure 2: Nittoc Construction Co., Ltd. - Financial Position ..................................................................................................11
Figure 3: Nittoc Construction Co., Ltd. - Operational Efficiency ...........................................................................................12
Figure 4: Nittoc Construction Co., Ltd. - Solvency ...............................................................................................................13
Figure 5: Nittoc Construction Co., Ltd. - Valuation ...............................................................................................................14
Figure 6: Nittoc Construction Co., Ltd. - Market Capitalization ............................................................................................16
Figure 7: Nittoc Construction Co., Ltd. - Efficiency...............................................................................................................17
Figure 8: Nittoc Construction Co., Ltd. - Turnover – Inventory and Asset ...........................................................................18
Figure 9: Nittoc Construction Co., Ltd. - Liquidity .................................................................................................................19

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1 Nittoc Construction Co., Ltd. - Business Analysis

1.1 Nittoc Construction Co., Ltd. - Company Overview

Nittoc Construction Co., Ltd. (Nittoc) is a construction services provider. The company’s service portfolio includes civil
engineering services, disaster prevention and environmental conservation, urban regeneration, maintenance and
renovation. It also offers grouting, survey, geological survey and design, applied engineering, construction consultants
and shield jacking services. Nittoc offers civil engineering works for dam, river, road, sewage, water supply and land
development. The company operates through its branch offices located in Sapporo, Tohoku, Tokyo, Hokuriku, Nagano,
Osaka, Hiroshima and Kyushyu in Japan. It operates through its subsidiaries including Midori Industries Co., Ltd and
Shimane Earth Engineering Co., Ltd. Nittoc is headquartered in Chuo-ku, Tokyo, Japan.

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1.2 Nittoc Construction Co., Ltd. - Major Products and Services

Nittoc is a construction services provider. Key services offered by the company include the following:

Table 1: Nittoc Construction Co., Ltd. - Major Products and Services


Services:

Civil Engineering Services

Disaster Prevention

Environmental Conservation

Urban Regeneration

Maintenance

Renovation

Grouting

Survey

Geological Survey and Design

Applied Engineering

Construction Consultants

Shield Jacking Service


Source: Timetric

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2 Nittoc Construction Co., Ltd. - Analysis of Key Performance


Indicators

2.1 Nittoc Construction Co., Ltd. - Five Year Snapshot: Overview of Financial and
Operational Performance Indicators

The company reported revenue of US$587 million during the fiscal year 2014 (2014). The company's revenue declined at
a compounded rate of 3.15% during 2010–2014, with an annual growth of 7.54% over 2013. During 2014, operating
margin of the company was 5.30% in comparison with operating margin of 4.57% in 2013. In 2014, the company recorded
a net profit margin of 2.91% compared to a net profit margin of 6.67% in 2013.

