The document discusses financial ratios and bonding capacity calculations for a construction company. It provides the company's balance sheets and income statements for 2013 and 2012, calculates various financial ratios to analyze liquidity, activity, profitability, and coverage, and estimates the company's total bonding capacity based on its adjusted working capital and net worth. While some ratios indicate issues with receivables collection and accounts payable turnover, other ratios show the company is performing well in areas like return on assets and equity. The estimated total bonding capacity is $32.6 million. Future session topics could include job costing, internal controls, and loan covenant compliance.
WORKING CAPITAL MANAGEMENT PROCEDURE(A Study on ACI Ltd.)Romana Aktar Anyka
A company cannot be fully evaluated only by over viewing the cash, accounts receivables, inventory, short-term security and short-term liabilities management procedures. Other types of financial performance indicators such as profitability ratios, debt ratios, activity ratios and market ratios etc should also be considered when assessing and appraising the performance of a company – and this is also true for ACI Ltd.
Comparisons should also be made:
between companies
between industries
between different time periods for one company
between a single company and its industry average
Fixed Capital Assessment PowerPoint Presentation Slides SlideTeam
Presenting this set of slides with name - Fixed Capital Assessment PowerPoint Presentation Slides. Keep your audience glued to their seats with professionally designed PPT slides. This deck comprises of total of thirtynine slides. It has PPT templates with creative visuals and well researched content. Not just this, our PowerPoint professionals have crafted this deck with appropriate diagrams, layouts, icons, graphs, charts and more. This content ready presentation deck is fully editable. Just click the DOWNLOAD button below. Change the colour, text and font size. You can also modify the content as per your need. Get access to this well crafted complete deck presentation and leave your audience stunned.
WORKING CAPITAL MANAGEMENT PROCEDURE(A Study on ACI Ltd.)Romana Aktar Anyka
A company cannot be fully evaluated only by over viewing the cash, accounts receivables, inventory, short-term security and short-term liabilities management procedures. Other types of financial performance indicators such as profitability ratios, debt ratios, activity ratios and market ratios etc should also be considered when assessing and appraising the performance of a company – and this is also true for ACI Ltd.
Comparisons should also be made:
between companies
between industries
between different time periods for one company
between a single company and its industry average
Fixed Capital Assessment PowerPoint Presentation Slides SlideTeam
Presenting this set of slides with name - Fixed Capital Assessment PowerPoint Presentation Slides. Keep your audience glued to their seats with professionally designed PPT slides. This deck comprises of total of thirtynine slides. It has PPT templates with creative visuals and well researched content. Not just this, our PowerPoint professionals have crafted this deck with appropriate diagrams, layouts, icons, graphs, charts and more. This content ready presentation deck is fully editable. Just click the DOWNLOAD button below. Change the colour, text and font size. You can also modify the content as per your need. Get access to this well crafted complete deck presentation and leave your audience stunned.
Working Capital Optimization PowerPoint Presentation SlidesSlideTeam
Enhance your audiences knowledge with this well researched complete deck. Showcase all the important features of the deck with perfect visuals. This deck comprises of total of thirty slides with each slide explained in detail. Each template comprises of professional diagrams and layouts. Our professional PowerPoint experts have also included icons, graphs and charts for your convenience. All you have to do is DOWNLOAD the deck. Make changes as per the requirement. Yes, these PPT slides are completely customizable. Edit the colour, text and font size. Add or delete the content from the slide. And leave your audience awestruck with the professionally designed Working Capital Optimization PowerPoint Presentation Slides complete deck.
Investment In Business Assets PowerPoint Presentation SlidesSlideTeam
Presenting this set of slides with name - Investment In Business Assets Powerpoint Presentation Slides. This deck consists of total of thirtynine slides. It has PPT slides highlighting important topics of Investment In Business Assets Powerpoint Presentation Slides. This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation.
