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From yesterday to tomorrow: Profit/Value/Performance

It’s Your Business sm

tm

OVERVIEW & FEATURES Presenting Profitize It tm software for financial analysis, forecasting, strategic planning, investment decision support and acquisition evaluation.

Copyright 1996-2005 AMPros Corporation , All Rights Reserved Profitize It is a trademark of AMPros Corporation

PROFITIZE IT TM, Copyright 2005 AMPros Corporation, All Rights Reserved

Introduction Presenting PROFITIZE IT tm, formerly AMPros Corporation's Profitizer! tm business performance software, a computer program for financial analysis, forecasting, strategic planning, investment decision support and acquisition evaluation. AMPros Corporation's PROFITIZE IT tm application was designed for the non-financial individual yet provides powerful tools for the financial professional and executive responsible for business performance and strategic management.

WHO would benefit? Accountant and Financial Professional Business Owner Non-Financial Manager Strategic Officer CEO/CFO/COO Business Consultant Individual Discerning Investor Banks and lending institutions Anyone that makes decisions on business financial matters and operational performance

Why is it Beneficial or Helpful? Assist businesses on strategic and operational decisions

Performance management and planning

Understand and act on financial information Develop business strategies Understand current and potential future investments

Evaluating competitors

Merger and acquisition assessment Common forum for comparing diverse company financial performance

Consolidate public traded company 10K and financial statements into common format for performance benchmark & comparison.

Loan evaluation

What can if be Used For? Support to Business or Strategic plan development Simultaneous Income Statement & Balance Sheet

Forecast by Trend or Ratio Z Score, common size, percentage and a multitude of ratio performance metrics

Multi-Period Productivity tracking

Multi-Company & Multi-Period Benchmark comparisons

Competitor analysis

Investment or portfolio evaluation Merger/Acquisition impact Economic value added calculations Determine Company health

Obviously, the business owner needs financial and performance information to guide business decisions for profitable growth and often just to survive. Investors care about business performance and consider potential value creation when they make investment decisions. What matters to the business owner, investor and banker alike is being able to make informed decisions using current information to drive future business growth, profitability, credit worthiness and shareholder value creation. This financial analysis application was designed with the non-financial individual and business owner or manager in mind yet provides powerful tools and insight to business performance essential to the financial and economic professional. Accounting and financial reporting data is entered into three main windows that are laid out in an easy to follow flow chart form. The first main window identified as Profitizer! Window tm summarizes detail accounting data into common categories which are grouped and linked between Income Statement, Balance Sheet and Shareholder Equity statements. The result is a single page presentation of a financial statement including revelation as to Cash Flow Sufficiency and many performance measures critical to the business manager, banker and investor. Over one hundred measures of performance are computed

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in total for profitability, liquidity, solvency, resource utilization and business survivability including Z Score. The second window, Economic Value Added, provides a means to easily make necessary adjustments to the Profitizer! Window tm information resulting in automatic computation of an increasingly popular measure of shareholder wealth creation. All the tools and data entry aids are made available to compute Economic Value Added, Economic Earnings, Cash Operating Profit After Taxes, Net Operating Profit After Taxes and many associated returns and indices. A third main window, Cash Statement, is provided to round out the family of financial statements. Enter company data or click on a button and calculate the flow-chart view of cash statement along with sources and uses of cash. Step by step instruction is provided for data entry and usage of application forms. Many of the topics or form help instructions are accompanied by Purpose, Procedure, Where to Find It and Related Forms information guiding the user through the process of converting accounting and financial reports into an understandable visual presentation of business performance and growth opportunity.

Purpose: Describes the intended use or need for the application form, data or topic. Procedure: How to use the form or enter appropriate data. Where to Find It: In many instances, sources are suggested for locating the required data, form or topic. Related Forms: Where appropriate, references to other forms useful to the currently active topic and procedure is provided.