Table 2: Nittoc Construction Co., Ltd. - Key Ratios - Annual

Key Ratios Unit/Currency 2014 2013 2012 2011 2010


Equity Ratios

EPS (Earnings per Share) JPY 39.04 82.76 10.86 52.86 32.90

Dividend per Share JPY 8.00 6.00 1.00 4.00

Dividend Cover Absolute 4.88 13.79 10.86 13.21

Book Value per Share JPY 384.36 352.84 229.05 248.19 185.20

Cash Value per Share JPY 288.26 284.83 208.96 282.93 211.79

Profitability Ratios

Gross Margin % 13.90 13.62 12.68 12.96 11.88

Operating Margin % 5.30 4.57 3.83 3.75 2.86

Net Profit Margin % 2.91 6.67 3.50 4.58 2.46

Profit Markup % 16.14 15.77 14.52 14.89 13.48

PBT Margin (Profit Before Tax) % 5.07 4.28 3.70 3.16 2.64

Return on Equity % 10.16 23.63 15.14 22.29 17.44

Return on Capital Employed % 13.75 11.57 10.46 10.42 12.91

Return on Assets % 4.05 9.08 4.98 6.51 4.08

Return on Fixed Assets % 31.31 25.63 25.62 24.55 20.70

Return on Working Capital % 24.50 21.08 17.67 18.11 34.30

Growth Ratios

Sales Growth % 7.54 2.24 2.84 -13.54 -1.65

Operating Income Growth % 24.56 22.12 5.11 13.05 -3.73

EBITDA Growth % 26.73 17.45 17.10 3.89 0.61

Net Income Growth % -53.15 94.84 -21.39 60.82 -0.96

EPS Growth % -52.59 677.42 -79.44 61.34 8.87

Working Capital Growth % 7.14 2.37 7.71 114.17 -38.69

Cost Ratios

Operating Costs (% of Sales) % 94.70 95.43 96.17 96.25 97.14

Administration Costs (% of Sales) % 8.47 8.62 8.00 8.50 8.22

Liquidity Ratios

Current Ratio Absolute 1.65 1.64 1.64 1.60 1.22

Quick Ratio Absolute 1.56 1.54 1.56 1.49 1.14

Cash Ratio Absolute 0.65 0.67 0.52 0.55 0.32

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Table 2: Nittoc Construction Co., Ltd. - Key Ratios - Annual

Key Ratios Unit/Currency 2014 2013 2012 2011 2010


Leverage Ratios

Debt to Equity Ratio Absolute 0.10 0.14 0.26 0.37 0.59

Net Debt to Equity Absolute -0.65 -0.67 -0.50 -0.55 -0.28

Debt to Capital Ratio Absolute 0.07 0.10 0.17 0.21 0.38

Efficiency Ratios

Asset Turnover Absolute 1.40 1.36 1.42 1.42 1.66

Fixed Asset Turnover Absolute 8.50 7.92 7.81 7.51 8.40

Inventory Turnover Absolute 29.28 26.43 31.89 23.32 31.21

Current Asset Turnover Absolute 1.83 1.80 1.81 1.82 2.15

Capital Employed Turnover Absolute 3.50 3.54 4.32 4.87 7.08

Working Capital Turnover Absolute 4.63 4.61 4.61 4.83 11.97

Revenue per Employee JPY 68,090,369.00

Net Income per Employee JPY 1,978,597.00

Capex to Sales % 0.24 0.44 0.27 0.07 0.10

R&D to Sales % 0.29 0.65 0.69 0.66


Source: Timetric

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Table 3: Nittoc Construction Co., Ltd. - Key Ratios - Interim

Key Ratios Unit/Currency Sep-2014 Jun-2014 Mar-2014 Dec-2013

Equity Ratios

Interim EPS (Earnings per Share) JPY 8.10 -1.41 29.28 14.51

Book Value per Share JPY 392.43 384.01 384.36 359.32


Profitability Ratios

Gross Margin % 15.78 13.75 16.29 14.03

Operating Margin % 4.96 1.39 10.21 6.65

Net Profit Margin % 2.61 -0.55 6.05 3.77

Profit Markup % 18.74 15.94 19.47 16.32

PBT Margin (Profit Before Tax) % 4.68 -0.06 9.91 6.54


Cost Ratios

Operating Costs (% of Sales) % 95.04 98.61 89.79 93.35

Administration Costs (% of Sales) % 10.82 12.35 6.08 7.37


Liquidity Ratios

Current Ratio Absolute 1.72 1.71 1.65 1.58

Quick Ratio Absolute 1.53 1.55 1.56 1.37


Leverage Ratios

Debt to Equity Ratio Absolute 0.09 0.10 0.10 0.12

Net Debt to Equity Absolute -0.73 -0.81 -0.65 -0.69

Debt to Capital Ratio Absolute 0.07 0.08 0.07 0.09


Source: Timetric

Table 4: Nittoc Construction Co., Ltd. - Key Capital Market Indicators

Key Ratios 29-Jan-2015

P/E (Price/Earnings) Ratio 14.39

EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization) 3.93

Enterprise Value/Sales 0.20

Enterprise Value/Operating Profit 3.85

Enterprise Value/Total Assets 0.28

Dividend Yield 0.01


Note: Above ratios are based on share price as of 29-Jan-2015. The above ratios are absolute numbers.
Source: Timetric

