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In time-series ratio analysis, the most important source of information is the firm's historical financial statements, as these are the ones that will reveal the trends within the firm's operations. While the firm's balance sheet, income statement, and statement of cash flows are the major sources of information, it's also important to look elsewhere in the financial statements for other pieces of data needed to calculate the ratios. For example, lease payment amounts, needed to calculate the fixed charges coverage ratio (discussed later in the chapter), are usually lumped into the sales, general, and administration (SG&A) expenses in the income statement. Often small details like this will have to be researched by the analyst to perform a complete analysis.

In a cross-sectional ratio analysis, not only are the firm's financial statements needed, but information from the industry and other competitors is also required. Many publications provide financial ratios for various industries and individual companies. Financial ratios for industries are published each census period by the U.S. Department of Commerce at www.commerce.gov. The Almanac of Business and Industrial Financial Ratios provides an annual publication of industry ratios by the North American Industry Classification System (NAICS). Individual company ratios can be found on the web by companies such as Fintel, Standard & Poor's, Bloomberg, and Hoover's.

For demonstration purposes, we will be calculating each of the 2013 financial ratios discussed (except for market ratios) for Old Pueblo Lithographers (OPL) based on the information provided by its financial statements included in the Appendix (Balance Sheet, Income Statement, and Statement of Cash Flows) at the end of this chapter. A summary of all financial ratios for 2012 and 2013, as well as industry averages for 2013, is included in Table 4.1 in the summary section of this chapter.