ASSET UTILIZATION MEASUREMENT

Sales to Working Capital Ratio Annualized net sales (Accounts receivable + Inventory – Accounts payable)

Sales to Fixed Assets Ratio Annualized net sales Total fixed assets

Sales to Administrative Expenses Ratio Annualized net sales Total general and administrative expenses

Sales to Equity Ratio Annual net sales Total equity

Sales per Person Annualized revenue Total direct labor full-time equivalents

Sales Backlog Ratio Total direct labor full-time equivalents Sales

Sales Returns to Gross Sales Ratio Total sales returns Gross sales

Repairs and Maintenance Expense to Fixed Assets Ratio Total repairs and maintenance expense Total fixed assets before depreciation

Accumulated Depreciation to Fixed Assets Ratio Accumulated depreciation Total fixed assets

Fringe Benefits to Wages and Salaries Expense
Sales Expenses to Sales Ratio
Discretionary Cost Ratio
Life insurance + Medical insurance + Pension funding expense + Other benefits
Wages + Salaries + Payroll taxes
Sales salaries + Commissions + Sales travel expenses + Other sales expenses
Sales
Discretionary costs Sales

Interest Expense to Debt Ratio Interest expense (Short-term debt) + (Long-term debt)

Foreign Exchange Ratio Foreign currency gains and losses Net Income

Overhead Rate Total overhead expense Direct labor or Total Machine Hours

Goodwill to Assets Ratio Unamortized goodwill Total assets

Overhead to Cost of Sales Ratio Total overhead expenses Cost of goods sold

Investment Turnover Sales Stockholders’ equity + Long-term liabilities

Break-Even Point Total operating expenses Average gross margin percentage

Margin of Safety Current sales level – Break-even point Current sales level
Tax Rate Percentage Income tax paid Before-tax income
OPERATING PERFORMANCE MEASUREMENTS

Operating Assets Ratio Assets used to create revenue Total assets

Sales to Operating Income Ratio Operating income (Net sales) – (Investment income)

Sales Margin Gross margin – Sales expenses Gross sales

Gross Profit Percentage Revenue – (Overhead + Direct materials + Direct labor)

Revenue

Gross Profit Index Gross profit in period two ÷ Sales in period two
Gross profit in period one ÷ Sales in period one
Investment Income Percentage Dividend income + Interest income Carrying value of investments

Operating Profit Percentage Sales – (Cost of goods sold + Sales, general, and administrative expenses)
Sales
Operating Leverage Ratio Sales – Variable expenses
Operating income
Net Income Percentage Net income Revenue

Core Operating Earnings + Employee stock option expenses

+ Restructuring charges from ongoing operations
+ Pension fund costs
+ Purchased R&D expenses
+ Asset write-downs
– Goodwill impairment charges
– Gains/losses from the sale of assets
– Pension gains
– Merger and acquisition-related expenses
– Litigation and insurance settlement costs and proceeds
– Unrealized gains from hedging activities

Profit per Customer Visit Net profits Total customer visits

Profit per Person Net profit Total full-time equivalents

Quality of Earnings Ratio Earnings – Cash from operations (Beginning assets + Ending assets) / 2
 CASH FLOW MEASUREMENTS

Cash Flow from Operations Income from operations + Noncash expenses – Noncash sales
Income from operations

Cash Flow Return on Sales Net income + Noncash expenses – Noncash sales Total sales

Fixed Charge Coverage Fixed expenses + Fixed payments Cash flow from operations

Expense Coverage Days Cash + Short-term marketable securities + Accounts receivable

Annual cash expenditures / 360

Cash Flow Coverage Ratio Total debt payments + Dividend payments + Capital expenditures
Net income + Noncash expenses – Noncash sales

Cash Receipts to Billed Sales and Progress Payments Cash receipts Billed sales + Billed progress payments

Cash to Current Assets Ratio Cash + Short-term marketable securities Current assets

Cash Flow to Fixed Asset Requirements
Cash Flow Return on Assets
Cash to Working Capital Ratio
Cash Reinvestment Ratio
Cash to Current Liabilities Ratio
Cash Flow to Debt Ratio
Stock Price to Cash Flow Ratio
Dividend Payout Ratio
Net income + Noncash expenses – Noncash sales – Dividends – Principal payments
Budgeted fixed asset purchases
Net income + Noncash expenses – Noncash sales
Total assets
Cash + Short-term marketable securities
Current assets – Current liabilities
Increase in fixed assets + Increase in working capital
Net income + Noncash expenses – Noncash sales – Dividends
Cash + Short-term marketable securities
Current liabilities
Net income + Noncash expenses – Noncash sales
Debt + Lease obligations
Stock price Number of shares outstanding
Earnings before interest, taxes, depreciation and amortization
Total dividend payments