All financial ratios of bata shoe of last five years Faiz Subhani
financial analysis of firm's financial statements & horizontal and vertical analysis is also given in this
also explained the purpose of finding each ratio for a firm and how can we compare with its past years and with other organizations and with industry standards
Current Years Estimation PowerPoint Presentation SlidesSlideTeam
This complete deck is oriented to make sure you do not lag in your presentations. Our creatively crafted slides come with apt research and planning. This exclusive deck with thirtynine slides is here to help you to strategize, plan, analyse, or segment the topic with clear understanding and apprehension. Utilize ready to use presentation slides on Current Years Estimation Power Point Presentation Slides with all sorts of editable templates, charts and graphs, overviews, analysis templates. It is usable for marking important decisions and covering critical issues. Display and present all possible kinds of underlying nuances, progress factors for an all inclusive presentation for the teams. This presentation deck can be used by all professionals, managers, individuals, internal external teams involved in any company organization.
FEW SECTORS HAVE clearer links to nutrition than agriculture. Most simply, of course, agriculture is a source of food. Because many poor households around the world grow food that they both consume and sell for income, agricultural interventions can have a massive effect on the lives of people in developing countries. Through the decades, and most famously in Asia’s Green Revolution, development projects have sought to boost agricultural production of staple foods as a way of improving people’s nutrition. Yet, while consuming a sufficient quantity of calories is important, especially among undernourished populations, quality matters too. Thus, the traditional focus on producing enough food to meet people’s calorie needs has evolved into a deeper understanding that to improve nutrition, we also need people to consume balanced, high-quality, and diverse diets that contain enough essential nutrients to meet their daily requirements.
Working Capital Optimization PowerPoint Presentation SlidesSlideTeam
Enhance your audiences knowledge with this well researched complete deck. Showcase all the important features of the deck with perfect visuals. This deck comprises of total of thirty slides with each slide explained in detail. Each template comprises of professional diagrams and layouts. Our professional PowerPoint experts have also included icons, graphs and charts for your convenience. All you have to do is DOWNLOAD the deck. Make changes as per the requirement. Yes, these PPT slides are completely customizable. Edit the colour, text and font size. Add or delete the content from the slide. And leave your audience awestruck with the professionally designed Working Capital Optimization PowerPoint Presentation Slides complete deck.
Investment In Business Assets PowerPoint Presentation SlidesSlideTeam
Presenting this set of slides with name - Investment In Business Assets Powerpoint Presentation Slides. This deck consists of total of thirtynine slides. It has PPT slides highlighting important topics of Investment In Business Assets Powerpoint Presentation Slides. This deck comprises of amazing visuals with thoroughly researched content. Each template is well crafted and designed by our PowerPoint experts. Our designers have included all the necessary PowerPoint layouts in this deck. From icons to graphs, this PPT deck has it all. The best part is that these templates are easily customizable. Just click the DOWNLOAD button shown below. Edit the colour, text, font size, add or delete the content as per the requirement. Download this deck now and engage your audience with this ready made presentation.
All financial ratios of bata shoe of last five years Faiz Subhani
financial analysis of firm's financial statements & horizontal and vertical analysis is also given in this
also explained the purpose of finding each ratio for a firm and how can we compare with its past years and with other organizations and with industry standards
Current Years Estimation PowerPoint Presentation SlidesSlideTeam
This complete deck is oriented to make sure you do not lag in your presentations. Our creatively crafted slides come with apt research and planning. This exclusive deck with thirtynine slides is here to help you to strategize, plan, analyse, or segment the topic with clear understanding and apprehension. Utilize ready to use presentation slides on Current Years Estimation Power Point Presentation Slides with all sorts of editable templates, charts and graphs, overviews, analysis templates. It is usable for marking important decisions and covering critical issues. Display and present all possible kinds of underlying nuances, progress factors for an all inclusive presentation for the teams. This presentation deck can be used by all professionals, managers, individuals, internal external teams involved in any company organization.
FEW SECTORS HAVE clearer links to nutrition than agriculture. Most simply, of course, agriculture is a source of food. Because many poor households around the world grow food that they both consume and sell for income, agricultural interventions can have a massive effect on the lives of people in developing countries. Through the decades, and most famously in Asia’s Green Revolution, development projects have sought to boost agricultural production of staple foods as a way of improving people’s nutrition. Yet, while consuming a sufficient quantity of calories is important, especially among undernourished populations, quality matters too. Thus, the traditional focus on producing enough food to meet people’s calorie needs has evolved into a deeper understanding that to improve nutrition, we also need people to consume balanced, high-quality, and diverse diets that contain enough essential nutrients to meet their daily requirements.
