Liberty Medical Group

Detailed Ratio Analysis - Group Comparison

The equity multiplier for Liberty Medical

Group is 12.80, which compared to the
baseline of 12.56 indicates the
company's assets are highly leveraged
and the company could be considered a
risk by creditors.

Debt to Equity
Total Liabilities / Total Equity

This ratio measures the financial leverage of a company by indicating what proportion of debt and equity
a company is using to finance its assets. A lower number suggests there is both a lower risk involved
for creditors and strong, long-term, financial security for a company.

The debt to equity ratio for Liberty

Medical Group is 11.80, which
compared to the baseline of 11.56
indicates there may be some issues
with the way the company is financed.

Cash Flow to Current Maturities Long Term Debt

(Net Income + Depreciation Expense) / Current Portion of Long Term Debt

This ratio measures how well cash flow from operations covers current maturities. Since cash flow is
necessary for debt retirement, this ratio reveals a company's capability to repay existing debt and to
take on additional debt. A higher number for this ratio is desired.

Financial Analysis CS: Sample Reports 57

 Liberty Medical Group
Detailed Ratio Analysis - Group Comparison

The cash flow to current maturities

long-term debt ratio for Liberty Medical
Group is 1.31, which compared to the
baseline of 1.24 indicates the company
is in a strong position to meet its current
obligations on long-term debt based on
its current cash flow.

Times Interest Earned

Earnings before Interest and Taxes / Interest Expense

This ratio measures a company's ability to meet interest payments. A higher number is preferred,
suggesting a company can easily meet interest obligations and can potentially take on additional debt.
Note that this particular ratio uses earnings before interest and taxes because this is the income amount
available to cover interest.

The times interest earned ratio for

Liberty Medical Group is 1.63, which
compared to the baseline of 1.57
indicates the company's interest
coverage is sufficient.

The following list includes several suggestions Liberty Medical Group should consider to improve the
coverage ratios:

Examine the company’s debt to uncover areas needing improvement and create a long range action
plan to address these areas and pay down debt.
Increase equity by increasing earnings.
Minimize the overall amount of debt to decrease interest expenses.
Reduce interest payments by evaluating financing alternatives and possibly refinancing existing debt.

58 Financial Analysis CS: Sample Reports

 Liberty Medical Group
Detailed Ratio Analysis - Group Comparison

Expense to sales ratios express specific expense items as a percentage of net sales. Comparisons of
expenses are more meaningful because net sales is used as a constant. Extreme variations in these
ratios are most pronounced between capital- and labor-intensive industries.

Percent Depreciation to Sales

Depreciation Expense / Sales * 100

This ratio measures depreciation expense as a percentage of sales and is based on a company's fixed
assets and how quickly they are being depreciated or amortized, relative to sales. Any depletion
expenses should be included in this ratio as well. Note that depreciation methods should also be
considered when evaluating this ratio.

The percent depreciation to sales for

Liberty Medical Group is 1.51%, which
compared to the baseline of 1.51%
indicates the company is performing
well in this area.

Percent Owners Compensation to Sales

Owners Compensation / Sales * 100

This ratio measures owners' compensation (which includes salaries, bonuses, commissions, drawings
of partners, etc.) as a percentage of sales. The desired percentage may vary between companies
depending on their individual goals.

The percent owners' compensation to

sales for Liberty Medical Group is
35.32%, which compared to the
baseline of 35.32% indicates the
company is performing as desired in this
area.

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60 Financial Analysis CS: Sample Reports

 Liberty Medical Group
Balance Sheet - Five-Year Trend Analysis

2008 2007 2006 2005 2004

Assets

Cash & Equivalents $336,818 $319,978 $313,578 $310,378 $303,978

Trade Accounts Receivable $134,569 $127,841 $125,284 $124,005 $121,449
Inventory $12,985 $13,657 $13,384 $13,247 $12,974
Other Current Assets $98,323 $94,325 $92,439 $91,495 $89,609
Total Current Assets $582,695 $555,801 $544,685 $539,125 $528,010

Long-Term Investments $81,197 $77,137 $75,594 $74,823 $73,280

Net Fixed Assets $412,458 $383,750 $366,088 $373,140 $379,580
Intangible Assets $61,874 $58,780 $57,605 $57,017 $55,841
Other Non-Current Assets $78,390 $74,471 $72,981 $72,236 $70,747
Total Assets $1,216,614 $1,149,939 $1,116,953 $1,116,341 $1,107,458