Accounts Receivable Turnover
Average Receivable Collection Period
Days Delinquent Sales Outstanding
Days Sales in Receivables Index
Accounts Receivable Investment
Ending Receivable Balance
Inventory to Sales Ratio
Inventory Turnover
Inventory to Working Capital Ratio
Liquidity Index
Accounts Payable Days
Accounts Payable Turnover
Current Ratio
Quick Ratio
Cash Ratio
Net income + Noncash expenses – Noncash sales
LIQUIDITY MEASUREMENTS
Annualized credit sales
Average accounts receivable + Notes payable by customers
Average accounts receivable
Annual sales / 365
Annualized credit sales from delinquent accounts ÷ Ave. delinquent accounts receivable
365
Accounts receivable in period two ÷ Sales in period two
Accounts receivable in period one ÷ Sales in period one
Average days to payment ÷ 365
x Annual credit sales x (1 – Gross margin %) x %Cost of capital
Average receivable collection period
x (Sales forecast for period ÷ Days in period)
Sales Inventory
Cost of goods sold Inventory
Or 365 (Cost of goods sold ÷ Inventory)
Inventory
Accounts receivable + Inventory – Accounts payable
(Accounts receivable x Days to liquidate) + (Inventory x Days to liquidate)
(Accounts receivable + Inventory)
Accounts payable (Purchases ÷ 365)
Total purchases Ending accounts payable balance
Current assets Current liabilities
Cash + Marketable securities + Accounts receivable
Current liabilities
Cash + Short-term marketable securities
Current liabilities
Sales to Current Assets Ratio Sales Current assets

Working Capital Productivity Annual sales Working capital

Days of Working Capital (Accounts receivable + Inventory – Accounts payable)

(Net sales ÷ 365)

Current Liability Ratio Current liabilities Total liabilities

Required Current Liabilities to Total Current Liabilities Ratio Current liabilities with required payment dates Total current liabilities

Working Capital to Debt Ratio Cash + Accounts receivable + Inventory – Accounts payable
Debt
Risky Asset Conversion Ratio Cost of assets with minimal cash conversion value Total assets

Noncurrent Assets to Noncurrent Liabilities Ratio Noncurrent assets Noncurrent liabilities

Short-term Debt to Long-term Debt Ratio Total short-term debt Total long-term debt

CAPITAL STRUCTURE AND SOLVENCY MEASUREMENTS

Times Interest Earned Average cash flow Average interest expense

Debt Coverage Ratio Earnings before interest and taxes

Interest + (Scheduled principal payments ÷ (1- Tax rate))
Asset Quality Index 1 – [ (Current assets in period two + Net fixed assets in period two)] ÷ Total assets in period two
1 – [ (Current assets in period one + Net fixed assets in period one] ÷ Total assets in period one

Accruals to Assets Ratio Change in working capital – Change in cash – Change in depreciation
Change in total assets

Times Preferred Dividend Earned Net income Preferred dividend

Debt to Equity Ratio Debt Equity
Funded Capital Ratio Stockholders’ equity + Long-term debt Fixed assets
Retained Earnings to Stockholders’ Equity Retained earnings Total stockholders’ equity
Preferred Stock to Total Stockholders’ Equity Preferred stock Total stockholders’ equity
Issued Shares to Authorized Shares Total issued shares Total authorized shares