Many other essential tools are provided to aid the investor, business manager or financial professional. Concurrent Income Statement, Balance Sheet and Owners' equity forecast is accomplished using either Trend or Ratio forecast forms. Trend forecasts use historical data to project future performance into the future. The result is an indication of future performance if the same types of decisions made in the past are continued into the future. A more proactive approach is to use Ratio forecast. Using key performance measures the business owner, financial professional or strategist projects a performance path to achieve, year by year, long-term goals and superior business profitability. Ratio forecast simultaneously projects Income Statement, Balance Sheet and Owners' Equity financial statement components. Supporting forms and procedures allow for Benchmarking or comparing multiple companies’ performance for competitive analysis, making investment decisions or establishing a basis for performance improvement. Consolidation of multiple companies, divisions of a larger corporation or Rollup of intermediate fiscal reporting data into annual financial reporting is facilitated through the Company Structure and Rollup forms. These application components assist in evaluating the impact of a potential business acquisition. Supporting tools allow for database management, transposing data and in some application versions, the importing of financial information.

Profitizer! Window tm Go to Profitizer! Window tm Procedure for data entry.

Navigating for Data Entry All computations made in AMPros Corporation’s PROFITIZE IT tm, formerly known as Proftizer! tm, a software tool used since 1996 to assess business performance and provide improvement and strategic guidance to a range of publicly traded and privately held companies, are made in the

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Profitizer! Window tm. The Profitizer! Window tm output is a printout shown below that puts financial statements into a flow chart structure with all components presented on a single page. Cash Statement and Economic Value Added, the other two main data entry windows, are presented as separate though similarly structured flow chart presentations. Numerous performance ratios are computed although not all are included in this graphic presentation. Data flows from left to right and top to bottom. Green segments represent the income statement, blue is the balance sheet asset and liability components and yellow is shareholder equity. Red boxes are computed results. Numbered regions are briefly described and represent the general flow of data input and calculation. Data from each company financial statement is summarized to one of the green, blue or yellow boxes corresponding to the relevant company financial statement accounts. Data entry begins in the upper left and proceeds in sequence using the Tab or Enter key. One challenge is that companies structure their financial statements differently even though they may be doing exactly the same thing business-wise as another company. It is sometimes necessary to move some accounts from one portion of the company financial statement to another to achieve an apples to apples comparison. Primary changes normally encountered involve moving direct labor related and depreciation costs & expenses from the general & administration section to cost of sales. While not perfect, the summary result is a common structure and content for developing benchmark results. A brief description of accounts consolidation is presented below corresponding to each numbered section in the Profitizer! Window tm below.

Income Statement 1. Revenue & Cost of Sales is the first data region starting with Gross Revenue assuming that Days, Date From and Date To have been entered for the current fiscal period record. All reported