Applying risk factors in the strategic selection of portfolio projects
Presented by John MacGregor
Monday 10th October 2016
APM North West branch and Risk SIG conference
Alderley Park, Macclesfield
Risk is a result or outcome which is other than what is / was expected. It is the amount of money that an investor can afford to lose in the interim, in his quest for certain return on investments. It is a state of uncertainty. Read more to find out how to access your risk appetite.
Name: Date:
Target Corporation Case
Answers and Analysis
Target Corporation (Target) operates large general merchandise and food discount stores in all of the
United States, with the exception of Alaska Hawaii, and Vermont. The company also has its own credit
card operations and operates a fully integrated online business, target.com. Although the online portion of
target’s business is small relative to the overall size of target, sales are growing at a more rapid pace in the
online business compared to the in-store sales. The company’s philosophy is to offer their customers a
delightful shopping experience and their team members a preferred place to work, and to invest in the
communities in which target conducts business to improve quality of life. Selected information from the
2007 form 10-k of Target Corporation is on pages 228-237.
Required:
1. Analyze the firm’s financial statements and supplementary information. Your analysis should include
the preparation of common-size financial statements, key financial ratios, and an evaluation of
short-term liquidity, operating efficiency, capital structure and long-term solvency, profitability, and
market measures.
2. Identify the strengths and weaknesses of the company.
3. What is your opinion of the investment potential and the creditworthiness of Target Corporation?
Company Overview:
Target Corporation (Target or ‘the company’) operates large format general merchandise and food
discount stores in the US, which include Target and Super Target stores. The company offers both
everyday essentials and fashionable merchandise. Target is headquartered in Minneapolis, Minnesota
and employs 366,000 people. The company recorded revenues of $63,367 million in the fiscal year
ended January 2008, an increase of 6.5% over 2007. The operating profit of the company was $5,272
million in the fiscal year 2008, an increase of 4% over 2007. The net profit was $2,849 million in the
fiscal year 2008, an increase of 2.2% over 2007.
Target Corporation
Consolidated Balance Sheets and common-size Balance Sheets
(In millions, except share and per share date)
Period End Date
2008
02/02/2008
2007
02/03/2007
Assets
Cash and Short Term Investments 2,450.00 12.96% 813 5.53%
Cash & Equivalents 599 3.17% 813 5.53%
Short Term Investments 1,851.00 9.79% 0 0.00%
Total Receivables, Net 8,651.00 45.76% 6,757.00 45.95%
Accounts Receivable - Trade, Net 8,054.00 42.60% 6,194.00 42.12%
Accounts Receivable - Trade, Gross 8,624.00 45.62% 6,711.00 45.63%
Provision for Doubtful Accounts -570 -3.01% -517 -3.52%
Receivables - Other 597 3.16% 563 3.83%
Total Inventory 6,780.00 35.86% 6,254.00 42.53%
Prepaid Expenses 0 0.00% 0 0.00%
Other Current Assets, Total 1,025.00 5.42% 882 6.00%
Total Current Assets 18,906.00 100.00% 14,706.00 100.00%
Property/Plant/Equipment, Total - Net 24,095.00 127.45% 21.
Name: Date:
Target Corporation Case
Answers and Analysis
Target Corporation (Target) operates large general merchandise and food discount stores in all of the
United States, with the exception of Alaska Hawaii, and Vermont. The company also has its own credit
card operations and operates a fully integrated online business, target.com. Although the online portion of
target’s business is small relative to the overall size of target, sales are growing at a more rapid pace in the
online business compared to the in-store sales. The company’s philosophy is to offer their customers a
delightful shopping experience and their team members a preferred place to work, and to invest in the
communities in which target conducts business to improve quality of life. Selected information from the
2007 form 10-k of Target Corporation is on pages 228-237.
Required:
1. Analyze the firm’s financial statements and supplementary information. Your analysis should include
the preparation of common-size financial statements, key financial ratios, and an evaluation of
short-term liquidity, operating efficiency, capital structure and long-term solvency, profitability, and
market measures.
