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Section III - Building the Business Plan: Marketing and Financial Considerations

Chapter 10
Creating a Successful Financial Plan (PPT 10.1)

Part One: Learning Objectives

1. Understand the importance of preparing a financial plan.

2. Describe how to prepare the basic financial statements and use them to manage to a small business.

3. Create projected (pro forma) financial statements.

4. Understand the basic financial statements through ratio analysis.

5. Explain how to interpret financial ratios.

6. Conduct a breakeven analysis for a small company.

Part Two: Lesson Plan

I. Basic Financial Statements (PPT 10.2)

A. The balance sheet-- takes a "snapshot" of a business at a given date, providing

owners with an estimate of its value in terms of assets, liabilities and equity.
B. The income statement-- also called a profit and loss (P&L) statement, compares
expenses against revenues for a certain period of time to indicate profits or losses.
C. The statement of cash flows-- shows the actual flow of cash into and out of a
business for a certain time period.

II. Creating Projected Financial Statements

A. The determination of funds needed for starting and sustaining a business for the
initial growth period-- the entrepreneur typically relies on data collection through
extensive market and field research and on published statistics summarizing the
performance of similar companies.
B. Develop Pro Forma Statements

Pro Forma Statements (projected) help the small business owner transform goals
into reality by estimating the profitability and overall financial condition of the
business for the initial one- to three-year period.

1. Always start with the sales forecast and work down.

a. The pro forma income statement begins with the sales forecast and
estimates the corresponding expenses required to generate those sales
dollars. Banks typically require two- to three-year projections.
b. The pro forma balance sheet starts with the beginning balances of
cash, inventories, assets and liabilities. Banks typically require a year-
one and year-two balance sheet projection.
c. The pro-forma cash flow statement charts cash flow, by month,
(typically) for the first two years of operation. It is often one of the
major criteria for lending decisions by creditors.

III. Ratio Analysis (PPT 10.3 thru 10.15)

Ratio Analysis expresses the relationship between two selected accounting elements and is
one technique used in conducting a financial analysis.

The twelve key ratios include:

A. Liquidity Ratios indicate whether the business will be able to meet its short-term
financial obligations as they come due.
1. Current ratio-- measures solvency through the relationship between current
assets and current liabilities.
2. Quick ratio-- focuses even more on liquidity by removing inventory from
the current ratio calculation.
B. Leverage Ratios measure the relationships between financing supplied by a firm’s
owners and by its creditors.
3. Debt ratio-- measures total debt against total assets-- the extent or
percentage of total assets owned by creditors
4. Debt-to-net-worth ratio-- indicates the degree of leveraging by measuring
capital contributions from creditors against those by the owners (debt-to-
5. Times interest earned-- a measure of the firm's ability to make the interest
payments on its debt.
6. Average inventory-turnover ratio--measures the average number of times
inventory is "turned over" during the year.
7. Average collection period ratio--measures the average number of days it
takes to collect receivables.
8. Average payable period ratio-- indicates the average number of days it
takes a company to pay its accounts payable.
9. Net Sales to Total Assets ratio-- the measure of a firm's ability to generate
sales in relation to its assets.
10. Net Sales to Working Capital ratio-- measures the sales that a business
generates for every dollar of working capital.
11. Net profit on sales ratio—measures a firm's profit per dollar of sales.
12. Net profit to equity ratio—measures an owner's rate of return on

YOU BE THE CONSULTANT - Yes, But Are Those Profits Real?

Desperate companies and dishonest people have unfortunately taken to manipulating financial
statements in an attempt to fool stockholders, creditors, suppliers and others, and to buy time. It is
relatively easy to deceive outsiders by “doctoring” statements (reported phony revenues and gross profits,
inflating inventories, misreporting expenses and so on).

Q1. Refer to the balance sheet and income statement for Sam's Appliance Shop (fig. 10.1 and 10.2) and do
some "creative accounting" of your own. Inflate the inventory values by a significant amount and see what
happens to net worth and profits.
Q2. Recalculate the twelve key ratios for Sam’s Appliance Shop. Compare the results. Which version
would look better to a banker? Why?
Q3. Who loses when managers of a company commit inventory fraud? What are the ethical implications of
such practices?

Q4. What dangers does the practice of “earnings management” hold for companies and their investors?

A1. & A2. Students should be led to realize how easy it is to recreate the financial standing of a company
by manipulating numbers that influence profitability and ratio analysis.