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sources of revenue are summed to the value entered in gross revenue with the exception of non-operating income. For instance, grants received should be placed into Other Income. The major summary action in cost of sales usually is to include direct labor and related expenses along with fixed asset depreciation. Purchased materials, parts and items incorporated into the final goods and services sold are placed in the "Material & Purchased Items" category. Failure to make these adjustments will generally yield results that are not comparable and could be misleading when comparing or bench marking to other business organizations. It is good practice to set the following parameters immediately after entering Date From and Date To information for each fiscal period data being analyzed. Save the results before proceeding to Gross Revenue data entry. 2. Selling, General & Administrative (SG&A) Expense is reported in this section with the adjustments noted above. All itemized accounts, such as selling expense, are entered into the corresponding expense category minus any wage related expense. All remaining accounts not included elsewhere are summarized to the "Admin" or “Other Exp” category. 3. Other Income & Expense, beginning with interest expense includes all non-operating income and expense account activity. 4. Income Taxes, After Tax Adjustments to Earnings, Extraordinary Items & Distributions are reported in this section. Companies exhibit a range of corporate structure and ownership. Some are "C" corporations, while others are sub-chapter "S", sole proprietor or some form of partnership. As such, income taxes and distributions vary considerably between companies. Income taxes are entered as reported, as are common dividends. Preferred dividends / distributions represent payment to the business owners for personal tax liability or in some cases owners compensation. The net result is a reduction in retained earnings. Adjustments to reconcile opening equity (generally retained earnings) to prior period closing balance sheet results are incorporated in the "(Charges) Additions to Income" account field. 5. Employee Head Count. is entered as Full Time Equivalent (FTE) head count. and used to calculate the revenue, assets and EBITDA per employee benchmarks. Balance Sheet 6. Current Assets incorporate many accounts that include short-term investments, cash & equivalents and inventory as the major components. All trade receivables are summarized to Accounts Receivable while all other types of receivables are summed to Other Receivables. 7. Fixed Assets accounts include both the physical operating assets as well as improvements to those assets. For instance, leasehold improvements are included in the Plant / Building category along with the actual building value where applicable. Not all companies own the building in which they are located. Fixed Assets is gross assets total less accumulated depreciation and amortization. 8. Other Non-current Assets include categories for both tangible and intangible assets that are not actively involved in the production of the business products and services or generally involve transactions beyond the next 12 months. 9. Current Liabilities include accounts payable and other liabilities due or expected to be paid within 12 months or one operating cycle. Many companies operate on strictly a cash basis and often have no current liabilities. 10. Non-current Liabilities, Preferred Securities & Debt Equivalents, and Minority Interests are reported here and all are treated as liabilities. This is done for consistency since both preferred securities and minority interests typically are not available as equity to the common shareholder. 11. Owners’ Equity includes common stock that may or may not have an assigned par value along with paid in additional capital and total retained earnings. Some companies have accounts for reconciling individual owners’ claims on company earnings and loans to the company. These are consolidated within the Other Adjustments category. One note to be made here and for non-current

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liabilities above is that "Opening" balances should equal prior period "Closing" balances. The exception may be when prior year results are restated or in the Rollup situation where multiple companies or operating units are combined into one consolidated financial statement. 12. Cash Flow Sufficiency is computed automatically and reflects the ability of the company to pay for changes in overall assets with retained earnings. A negative value means that a company must obtain additional funding from debt or equity placement in order to pay for the increase in assets. This is often the situation for a rapidly growing company and is not necessarily a problem since it is often appropriate to leverage growth. However, sometimes companies fall into the trap of borrowing to fund working capital because of poor receivables, high inventory or inability to meet current liabilities. 13. Stock Performance is the last data entry sequence in Profitizer! Window tm. Performance Measures & Improvement 14. Primary and Secondary Performance Ratios plus Economic Value Added and Cash Related measures are presented in this section. These data are calculated automatically as the financial information is entered into the appropriate section enumerated above. Manage performance to the "Primary Ratio" guidance and the "Secondary Ratio" benchmarks will be achieved. A listing of computed performance measures is presented below. 15. What If provides a means to quickly test alternatives for improving performance and observing the result in real time.

OPERATING & VALUE PERFORMANCE (Calculated in Economic Value Added Window)

Operating Sales Sales Grow (%) NOPBT Percent of Sales NOPAT NOPAT (%) of Sales Oper. Cash Tax Rate (%) COPAT COPAT (%) of Sales Capital; Beginning Capital; Ending Sales/Beg. Capital Fixed Assets; Adjusted Net Working Cap/Sales (%) Capital Growth (%) Free Cash Flow NOPAT Increase in Capital (l) Free Cash Flow Invest Rate (I/NOPAT) (%) Internal Performance Rate of Return % ( r ) Wt. Ave Cap Cost % (c*) Economic Spread % (r-c*) Rate of Return Index (r/c*) Economic Value Added Change in Value Economic Book Value External Performance Year End Share Price Fair Market Value Econ. Book Value/Share Share Price - Econ. Book No. Shares Outstanding Market Value to Econ Book Value Market Value Added Period Change Market Value Added

Market Value to Beginning Capital

Average Based Economic Earnings

Average Invested Capital Average Equity (%) of Capital Average Debt (%) of Capital Wt. Cost (%) of Average Capital Charge on Average Capital Economic Earnings Return on Average Capital (%) Return Index on Average Capital