2. Identify the strengths and weaknesses of the company.
3. What is your opinion of the investment potential and the creditworthiness of Target Corporation?
Company Overview:
Target Corporation (Target or ‘the company’) operates large format general merchandise and food
discount stores in the US, which include Target and Super Target stores. The company offers both
everyday essentials and fashionable merchandise. Target is headquartered in Minneapolis, Minnesota
and employs 366,000 people. The company recorded revenues of $63,367 million in the fiscal year
ended January 2008, an increase of 6.5% over 2007. The operating profit of the company was $5,272
million in the fiscal year 2008, an increase of 4% over 2007. The net profit was $2,849 million in the
fiscal year 2008, an increase of 2.2% over 2007.
Target Corporation
Consolidated Balance Sheets and common-size Balance Sheets
(In millions, except share and per share date)
Period End Date
2008
02/02/2008
2007
02/03/2007
Assets
Cash and Short Term Investments 2,450.00 12.96% 813 5.53%
Cash & Equivalents 599 3.17% 813 5.53%
Short Term Investments 1,851.00 9.79% 0 0.00%
Total Receivables, Net 8,651.00 45.76% 6,757.00 45.95%
Accounts Receivable - Trade, Net 8,054.00 42.60% 6,194.00 42.12%
Accounts Receivable - Trade, Gross 8,624.00 45.62% 6,711.00 45.63%
Provision for Doubtful Accounts -570 -3.01% -517 -3.52%
Receivables - Other 597 3.16% 563 3.83%
Total Inventory 6,780.00 35.86% 6,254.00 42.53%
Prepaid Expenses 0 0.00% 0 0.00%
Other Current Assets, Total 1,025.00 5.42% 882 6.00%
Total Current Assets 18,906.00 100.00% 14,706.00 100.00%
Property/Plant/Equipment, Total - Net 24,095.00 127.45% 21 ...
Name: Date:
Target Corporation Case
Answers and Analysis
Target Corporation (Target) operates large general merchandise and food discount stores in all of the
United States, with the exception of Alaska Hawaii, and Vermont. The company also has its own credit
card operations and operates a fully integrated online business, target.com. Although the online portion of
target’s business is small relative to the overall size of target, sales are growing at a more rapid pace in the
online business compared to the in-store sales. The company’s philosophy is to offer their customers a
delightful shopping experience and their team members a preferred place to work, and to invest in the
communities in which target conducts business to improve quality of life. Selected information from the
2007 form 10-k of Target Corporation is on pages 228-237.
Required:
1. Analyze the firm’s financial statements and supplementary information. Your analysis should include
the preparation of common-size financial statements, key financial ratios, and an evaluation of
short-term liquidity, operating efficiency, capital structure and long-term solvency, profitability, and
market measures.
2. Identify the strengths and weaknesses of the company.
3. What is your opinion of the investment potential and the creditworthiness of Target Corporation?
Company Overview:
Target Corporation (Target or ‘the company’) operates large format general merchandise and food
discount stores in the US, which include Target and Super Target stores. The company offers both
everyday essentials and fashionable merchandise. Target is headquartered in Minneapolis, Minnesota
and employs 366,000 people. The company recorded revenues of $63,367 million in the fiscal year
ended January 2008, an increase of 6.5% over 2007. The operating profit of the company was $5,272
million in the fiscal year 2008, an increase of 4% over 2007. The net profit was $2,849 million in the
fiscal year 2008, an increase of 2.2% over 2007.
Target Corporation
Consolidated Balance Sheets and common-size Balance Sheets
(In millions, except share and per share date)
Period End Date
2008
02/02/2008
2007
02/03/2007
Assets
Cash and Short Term Investments 2,450.00 12.96% 813 5.53%
Cash & Equivalents 599 3.17% 813 5.53%
Short Term Investments 1,851.00 9.79% 0 0.00%
Total Receivables, Net 8,651.00 45.76% 6,757.00 45.95%
Accounts Receivable - Trade, Net 8,054.00 42.60% 6,194.00 42.12%
Accounts Receivable - Trade, Gross 8,624.00 45.62% 6,711.00 45.63%
Provision for Doubtful Accounts -570 -3.01% -517 -3.52%
Receivables - Other 597 3.16% 563 3.83%
Total Inventory 6,780.00 35.86% 6,254.00 42.53%
Prepaid Expenses 0 0.00% 0 0.00%
Other Current Assets, Total 1,025.00 5.42% 882 6.00%
Total Current Assets 18,906.00 100.00% 14,706.00 100.00%
Property/Plant/Equipment, Total - Net 24,095.00 127.45% 21.
