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Ratios: Common Size and Trend Percents

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This file contains examples in the preparation and calculation of financial ratios; both - common size percents and trend percents for the Bluegrass Corporation. Examples which can used to calculate relevant financial ratios for any company.

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The solution uses examples to calculate relevant financial ratios for a company.

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For your convenience, I have attached a formatted MS Excel spreadsheet containing the information below.

1) Current Ratio = Current Assets / Current Liabilities
Current Ratio:
2007 = $36,300 / $16,500 = 2.20
2008 = $32,660 / $19,180 = 1.70
2009 = $54,860 / $23,370 = 2.45

BLUEGRASS CORPORATION 2) BLUEGRASS CORPORATION
Comparative Income Statements Common-size Percentages from Comparative Income Statements
For Years Ended December 31, 2009, 2008, and 2007 For Years Ended December 31, 2009, 2008, and 2007

2009 2008 2007 2009 2008 2007

Sales $198,800 $166,000 $143,800 Sales 100.00% 100.00% 100.00%
Cost of goods sold 108,890 86,175 66,200 Cost of goods sold 54.77% 51.91% 46.04%
Gross profit 89,910 79,825 77,600 Gross profit 45.23% 48.09% 53.96%
Selling expenses 22,680 19,790 18,000 Selling expenses 11.41% 11.92% 12.52%
Administrative expenses 16,760 14,610 15,700 Administrative ...

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