**Safe Bulkers (SB) Basic Financial Metrics**

**Sales per share.**Safe Bulkers' sales for trailing 12 months were $152,300,000. At the end of 3Q 2010 there were 65,880,000 shares outstanding. By dividing $152,300,000 by 65,880,000, we get

*sales per share*of $2.31.

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**Earnings per share.** Safe Bulkers' *earnings per share* of $1.54 for the trailing 12 months were calculated by dividing net income (income statement) by outstanding shares (balance sheet). They earned $101,680,000 over the last 12 months.

**Dividends per share.** By dividing $31,253,500 in dividends paid in the last 12 months by 65,880,000 shares outstanding, we find that Safe Bulkers had dividends per share for the last 12 months of $0.47 cents.

3Q2010: 65,870,000 shares x $0.15 dividend = $9,880,500 in dividends

2Q2010: 65,870,000 shares x $0.15 dividend = $9,880,500 in dividends

1Q2010: 55,440,000 shares x $0.15 dividend = $8,316,000 in dividends

4Q2009: 54,510,000 shares x $0.15 dividend = $8,176,500 in dividends

**Cash flow per share.** The cash flow per share of $1.82 for the last 12 months was calculated by taking net income of $101,680,000 and adding back in the depreciation of $18,190,000, which has no impact on cash flow (income statement), and then dividing by the 65,880,000 shares outstanding (balance sheet).

**Dividend yield.** Safe Bulkers' stock had a dividend yield on December 31st, 2010, of 6.77 percent. The dividend yield is calculated by dividing the dividend per share of $0.60 per share at the close of 2010 by the stock price of $8.86.

Now let's begin our analysis of the ability of Safe Bulkers to meet its maturing loan obligations and current cash flow needs by computing its liquidity and debt coverage ratios.

**Quick ratio**

The quick ratio is an important liquidity ratio that is computed by removing inventory from current assets and then dividing by the remainder by current liabilities. This information can be found on Safe Bulkers' balance sheet. Since inventories are typically the least liquid of a company's current assets and are likely to produce a loss if liquidated, it is prudent to look at the firm's ability to cover short-term liabilities without relying on them. The rule of thumb is that a company with a quick ratio over 1 or better indicates that it could cover all current liabilities with the liquid assets it has on hand, thereby reducing any need to cut its dividend.

Safe Bulkers' quick ratio for the last 12 months is 3.30, more than the standard rule of thumb that you would like to see. The higher the ratio, the better we like the company.

Calculation: $140,610,000 current assets in 3Q2010 and no inventory divided by $42,630,000 in current liabilities in 3Q2010.

**Debt coverage ratio**

The short-term debt coverage ratio allows you to quickly see if the company's short-term debt obligations can easily be paid by using the cash that is being generated from company operations. This ratio is calculated by dividing income from operations by current liabilities or short-term debt (balance sheet). This ratio should equal at least 2.0.

Safe Bulker's short-term debt coverage ratio equals 2.82 for the last 12 months. This means that the company is generating more than twice the cash flow it needs from operations to pay off all of its short-term obligations. Taken by itself, this ratio would indicate that the dividend is pretty secure and would also indicate that there is sufficient operating income to offset a slightly lower liquidity position if that were indicated by the company's quick ratio.

**Valuation ratios**

There are two important ratios that can help you identify companies with good value characteristics.

** Price-to-sales ratio.** We rank companies with low *price-to-sales ratios* higher than those companies whose stock is pricey relative to the sales being generated. You can calculate the ratio by dividing the stock price at the end of 3Q2010 ($7.91) by sales per share ($2.31). Safe Bulkers' price-to-sales ratio for the last twelve months is 3.42, which is not better than our 2.00 rule of thumb ratio that we use to indicate good value.

**Price-to-earnings ratio (P/E).** Also known as the *price-to-earnings multiple*, this ratio tells you how expensive the stock is from a price standpoint given earnings that the stock is generating. Historically, stocks are a good value when the ratio or multiple is below 10, but we consider stocks that have a P/E of less than 12 – the lower the ratio the better. You can calculate the ratio by dividing the stock's price by the earnings per share being generated. Safe Bulkers' *price-to-earnings ratio* for the last 12 months was is 5.14 ($7.91 stock price divided by $1.54 per share). It is about the same today.

**Dividend ratios**

**Dividend coverage ratio.** This ratio shows how secure the dividend is based on the cash flow being generated by the company. Instead of applying the cash flow to analyze whether the company can meet its debt obligations, we analyze this ratio to assess how easily the company can keep making its dividend payments. To calculate this ratio, you divide cash flow per share by dividend per share. The higher the dividend coverage from cash flow, the better we like it.

Safe Bulkers has a dividend coverage ratio of 387 percent.** Dividend payout ratio.** This ratio tells you how much profit the company is paying out to shareholders in dividends. Once again, the higher the better, so long as the ratio does not exceed 100 percent. Since a company can only pay dividends from current or retained earnings, it is a warning sign if a company is paying dividends that exceed current earnings.

Safe Bulkers' dividend payout ratio is 30.5 percent and is calculated by dividing its dividend per share ($0.47) by earnings per share ($1.54). We tend to look for companies that have payout ratios of at least 50 percent, which to us indicates that company is committed to rewarding shareholders through dividend payouts. However, Safe Bulkers is a very new company (less than 5 years old), so that is a nice dividend payout for such a young company.

**Growth ratios**

I'm not going to calculate the growth ratios until Safe Bulker's releases 4Q2010 earnings.

Be seeing you!

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