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2.2 Nittoc Construction Co., Ltd. - Key Financial Performance Indicators

2.2.1 Nittoc Construction Co., Ltd. - Revenue and Operating Profit

The consolidated group revenue of the company for 2014 stood at US$587 million, which corresponds to a growth rate of
7.54% over the previous year. The operating margin of the company was 5.30% in 2014, an increase of 72.00 basis
points over the previous year.

Figure 1: Nittoc Construction Co., Ltd. - Revenue and Operating Profit

Source: Timetric

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2.2.2 Nittoc Construction Co., Ltd. - Asset and Liabilities

The company's assets grew 4.95% over the previous year to US$421 million in 2014. The company's liabilities grew
2.47% over the previous year to US$253 million in 2014. The company's asset to liability ratio improved from 1.62 in 2013
to 1.66 in 2014.

Figure 2: Nittoc Construction Co., Ltd. - Financial Position

Source: Timetric

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2.2.3 Nittoc Construction Co., Ltd. - Operational Efficiency

The company's working capital turnover for 2014 grew to 4.63, from the previous year's working capital turnover of 4.61.
In 2014, the company's asset turnover improved to 1.40 from the previous year's current ratio of 1.36.

Figure 3: Nittoc Construction Co., Ltd. - Operational Efficiency

Source: Timetric

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2.2.4 Nittoc Construction Co., Ltd. - Solvency

In 2014, the company's current ratio increased to 1.65 from the previous year's current ratio of 1.64. The company’s quick
ratio increased to 1.56 in 2014 from the previous year's quick ratio of 1.54. In 2014, the company’s debt ratio decreased
to 0.04 from the previous year's debt ratio of 0.05.

Figure 4: Nittoc Construction Co., Ltd. - Solvency

Source: Timetric

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2.2.5 Nittoc Construction Co., Ltd. - Valuation

As of 29-Jan-2015, the company recorded an EV/EBIT of 3.85, EV/Total Assets of 0.28 and EV/Sales of 0.20.

Figure 5: Nittoc Construction Co., Ltd. - Valuation

Source: Timetric

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2.3 Nittoc Construction Co., Ltd. - Competitive Benchmarking

The following companies are the major competitors of Nittoc Construction Co., Ltd.:

A.C HOLDINGS Co., Ltd. (Ticker: 1783)

A.D.Works Co., Ltd. (Ticker: 3250)

Daiho Corporation (Ticker: 1822)

Fukuda Corporation (Ticker: 1899)

Hazama Ando Corporation (Ticker: 1719)

Kajima Corporation (Ticker: 1812)

KFC, Ltd. (Ticker: 3420)

Maeda Corporation (Ticker: 1824)

Nihon Suido Consultants Co., Ltd.

Nishimatsu Construction Co., Ltd. (Ticker: 1820)

Nissei Build Kogyo Co., Ltd. (Ticker: 1916)

Seikitokyu Kogyo Co., Ltd. (Ticker: 1898)

Shimizu Corporation (Ticker: 1803)

Swing Corporation

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For competitive benchmarking, latest financial results are considered. Following are the key performance indicators
against which the companies have been benchmarked:

2.3.1 Nittoc Construction Co., Ltd. - Market Capitalization

As of 29-Jan-2015, the company recorded a market capitalization of US$273 million, lower than its close competitors
Shimizu Corporation (Ticker: 1803), Maeda Corporation (Ticker: 1824) and Kajima Corporation (Ticker: 1812) which
recorded market capitalizations of US$7,326 million, US$1,863 million and US$5,545 million respectively. The company
recorded earnings per share of US$0.44 in 2014, which has led to a price/earnings ratio (P/E ratio) of 14.39. This was
lower than the P/E ratios of its peers, Shimizu Corporation (Ticker: 1803), Maeda Corporation (Ticker: 1824) and Kajima
Corporation (Ticker: 1812), which recorded P/E ratios of 45.42, 18.35 and 23.47 respectively.

