Account receivables Turnover

Net Credit Sales for the year / Average accounts receivables for the year

Ex : 500000 / 42000 = 11.90%

Days Sales in Accounts Receivables

365 days in year / Accounts Receivables turnover in year

Ex : 365 days / 11.90 = 30.67 days

Inventory Turnover
Cost of goods sold for the year / Average inventory for the year

Ex : 380000 / 30000 ( a computed average ) = 12.67

Days sales in Inventory

365 days In year / Inventory Turnover in year

Ex : 365 days / 12.67 = 28.81

Example of Income caluculate statement

Sales ( As on credit ) 500000
Cost of goods sold 380000
Gross profit 120000
Operating expences
Selling expences 35000
Administrative exp 45000
Total Operating exp 80000

Operating Income 40000

Interest expenses 12000
Income before taxes 28000
Income tax expenses 5000
Net Income after taxes 23000

Debt to Equity
Total Liablities / Total Stockholders Equity : 1

Ex : 481000 / 289000 : 1 = 1.66 : 1

Example of Income caluculate statement

Sales ( As on credit ) 100.0%
Cost of goods sold 76.0%
Gross profit 24.0%
Operating expences
Selling expences 7.0%
Administrative exp 9.0%
Total Operating exp 16.0%

Operating Income 8.0%

Interest expenses 2.4%

Income before taxes 5.6%

Income tax expenses 1.0%

Net Income after taxes 4.6%

Finansial Ratios Based on the Income Statement :

Gross Margin
Gross Profit / Net Sales

Ex : 120000 / 500000 = 24.0%

Profit Margin ( after tax)
Net income after tax / Net Sales

Ex : 23000 / 500000 = 4.6%

Earnings Per Share (EPS)

Net income after tax / Weighted Average Number of Common Shares Outstanding

Ex : 23000 / 100000 = 0.23

Times Interest Earned

Earning for the year before Interest and Income Tax Expense / Interest Expense for
the year

Ex : 40000 / 12000 = 3.3

Return on Stockholders Equity ( after tax )

Net incomes for the year after Taxes / Average Stockholders Equity during the
year

Ex : 23000 / 278000 ( a computed average ) = 8.3%

Statement of Cash Flows

Cash Flow from Operating Activities
Net Income 23000
Add : Depreciation Expenses 4000
Increase in accounts receivable (6000)
Decrease in inventory 9000
Decrease in accounts payable (5000)
Cash provided (used) in operating activities 25000
Cash Flow from Investing Acitivities
Capital Expindatures (28000)
 Proceeds from sale of Property 7000
Cash Provided (used) by investing activities 21000
Cash Flow from Financing Activities
Borrowings of long term debt 10000
Cash devidents (5000)
Purchase of treasury stock (8000)
Cash provided (used) by financing activities 3000
Net increase in cash 1000
Cash at the beginning of the year 1200
Cash at the end of the year 2200

Free Cash Flow

Cash Flow Provided by Operating Activities – Capital Expenditures
Ex : 25000 – 28000 = 3000