Name: Date:
Target Corporation Case
Answers and Analysis
Target Corporation (Target) operates large general merchandise and food discount stores in all of the
United States, with the exception of Alaska Hawaii, and Vermont. The company also has its own credit
card operations and operates a fully integrated online business, target.com. Although the online portion of
target’s business is small relative to the overall size of target, sales are growing at a more rapid pace in the
online business compared to the in-store sales. The company’s philosophy is to offer their customers a
delightful shopping experience and their team members a preferred place to work, and to invest in the
communities in which target conducts business to improve quality of life. Selected information from the
2007 form 10-k of Target Corporation is on pages 228-237.
Required:
1. Analyze the firm’s financial statements and supplementary information. Your analysis should include
the preparation of common-size financial statements, key financial ratios, and an evaluation of
short-term liquidity, operating efficiency, capital structure and long-term solvency, profitability, and
market measures.
2. Identify the strengths and weaknesses of the company.
3. What is your opinion of the investment potential and the creditworthiness of Target Corporation?
Company Overview:
Target Corporation (Target or ‘the company’) operates large format general merchandise and food
discount stores in the US, which include Target and Super Target stores. The company offers both
everyday essentials and fashionable merchandise. Target is headquartered in Minneapolis, Minnesota
and employs 366,000 people. The company recorded revenues of $63,367 million in the fiscal year
ended January 2008, an increase of 6.5% over 2007. The operating profit of the company was $5,272
million in the fiscal year 2008, an increase of 4% over 2007. The net profit was $2,849 million in the
fiscal year 2008, an increase of 2.2% over 2007.
Target Corporation
Consolidated Balance Sheets and common-size Balance Sheets
(In millions, except share and per share date)
Period End Date
2008
02/02/2008
2007
02/03/2007
Assets
Cash and Short Term Investments 2,450.00 12.96% 813 5.53%
Cash & Equivalents 599 3.17% 813 5.53%
Short Term Investments 1,851.00 9.79% 0 0.00%
Total Receivables, Net 8,651.00 45.76% 6,757.00 45.95%
Accounts Receivable - Trade, Net 8,054.00 42.60% 6,194.00 42.12%
Accounts Receivable - Trade, Gross 8,624.00 45.62% 6,711.00 45.63%
Provision for Doubtful Accounts -570 -3.01% -517 -3.52%
Receivables - Other 597 3.16% 563 3.83%
Total Inventory 6,780.00 35.86% 6,254.00 42.53%
Prepaid Expenses 0 0.00% 0 0.00%
Other Current Assets, Total 1,025.00 5.42% 882 6.00%
Total Current Assets 18,906.00 100.00% 14,706.00 100.00%
Property/Plant/Equipment, Total - Net 24,095.00 127.45% 21.