Figure 6: Nittoc Construction Co., Ltd. - Market Capitalization

Source: Timetric
Note: Company names are represented by ticker symbols
Bubble size represents Market Capitalization US$ Million
For those data points with negative values, bubbles will not be displayed.
Where the market cap is disproportionately smaller, a bubble may not be displayed.

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2.3.2 Nittoc Construction Co., Ltd. - Efficiency

The company recorded an operating margin of 5.30% in 2014. This was higher than the operating margins of its peers,
Shimizu Corporation (Ticker: 1803), Maeda Corporation (Ticker: 1824) and Kajima Corporation (Ticker: 1812), which
recorded the margins of 1.74%, 1.32% and 1.41% respectively. In terms of revenues, the company is 0.04 times of
Shimizu Corporation (Ticker: 1803), 0.14 times of Maeda Corporation (Ticker: 1824), and 0.04 times of Kajima
Corporation (Ticker: 1812).

Figure 7: Nittoc Construction Co., Ltd. - Efficiency

Source: Timetric
Note: Company names are represented by ticker symbols

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2.3.3 Nittoc Construction Co., Ltd. - Turnover – Inventory and Asset

In 2014, the company reported an inventory turnover of 29.28, higher than that of its peers: during the same period,
Shimizu Corporation (Ticker: 1803), Maeda Corporation (Ticker: 1824) and Kajima Corporation (Ticker: 1812), recorded
inventory turnovers of 7.97, 14.83 and 9.56 respectively. The company’s asset turnover in 2014 was 1.40, higher than the
asset turnovers of its peers: during the same period, Shimizu Corporation (Ticker: 1803), Maeda Corporation (Ticker:
1824) and Kajima Corporation (Ticker: 1812) recorded asset turnovers of 0.99, 0.96 and 0.85 respectively.

Figure 8: Nittoc Construction Co., Ltd. - Turnover – Inventory and Asset

Source: Timetric
Note: Company names are represented by ticker symbols

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2.3.4 Nittoc Construction Co., Ltd. - Liquidity

The company reported a current ratio of 1.65 in 2014, higher than the current ratios of its peers: during the same period,
Shimizu Corporation (Ticker: 1803), Maeda Corporation (Ticker: 1824) and Kajima Corporation (Ticker: 1812) recorded
current ratios of 1.20, 1.21 and 1.10 respectively. In 2014, the company's debt to equity ratio was 0.10, lower than that of
its peers: during the same period, Shimizu Corporation (Ticker: 1803), Maeda Corporation (Ticker: 1824) and Kajima
Corporation (Ticker: 1812) recorded debt to equity ratios of 0.92, 0.76 and 1.21 respectively.

Figure 9: Nittoc Construction Co., Ltd. - Liquidity

Source: Timetric
Note: Company names are represented by ticker symbols

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3 Nittoc Construction Co., Ltd. - Key Employees

Table 5: Nittoc Construction Co., Ltd. - Key Employees

Name Job Title Board Level Since Age

Tamotsu Nakamori Director, President Executive Board

Source: Timetric

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4 Nittoc Construction Co., Ltd. - Locations and Subsidiaries


4.1 Nittoc Construction Co., Ltd. - Head Office

Nittoc Construction Co., Ltd.


