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There are a tremendous number of Financial Ratio's

Which ratio's do you use on a regular basis and actually find value in running your business. For argument's sake, let's all agree on the A/R & A/P Days Outstanding and/or Turnover ratio's. As always, why? Here is a short list (not all inclusive): Financial Ratios Receivables Turnover Ratio Asset Turnover Ratio Cash Conversion Cycle Cash Ratio Contribution Margin Current Ratio Days Sales in Inventory Days Sales Outstanding Debt Ratio Debt Service Coverage Ratio Debt to Equity Ratio Dividend Payout Dividend Yield DuPont Analysis Earnings per Share Equity Multiplier Equity Ratio Fixed Charge Coverage Ratio Gross Margin Ratio Inventory Turnover Ratio Operating Margin Ratio Payables Turnover Ratio Price Earnings P/E Ratio Profit Margin Ratio Quick Ratio - Acid Test Retention Rate Return on Assets Return on Capital Employed Return on Equity Times Interest Earned Ratio Working Capital Ratio

Answers

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Bond working capital is our most important ratio, excluding the A/R & A/P ratios. It helps us to know that we're within our range of bond coverage for our construction projects. I haven't heard of a few of those analyses either.

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Months Burn (Gross in bank, Net). Basically, how soon do I need to get out my suit and start begging.
Trailing Three Months revenue trends. In the businesses I'm doing right now, there is quite a lot of near-term volatility. However, I need to predict if we can add the next person. In this firm 3 months revenue is about right to smooth the bumps without losing the trend.
Quote to Cash cycle time. This ties pretty closely to pipeline. Basically, how quickly can I turn my pipe into cash?
Pipeline accuracy/volatility. This is hard to really get a handle on, so I do it by volatility. Basically like tracking the weather. "I said it would be a 30% chance of rain; did it rain 30% of the time?" Much more rearward looking than I like, but we need to keep ourselves honest.

Cheers

KP

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