Spreadsheet: 00e6a559-d336-41c0-8265-e20a5df3e2f5
Sheet: Financial Ratio  - Summary

Financial Ratio - Summary
Project Name |  |  |  | County / Municipality of Project Site
 |  |  |  |  |  |  |  | Harrisburg
Full Address of Project Site |  |  |  | BP Submitted for Round
Name of Entity on Financial Statements
Name | Where to find | Function | [NAME] | Year 1 (earliest)      Date Ending | Year 2        Date Ending | Year 3   (latest)      Date Ending
[NAME] (5)
[NAME] "Acid test" or "liquid" ratio | Balance Sheet | Measures the extent to which a business can cover its current liabilities with those current assets readily convertible to cash. Liquid Assets: Cash or assets that can be converted into cash without further sales effort (receivables & most marketable securities) | Cash + Accounts Receivable (net) ÷ Current Liabilities
(Cash + Accounts Reeivable)/Current Liabilities |  | Liquid Assets include all current assets, except inventory and prepaid expenses.
 |  | Shows number of dollars of liquid assets available to cover each dollar of current debt.
 |  | Accounts Receivable (net) includes allowance for Bad Debts
 |  | Any time the ratio is 1:1 (1.0), the business is said to be in a liquid condition. The larger the ratio, the greater the liquidity.
Current Ratio (Current assets to current liabilities) | Balance Sheet | Measures the degree to which current assets cover current liabilities. | Current Assets ÷ Current Liabilities
 |  | The higher the ratio, the more likely the company will be able to meet its liabilities. A ratio of 2 to 1 (2.0) or higher is desirable.
Current Liabilities to Net Worth Ratio (%) | Balance Sheet | Indicates the amount due creditors within a year (Short Term) as a percentage of the owners' or stockholders' investment. | Current Liabilities ÷ Net Worth (Equity)
 |  | Measures the funds creditors are risking with a business temporarily against the funds permanently invested by its owners.
 |  | Normally a business starts to have trouble when this relationship exceeds 80%.
(Debt Ratios) Total Liabilities to Net Worth (Equity) Ratio (%) | Balance Sheet | Shows how all of the company’s debt relates to the equity of the owner or stockholders. | Total Liabilities ÷ Net Worth (Equity)
 |  | The higher this ratio, the less protection there is for creditors.
 |  | If total liabilities exceed net worth then creditors have more at stake than stockholders.
 |  | The difference between this ratio and Current Liabilities to New Worth Ratio is that it pinpoints the relative size of long-term debt, which can burden a firm with substantial interest charges.
Fixed Assets to Net Worth Equity (%) | Balance Sheet | Shows the percentage of assets centered in fixed assets compared to total equity. (Depreciated costs of Plant, Property & Equipment) | Fixed Assets ÷ Net Worth (Equity)
 |  | Generally the higher this percentage is over 75%, the more vulnerable a concern becomes to unexpected hazards and business climate changes. Capital is frozen in the form of machinery and the margin for operating funds becomes too narrow to support day-to-day operations.
Efficiency Ratios (3)
Collection Period Ratio (Days) | Balance Sheet | Helpful in analyzing the collectability of accounts receivable, or how fast a business can increase its cash supply. | Average Balance of Accounts Receivable ÷ Net Sales x 365 Days
Sales to Net Working Capital Ratio | (Net Sales) Income Statement | Measures the number of times working capital turns over annually in relation to net sales. Should be viewed in conjunction with the assets to sales ratio. | Net Sales ÷ Net Working Capital (Current Assets – Current Liabilities)
 |  | This ratio is usually not significant unless it is exceptionally large.  A high turnover rate can indicate overtrading (excessive sales volume in relation to the investment in the business). A high turnover may indicate that the business relies extensively upon credit granted by suppliers or the bank as a substitute for an adequate margin of operating funds.
Accounts Payable to [NAME] (%) | Balance sheet & Income Statement | Measures how the company pays its suppliers in relation to the sales volume being transacted. | Accounts Payable ÷ Net Sales
 |  | A low percentage would indicate a healthy ratio. A high percentage indicates the firm may be using suppliers to help finance operations.
Profitability Ratios (3)
Return on Sales (%) = Net Income/Net Sales | Income Statement | Measures profits after taxes on the year’s sales (profits earned per dollar of sales). | Net Profit After Taxes ÷ Net Sales
Profit Margin |  | The higher this ratio, the better prepared the business to handle downtrends brought on by adverse conditions.
Return on Assets Ratio (%) = Net Income/ Total Assets | Income Statement & Balance Sheet | The key indicator of profitability. | Net Profit After Taxes ÷ Total Assets
 |  | A high percentage tells you the company is well run and has a healthy return on assets.
Return on Net Worth (%) = Net Income/Net Worth | Income Statement & Balance Sheet | Measures the ability of a company’s management to realize an adequate return on the capital invested by the owners. | Net Profit After Taxes ÷ Net Worth (Equity)