14-14, 8-Chome, Ginza
Chuo-Ku
Zip: 104 0061
Japan
Tel: + 81 3 35429120
Fax: + 81 3 35429133

4.2 Nittoc Construction Co., Ltd. - Other Locations and Subsidiaries

Table 6: Nittoc Construction Co., Ltd. - Subsidiaries

Shimane Earth Engineering Co.,Ltd


Midori Industries Co.,Ltd
124-1, Higashi-Asahi-Cho
14-14, Ginza 8-Chome
Matsue-Shi
Chuo-ku
Shimane
Zip: 104-0061
Zip: 690-0001
Japan
Japan

Source: Timetric

Table 7: Nittoc Construction Co., Ltd. - Locations

Allianz Tower
Lantai 29, Untit C&D, Jl. HR Rasuna Said
Jakarta Selatan
Zip: 12980
Indonesia
Tel: + 62 21 29353008
Fax: + 62 21 29353018

Source: Timetric

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5 Appendix
5.1 Methodology

Timetric company reports are based on a core set of research techniques which ensure the best possible level of quality
and accuracy of data. The key sources used include:
Company Websites

Company Annual Reports


SEC Filings
Press Releases
Proprietary Databases

Notes
Financial information of the company is taken from the most recently published annual reports or SEC filings
The financial and operational data reported for the company is as per the industry defined standards
Revenue converted to US$ at average annual conversion rate as of fiscal year end

5.2 Ratio Definitions

Capital Market Ratios measure investor response to owning a company's stock and also
Capital Market Ratios
the cost of issuing stock.

Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual
income earned per share. It is a financial ratio used for valuation: a higher P/E ratio
means that investors are paying more for each unit of income, so the stock is more
Price/Earnings Ratio (P/E) expensive compared to one with lower P/E ratio. A high P/E suggests that investors are
expecting higher earnings growth in the future compared to companies with a lower P/E.
Price per share is as of previous business close, and EPS is from latest annual report.

Formula: Price per Share / Earnings per Share

Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel


with, or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE
Enterprise Value/Earnings ratio is that it is unaffected by a company's capital structure. It compares the value of a
before Interest, Tax, business, free of debt, to earnings before interest. Price per share is as of previous
Depreciation & business close, and shares outstanding last reported. Other items are from latest annual
Amortization (EV/EBITDA) report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / (Net
Income + Interest + Tax + Depreciation + Amortization)

Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to
buy the company's sales. EV/Sales is seen as more accurate than Price/Sales because
market capitalization does not take into account the amount of debt a company has, which
Enterprise Value/Sales
needs to be paid back at some point. Price per share is as of previous business close,
and shares outstanding last reported. Other items are from latest annual report.

Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Sales

Enterprise Value/Operating Profit measures the company's enterprise value to the


operating profit. Price per share is as of previous business close, and shares outstanding
Enterprise last reported. Other items are from latest annual report.
Value/Operating Profit
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Operating
Income

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Enterprise Value/Total Assets measures the company's enterprise value to the total
assets. Price per share is as of previous business close, and shares outstanding last
Enterprise Value/Total
reported. Other items are from latest annual report.
Assets
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Total
Assets

Dividend Yield shows how much a company pays out in dividends each year relative to its
share price. In the absence of any capital gains, the dividend yield is the return on
Dividend Yield
investment for a stock.

Formula: Annual Dividend per Share / Price per Share

Equity Ratios These ratios are based on per share value.

Earnings per share (EPS) is the portion of a company's profit allocated to each
outstanding share of common stock. EPS serves as an indicator of a company's
Earnings per Share (EPS)
profitability.

Formula: Net Income / Weighted Average Shares

Dividend is the distribution of a portion of a company's earnings, decided by the board of


Dividend per Share
directors, to a class of its shareholders.

Dividend cover is the ratio of company's earnings (net income) over the dividend paid to
Dividend Cover shareholders.

Formula: Earnings per share / Dividend per share

Book Value per Share measure used by owners of common shares in a firm to determine
the level of safety associated with each individual share after all debts are paid
Book Value per Share
accordingly.

Formula: (Shareholders Equity - Preferred Equity) / Outstanding Shares

Cash Value per Share is a measure of a company's cash (cash & equivalents on the
balance sheet) that is determined by dividing cash & equivalents by the total shares
Cash Value per Share
outstanding.

