Report Analysis - How to Read the Statements

Operating Profit Margin

Operating profit margin refers to the value earned as a percentage of net sales.   The operating profit is often referred to as earnings before interest, taxes, depreciation and amortization, (EBITDA).   This is a misleading reference […]

Report Analysis - How to Read the Statements

Total Assets Turnover Rate

Within the group of activity ratios, the total assets turnover rate is the broadest in scope.   Similar to other activity ratios, it utilizes net sales as the numerator.  However the denominator doesn’t focus in on […]

Specialty Taxes

Basis in Business

Basis is a business term used to identify the value of an individual or entity’s investment in an entrepreneurial endeavor.   It is customarily linked to taxation as this term is used by the Internal Revenue […]

Report Analysis - How to Read the Statements

Debt Ratio

Debt is a natural part of business.   The most volume (number of transactions) of debt occurs with the simple purchase of materials (inventory) or supplies on account.   Every business buys on account whether it is […]

Report Analysis - How to Read the Statements

Fixed Asset Turnover Rate

The fixed asset turnover rate is another activity ratio whereby an income statement financial characteristic is compared to a balance sheet asset section.    In this case, comparing adjusted sales against historical cost of fixed […]

Report Analysis - How to Read the Statements

Working Capital Turnover

The activity ratios measure performance of a current asset on the balance sheet against a corresponding area of the income statement.  The working capital turnover is the most encompassing of all the activity ratios; in […]