Liabilities

Accounts Payable $42,787 $32,658 $36,777 $37,730 $39,383

Notes Payable $88,247 $83,835 $88,142 $85,498 $81,223
Accrued Liabilities $532,506 $530,190 $484,929 $470,382 $446,861
Income Taxes Payable $10,014 $9,115 $8,905 $8,638 $8,206
Current Portion of Long-Term Debt $111,238 $115,676 $117,995 $120,687 $124,596
Total Current Liabilities $784,792 $771,474 $736,748 $722,935 $700,269

Long-Term Debt $281,809 $263,352 $266,740 $270,240 $275,560

Other Long-Term Liabilities $55,000 $36,000 $37,000 $38,000 $39,000
Total Long-Term Liabilities $336,809 $299,352 $303,740 $308,240 $314,560

Total Liabilities $1,121,601 $1,070,826 $1,040,488 $1,031,175 $1,014,829

Retained Earnings $95,013 $79,113 $76,465 $85,166 $92,629

Total Equity $95,013 $79,113 $76,465 $85,166 $92,629

Total Liabilities and Equity $1,216,614 $1,149,939 $1,116,953 $1,116,341 $1,107,458

Financial Analysis CS: Sample Reports 61

 Liberty Medical Group
Statement of Income - Five-Year Trend Analysis

2008 2007 2006 2005 2004

Sales $8,079,445 $7,756,268 $7,601,142 $7,523,579 $7,445,102

Cost of Sales $0 $0 $0 $0 $0
Gross Profit $8,079,445 $7,756,268 $7,601,142 $7,523,579 $7,445,102

Operating Expenses $7,945,326 $7,620,193 $7,453,119 $7,369,162 $7,295,736

Operating Profit $134,119 $136,075 $148,023 $154,417 $149,366

Other Income $0 $0 $0 $0 $0
Other Expenses $16,360 $15,542 $15,231 $15,076 $14,749
Earnings Before Interest and Taxes $117,759 $120,533 $132,792 $139,341 $134,617

Interest Expense $72,301 $68,439 $67,071 $66,386 $64,949

Earnings Before Taxes $45,458 $52,094 $65,721 $72,955 $69,668

Provision for Income Taxes $21,877 $21,070 $20,649 $20,438 $19,995

Net Income $23,581 $31,024 $45,072 $52,517 $49,673

Additional Information
Owners Compensation $2,853,654 $2,796,581 $2,810,564 $2,768,615 $2,712,683
Depreciation Expense $122,001 $115,901 $113,583 $112,424 $115,437
Selling Expenses $0 $0 $0 $0 $0

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 Liberty Medical Group
Ratio Analysis - Five-Year Trend Analysis

2008 2007 2006 2005 2004

Liquidity Ratios

Current Ratio 0.7 0.7 0.7 0.7 0.8

Quick Ratio 0.6 0.6 0.6 0.6 0.6
Defensive Interval Days 22.3 22.1 22.1 22.2 21.9
Accounts Receivable to Working Capital -0.7 -0.6 -0.7 -0.7 -0.7
Inventory to Working Capital -0.1 -0.1 -0.1 -0.1 -0.1
Long-Term Liabilities to Working Capital -1.7 -1.4 -1.6 -1.7 -1.8
Sales to Working Capital -40.0 -36.0 -39.6 -40.9 -43.2

Activity Ratios

Accounts Receivable Turnover 60.0 60.7 60.7 60.7 61.3

Days Sales in Receivables 6.1 6.0 6.0 6.0 6.0
Inventory Turnover 0.0 0.0 0.0 0.0 0.0
Days Cost of Sales in Inventory 0.0 0.0 0.0 0.0 0.0
Accounts Payable Turnover 0.0 0.0 0.0 0.0 0.0
Days Cost of Sales in Payables 0.0 0.0 0.0 0.0 0.0
Operating Cycle Days 6.1 6.0 6.0 6.0 6.0
Sales to Assets 6.6 6.7 6.8 6.7 6.7
Sales to Net Fixed Assets 19.6 20.2 20.8 20.2 19.6
Percent Depreciation Expense to Fixed Assets 25.2 25.8 26.5 26.3 27.1
Percent Accumulated Depreciation to Fixed Assets 14.8 14.7 14.7 12.9 11.0
Net Fixed Assets to Equity 4.3 4.9 4.8 4.4 4.1

Profitability Ratios
Percent Gross Profit 100.0 100.0 100.0 100.0 100.0
Percent Profit Margin on Sales 0.6 0.7 0.9 1.0 0.9
Percent Rate of Return on Assets 3.7 4.5 5.9 6.5 6.3
Percent Rate of Return on Equity 47.8 65.8 85.9 85.7 75.2
Price Earnings Ratio 0.0 0.0 0.0 0.0 0.0
Earnings Per Share 0.0 0.0 0.0 0.0 0.0