Answer: As an example: if inventory is increased from $455,455 by 50% to $683,183, total assets would
be increased by $227,727 to $1,075,382., and net worth to $495.382. Increasing inventory to 683,183
results in cost of goods sold changing to $1,062,389 and gross profit to $808,452. Net income rises to
$288,357 (a dramatic increase from the original $60,629).

New Original
Current Ratio 2.49:1 1.87:1
Quick Ratio .63:1 .63:1
Debt Ratio .54:1 .68:1
Debt to Net 2.20:1 2.20:1
Worth Ratio
Times Interest 1.43:1 2.05:1
Average Collection 50 days 50 days
Average Payable 59.3 59.3
Net Sales to Total 1.74:1 2.21:1
Net Sales to 3.42:1 5.86:1
Working Capital

Net Profit on Sales 3% 3%

Net Profit on Equity 22.6$ 22.6%

A3. Many individuals both inside and outside of a company are adversely affected by fraud. Suppliers,
stockholders, employees, creditors and even customers are affected. Any such unethical practice may
permanently damage the reputation and existence of a company.
A4. Bankruptcy and prison time are the primary dangers of accounting fraud.

YOU BE THE CONSULTANT - All Is Not Paradise in Eden's Garden: Part 1

Joe and Kaitlin Eden, co-owners of Eden’s Garden, a small nursery, lawn and garden supply
business, received their year-end financial statements from accountant Shelley Edison. The Eden’s are
having trouble keeping up with their bills-- Edison has offered to show the Edens how to analyze financial
statements and avoid such problems. Students are provided with balance sheet and income statement data.

Q1. Assume the role of Shelley Edison. Using the financial statements for Eden's Garden, calculate the 12
ratios covered in this chapter.
Q2. Do you see any ratios that, on the surface, look suspicious? Explain.


Current Ratio 129,936 = 1.48:1

Quick Ratio 129,936-88,157 = .48:1
Debt Ratio 87,622,+119,846 = 74:1
Debt to Net 87,622,+119,846 = 2.83:1
Worth Ratio 73,375
Time Interest 30,189,+21,978 = 2.37:1
Earned 21,978
Average 395,683 = 4.8 times/yr.
Inventory 78,271,+86,1572
Average 289,484 = 11.15 times/yr
Collection 25,952
365 = 32.7 days
Average 403,569 = 7.44 times/yr.
Payable 54,258
365 = 49 days
Net Sales to 689,247 = 2.45:1
Net Assets 280,843
Net Sales to 689,247 = 16.29:1
Working 129,936-87,622
Net Profit on 30,189 = 4%
Sales 689,247
Net Profit to 30,189 = 41%
Equity 73,375

A2.Ask students to go to Robert Morris Associates Annual statement studies or Dun and Bradstreet’s Key
Business ratios and compare the 12 ratios calculated for Eden's Garden against businesses within this
industry of a similar size (look under Nursery, and Lawn and Garden Supplies). Answers will vary
depending on the year or edition used. Part 2 of this exercise will ask for additional analysis.

IV. Interpreting Business Ratios-- Ratios are useful yardsticks when measuring a small firm's
performance and can point out potential problems before they develop into a crisis. (PPT
10.16 thru 10.27)

A. Comparison of a firm's ratios to businesses within the same industry is a useful

tool. A firm can also develop ratios unique to its operation. Several organizations
compile and publish operating statistics including key ratios. This information
may be found in the following sources:

1. Robert Morris Associates

2. Dun & Bradstreet, Inc.
3. Vest Pocket Guide to Financial Ratios
4. Industry Spotlight
5. Bank of America
6. Trade associations
7. Government agencies
B. What Do All of These Numbers Mean? Learning to interpret financial ratios just
takes practice--students are presented with the twelve ratios from Sam’s Appliance
Shop along with a corresponding analysis from Robert Morris Associate’s Annual
Statement Studies.

YOU BE THE CONSULTANT - All Is Not Paradise in Eden's Garden: Part 2

Having now calculated and compared the ratios for Joe and Kaitlin Eden’s business to the industry
averages in the Robert Morris Associates database, it is time to meet with and help the clients.

Q1. Analyze the comparisons you have made of Eden's Garden's ratios with those from Robert Morris
Associates. What “red flags” do you see?
Q2. What might be causing the deviations you have observed?
Q3. What recommendations can you make to the Edens to improve their company’s financial performance?

