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Credit Engineering for Bankers, 2nd Edition by Johnathan Mun, Morton Glantz

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Chapter 3 Multivariate Ratio Analysis

Chapter Outline

  • The Role of Ratios 38
    • Limitations of Ratios 38
    • Peer Group or Industry Comparisons 40
  • Ratio Trends 42
    • Case Study: Trudy Patterns, Inc. 42
  • Liquidity Ratios 45
    • Current Ratio 45
    • Quick Ratio 45
  • Activity or Turnover Ratios 46
    • Average Collection Period 46
    • Bad Debt Expense/Sales 46
    • Inventory Turnover 47
    • The Fixed Asset Turnover 47
    • Working Capital Turnover 48
    • Total Asset Turnover 48
    • The Average Settlement Period 49
  • Profitability Ratios 49
    • The Gross Profit Margin 50
    • Selling, General, and Administration Expenses/Sales 50
    • Effective Tax Rate 51
    • The Net Margin 51
    • Return on Net Worth 51
    • Return on Total Assets 52
    • Dividend Payout Ratio 52
  • Leverage Ratios 53
    • Debt to Equity and Debt to ...

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