2. Agenda
Goal of session
Case study
Other considerations
Future sessions
3. Balance Sheet - Assets
2013 2012
Cash & Equivalents 2,716,000 1,436,000
Trade Accounts Receivable 4,846,000 3,336,000
Prepaid Expenses 46,000 24,000
Underbillings 244,000 74,000
Total Current Assets 7,852,000 4,870,000
Net Fixed Assets 660,000 564,000
Total Assets 8,512,000 5,434,000
4. Balance Sheet - Liabilities
2013 2012
Accounts Payable 4,506,000 1,710,000
Notes Payable - -
Accrued Liabilities 156,000 282,000
Current Portion of Long-Term Debt 48,000 46,000
Overbillings 440,000 584,000
Total Current Liabilities 5,150,000 2,622,000
Long-Term Debt 102,000 150,000
Total Long-Term Liabilities 102,000 150,000
Total Liabilities 5,252,000 2,772,000
5. Balance Sheet - Equity
2013 2012
Capital Stock 2,000 2,000
Additional Paid-In Capital 48,000 48,000
Retained Earnings 3,210,000 2,612,000
Total Equity 3,260,000 2,662,000
Total Liabilities and Equity 8,512,000 5,434,000
6. Income Statement
2013 2012
Sales 33,962,000.00 26,508,000.00
Cost of Sales 28,850,000.00 21,134,000.00
Gross profit 5,112,000.00 5,374,000.00
Operating Expenses 3,830,000.00 3,104,000.00
Operating Profit 1,282,000.00 2,270,000.00
Other Income 2,000.00 2,000.00
Loss on Sale of Assets 0.00 0.00
Earnings Before Interest 1,284,000.00 2,272,000.00
Interest Expense 16,000.00 22,000.00
Net Income 1,268,000.00 2,250,000.00
7. Income Statement – Additional Information
2013 2012
Officer Compensation 2,318,000.00 1,976,000.00
Depreciation & Amortization 162,000.00 160,000.00
Earnings Before Interest, Amortization &
Depreciation
1,446,000.00 614,400.00
Distributions 670,000.00 688,000.00
8. Liquidity Ratios
Measure a company’s ability to meet short term
obligations
Can assets be quickly converted to cash?
Critical in industries where cash flow is unsteady
Key predictor of a company’s ability to make timely
debt service payments
9. Liquidity Ratios – Current Ratio
2013 2012 Industry
Current Ratio 1.52 1.86 1.60
Current Assets/Current Liabilities
10. Liquidity Ratios – Current Ratio
0
0.5
1
1.5
2
Current ratio
1.52
1.86
1.6
2013
2012
Industry
Compared with the industry baseline of 1.6, this
company’s ratio of 1.52 indicates its ability to service
short-term obligations is not satisfactory
11. Liquidity Ratios – Quick Ratio
2013 2012 Industry
Quick Ratio 1.47 1.82 1.40
(Cash + Marketable Securities + Trade
Accounts Receivable)/Current Liabilities
12. Liquidity Ratios – Quick Ratio
0
0.5
1
1.5
2
Quick ratio
1.47
1.82
1.4
2013
2012
Industry
Compared with the industry baseline of 1.4, this
company’s ratio of 1.47 indicates its ability to service
short-term obligations is favorable
13. Liquidity Ratios – Sales to Working Capital
2013 2012 Industry
Sales to Working Capital 12.57 11.79 12.40
Sales/(Current Assets - Current Liabilities)
14. Liquidity Ratios – Sales to Working Capital
11.4
11.6
11.8
12
12.2
12.4
12.6
Sales to working capital
12.57
11.79
12.4
2013
2012
Industry
Compared with the industry baseline of 12.40, this
company’s ratio of 12.57 reveals the company’s level of
working capital is strong
15. Activity Ratios
Gauge a company’s operations
Based on account balances on a single day
Seasonal fluctuations not necessarily reflected
17. Activity Ratios – A/R Turnover
6
6.5
7
7.5
8
A/R turnover
7.01
7.95
6.7
2013
2012
Industry
Compared with the industry baseline of 6.70, this
company’s ratio of 7.01 is on target with company
objectives
18. Activity Ratios – Days Sales in Receivables
2013 2012 Industry
Days Sales in Receivables 52.08 45.93 54.00
Trade Accounts Receivable/(Sales/Days)
19. Activity Ratios – Days Sales in Receivables
40
42
44
46
48
50
52
54
Days sales in receivables
52.08
45.93
54
2013
2012
Industry
This company’s ratio of 52.08 indicates it may not
be effective in collecting outstanding receivables
20. Activity Ratios – A/P Turnover
2013 2012 Industry
Accounts Payable Turnover 6.40 12.36 12.70
Cost of Sales/Trade Accounts Payable
21. Activity Ratios – A/P Turnover
0
2
4
6
8
10
12
14
A/P turnover
6.4
12.36 12.7
2013
2012
Industry
Compared with the industry baseline of 12.70, this
company’s ratio of 6.40 indicates the company’s ability
to promptly pay creditors may need improvement
22. Activity Ratios – Sales to Assets