A1.The average collection period and average payable period numbers are beyond industry norms.
Profitability on sales is also below normal.
A2. Under-pricing and sluggish collection of receivables will adversely affect cash flow causing extended
payable periods and other problems.
A3. Students will offer a number of recommendations that should include pricing, cost control and
expedited collections.

V. Breakeven Analysis (PPT 10.28 thru 10.31)

The breakeven point is the level of production and sales volume at which a company’s
revenues equal its expenses, resulting in a net income of zero.

A. Determining variable and fixed expenses.

1. Fixed expenses--costs that do not vary with changes in the volume of sales
or production.
2. Variable expenses--costs that vary directly with changes in the volume of
sales or production.
B. Steps in calculating the breakeven point

Step 1: Determine the expenses a business can expect to incur.

Step 2: Categorize those expenses as fixed or variable.
Step 3: Calculate the percentage of variable expenses to net sales.

Determine the percentage of contribution margin to sales.
Step 4: Compute the breakeven point.
C. Include Desired Net Income into the Breakeven Analysis calculations.
D. Calculate the Breakeven Point and Desired Profit in both units and dollars.
E. How to use the Breakeven Analysis data.

YOU BE THE CONSULTANT - Where Do We Break Even?

Students are provided with the cost structure and data for Anita Dawson’s existing business and for
her proposed growth venture.

Q1. Calculate Anita's current breakeven point; include a break-even chart.

Q2. Calculate Anita’s breakeven point under the proposed growth venture.
Q3. Would you recommend that Anita expand her business? Explain.

First calculate the contribution margin:
Variable costs = $337,000 + $42,750 = $379,750
Sales are given at $495,000
Variable costs as a percentage of sales = 379,750/495,000 = .77
Contribution margin = 1.0 - .77 = .23

Then calculate breakeven sales dollar amount

Total Fixed Cost = $78,100 = $339,565

Contribution margin .23

A2. First calculate the contribution margin:

Given New Sales = $495,000 + $102,000 = $597,000

Cost of Goods Sold as a percentage of original sales ($337,000/$495,000) = .68
Variable costs = (.68)($597,000) + 42,750 + $22,400 = $471,110
Variable costs as a percentage of sales = $471,110/597,000 = .79
Contribution margin = 1.0 - .79 = .21

Then calculate breakeven sales dollar amount

Total Fixed Cost = $78,100 + 66,000 = $686,190

Contribution margin .21

A3. No, assuming that her cost of goods remained constant at 68% of sales, the additional $22,400 in
variable cost would reduce the contribution margin to 21%. With the additional $66,000 to fixed
costs, breakeven rises from $339,565 to $686,190. An amount above the projected new sales
amount of $597,000, (495,000+102.000).

At first glance, Anita should be discouraged from expanding. Students may note however that the
contribution margin percent is very low, indicating low pricing, high cost of goods or both. An
improvement in either area would lower the breakeven point significantly.

Part Three: Suggested Answers to Discussion Questions

1. Why is developing a financial plan so important to an entrepreneur about to launch a business?

Developing a financial plan is one of the most important steps in launching a new business venture.
Prospective investors will demand such a plan before putting their money into a startup company.
A financial plan is a tool that helps entrepreneurs manage their businesses more effectively, steering
their way around the pitfalls that cause failures.

2. How should a small business use the 12 ratios discussed in this chapter?

Ratios help measure a firm's performance and can point out potential problems before they become
more serious. One way to use ratios is to compare a business to others in the same industry. It is
also helpful for the owner to analyze the firm's financial ratios and trends over time.

3. Outline the key points of the twelve ratios discussed in this chapter. What signals does each give
the manager?

1. Current ratio-- the firm's ability to pay current liabilities using current assets.
2. Quick ratio--extent to which firm's most liquid assets cover its current liabilities.
3. Debt ratio--measure the financing supplied by business owners and creditors.
4. Debt-to-net-worth ratio--compares what the business owes to what it owns.
5. Times interest earned--a measure of the firm's ability to make interest payments.
6. Average inventory turnover ratio--measures the number of times inventory is "turned
over” per year.
7. Average collection period-- the average number of days to collect accounts receivables.
8. Average payable period-- the average number of days it takes to pay accounts payables.
9. Net sales to total assets ratio-- measures a firm's ability to generate sales in relation to its assets.
10. Net sales to working capital-- measures sales generated for every dollar of working capital.
11. Net profit on sales ratio-- measures a firm's profit per dollar of sales.
12. Net profit to equity ratio—measures an owner's rate of return on investment (ROI).