MANAGEMENT PERFORMANCE METRICS (calculated in Profitizer! Window)

PRIMARY Ratios & Metrics Activity (Net Sales to Closing Net Assets)

R/M Days WIP Days

F/G Days Inventory Days R/M Turns WIP Turns F/G Turns Inventory Turns Inventory Utilization A/R Days A/P Days A/R Turns A/P Turns Total Asset Utilization Total Asset Turnover (Beg) Total Asset Turnover (Ave) Fixed Assets Activity Long Term Financing Trading Ratio Depreciated Asset Ratio

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SECONDARY Ratios & Metrics RONA (%) ROE(%, Beg) ROE(%, Ave) ROI(%, Ave) ROTA(%, Ave) Pre-Interest Return on Assets (%) Pretax ROTA % A/R to Working Capital Ratio Inventory to Working Capital

Ratio Net Sales to Working Capital L / T Liab. to Working Capital Current Ratio Quick Ratio Debt to Equity Ratio Cur. Liab to Net Worth Noncurrent Assets to Equity Ratio

Interest Coverage Ratio Debt Coverage Ratio

% Change in Equity % Change in Loans Growth and Survivability Potential Annual Growth (%, Beg) Sustainable Growth Index Z Score

COMMON STOCK PERFORMANCE Per Share End Stockholder Equity

Per Share End Net Asset Value Per Share Income to Common

Per Share Dividend to Common P/E Ratio Share Price: High Share Price: Low Wt. Ave. or Ending Price Number of Shareholders

ADDITIONAL COMMON METRICS Deprec & Amort % of Sales Officer Salary % of Sales Incentives & Bonus % of Sales Fixed Assets to Tang. Equity Pretax Return on Tang. Equity Ttl Debt to Tang. Equity Times Interest Earned Gross Margin Return on

Inventory (%) Cash Flow Metrics (Calculated in Cash Statement Window)

Overall Cash Flow Ratio Cash Return on Sales Cash Flow to Net Income Operating Capital Management Days Cash on Hand Days Receivable Cash Days Inventory Cash Ttl Cash Trading Cycle Days Payable Cash Net Cash Operating Cycle Days Operating Capital Working Capital % of Net Sales Working Capital Days Total Capitalization Capital Structure Total Int Bearing Debt % of Cap Structure

Financial Leverage

Economic Value Added Window Go to Economic Value Added procedure for data entry instruction.

ECONOMIC VALUE ADDED OVERVIEW Economic Value Added is a concept developed and advanced by G. Bennett Stewart, III as a means to measure value created by company management for the business shareholders and owners. It requires various adjustments in traditional financial statements to convert to a cash basis statement of revenue, expenses, costs and earnings including adjustments to balance sheet assets and liabilities. There are two equivalent approaches, financial and operating, to computing economic value added. The operating perspective is used and presented here with the belief that this view is more easily related to by business management. A full discussion of Economic Value Added theory is beyond the scope of this document, the reader is referred to "The Quest for Value" by G. Bennett Stewart, III and "Foundations of Economic Value Added" by James L. Grant for further information. Economic Value Added is not as difficult to compute as many economists espouse nor as simple as the procedure used by many accountants. Complicating the situation are the many ways developed by different individuals and organizations to compute and express measures of economic value, economic earnings and cash profit. The approach presented in this software application allows the user to use the model developed by G. Bennett Stewart, III or use other approaches that include or exclude certain expenses and asset adjustments. Both beginning capital and average capital performance metrics are computed along with many other measures useful to the value creating management team.

