Many readers calculate ratios based on your projected financial statements.  Calculating certain ratios allows potential investors and other evaluators of your plan to get an indication of the way your company operates and how successful it is from a financial perspective.  The ratios could aid in assigning a value to your company.

There are many different types of ratios available.  Some of the possible ratios and formulas are listed below.  If you choose to include this section in your plan, it would be wise to list the formulas below along with your calculations, so the reader will see how you arrived at your numbers.  This is necessary because some people use slightly different numbers for their calculations.

Current Ratio  =  Current Assets/Current Liabilities.

Acid Test  =  Cash + Cash Equivalents/Current Liabilities.

A/R Turnover  =  Net Sales/Average Inventory.

Inventory Turnover  =  Cost of Goods Sold/Avg. Inventory.

Profit Margin on Sales  =  Net Income/Net Sales.

Rate of Return on Assets  =  Net Income/Avg. Total Assets.

Rate of Return on Equity  =  Net Income/Equity.

Debt Ratio  =  Debt/Total Assets.

Times Interest Earned  =  Income Before Taxes/Interest Charges.