4. Describe the method for building a projected income statement and a projected balance sheet for a
new business.

A projected income statement starts with a sales forecast that should based primarily on market
research about the firm’s competition and customer base. The sales forecast allows the income
statement and balance sheet to be completed.

5. Why are pro forma financial statements important to the financial planning process?

No entrepreneur should launch a business without first creating a sound financial plan and
attracting the capital to operate it. Pro forma statements are a vital element in such a plan, as they
estimate the firm's future profitability and overall financial condition. These statements help the
owner determine what funds are required to launch the business and sustain it through its initial
growth period.

6. How can breakeven analysis help an entrepreneur launch a business?

Breakeven-analysis first lets an entrepreneur know the sales volume that must be generated to
"break even." It also serves as a “reality check” in relation to the competition, the customer base,
and the sales volume that must be generated in order to earn the desired profit.

Part Four: Lecture or Critical Thinking Case Studies-Not In Student Text




Accounting is just a necessary function that every small company must perform; it's nothing that can
help the business compete, right? Wrong.

Managers and employees at Springfield Remanufacturing Company, a Missouri-based business that

rebuilds engines, would argue that the accounting and financial functions can be a source for building a
competitive edge. Indeed, SRC has developed a creative system that uses accounting as a strategic weapon.

When managers and employees bought SRC from International Harvester in a leveraged buy-out, the
company was losing money fast, despite IH's best efforts to turn it around. Facing huge debts and a short
time horizon, President Jack Stack created "the great game of business"--a plan for survival and growth. He
began by teaching every employee how to read, analyze, and understand financial statements and other
numbers of the business.

The game Stack created is to beat the numbers. According to Stack, "I think you need an invisible
enemy to get your dander up. We set up this income statement as the enemy." Employees at SRC not only
understand the numbers, they also act on them. Stack states, "We need our people to look at the labor; we
need them to look at the overhead; and we need them to look at the material [costs]. We need them to make
management decisions at virtually every operation at every time of the day." For example, some of the
toughest jobs in the plan are in the maintenance department; when a machine or tool breaks down, the
operator wants it fixed yesterday. Stack related the following story:

“One day, I went out to the maintenance foreman, and I asked him, ‘Are you reading the statements?
Are you getting any meaning out of the statements?’ He said, ‘Yeah.’ ‘How?’ Stack asked. ‘I go over
the labor portion of that financial statement and I look for the departments that are not meeting their
standards,’ the foreman explained. ‘Then I go to my people. Any department that is not meeting their
standards and has a machine down, I send my maintenance people there first.’ Stack responded,
‘That's a phenomenal way of scheduling your manpower.’ The foreman replied, ‘If I can get these
guys up to standard, then we're going to make more money.’

And so it goes at SRC. Employees actually use numbers to make business decisions that benefit the
company and themselves. Stack claims, "What we have done here is break down, individually, each and
everyone's responsibility and show how those results flow into a financial statement and how they actually
contributed to the success or failure in that particular period of time." As a result, SRC employees have come
to understand the importance of their jobs to the company. Stack continues, "Our people know exactly the
profit and loss of every piece [of work] they perform, and how that piece fits into the whole."

Stack is convinced that SRC is in a stronger competitive position because its employees understand
and use financial information creatively. The evidence is the dramatic increase in company sales--from $16
million to $43 million--in just three years. Jack Stack concludes, "We use numbers from the competitive side
of things. We needed a game to unify everybody out in that factory. We needed something that was concrete.
We needed something that they could believe in, and this game was absolutely perfect to play."

1. What financial summaries should small business owners prepare to improve their control over their
2. Why do some owners fail to prepare adequate financial summaries and reports?
3. What benefits does SRC gain form its approach to financial management?

Adapted from "Numbers," in Paul Hawken, "Growing a Business," KQED Video, 1988.