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Three basic tenets are laid out in the theory for improving Economic Value Added, get rid of non-productive assets, improve operating efficiencies including adding new more productive assets or improve profits without tying up new capital. The underlying principle is to make improvements that are realized without increasing capital costs or that decrease the cost of capital. There is a basic limitation in that it is not possible to directly forecast Economic Value Added improvements in a way that is meaningful to operational management. A better alternative is to use the Ratio Forecast technique provided in this software application to forecast from current key performance levels to specific goals that move the entire company to higher performance and result in improved Economic Value Added. Achieve superior operational performance and value added improvements automatically follow. There are many potential adjustments that could be made to financial statements but not all have significant impact or the cost of making the adjustments is prohibitive. The most significant and readily accomplished adjusts are presented in the Operating Perspective of Economic Value Added window. Much of the necessary information is pulled directly from the Income Statement or Balance Sheet. Users are provided with additional forms to accomplish other adjustments at the appropriate point in data entry process making it relatively easy to compute Economic Value Added and other related performance measures. Much of the necessary adjustment data is found in notes to the company financial statement or in the form 10K filing with the Securities and Exchange Commission (SEC).

Operating Perspective of Economic Value Added

1. Revenue and Cost of Sales adjustments are minimal and depend on which method of measuring economic value added is used. Depreciation & Amortization is automatically included as part of the Total Expense but can be eliminated by using a very small numeric entry or better to respond "Yes" to the message that will appear automatically as you enter section 5, adjustments to

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net fixed assets. You can also make other adjustments to eliminate other interest bearing expense using "Other Adjust to Exp or Cost". All other necessary data, less any financing related accounts, is pulled directly from the income statement window and summed to the displayed total values. 2. Capitalized Expenses. An opportunity is provided to capitalize certain of expenses recorded in the income statement. As a general rule there will be no entries here but if needed, enter a value between 0 and 100 corresponding to percent that is to be capitalized. Click in corresponding "Net Intangible Capitalized Adjustment" box to activate form that completes this calculation. Return to this section at any time to incorporate capitalized intangible adjustments in NOPBT computation. Otherwise proceed to section 3 by using keyboard to tab to "Change in Bad Debt / Allowances and Reserves". 3. Adjustments to expenses are made in this section to further compensate for distortions resulting from non-cash expenses. Generally changes from the prior period to current period is entered here but provision is also included for other categories such as "Interest Exp Non-Capitalized Leases". A form will activate to include adjustments from non-capitalized leases as the cursor is tabbed from "Period Changes to LIFO Reserves" or when the Mouse is clicked directly into the field. Follow popup form "Template for Present Value Non-Capitalized Lease" instructions to calculate period expense adjustments and PV Non-Cap. Lease value that goes to balance sheet, see section 5. Other adjustments accommodate "Stock Based Compensation" entries as well as other approaches to computing economic earnings and value added. 4. Savings from taxes paid on interest, changes in deferred taxes and from unusual losses and/or gains are factored in to calculate a cash operating tax. Certain message boxes appear automatically asking to perform selected adjustments but user can over ride by indicating No or by manually entering values. Tabbing through the data entry fields automatically activate the appropriate messages. Tax Percent Rate can be pulled automatically from the income statement or a value such as 34% can be entered, note - do not enter the % sign as it will be ignored. 5. Fixed Asset adjustments are made if the economic earnings method for adding back all depreciation is used. A message will appear asking if adjustments are desired, click No or Yes or directly make adjustments in the "Other Adjust to Fixed Assets" field. Click in "PV Non-Cap. Lease" field if fixed asset adjustments are desired that did not get made in section 3 for "Interest Exp Non-Capitalized Leases". 6. Current asset adjustments are limited to LIFO inventory adjustments, bad debt and other adjustments. All other values are automatically loaded from the balance sheet current assets entries. 7. Current liabilities adjustments exclude all interest bearing notes and liabilities. Make any adjustments to further eliminate interest bearing accounts in the "Other Adjustment to Current Liabilities" field. 8. Non-current asset and liabilities adjustments are generally limited to "Goodwill" and "Unrecorded Goodwill" but provision is made to include other adjustments if needed. Normally the "Other " data entry fields will be left as zero value unless some portion of the values that were automatically pulled from the Balance Sheet need to be reversed or partially offset. 9. Computation of weighted average cost of capital is made as simple as possible. Enter the company Beta Value if it is known if not enter "1". Many companies use a value of 12% as their cost of capital instead of actually computing the result. That value can be approximated by entering "1" for Beta Value, "6" for Risk Premium Factor, "6" for 1 Yr Ave. Yield Long Term Government Bonds, "1" for Business Size Premium and "12" for Company Yield on Long-Term Bonds. The Income tax rate is pulled from section 4, Tax Percent Rate and is often set to a standard rate of 34%. Adjust any of these values to affect different "Wt. Ave. % of Capital" cost of capital result. Equity and Debt % is automatically calculated from Balance Sheet entries. 10. Capital charge is computed automatically by applying cost of capital % to the prior period gross invested capital. If there was no prior period then enter a value equal to or less than the current

