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HomeMy WebLinkAbout29- Community Developmment C I T Y O F N B E R N "tR D I N O INTEROrFICE MEMORANuUM 8801-1112 TO: Honorable Mayor Wilcox and Members of the Common Council FROM: Kenneth J. Henderson, Director of Community Development SUBJECT: COMMON COUNCIL AGENDA ITEMS NUMBERED -2-0 AND 30 -- JANUARY 19, 1988 DATE: January 15, 1988 (7320) COPIES: City Administrator; Deputy City Administrator - Development Services; Executive Assistant to x Council; Executive Assistant to Mayor; Economic 7 Development Consultant; File n -------------------------------------------------------------- Agenda items numbered 29 and 30 are the first two (2) small -r-, business loans recommended by the City Economic Development Program Committee (EDPC) . The staff reports identify ratios utilized by staff and the Committee in analyzing requests for financial assistance. The information set forth below summarizes definitions for the ratios used: Current Ratio Computation: Total current assets divided by total current liabilities. Sales/Working Capital Computation: Net sales divided by net working capital (current assets less current liabilities equals net working capital) . Coverage Ratios Coverage ratios measure a firm's ability to service debt. Debt/Net Worth Computation: Total liabilities divided by tangible net worth. % Profit Before Taxes/Total Assets Computation: Profit before taxes divided by total assets and multiplied by 100. INTEROFFICE MEMORANDUM: 801-1112 COMMON COUNCIL AGENDA ITEMS NUMBERED 20 AND 30 -- JANUARY 19, 1988 January 15, 1988 Page 2 Net Profit Ratio Net Profit Ratio $ 355, 000 Sales $6, 500, 000 = 5. 5% By comparing the net profit from year to year for the same company, and other companies in the same industry, a judgment of profit growth can be made. Interest Coverage Measures whether a company can meet its annual interest payments. Total Income $810, 000 Interest on Bonds $135, 000 = 6 Please note that different ratios are utilized for different types of businesses. For your information, the following are members of the EDPC: Scott Burger, Bank of Redlands (Highland Avenue Branch) Wayne Stair, Bank of America Scott Andrews, First Interstate Bank John Remson and Kenneth Wong, American National Bank Darlene Jacks, Progressive Mortgage Dr. Ernesto Garcia, California State University Wilfred Prendergast, Golden State Insurance Company Director of Community Development (non-voting member) Please call me at 5065 if additional information or clarifi- cation is required. G• Kenneth J. enders n Director of Community Development KJH/lab