Although trained as a behavioral psychologist, Larry Stifler, founder of Health Management

Resources Inc. (HMR), "is a numbers guy," says one employee. Stifler uses his "sixth sense"--an uncanny
ability to see relationships in numerical terms--to manage his highly successful weight-control business. He
showed a knack for numbers as a kid when he performed math tricks in his head on stage. "I do everything
by the numbers," he explained. That includes running his $60 million company, which combines medically
supervised very low-calorie diets (VLCDs) with extensive behavior modification and support programs.
HMR targets clinically obese individuals, not casual post-holiday dieters, and treats them as medical

Rather than incur the high start-up and maintenance costs of freestanding diet clinics (and raising
its break-even point to excessive levels), HMR invests between $25,000 and $30,000 to open clinics in
existing hospitals and medical facilities. The weight-loss clinics belong to HMR, which shares a portion of
gross revenues with hospitals. In other cases, HMR trainers show hospital professionals how to open and
operate their own diet clinics and then offer ongoing, off-site training sessions for hospital staffers. The
company also sells its liquid weight-loss supplement to non-HMR-affiliated clinics. All of this has pushed
HMR into the number one spot in the nation's medically supervised VLCD market. "Larry has a
commitment to health," observes one employee. "He lives it. He's not in business just to make money. But
he believes in capitalism too. There's no conflicts between profitability and running a good program.
Profitability and clinical effectiveness go hand in hand."

Although Stifler admits to being a numbers guy, he doesn't use numbers in the traditional sense to
manage his companies. For instance, HMR has no budgets in place, and no one in the company plans in
dollar amounts. Stifler despises the bean-counting philosophy on which businesses have traditionally
relied, scrutinizing every budget line item for places to cut costs. Instead, Stifler relies almost exclusively
on ratios to express relationships among the people, things, and events that are crucial to HMR's success.
Once he understands those relationships, he builds mathematical models that capture the essence of those
factors required for business success.

Stifler uses his ratios and models to make better business decisions. For instance, HMR spends
almost nothing on consumer advertising. Why not? After looking at a few ratios, Stifler discovered that he
didn't need to. Using company records, he noted that on average, every patient that moves from the VLCD
phase into HMR's eighteen-month maintenance stage recommends 2.2 additional patients who enter the
program. The number told him that to keep the program self-sustaining, HMR had to get 46 percent of all
patients into the maintenance phase (because 46% x 2.2 = 100%). If more than 46 percent
go into the maintenance stage, the program will grow automatically, and this means that every dollar spent
offering top-quality patient care will produce $2.20 in additional revenue. "So," Stifler noted, "I said, 'Set
up the business for quality care, and it will grow by itself.'"

Stifler uses these numerical relationships to allocate resources in the company without a budget.
The key variable at HMR is the number of patients enrolled in the weight-loss program; everything is
ultimately related to the number of patients enrolled. Stifler starts by determining a reasonable patient--
staff ratio, say 50:1. He knows the cost of each employee in regard to compensation and benefits as well as

the cost of office equipment and furniture to support each one. Then he builds a mathematical model
incorporating these relationships. Employees simply track the number of patients enrolled and follow the
model. "I never write a budget or proposals," marvels one employee. "I just work with patients, and in a
year of working here, there's nothing we've wanted that we couldn't get. The model tells us."

Stifler also uses ratios to keep track of how well the system is working and to control the business.
The first ratio he looks at every month measures productivity--net sales revenue divided by the number of
full-time employees in the company. "This will tell me if there's something wrong. If productivity is the
same or better from month-to-month, then we're OK."

The second relationship he studies tells him at a glance how the two parts of the business--products
and service--are performing relative to each other. HMR generates a profit by selling its liquid diet
supplement. Although it charges patients for the service it provides them, the service basically is a cost
incurred to sell the supplement. To keep track of the cost of providing the service, Stifler keeps two
checking accounts--one for product receipts and expenditures and one for service revenue and expenditures.
Because HMR makes money on product sales and loses money on service, Stifler must write a check from
the product account to cover the service deficit. The size of the check is not important; Stifler knows
something is wrong only if the cost of service rises as a proportion of product revenue.

If the service/product ratio is out of balance, Stifler calculates eighteen different ratios covering a
variety of cost categories; the denominator in every case is net revenue. "This may sound deceptively
simple," he says, "but nobody has to shuffle 150 pieces of paper after four months to see what went wrong.
I can do it at the end of the month in three minutes." If a ratio is off, Stifler knows exactly where the
problem is and can begin doing something about it immediately. In essence, it's numbers--in the form of
ratios--that enable Stifler to see the big picture at HMR and to be sure it's properly formed.

1. How important are budgets to HMR? Ratio analysis?

2. What is the key variable of interest to Stifler in monitoring HMR's financial performance? How
might other businesses-- retailers, wholesalers and manufacturers translate this variable into
something relevant to them?
3. Why do so few business owners actively manage their companies' financial affairs?

Source: Tom Richman, "The Language of Business," Inc., February 1990, pp.41-50.