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Gross Invested Capital value. This final data entry provides the basis for calculating Economic Value Added and all related value added performance measures, section 11. 11. Economic performance is computed variously by different companies. The most common are based on performance calculated using beginning capital and results calculated on the average of beginning and ending capital. Both results are presented below including cash operating profit after tax (COPAT%), a measure many large companies use to indicate "true" profitability.

Performance on Beginning Capital Rate of Return on Beginning Capital Rate of Return Index NOPBT (%) NOPAT (%) Operating Cash Tax Rate (%) Sales / Beginning Capital Net Working Capital / Sales (%) Econ. Book Value / Share ($) Fair Market Value ($) Market to Economic Book Value Market Value to Beginning Capital Investment Rate (%) Capital Growth Rate (%) COPAT % of Sales

Average Based Economic Performance Ave. Invested Capital Ave. Equity % of Capital Ave. Debt % of Capital Wt. Cost % of Ave. Capital Charge on Ave. Capital Economic Earnings Return on Ave. Capital Return Index on Ave. Capital

Cash Statement Window Go to Cash Statement procedure for instruction on data entry.

Cash Statement Overview Creating a cash statement or statement of cash transactions usually requires intimate knowledge of business and accounting transactions that occurred during a fiscal year. If a company has prepared a Cash Statement and included it in a financial report or is available in the form 10K SEC filings then enter the data exactly as presented into the data fields that most closely resemble the company cash statement account. One thing that complicates creating a cash statement is a definition of what is operational versus financing or an investing activity. Depending on what actually occurred during the reporting period, a particular expense, asset or liability account transaction may be classified as operational when it was previously in either investing or financing. In other words, if you are not an accountant and privy to the detailed company accounting transaction, it is best to either skip this section or alternatively compute an indirect cash statement. The Cash Statement window provides a non-printing button labeled "Cash Calc" located at the top center portion of the window. Click on this button and a cash statement will be calculated using the indirect method. A warning message will appear after the button is clicked that states any existing cash statement for this company current fiscal period will be over written. Click No if you do not wish to over write existing cash statement data. Place the cursor into any field after the cash calculation is completed, press the Enter key and data will be automatically formatted to a consistent form. Pay particular attention to section 7 below, "Adj to Beg. Cash" and "Misc Adjustments". If there was no prior period ending cash balance then a calculated value is entered into "Adj. to Beg. Cash" in order to reconcile the cash statement ending balance to the value presented in the Balance Sheet cash & equivalents data field. If there is a known "Beginning Cash & Equivalents" balance then enter that value in the corresponding field and delete the "Adj. to Beg. Cash" data. If there is a value in the "Misc. Adjustment" field then there is an omission or error in the Income Statement and/or Balance sheet that could not be discovered by "Cash Calc". Look for and correct the error in

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the appropriate statement then either rerun "Cash Calc" or manually enter the correction in the appropriate Cash Statement field. Bottom line is that the computed result for ending cash and equivalents must equal the Profitizer! Window tm Balance Sheet Cash & Equivalent value. Note, if entering data from a company generated Cash Statement, then enter the data exactly as shown on the company statement paying particular attention to the numeric sign of the entered data. If the company data has a negative sign then enter the data as a negative. It is sometimes helpful and informative to run "Cash Calc" first then edit the result to include the company cash statement information. A view of the Cash Statement window is presented with numbered sections corresponding to the different types of cash transactions that may occur during a fiscal period.

