Learning Bank Reconselation

Step 1.
Balance per Bank Statement on Aug, 31. 2006
Adjustments:
Add: Deposits in transit
Deduct: Outstanding checks
Add or Deduct: Bank errors
Adjusted/Corrected Balance per
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Bank Step 2.
Balance per Books on Aug, 31 2006
Adjustments:
Deduct: Bank service charges
Deduct: NSF checks & fees
Deduct: Check printing charges
Add: Interest earned
Add: Notes Receivable collected by bank
Add or Deduct: Errors in company's Cash account
Adjusted/Corrected Balance per Books

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Liquidity Analysis Ratios

Current Ratio

Current Assets
Current Ratio = ------------------------
Current Liabilities

Quick Ratio

Quick Assets
Quick Ratio = ----------------------
Current Liabilities

Quick Assets = Current Assets - Inventories

Net Working Capital Ratio

Net Working Capital
Net Working Capital Ratio = --------------------------
Total Assets

Net Working Capital = Current Assets - Current Liabilities


Profitability Analysis Ratios
Return on Assets (ROA)

Net Income
Return on Assets (ROA) = ----------------------------------
Average Total Assets

Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2

Return on Equity (ROE)

Net Income
Return on Equity (ROE) = --------------------------------------------
Average Stockholders' Equity

Average Stockholders' Equity
= (Beginning Stockholders' Equity + Ending Stockholders' Equity) / 2

Return on Common Equity (ROCE)

Net Income
Return on Common Equity (ROCE) = --------------------------------------------
Average Common Stockholders' Equity

Average Common Stockholders' Equity
= (Beginning Common Stockholders' Equity + Ending Common Stockholders' Equity) / 2

Profit Margin

Net Income
Profit Margin = -----------------
Sales


Earnings Per Share (EPS)

Net Income
Earnings Per Share (EPS) = ---------------------------------------------
Number of Common Shares Outstanding



Activity Analysis Ratios
Assets Turnover Ratio

Sales
Assets Turnover Ratio = ----------------------------
Average Total Assets

Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2

Accounts Receivable Turnover Ratio

Sales
Accounts Receivable Turnover Ratio = -----------------------------------
Average Accounts Receivable

Average Accounts Receivable
= (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Inventory Turnover Ratio

Cost of Goods Sold
Inventory Turnover Ratio = ---------------------------
Average Inventories

Average Inventories = (Beginning Inventories + Ending Inventories) / 2


Capital Structure Analysis Ratios
Debt to Equity Ratio

Total Liabilities
Debt to Equity Ratio = ----------------------------------
Total Stockholders' Equity


Interest Coverage Ratio

Income Before Interest and Income Tax Expenses
Interest Coverage Ratio = -------------------------------------------------------
Interest Expense

Income Before Interest and Income Tax Expenses
= Income Before Income Taxes + Interest Expense


Capital Market Analysis Ratios
Price Earnings (PE) Ratio

Market Price of Common Stock Per Share
Price Earnings (PE) Ratio = ------------------------------------------------------
Earnings Per Share


Market to Book Ratio

Market Price of Common Stock Per Share
Market to Book Ratio = -------------------------------------------------------
Book Value of Equity Per Common Share

Book Value of Equity Per Common Share
= Book Value of Equity for Common Stock / Number of Common Shares

Dividend Yield

Annual Dividends Per Common Share
Dividend Yield = ------------------------------------------------
Market Price of Common Stock Per Share

Book Value of Equity Per Common Share
= Book Value of Equity for Common Stock / Number of Common Shares

Dividend Payout Ratio

Cash Dividends
Dividend Payout Ratio = --------------------
Net Income



ROA = Profit Margin X Assets Turnover Ratio
ROA = Profit Margin X Assets Turnover Ratio

Net Income Net Income Sales
ROA = ------------------------ = -------------- X ------------------------
Average Total Assets Sales Average Total Assets

Profit Margin = Net Income / Sales
Assets Turnover Ratio = Sales / Averages Total Assets