Part Five: Chapter 9 Exercises

9.1 Startup Expenses-Wish Lists and the Pro Forma Balance Sheet

Startup costs need be determined before developing a new firm’s first balance sheet. Purchasing used
equipment, utilizing leases and hiring temporary employees are ways to help a small business conserve
needed cash in the opening stages of development. Although many firms startup without the necessary
capital to see them through the first few years, it is not recommended. The basic rule-of-thumb is to open
the doors with at least enough cash to see the business through three months worth of expenses or to use
published industry standards throughout the year.

After determining the cash and inventory balances sufficient to meet industry standards (RMA Annual
Statement Studies) entrepreneurs can use tools like the planning forms shown in figures 9.3 and 9.4 of the
student text to determine other assets the firm will need to open its doors and operate its business. Once this
“wish list” has been identified, the entrepreneur’s contribution in either assets or cash is taken into
consideration and the remaining amount needed to be financed is then determined.

In the example below, the owner will contribute $83,000 in either cash or assets, leaving an amount of
$120,000 to be financed by outside sources.

Jazmine Johnson’s Educational Toy Store

Jazmine Johnson has just developed a “wish list” of things she will need to start her new educational toy
store. Inventory and cash requirements were determined from industry averages found in Dunn &
Bradstreet’s Costs of Doing Business reports. (See your textbook under-The Pro Forma Balance Sheet).
The other items and their costs were determined from actual estimates and research from the local business

To keep the accounting equation in balance, all items from the “wish list” must be accounted for on the
balance sheet. Assets = Liabilities + Owners’ Equity (Net worth). If anything new is added, the numbers
will not balance unless the new items are identified on the “wish list” first. Then subtract the amount the
owner can supply (equity infusion) to determine the amount needed to be financed.

Use the icons and various symbols in the example “Wish List” and First balance Sheet to keep track of specific
items as they make their transition from the “Wish List” to balance sheet accounts.

The “Wish List” for Jazmine’s Educational Toy Store is as follows:

Inventory $100,000
Furniture and Fixtures 30,000
*Deposits 5,000
Prepaid Insurance 2,000
*Licenses 800
*Professional Fees 1,300
•Building Renovations 25,000
~Opening Cash Requirement 30,000
Opening Advertising 5,000
*Employee Training 2,000
*Miscellaneous 2,500
° Owner’s Equity Infusion <83,600>
» Bank Loan $120,000


current current
Cash (~) $30,000 Accounts Payable 0
Inventory 100,000 Current Portion Loan (») $12,000
Prepaid Insurance 2,000
Prepaid Advertising 5,000 long term
Prepaid Misc. (*) 11,600 L.T. Loan (») 108,000
Total Liabilities 120,000
Furniture and Fixtures 30,000 OWNER EQUITY
Leasehold Improvements(•) 25,000 John Doe Equity (°) 83,600
Total Assets $203,600
Total Liabilities & Owners Equity $203,600

Individually, or in a group setting, use your business plan idea to identify the “Wish List” and first balance
sheet for a new business in the industry. To determine the cash requirement for this exercise use the
rule-of-thumb of three months of operating expenses plus all costs to open the doors for the first
time. This should include enough cash to cover your wage responsibilities, rent, utilities, employee
training etc…If industry standards are unavailable at your institution, approximate your starting
inventory and other expenses.

Part Six: Supplement Readings

Dennis, Michael C. "The limitations of financial statement analysis." Business Credit. Feb. 1995,
v97 n2 p32(2).

Sack, Karen J. "Composite industry data." Standard & Poor's Industry Surveys: Retailing. Dec. 19,
1996 v164 n51 p25(2).

Reich, S. and Andre Shih. "Profit analysis crucial in asset-liability management." American Banker.
Jan. 15, 1997 v162 n10 p22(1).

Artz, W. and Raymond Neihengen Jr. An analysis of finance company ratios in 1994." Journal of
Commercial Lending. Sept 1995 v78 n1 p33(8).

Sudarsanam, P.S. and R.J. Taffler. "Financial ratio proportionality and inter-temporal stability: an
empirical analysis." Journal of Banking and Finance. April 1995, v19 n1 p45(33).

Dahltedt, R., Salmi, T., Luoma, M. and Arto Laakkonen. "On the usefulness of standard industrial
classifications in comparative financial statement analysis." European Journal of Operational Research.
Dec. 8, 1994 v79 n2 p230(9).