1. Operating Activities first has Net Income adjusted to remove the influence of Extraordinary Items to yield Income (Loss) from Continuing Operations. These data, if they were entered and saved in the Profitizer! Window tm, are pulled automatically when "Cash Calc" is activated. In fact, all necessary data for all sections below is pulled automatically and computed for input to Cash Statement when "Cash Calc" is selected. Otherwise any necessary adjustment must be manually entered except for Net Income After Tax. 2. Adjustments to reconcile net income to net cash actually include sections 2, 3, & 4. Section 2 generally comes from income statement related transactions but could also include balance sheet activities especially related to previously classified investment or financing items that are now part of the current operating period transaction activities. Depreciation and amortization is the most common entry in this section. 3. Changes in Current Assets addresses cash tied up or made available through changes in

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receivables, inventory and taxes from the current period compared to the previous accounting period. Note that increases in current assets take cash out of circulation therefore increases are entered as negative values. 4. Change in Current Liabilities includes a few categories not included on the Balance Sheet permitting greater description of cash usages that otherwise is obscured during the summarizing process in Balance Sheet data entry. As current liabilities decrease, cash is freed and made available for other purposes, therefore, a decrease in current liabilities is entered as a negative value. Total Adjustments for Operating Activities is the total for sections 2, 3 & 4 and is added to the total from section 1 to yield Net Cash from Operating Activities. 5. Investing Activities presents the picture of how cash from retained earnings, borrowings or equity placement was used to acquire assets for the business. Some investing activities may be associated with sale of non-productive assets or divestiture of a business segment. Increases in investing activities consume cash, thus an increase is shown as a negative value. It is usually desired to show both investment increases and decreases separately but often only the net change is available. Enter both if available and a data field is presented otherwise enter the net change value. Net Cash used in Investing Activities is the total for all accounts under the Investing Activities category. 6. Financing Activities address the use of debt, equity and equivalent instruments in financing business operations and investments including rewarding of investors and owners through dividend distributions. Negative values show a decrease in cash through cash payments or outlays while positive values for financing activities increase available cash. Net Cash (Used) Provided by Financing Activities is the total value for the account categories presented as Financing Activities. Note also there is provision for "Currency Rate Change Effect on Cash" for those companies that have operations and business transactions affected by fluctuations in currency exchange rates. 7. Change in Cash & Equivalents is computed automatically from the sum of operating, investing, financing and currency rate change data. This change is added to Beginning Cash & Equivalents, Adjustments to Beginning Cash and Miscellaneous Adjustments to Cash to yield Ending Cash & Equivalents. This result should equal the Balance Sheet Cash & Equivalent value, if the result does not balance then an error occurred somewhere in data entry or classification of accounting information. Run "Cash Calc" to see if the error is resolved as the last step if the error cannot otherwise be found. Sometimes restatements of prior year results may affect cash balance. It is advisable to print the Cash Statement Window data for reference as steps are taken to resolve any balancing issues. Note that under most circumstances, "Adj to Beg. Cash" and "Misc. Adjustment" should be zero. 8. Financial reporting regulations require reporting of certain additional information including non-cash items. Enter this information in section 8, Supplemental Cash Flow Information. 9. Cash Management Performance includes several measures that are automatically computed and presented in the Cash Statement window. Net Cash Cycle Days is a rough measure of how long a dollar expended comes back to the business through revenue, working capital management and earnings.

