TITLE : KEY MANAGEMENT RATIOS: HOW TO ANALYZE COMPARE AND CONTROL THE FIGURES THAT DRIVE COMPANY VALUE.

 
Foreword xi
 
Key for symbols xiii
 
Acknowledgments xv
 
PART I FOUNDATIONS 1
 
1. Background 3
Why do you need this book? 4
The form and logic 4
Method 5
The philosophy 5
Excitement 6
Data that makes sense 6
 
2. Financial statements 9
Introduction 11
The balance sheet 14
Balance sheet structure - fixed assets 18
Balance sheet structure - liabilities 20
Summary 24
 
3. Balance sheet terms 25
Introduction 26
The terms used 26
 
4. Profit and loss account 35
Introduction 36
Working data 42
 
PART II OPERATING PERFORMANCE 47
 
5. Measures of performance 49
Relationships between the balance sheet and profit and loss account 50
The ratios "return on total assets" and "return on equity" 52
Balance sheet layouts 54
 
6. Operating performance 59
Return on investment (ROI) 61
Return on equity (ROE) 62
Return on total assets (ROTA) 64
Standards of operating performance 66
 
7. Performance drivers 81
Operating performance 82
Operating profit model 88
 
PART III CORPORATE LIQUIDITY 95
 
8. Cash flow cycle 97
Corporate liquidity 99
The cash cycle 100
Measures of liquidity - long and short analysis 110
 
9. Liquidity 113
Short-term liquidity measures 115
Current ratio 116
Quick ratio 118
Working capital to sales ratio 120
Working capital days 122
 
10. Financial strength 125
Interest cover 126
"Debt to equity" ratio (D/E) 128
Leverage 134
Summary 136
 
11. Cash flow 137	
The cash flow statement 139
Sources and uses of funds - method 140
Opening and closing cash reconciliation 144
Long and short analysis 146
Financial reporting standards 150
 
PART IV DETERMINANTS OF CORPORATE VALUE 153
 
12. Corporate valuation 155
Introduction 156
Share values 158
 
13. Financial leverage and corporate valuation 175
Introduction 176
Financial leverage 176
V chart 178
Market to book ratio 182
 
14. Growth 189
Growth 190
Analysis 194
Growth equilibrium 196
Appllcation to acquisitions 202
 
PART V MANAGEMENT DECISION-MAKING 205
 
15. Cost, volume and price relationships 207
Introduction 209
Costing illustration 210
Contribution 214
Break-even (B/E) 220
Contribution to sales percentage (CPS) 226
Summary 240
 
16. Investment ratios 241
Introduction 243
Product appraisal - the problem 244
Product appraisal - steps to solution (1) 246
Product appraisal - steps to solution (2) 248
Product appraisal - present value (PV) 250
Product appraisal - internal rate of return (IRR)	254
Product appraisal - summary 256
 
17. Shareholder value added (SVA) 259
Introduction 261
Description 262
Approach to valuation (1) 266
Approach to valuation (2) 268
Value for the equity shareholders 274
Discount factor 276
Terminal (continuing) value 286
Complete model 288
 
Appendix 1: Special items 291
Appendix 2: Companies used in the sample 304
Appendix 3: Full set of ratio charts from sample companies 307
Appendix 4: Discounting and compounding tables 325
 
Glossary 333
 
Index	343