Financial Health Report 
This is the meat without fat. When banks look over your business for a loan
these ratios are the litmus test for risk limits. 

Description 


1998 
1997 
1996 
1995 







The
Standard of All Key Ratios 






The
Altman ZScore 


5.43 
5.70 
5.47 
5.36 
The Altman ZScore shows a combination of five different ratios, with each
ratio assigned a different weighting. For years, researchers have attempted to identify a
ratio or set of ratios that provided an early warning of a business going bankrupt. In the
early part of this century, for example, some researchers concluded that the best ratio to
calculate and examine was Net Working Capital to Total Assets. A few years later, someone discovered that the Return on Net Worth and Net
Worth to Total Debt ratios were best. Later on, other researchers successfully focused on
the Current Ratio, Net Worth to Total Debt, Times Interest Earned, and Net ProfittoSales
ratios.
Finally, in the 1960s, Edward Altman combined 5 ratios into
what has become known as the Altman ZScore, the bestknown predictor of bankruptcy. What
the Altman ZScore does is calculate and combine the 5 financial ratios, assigning
each a different weighting.
If the total ZScore is 1.81 or less, there is a very good
chance the business could go bankrupt in the coming year. If the total ZScore is 3.00 or
better there is little danger of bankruptcy. 
Liquidity Ratios 


1998 
1997 
1996 
1995 
Current
Ratio 


1.75 
1.67 
1.89 
1.73 
The Current Ratio shows a ratio of current assets to current liabilities. 
Quick
Ratio 


0.26 
0.54 
0.12 
0.31 
The Quick Ratio shows a ratio of liquid assets (cash and nearcash assets as
well as accountants receivable) to its current liabilities. 
Activity Ratios 


1998 
1997 
1996 
1995 
Days
Sales in AR 


3.72 
2.54 
3.14 
3.04 
The Days Sales in AR shows a ratio indicates how long it takes a business to
collect receivables from its customers. 
Allowance
for Bad Debt as % of AR 


18.41% 
25.76% 
29.07% 
31.35% 
The Allowance for Bad Debt as % of AR shows what percentage of the accounts
receivable balance is considered not collectible. 
Bad
Debt Expense as % of Net Revenues 


0.15% 
0.14% 
0.19% 
0.19% 
The Bad Debt Expense as % of Net Revenues shows what percentage of revenues
is considered not collectible. 
Inventory
Turnover 


1282.65 
1102.41 
582.20 
736.69 
The Inventory Turnover indicates how quickly a business sells its inventory
by comparing the inventory balance to the cost of goods sold expense for the period 
Days
Inventory 


0.28 
0.33 
0.63 
0.50 
The Days Inventory shows a ratio indicating how many days a business could
continue selling using only its existing inventory. 
Net
Sales to Inventory 


1,646.51 
1,472.91 
735.32 
983.32 
The Net Sales to Inventory ratio indicates the size of annual net sales
relative to inventory. 
Days
Purchases in AP 


1.88 
2.42 
1.79 
1.94 
The Days Purchases in AP ratio indicates the size of accounts payable
relative to cost of sales. 
Net
Sales to Working Capital 


152.73 
181.65 
165.91 
182.22 
The Net Sales to Working Capital ratio indicates the size of annual net sales
relative to working capital (current assets minus current liabilities). 
Total
Assets to Net Sales 


0.03 
0.02 
0.02 
0.02 
The Total Assets to Net Sales ratio indicates how many dollars of assets are
required to produce a dollar of sales. 
Net
Sales to AR 


98.06 
143.86 
116.36 
120.25 
The Net Sales to AR ratio indicates the size of the annual net sales relative
to accounts receivable. 
Net
Sales to Net Fixed Assets 


98.63 
110.94 
99.94 
97.57 
The Net Sales to Net Fixed Assets ratio indicates the size of the annual net
sales relative to net fixed assets. 

Net
Sales to Total Assets 


39.40 
44.00 
43.92 
43.06 
The Net Sales to Net Worth ratio indicates the size of the annual net sales
relative to total assets. 

Net
Sales to Net Worth 


69.42 
83.40 
97.85 
96.10 
The Net Sales to Net Worth ratio indicates the size of the net sales relative
to net worth (total assets minus total liabilities). 
Amortization and Depreciation Expense to Net Sales 

0.03 
0.02 
0.02 
0.02 
The Amortization and Depreciation Expense to Net Sales ratio indicates what
percentage of each dollar of sales pays noncash expenses such as amortization expense of
intangible assets, copyrights and patents, and depreciation expense of fixed assets. 
Profitability Ratios 


1998 
1997 
1996 
1995 
Gross
Profit Percentage 


22.10% 
25.15% 
20.82% 
25.08% 
The Gross Profit Percentage ratio indicates what percentage of each dollar of
sales is left over after paying the costs of sales amount. 
Operating
Expenses as % of Net Sales 


97.37% 
96.71% 
99.15% 
98.21% 
The Operating Expenses as % of Net Sales ratio indicates what percentage of
each of sales goes to pay operating expenses. 
Return
on Total Assets 


1.04 
1.45 
0.37 
0.77 
The Return on Total Assets ratio indicates the size of net income after taxes
relative to a firm’s total assets. 
Return
on Net Worth 


1.83 
2.75 
0.83 
1.72 
The Return on Net Worth ratio indicates the size of net income after taxes
relative to a firm’s net worth (total assets minus total liabilities). 
Return
on Net Sales 


0.03 
0.03 
0.01 
0.02 
The Return on Net Sales ratio indicates what percentage of each dollar of
sales actually ends up as profit. 
Income
before tax to Net Worth 


1.83 
2.75 
0.83 
1.72 
The Income before tax to Net Worth ratio indicates the size of net income
before taxes relative to a firms’ net worth (total assets minus total liabilities). 
Income
before tax to Total Assets 


1.04 
1.45 
0.37 
0.77 
The Income before tax to Total Assets ratio indicates the size of net income
before taxes relative to a firms’ total assets. 
Retained
Earning to Net Income 


0.00 
0.00 
0.00 
0.00 
The Retained Earnings to Net Income ratio indicates the size of retained
earning to net income. 
Coverage Ratios 


1998 
1997 
1996 
1995 
Times
Interest Earned 


2.40 
3.00 
0.78 
2.46 
The Times Interest Earned ratio indicates the size of a firm’s interest
expense relative to its operating profits. 
Interest
Expense to Net Sales 


0.01 
0.01 
0.01 
0.01 
The Interest Expense to Net Sales ratio indicates what percentage of a
firm’s net sales goes to pay interest expense on its debts. 
Current
Liabilities to Net Worth 


0.60 
0.68 
0.66 
0.72 
The Current Liabilities to Net Worth ratio indicates the size of firms’
current liabilities relative to its net worth (total assets minus total liabilities). 
Current
Liabilities to Inventory 


14.32 
12.09 
4.95 
7.36 
The Current Liabilities to Inventory ratio indicates the size of a
firms’ current liabilities relative to its inventory. 
AP
to Net Sales 


0.00 
0.00 
0.00 
0.00 
The AP to Net Sales ratio indicates the size of a firms’ accounts
payable relative to its sales revenue. 
Total
Liabilities to Net Worth 


0.63 
0.70 
0.67 
0.72 
The Total Liabilities to Net Worth ratio indicates the size of firms’
total liabilities relative to its net worth. 
Net
Worth to Total Liabilities 


1.59 
1.44 
1.49 
1.38 
The Net Worth to Total Liabilities ratio indicates the size of firms’
net worth relative to its total liabilities. 

© Copyright,
2007, Jaxworks, All Rights Reserved. 