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Financial Ratios

Comment Icon0 Looking at the financial information for an industry provides insight into its financial operations. Often financial information is converted into ratios in order to provide a basis for comparison. Typically, for an industry, you will find different types of ratios. These are available from online resources like Standard & Poor’s NetAdvantage (see link in Business Databases section) as well as in print resources in the Reference Room of Maag Library. For more information concerning ratios, visit Maag Library’s Financial Ratios Guide.

Comment Icon0 Examples of some of the ratios you will encounter include:

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  • CURRENT RATIO : Current Assets divided by Current Liabilities. This ratio reveals the protection afforded short-term creditors in cash or near-cash assets. It shows the number of dollars of liquid assets available to cover each dollar of current debt. The larger the ratio the greater the liquidity. (From Industry Norms and Key Business Ratios)
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  • QUICK RATIO : Cash plus Accounts Receivable divided by Current Liabilities. This ratio measures the degree to which current assets cover current liabilities. The higher the ratio the more assurance exists that the retirement of current liabilites can be made. (From Industry Norms and Key Business Ratios)
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  • INVENTORY TURNOVER : A measurement of the liquidity of inventory computed by dividing the Cost of Goods Sold by the Average Inventory. The result shows the number of times that the average inventory can be converted into receivables or cash. Typically, the higher the turnover rate, the more likely profits will be higher. (From Almanac of Business and Industrial Financial Ratios)
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  • RECEIVABLES TURNOVER: Obtained by dividing Sales Average by Net Receivables. This ratio measures the liquidity of accounts receivable. It indicates the average collection period throughout the year. (From Almanac of Business and Industrial Financial Ratios)

Comment Icon0 The books listed below contain the financial ratios calculated for various industries. If you have questions about what the ratios mean, check the introduction to each volume to find a description of the different ratios and how they are calculated. To find an SIC or NAICS industry code, refer to Maag’s Industry Research Guide: Industry Codes page.

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  • Almanac of Business and Industrial Financial Ratios: 2011 Edition / Troy’s
    READY REF HF5681.R25 A45 2011 (Held at Reference Desk – ID Required)
    This comprehensive resource puts 50 comparative performance indicators at the practitioner’s command and covers all of North America using NAICS data. Provides financial information that is calculated and derived from the latest available IRS data on over five million U.S. and international companies. Gives you accurate performance data for 50 operating and financial factors in nearly 200 industries. Data for each industry is divided into 13 categories based on company size, so you’ll find a precise industry-wide benchmark against which to measure any company’s performance.
    >>Previous issues (1992-2010) can be found in the General Collection OVERSIZE HF5681 .R25 A45 (Floor 3A).
    >>More Information About This Book
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  • Industry Norms & Key Business Ratios: Statistics on Over 800 Lines of Business / Dun & Bradstreet
    READY REF HF5681 .R25 I53 2011-2012 (Held at Reference Desk – ID Required)
    Calculations of the Industry Norms; Calculation of the 14 Key Business Ratios; Industry Norms for Financial Analysis; and Applications by Functional Areas. Made possible through over one million financial statements in the D&B Financial Information Base. This file consists of U.S. corporations, partnerships and proprietorships both public and privately owned, in all size ranges, and includes over 800 different lines of business as defined by the U.S. SIC code numbers.
    >>Previous issues (1982/1983 through 2009/2010) can be found in the Reference Room REF HF5681 .R25 I53.
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  • RMA Annual Statement Studies: Financial Ratio Benchmarks 2012/2013 / Risk Management Association
    READY REF HF5681.B2 R6 2012/2013 (Held at Reference Desk – ID Required)
    The industry standard for comparison financial data. Features data for over 710 industries derived directly from more than 190,000 statements of financial institutions’ borrowers and prospects.
    >>Previous issues (1974 through 2010/2011) can be found in the General Collection HF5681 .B2 R6 (Floor 3A)

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