Coverage Ratios
Debt to Total Assets 0.9 0.9 0.9 0.9 0.9
Percent Owners' Equity 7.8 6.9 6.8 7.6 8.4
Equity Multiplier 12.8 14.5 14.6 13.1 12.0
Debt to Equity 11.8 13.5 13.6 12.1 11.0
Cash Flow to Current Maturities Long Term Debt 1.3 1.3 1.3 1.4 1.3
Times Interest Earned 1.6 1.8 2.0 2.1 2.1
Book Value Per Share 0.0 0.0 0.0 0.0 0.0
Expense to Sales Ratios
Percent Depreciation to Sales 1.5 1.5 1.5 1.5 1.6
Percent Owners' Compensation to Sales 35.3 36.1 37.0 36.8 36.4

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64 Financial Analysis CS: Sample Reports

 Ratios

Liquidity Ratios

Current Ratio Current Assets / Current Liabilities

Quick Ratio (Cash + Marketable Securities + Trade Accounts Receivable) / Current

Liabilities

Defensive Interval Days (Cash + Marketable Securities + Trade Accounts Receivable) / ((Operating
Expenses - Other Expenses - Interest Expense - Provision for Income Taxes -
Depreciation Expense) / Days)

Altman Z score - Retail (((Current Assets - Current Liabilities) / Total Assets) * 6.6) + ((Total Equity /
Total Assets) * 3.3) + ((Earnings before Interest and Taxes / Total Assets) *
6.7) + ((Total Equity / Total Liabilities) * 1.0)

Altman Z score - Manufacturing (((Current Assets - Current Liabilities) / Total Assets) * 0.717) + ((Total Equity /
Total Assets) * 0.847) + ((Earnings before Interest and Taxes / Total Assets) *
3.107) + ((Total Equity / Total Liabilities) * 0.42) + ((Sales / Total Assets) *
0.998)

Accounts Receivable to Working Trade Accounts Receivable / (Current Assets - Current Liabilities)
Capital

Inventory to Working Capital Inventory / (Current Assets - Current Liabilities)

Long-Term Liabilities to Working Long Term Liabilities / (Current Assets - Current Liabilities)
Capital

Sales to Working Capital Sales / (Current Assets - Current Liabilities)

Activity Ratios

Accounts Receivable Turnover Sales / Trade Accounts Receivable

Days Sales in Receivables Trade Accounts Receivable / (Sales / Days)

Inventory Turnover Cost of Sales / Inventory

Days Cost of Sales in Inventory Inventory / (Cost of Sales / Days)

Accounts Payable Turnover Cost of Sales / Trade Accounts Payable

Days Cost of Sales in Payables Trade Accounts Payable / (Cost of Sales / Days)

Operating Cycle Days (Inventory / (Cost of Sales / Days)) + (Trade Accounts Receivable / (Sales /
Days))

Sales to Assets Sales / Total Assets

Sales to Net Fixed Assets Sales / (Property and Equipment - Accumulated Depreciation)

Financial Analysis CS: Sample Reports 65

 Ratios

Activity Ratios (cont.)

Percent Depreciation Expense Depreciation Expense / Property and Equipment * 100

to Fixed Assets

Percent Accumulated Accumulated Depreciation / Property and Equipment * 100

Depreciation to Fixed Assets

Net Fixed Assets to Equity (Property and Equipment - Accumulated Depreciation) / Total Equity

Profitability Ratios

Percent Gross Profit ((Sales - Cost of Sales) / Sales) * 100

Percent Profit Margin on Sales Earnings before Taxes / Sales * 100

Percent Rate of Return on Earnings before Taxes / Total Assets * 100

Assets

Percent Rate of Return on Earnings before Taxes / Total Equity * 100

Price Earnings Ratio Stock Price / (Net Income / Outstanding Shares)

Earnings Per Share Net Income / Outstanding Shares

Coverage Ratios

Debt to Total Assets Total Liabilities / Total Assets

Percent Owners' Equity Total Equity / Total Assets * 100

Equity Multiplier Total Assets / Total Equity

Debt to Equity Total Liabilities / Total Equity

Cash Flow to Current Maturities (Net Income + Depreciation Expense) / Current Portion of Long Term Debt
Long-Term Debt

Times Interest Earned Earnings before Interest and Taxes / Interest Expense

Book Value Per Share Total Equity / Outstanding Shares

Expenses to Sales Ratios

Percent Depreciation to Sales Depreciation Expense / Sales * 100

Percent Owners' Compensation Owners Compensation / Sales * 100

to Sales

66 Financial Analysis CS: Sample Reports