HomeMy WebLinkAbout30- Community Development C I T Y OF1c N B E R N R 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
Council; Executive Assistant to Mayor; Economic
Development Consultant; File
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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.
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INTEROFFICE MEMORANDUM: X801-1112
• 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.
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Kenneth J. Henders n
Director of Community Development
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