Formula: Cash & equivalents / Outstanding Shares

Profitability Ratios are used to assess a company's ability to generate earnings, based on
revenues generated or resources used. For most of these ratios, having a higher value
Profitability Ratios
relative to a competitor's ratio or the same ratio from a previous period is indicative that
the company is doing well.

Gross margin is the amount of contribution to the business enterprise, after paying for
Gross Margin direct-fixed and direct variable unit costs.

Formula: {(Revenue-Cost of revenue) / Revenue}*100

Operating Margin is a ratio used to measure a company's pricing strategy and operating
Operating Margin efficiency.

Formula: (Operating Income / Revenues) *100

Net Profit Margin is the ratio of net profits to revenues for a company or business segment
Net Profit Margin - that shows how much of each dollar earned by the company is translated into profits.

Formula: (Net Profit / Revenues) *100

Profit Markup measures the company's gross profitability, as compared to the cost of
revenue.
Profit Markup
Formula: Gross Income / Cost of Revenue

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Profit Before Interest & Tax Margin shows the profitability of the company before interest
PBIT Margin (Profit Before
expense & taxation.
Interest & Tax)
Formula: {(Net Profit + Interest + Tax) / Revenue} *100

PBT Margin (Profit Before Profit Before Tax Margin measures the pre-tax income over revenues.
Tax)
Formula: {Income Before Tax / Revenues} *100

Return on Equity measures the rate of return on the ownership interest (shareholders'
Return on Equity equity) of the common stock owners.

Formula: (Net Income / Shareholders Equity)*100

Return on Capital Employed is a ratio that indicates the efficiency and profitability of a
company's capital investments. ROCE should always be higher than the rate at which the
Return on Capital
company borrows; otherwise any increase in borrowing will reduce shareholders'
Employed
earnings.

Formula: EBIT / (Total Assets – Current Liabilities)*100

Return on Assets is an indicator of how profitable a company is relative to its total assets,
Return on Assets the ratio measures how efficient management is at using its assets to generate earnings.

Formula: (Net Income / Total Assets)*100

Return on Fixed Assets measures the company's profitability to its fixed assets (property,
Return on Fixed Assets plant & equipment).

Formula: (Net Income / Fixed Assets) *100

Return on Working Capital measures the company's profitability to its working capital.
Return on Working Capital
Formula: (Net Income / Working Capital) *100

Cost ratios help to understand the costs the company is incurring as a percentage of
Cost Ratios
sales.

Operating costs as percentage of total revenues measures the operating costs that a
Operating costs (% of company incurs compared to the revenues.
Sales)
Formula: (Operating Expenses / Revenues) *100

Administration costs as percentage of total revenue measures the selling, general and
Administration costs (% of
administrative expenses that a company incurs compared to the revenues.
Sales)
Formula: (Administrative Expenses / Revenues) *100

Interest costs as percentage of total revenues measures the interest expense that a
company incurs compared to the revenues.
Interest costs (% of Sales)
Formula: (Interest Expenses / Revenues) *100

Leverage ratios are used to calculate the financial leverage of a company to get an idea of
the company's methods of financing or to measure its ability to meet financial obligations.
Leverage Ratios
There are several different ratios, but the main factors looked at include debt, equity,
assets and interest expenses.

Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio
also depends on the industry in which the company operates. For example, capital-
intensive industries tend to have a higher debt equity ratio.
Debt to Equity Ratio
Formula: Total Liabilities / Shareholders Equity

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Debt to capital ratio gives an idea of a company's financial structure, or how it is financing
its operations, along with some insight into its financial strength. The higher the debt-to-
capital ratio, the more debt the company has compared to its equity. This indicates to
investors whether a company is more prone to using debt financing or equity financing. A
Debt to Capital Ratio
company with high debt-to-capital ratios, compared to a general or industry average, may
show weak financial strength because the cost of these debts may weigh on the company
and increase its default risk.

