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RATIO COMPARISONS

1. The Current Ratio is an approximate measure of a firm's ability to meet its current obligations and is calculated as Current Assets/Current Liabilities.

Typical INC.’S current ratio is on a upward trend. This would indicate that the amount of current assets is increasing steadily as is the "cushion" between current liabilities and the ability to pay them. It could suggest that Typical has a relatively more stable position than the industry and seems to suggest that there is an opportunity for expanded operations.

2. The Revenue to Receivables ratio measures the number of times trade receivables turn over in a year. It is calculated as the Net Revenue/Trade Receivables..

Typical INC.’S recent revenue to receivables ratio is on a downward trend. This indicates that collection methods need to be improved. (This has been done)

3. The Cost of Goods to Payables ratio measures the number of times trade Payables turn over in a year. It is calculated as Cost of Goods Sold/Trade Payables.

Typical INC.’S recent cost of goods to Payables ratio is on an downward trend. This indicates that the company may be experiencing cash shortages due to the amount of time between the payment of supplies or subcontractors and receipt of payment for its billings. It might want to consider extending the time it takes to pay for supplies or subcontractors.

4. The Revenue to Working Capital ratio is a measure of the margin of protection for current creditors. It is calculated as Net Revenue/{Current Assets-Current Liabilities}. (This has been corrected with the change in payment policy to subcontractors.)

Typical INC.’S recent revenue to working capital ratio is on a upward trend. This indicates efficient use of working capital .

5. The EBIT to Interest ratio is a measure of ability to meet annual interest payments. It is calculated as Earnings before interest and taxes/Annual Interest Expense.

Typical INC.’S recent EBIT to interest ratio is on a upward trend. This indicates that the company should not have a problem servicing its debt. The figures for 1997-1999 is above industry median figures. This could indicate that the company is better able to make interest payments and could possibly handle more debt.

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