Business Valuation -- Financial Ratio Analysis

Company-Specific Ratios
Industry Ratios (Benchmarks)

Company-Specific Ratios

Generating Your Own Calculations
Locating Company Generated Financial Ratios
Secondary Sources

Analysis drawn from company financial statements (income statement, balance sheet, cash flow statement) is used to assess an organization's business condition and overall risk

Generating Your Own Calculations

When generating your own calculations on financial statements found in the 10K and 10Q, you working with the actual numbers as they were stated by the company, rather than a recalculation or standardization of those numbers. EdgarScan allows you to easily download the company's financial statements into Excel directly from the SEC filings.

Most of the secondary financial services (such as S&P and Thomson ONE Banker) rework the financials..

Locating Company Generated Financial Ratios
Most companies include select ratios in their Annual Report and/or 10K

Secondary Sources
These sources provide a range of select liquidity, efficiency, and profitability ratios; most allow for downloading into Excel

Thomson ONE Banker

Companies>Financials>Fundamental Ratios/Growth Ratios
Approximately 20 years of data

Investext
S&P Industry Surveys Company Comparison Analysis (3-5 years for industry's top competitors)
Bloomberg (Ticker Symbol<EQUITY>FA<GO>, 5 years with 5 year average; Ticker Symbol<EQUITY>RV<GO>, company and industry peers)
S&P Stock Report (10 years)
ValueLine (10 years)
Reuters Investor Ratios (most recent; company and comparative industry, sector, and S&P 500 ratios; "learn about..." link offers definition of ratio. NOTE: Registration required but site is free)
Yahoo! Finance Key Statistics (most recent)

Industry Ratios (Benchmarks)

Ratios also provide useful aggregate comparative data on industry performance and are used to benchmark a company's performance to its industry peers.

Frequently used ratios include:

Solvency Ratios
- Quick Ratio
- Current Ratio
- Current Liabilities to Net Worth
- Current Liabilities to Inventory
- Total Liabilities to Net Worth
- Fixed Assets to Net Worth
Efficiency Ratios
- Collection Period
- Sales to Inventory
- Assets to Sales
- Sales to Net Working Capital
- Accounts Payable to Sales
Profitability Ratios
- Return on Sales
- Return on Assets
- Return on Net

Dun's Industry Norms and Key Business Ratios
BUS REF HF 5681 R25 I525

RMA Annual Statement Studies
BUS REF HF 5681 .B2 R6

Financial Ratios and Quality Indicators
Provides good explanations of the key business ratios and how they are calculated

Other Sources

Investext
Industry Trade Associations (many associations generate industry ratios based on their membership)
Reuters Investor Ratios (most recent; company and comparative industry, sector, and S&P 500 ratios; "learn about..." link offers definition of ratio. NOTE: Registration required but site is free)