Inventory to Sales Ratios for Businesses

The graph below was created by using Google’s graph tools.

The line graph shows that US businesses have been steadily decreasing the amount of inventory they have on hand as a percentage of their sales. The graph shows that US businesses are recognizing the impact of the carrying costs of inventory on profits and are applying just in time (only as needed) concepts.

The chart shows that companies should be decreasing their inventory to sales ratios in order to be keeping up with peers.

The graph’s data was obtained from a Federal Reserve Bank of St. Louis’s website where economics data is provided on production and business activity in the United States. Data at this website can be obtained by clicking here.

Annual US Construction Spending 1993 to 2011

The graph below was created by using Google’s graph tools.

The line graph shows the total annual construction spending in the United States in millions of US dollars from 1993 to 2011 and the large drop off in construction in the United States since 2007.

The graph’s data was obtained from a Federal Reserve Bank of St. Louis’s website where economics data is provided on construction spending in the United States. Data at this website can be obtained by clicking here.

Return on Equity for 16 Business Sectors

The graph below was created using Google’s graph tool.

The horizontal bar graph shows the return on equity (net income as a percentage of equity) less the cost of equity percentage (estimated by the using capital asset pricing model). The resulting percentage can then be used to compare the sector’s value-adding performance to other sectors based on the data used for the sectors.

The graph was generated using data at Aswath Damodaran’s website. Go to this website by clicking here. At the website, click the “Corporate Finance” button, then go down the page to “The Investment Decision: Measuring Return on Investments”, and then click “EVA and Equity EVA: By Sectors” to find the data that the graph is based on.

Tax Rate Before and After Allowed Credits

The graph below was prepared using Google’s chart tool.

This horizontal bar graph shows the 2008 corporate tax rate before and after corporations apply tax credits to their returns.

The data used for the rates are from the Internal Revenue Service’s publication: 2008 Statistics of Income – Corporation Income Tax Returns. This publication can be reviewed by clicking here (PDF file).

To obtain the two rates, the total income reported on all form 1120 returns filed for 2008 was divided into the total income tax before credits and also into the total income tax after credits, reported on the returns.

The rates shown in the graphs indicate, it seems to me, just how much tax credits can reduce taxes paid by companies. Tax credits can be an important way to reduce company tax expenditures.