net profit margin =  net earnings
                                                        total revenues

6. Current Ratio [YF]:  indicates the relationship between current assets and current liabilities.  A financially healthy company will have more than enough current asset value to cover payments of its current liabilities.  A current ratio of 2.0 or higher is desirable.  A current ratio greater that 5.0 may indicate that business volume is not meeting expectations (inability to sell product or use assets to best advantage).

                                current ratio =  current assets
                                                    current liabilities

7.  Capital Structure [VL or C-AR]:  total amount of money invested in a company including bonds (long-term debt) and equity (money paid by investors).  Capital structure always equals 100%.  Can help determine how risky a particular company's stock is as an investment.  The greater the percentage of long-term debt the greater the risk.

  example:    long-term debt              $ 85,000                  7%
                  stockholders' equity      1,150,000                  93%
                  total capitalization        1,235,000                100% 

8. Earnings Per Share (EPS) [VL]:  a drop in EPS could signal problems, a steadily rising figure is a very healthy sign.  An annual increase of at least 10% indicates sound growth.

                                      EPS =  net earnings
                                        # of outstanding shares

9.  Dividend Payout [C]:  tells what percentage of earnings is paid out in dividends.  A good growth company pays out less than 50% and a good income company pays out more than 50%.

                            dividend payout = dividend per share
                                                        earnings per share

10.  Inventory Turnover [C-AR]:  shows whether the average monthly inventory might be too large or too small.

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