Contents - MiTAC

2.1 Financial Structure
(1) Debt ratio = Total liabilities / Total assets
(2) Ratio of long-term funds to property and equipment = (Net shareholders’ equity +
Long-term debts) / Net fixed assets
2.2 Solvency
(1) Current ratio = Current assets / Current liabilities
(2) Quick ratio = (Current assets – Inventory – Prepaid expenses) / Current liabilities
(3) Times-Interest-earned Ratio = Net income before income tax and interest expenses /
Interest expenses
2.3 Operational Ability
(1) Turnover rate of receivables (including accounts receivable and notes receivable from
operations) = Net sales / Average receivables balance (including accounts receivable and
notes receivable from operations) in various terms
(2) Days sales in receivable = 365 / Turnover rate of receivables
(3) Inventory turnover = Cost of goods sold / Average value of inventory
(4) Turnver rate of payables (including accounts payable and notes payable from operations)
= Cost of goods sold / Average accounts payable balance (including accounts payable and
notes payable from operations) in various terms
(5) Days to sell inventories = 365 / Inventory turnover
(6) Turnover rate of property and equipment = Net sales) / Net fixed assets
(7) Turnover rate of overall assets = Net sales / Total assets
2.4 Profitability
(1) Return on assets = [Profit after tax + (Interest expenses) x (1 – (tax rate)] / Average of
total assets
(2) Return on shareholders’ equity = Profit after tax / Average net equity
(3) Net profit rate = Profit after tax / Net sales
(4) EPS = (Profit after tax – Dividend from preferred stock) / Weighted average of
outstanding shares
2.5 Cash Flow
(1) Cash flow ratio = Cash flow from operations / Current liabilities
(2) Cash flow adequacy ratio = Most recent five-year cash flow from operations / Most recent
five-year sum of capital expenditures, increases in inventory, cash dividends
(3) Cash reinvestment ratio = (Cash flow from operating activities – Cash dividend) / (Gross
fixed assets + Long-term investment + Other assets + Working capital)
2.6 Leverage
(1) Operating leverage = (Net revenue – Variable cost of goods sold and operating expenses) /
Operating income
(2) Financial leverage = Operating income / (Operating income – Interest expenses)
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