Overall Cash Flow Ratio Cash Return on Sales Cash Flow to Net Income Ratio Days Cash on Hand Days Receivable Cash Days Inventory Cash Total Cash Trading Cycle Days Payable Cash Net Cash Cycle (Day) Operating Capital

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Performance Metrics and Ratios Over one hundred measures of performance and financial ratios are computed automatically as data is entered into the main PROFITIZE IT windows and as certain forms are activated. Most ratios and performance measures are read only and cannot be directly changed. The exceptions are those associated with "What If" options displayed on the Profitizer! Window. Some of the key performance improvement options are presented in tabular form below followed by an alphabetical listing of computed metrics and ratios along with reference to the mathematical formulae used in this application. Formulas presented in this help document are basic, annualized forms but actual computations performed make adjustments for the number of days in the fiscal period. Adjustments are also automatically incorporated for data comparing one company to another that have different multipliers for dollars and/or shares issued. Actual performance data is accessed from the main data entry windows, trend forecast, economic value summary, and economic value benchmark forms. Some improvement tips are provided for selected key performance measures.

Key Performance

Metric Improvement Tips

Revenue Growth Higher is better. Use price increases, new product introduction or marketing campaign to increase sales while minimizing increase in cost of sales and expenses. Also minimize customer returns and discounts.

Net Profitability % Higher is better. Use price increases or market higher value products / services as first improvement option followed by cost of sales and operating expense reductions. Automate processes where feasible to reduce expense.

Asset Utilization Higher is better. Increase sales using existing assets on multiple shifts, improve process efficiency or replace assets with higher productivity assets.

Accounts Receivable Days

Lower is better. Improve billings and collections process to reduce time to collect and/or amount of monies owed to the business.

Fixed Asset Activity Ratio

Higher is better but must consider degree to which asset is depreciated. Improvement is same as Asset Utilization above.

Net Sales to Working Capital

Higher is better. Improve sales for given level of working capital but watch for under-capitalization where working capital may be insufficient to support sales and customer demand.

Gross Margin% Higher is better. Manage by price increases, reduction in cost of goods or combination of the two. Improve throughput via automation if appropriate.

Inventory Days Lower is better. Minimize level of inventory necessary to support sales while maximizing cash flow. High inventory ties up cash that may be needed otherwise to support near term obligations.

Accounts Payable Days

Higher is better. Maximize cash flow by paying to best terms allowed by suppliers and service providers without incurring adverse credit ratings. Balance rate for paying current obligations with earnings and accounts receivable days.

Total Operating Expense %

Lower is better. Minimize but do not sacrifice personnel retention and quality of services necessary to support customer requirements.

Depreciated Asset Ratio

Lower values reflect investments in newer assets and may be competitive advantage but be aware older, highly depreciated assets may be very productive. Use in conjunction with Fixed Asset Activity Ratio.

Long Term Financing Ratio

Lower is better. Use debt to leverage growth where high sales and profit opportunity can be achieved with additional debt.

Trading Ratio Higher is better but very high value may indicate insufficient equity to support sales. Increase sales as noted above. Increase profitability and retained earnings to improve equity and cash flow sufficiency.

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Key Performance Metric

Improvement Tips

CASH TRADING CYCLE

Days Cash on Hand Higher is better to a point, typical is 3 to 12 days of annual revenue for days cash on hand. Recommended is 8 days or 2% of revenue. Improve profitability and retained earnings to improve cash. Low values inhibit ability to meet short term obligations while high values often indicate poor cash management where higher returns might be achieved through investment in assets to promote business growth.

Days Receivable Cash

Lower is better and should be balanced with payables and profitability margins. 30 to 60 days is typical. Improve collections process and/or offer incentives for faster payments from customers.

Days Inventory Cash Lower is better to the extent that cash tied up inventory is minimized but sufficient amount is available to support operating lead time and customer demands.

Total Cash Trading Cycle

Lower is better and is the sum of the three components above.

Days Payable Cash Higher is better to the extent allowed by suppliers and creditors but take advantage of discounts for early payment if cash on hand is sufficient. Balance payable with receivables as noted above.

NET CASH OPERATING CYCLE DAYS

This is a measure of the time it takes to recover money spent. Lower is better with 30 to 60 days typical but could be higher for technology and other companies with very high profit margins.

Many more performance measures and associated formulas are computed in Profitize It and presented in the Help file and User’s Manual.

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