Formula: {Total Debt / (Total assets - Current Liabilities)}

Interest Coverage Ratio is used to determine how easily a company can pay interest on
Interest Coverage Ratio outstanding debt, calculated as earnings before interest & tax by interest expense.

Formula: EBIT / Interest Expense

Liquidity ratios are used to determine a company's ability to pay off its short-terms debts
obligations. Generally, the higher the value of the ratio, the larger the margin of safety that
the company possesses to cover short-term debts. A company's ability to turn short-term
Liquidity Ratios
assets into cash to cover debts is of the utmost importance when creditors are seeking
payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios
to determine whether a company will be able to continue as a going concern.

Current Ratio measures a company's ability to pay its short-term obligations. The ratio
gives an idea of the company's ability to pay back its short-term liabilities (debt and
payables) with its short-term assets (cash, inventory, receivables). The higher the current
Current Ratio
ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests
that the company would be unable to pay off its obligations if they came due at that point.

Formula: Current Assets / Current Liabilities

Quick ratio measures a company's ability to meet its short-term obligations with its most
Quick Ratio liquid assets.

Formula: (Current Assets - Inventories) / Current Liabilities

Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It
only looks at the most liquid short-term assets of the company, which are those that can
be most easily used to pay off current obligations. It also ignores inventory and
Cash Ratio
receivables, as there are no assurances that these two accounts can be converted to
cash in a timely matter to meet current liabilities.

Formula: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

Efficiency ratios measure a company's effectiveness in various areas of its operations,


Efficiency Ratios
essentially looking at maximizing its use of resources.

Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to
generate sales. A higher ratio indicates the business has less money tied up in fixed
Fixed Asset Turnover assets for each currency unit of sales revenue. A declining ratio may indicate that the
business is over-invested in plant, equipment, or other fixed assets.

Formula: Net Sales / Fixed Assets

Asset turnover ratio measures the efficiency of a company's use of its assets in
generating sales revenue to the company. A higher asset turnover ratio shows that the
Asset Turnover
company has been more effective in using its assets to generate revenues.

Formula: Net Sales / Total Assets

Current Asset Turnover indicates how efficiently the business uses its current assets to
Current Asset Turnover generate sales.

Formula: Net Sales / Current Assets


Inventory Turnover ratio shows how many times a company's inventory is sold and
replaced over a period. A low turnover implies poor sales and, therefore, excess
Inventory Turnover inventory. A high ratio implies either strong sales or ineffective buying.

Formula: Cost of Goods Sold / Inventory

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Working Capital Turnover is a measurement to compare the depletion of working capital


to the generation of sales. This provides some useful information as to how effectively a
Working Capital Turnover
company is using its working capital to generate sales.

Formula: Net Sales / Working Capital

Capital employed turnover ratio measures the efficiency of a company's use of its equity
Capital Employed
in generating sales revenue to the company.
Turnover
Formula: Net Sales / Shareholders Equity

Capex to Sales ratio measures the company's expenditure (investments) on fixed and
Capex to sales related assets' effectiveness when compared to the sales generated.

Formula: (Capital Expenditure / Sales) *100

Net income per Employee looks at a company's net income in relation to the number of
employees they have. Ideally, a company wants a higher profit per employee possible, as
Net income per Employee
it denotes higher productivity.

Formula: Net Income / No. of Employees

Revenue per Employee measures the average revenue generated per employee of a
company. This ratio is most useful when compared against other companies in the same
Revenue per Employee
industry. Generally, a company seeks the highest revenue per employee.

Formula: Revenue / No. of Employees

Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company
is losing a larger percentage of its income to expenses. If the efficiency ratio is getting
Efficiency Ratio
lower, it is good for the bank and its shareholders.

Formula: Non-interest expense / Total Interest Income


Source : Timetric

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The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the
findings, conclusions and recommendations that Timetric delivers will be based on information gathered in good faith from
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accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

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