Net Worth
Book Value per Share
Book Value per specific share
Tangible Book Value
Return on Assets Employed
Return on Infrastructure Employed
Return on Operating Assets
Return on Equity Percentage
Return on Common Equity
Financial Leverage Index
Equity Growth Rate
Earnings per Share
Percentage Change in Earnings per Share
Economic Value Added
Relative Value of Growth
Dividend Payout Ratio
Dividend Yield Ratio
Insider Stock Buy-Sell Ratio
Market Value Added
Enterprise Value/Earnings Ratio
Stock Options to Common Shares Ratio
RETURN ON INVESTMENT MEASUREMENTS
Total assets – Total liabilities
or Total assets – Total liabilities – Preferred stock dividends
Total equity – Cost to liquidate preferred stock
Total number of common shares outstanding
Liquidation value of preferred stock + Unpaid preferred dividends
Number of preferred shares outstanding
Book Value – (Goodwill + Other intangibles)
Net profit Total assets
(IT) Before-tax earnings Information technology operating expenses
Net income Assets used to create revenue
Net income Total equity
Net income – Preferred stock dividends Common stockholders’ equity
Return on equity Return on assets
Net income – Common stock dividends – Preferred stock dividends
Beginning common stockholders’ equity
Net income – Dividends on preferred stock
Number of outstanding common shares + Common stock equivalents
Incremental change in earnings per share Earnings per share from previous period
(Net investment) (Actual return on investment – Percentage cost of capital)
Sustainable cash flow
(Weighted average cost of capital) – (Investors’ growth expectations) – (1%)
Dividend per share Earnings per share
Dividend per share Market price per share
MARKET PERFORMANCE MEASUREMENTS
Number of stock sale transactions by insiders
Number of stock purchase transactions by insiders
(Number of common shares outstanding x Share price) + (Number of preferred
shares outstanding x Share price) – (Book value of invested capital)
(Total shares x Stock price) + Debt – Cash – Marketable securities
Net income – Interest expense
Total stock options Total common shares outstanding
Cost of Capital
Sales to Stock Price Ratio
Price/Earnings Ratio
Capitalization Rate
Measurements for the Accounting/Finance Department
Purchase Discounts Taken to Total Discounts
Percentage of Payment Discounts Missed
Transactions Processed per Person
Transaction Error Rate
Average Time to Issue Invoices
Average Employee Expense Report Turnaround Time
Payroll Transaction Fees per Employee
Time to Produce Financial Statements
Percentage of Tax Filing Dates Missed
Proportion of Products Costed Prior to Release
Internal Audit Savings to Cost Percentage
Bad Debt Percentage
Percent of Receivables over XX Days Old
Percentage Collected of Dollar Volume Assigned
Cost of Credit
Earnings Rate on Invested Funds
Brokerage Fee Percentage
Interest expense x (1 – Tax rate)
Amount of debt – Debt acquisition fees + Premium on debt – Discount on debt
Annual net sales Average common stock price
Average common stock price Net income per share
Earnings per share Market price per share
Total purchase discounts taken Total economical discounts available
Number of payment discounts missed
Total number of payment discounts available
Total number of transactions processed
Number of full-time equivalents required to complete transactions
Number of errors Total number of transactions processed
Sum of invoice dates – Sum of shipment dates
Number of invoices issued
Date of payment to employees – Date of expense report receipt
Total payroll outsourcing fee per payroll
Total number of employees itemized in payroll
Financial statement issue date – First day of the month following the reporting month
Total number of tax returns filed late
Total number of tax returns filed
Number of products costed prior to release Total number of products released
Internal audit recommended savings Internal audit expense
Total bad debt dollars recognized Total outstanding accounts receivable
Dollar amount of outstanding receivables > XX days old
Total dollars of outstanding receivables
Cash received from collection agency
Total accounts receivable assigned to collection agency
Discount % ÷ (100 – Discount %) x (360/Full allowed payment days – Discount days)
Interest earned + Increase in market value of securities
Total funds invested
Bank / broker transaction fees charged Total funds invested
 MEASUREMENTS FOR THE HUMAN RESOURCES DEPARTMENT

Employee Turnover Number of Full Time Equivalent employees who resigned

(Total FTE employees at beg of period + Total FTE employees at end of period) ÷ 2

MEASUREMENTS FOR THE LOGISTICS DEPARTMENT

Production Schedule Accuracy Number of scheduled jobs completed Number of jobs scheduled for completion

Economic Order Quantity

Number of Orders to Place in a Period Total usage in units EOQ

Raw Material Inventory Turns
Raw Material Content
Finished Goods Inventory Turns
Obsolete Inventory Percentage
Percentage of Inventory > XX Days Old
Percentage of Returnable Inventory
Inventory Accuracy
Percentage of Certified Suppliers
Order Fill Rate
Average Time to Ship
On-Time Delivery Percentage
Percentage of Products Damaged in Transit
Percentage of Sales through Distributors
(Raw material dollars consumed ÷ Raw material inventory dollars on hand) x 12
Raw material dollars sold Sales
(Finished goods dollars consumed ÷ Finished goods inventory dollars on hand) x12
Cost of inventory items with no recent usage Total inventory cost
Dollars of inventory > XX days old Total dollars of inventory
Dollars of returnable inventory Total dollars of inventory
Number of accurate test items Total number of items sampled
Number of certified production suppliers Total number of production suppliers
Number of customer orders completely filled by promised ship date
Number of customer orders having promised ship dates within the measurement period
Delivery date – Date order was sent to shipping area
Required delivery date – Actual delivery date
Damage-related customer complaints Number of orders shipped
Total dollars of sales to distributors Total dollars of sales

MEASUREMENTS FOR THE PRODUCTION DEPARTMENT

Constraint Productivity Number of units produced per hour Number of hours worked
Takt Time Operating time Required quantity
Manufacturing Efficiency Current cycle time Value-added time
Work-in-Process Turnover Annual cost of goods sold Total work-in-process
Warranty Claims Percentage Total number of warranty claims received Total number of products sold