2013 2012 Industry
Sales to Assets 3.99 4.88 3.20
Sales /Total Assets
23. Activity Ratios – Sales to Assets
0
1
2
3
4
5
Sales to assets
3.99
4.88
3.2
2013
2012
Industry
Compared with the industry baseline of 3.20, this
company’s ratio of 3.99 indicates the company is
performing well in this area
24. Profitability Ratios
Measure a company’s ability to use its capital or
assets to generate profits
Key component in determining success
Based on earnings before taxes
25. Profitability Ratios - Percent Rate of Return
on Assets
2013 2012 Industry
Percent Rate of Return on Assets 14.90 41.41 9.20
Earnings before Taxes /Total Assets * 100
26. Profitability Ratios - Percent Rate of Return
on Assets
0
10
20
30
40
50
% rate of return on assets
14.9
41.41
9.2
2013
2012
Industry
Compared with the industry baseline of 9.20%, this
company’s ratio of 14.90% indicates the company
successfully uses its asset base to generate profits
27. Profitability Ratios - Percent Rate of Return
on Equity
2013 2012 Industry
Percent Rate of Return on Equity 38.90 84.52 27.00
Earnings before Taxes/Total Equity * 100
28. Profitability Ratios - Percent Rate of Return
on Equity
0
20
40
60
80
100
% rate of return on equity
38.9
84.52
27
2013
2012
Industry
Compared with the industry baseline of 27.00%, this
company’s ratio of 38.91% indicates the company is
performing well in this area
29. Coverage Ratios
Assess a company’s ability to meet its long-term
obligations, remain solvent, and avoid bankruptcy
Measures how well a company’s cash flow covers its
short-term financial obligations
Assess vulnerability to economic downturns
High debt levels pose higher risk to creditors
30. Coverage Ratios – Debt to Equity
2013 2012 Industry
Debt to Equity 1.61 1.04 1.50
Total Liabilities /Total Equity
31. Coverage Ratios – Debt to Equity
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Debt to equity
1.61
1.04
1.5
2013
2012
Industry
Compared with the industry baseline of 1.50, this
company’s ratio of 1.61 indicates there may be some
issues with the way the company is financed
32. Estimate of Bonding Limit for a Single Job
Current assets (GAAP) 7,852,000.00
Deduct receivables from owners or employees 0.00
Deduct receivables over 90 days old 0.00
Deduct 50 percent of retainage receivable 468,000.00
Deduct 50 percent of inventory not on job site 0.00
Deduct 50 percent of prepaid insurance 22,000.00
Deduct 100 percent of other prepaid amounts 2,000.00
Subtotal 7,360,000.00
Add: Cash surrender value of life insurance 0.00
Current assets for bonding capacity 7,360,000.00
Deduct current liabilities (GAAP*) 5,150,000.00
Adjusted working capital for bonding capacity
calculation 2,210,000.00
Single job bonding capacity 22,100,000
33. Estimate of total bonding capacity
Adjusted Working Capital for Bonding Capacity Calculation 2,210,000.00
Add fair market value of all assets not considered in calculation
of Net Working Capital above 1,152,000.00
Subtotal 3,362,000.00
Deduct All liabilities not considered in calculation of Net
Working Capital, with adjustments to eliminate GAAP required
provisions that are not "real liabilities". 102,000.00
Adjusted Net Worth for Bonding Capacity Calculation 3,260,000.00
Total bonding capacity = 32,600,000.00
34. Additional bonding considerations
Estimated gross profit in backlog should be greater
than 50% of annual general and administrative
overhead
Underbillings should not exceed 20% of Adjusted
Net Worth
Net Quick Ratio should be greater than 1 to 1
Total liabilities should be less than 3 times Adjusted
Net Worth
35. Additional bonding considerations – cont.
Interest bearing debt should be less than 75% of
adjusted net worth
Debt coverage should be at least 125%
General and administrative overhead should be less
than 10% of contract revenue earned
All other information should compare favorably to
industry averages or other benchmarking data
36. Other Resources
National Association of Surety Bond Producers
www.sio.org – general surety information
www.suretylearn .org – for small, emerging contractors
37. Future sessions potential topics
Quickbooks
Independent contractor versus employee
Internal controls
Job costing schedules
Loan covenants and how to effectively deal with
violations