Financial Management Formulas Flashcards
Gross Profit Ratio
Gross Profit Ratio = Sales - COGS / Sales
Operating Profit Ratio (Return onn Sales)
Operating Margin = Operating Income (EBIT) / Sales
Net Profit Ration
Profit Margin = Net Income (NOPAT) / Sales
Return on Assets
Return on Assets = Net Income / Total Assets or Profit Margin x Asset Turnover
Return on Equity
Net Income / Shareholder’s Equity
Earnings Per Share
EPS = Net Income - Pref. Shares Dividends / Weighted Ave. Shares Outstanding
Price/Earnings Ration
P/E Ratio = Price Per Share / Earnings Per Share
Dividend Payout Ration
Dividend Payout Ration = Dividend Per Share / Earnings Per Share
Dividend Yield Ration
Dividend Yield Ration = Dividend Per Share / Market Price Per Share
Current Ratio
Current Ratio = Current Assets / Current Liabilities
Quick Ratio
Quick Assets / Current Liabilities
Accounts Receivable Turnover
Accts. Rec. Turnover = Net Sales / Ave. Accounts Receivable
Average Collection Period
Average Collection Period = 365 / AR Turnover Ratio
Inventory Turnover
Inventory Turnover Ratio = COGS / Average Inventory
Average Sales Period
Average Sales Period = 365 / Inventory Turnover Ratio
Operating Cycle
Operating Cycle = Average Collection Period + Average Sales Period
Debt Ratio
Debt Ratio = Total Liabilities / Total Assets
Debt - to - Equity Ratio
Total Liabilities / Total Equity
Times - Interest - Earned
TIE Ratio = EBIT / Interest Expense
Rate of Return on Sales
Rate of Return on Sales = Net Income / Net Sales
Rate of Return on Total Assets
Return on Sales x Asset Turnover or Net Income / Average Total Assets
Asset Turnover
Net Sales / Average Total Assets or total investment in the business
Operating Ratio
Cost of Sales + Operating Expenses / Net Sales
Rate of Return on Current Assets
Net Income / Average Current Assets
Current Asset Turnover
Cost of Sales + Operating Expenses (excluding charges not requiring current assets) / Average Current Assets
Rate of Return Per Current Asset Turnover
Rate of Return on Current Asset / Current Asset Turnover
Rate of Return on Working Capital
Net Income / Average Working Capital
Working Capital Turnover
Cost of Sales + Operating Expenses (Excluding charges not requiring working capital) / Average Working Capital
Rate of Return per Working Capital Turnover
Rate of Return on Working Capital / Working Capital Turnover
Invested Capital Turnover
Net Sales / Average Owner’s Equity
Rate of Return on Owner’s Equity
Net Income / Average Owner’s Equity or rate of return on sales x invested capital turnover
Earnings Per Share
Net Income - Preferred stock dividend requirement / Ave. no. of common shares outstanding
Price - earnings Ratio
Market Price Per Share / Earnings Per Share
Capitalization Rate or Earnings/Price Ration
Earnings per share / Market Price per Share
Dividends per Share
Dividend Paid or Declared / Common Share Outstandning
Yield on common stock
Dividend per Share / Market Value per Share of common stock
Payout Ratio
Dividends per share / earnings per share
Retained Earnings to Capital Stock
Retained Earnings / Capital Stock
Market Price to Book Value per Share
Market Price per Share / Book Value per share
Current Ratio
Current Assets / Current Liabilities
Acid Test Ratio
Quick Assets / Current Liabilities
Current Assets to Total assets
Currents Assets / Total Assets
Ratio of Each Current Asset Item to Total Current Assets
Each Current Asset Item / Total Current Assets
Receivable Turnover
Net Credit Sales / Average Receivable
Number of days sales in average receivable or average collection period
360/Receivable Turnover
Merchandise Inventory (or Finished Goods) Turnover
COGS / Average Inventory
Work in Process Turnover
Cost of Goods Manufactured / Average Work in Process Inventory
Raw Materials Turnover
Raw Materials Used / Average Raw Materials Inventory
Number of Days Supply in Inventory
360/Invetory Turnover
Working Capital Turnover
COGS + Operating Expenses (excluding charges not requiring working capital) / Average Working Capital
Current Asset Turnover
COGS + Operating Expenses (excluding charges not requiring current assets) / Average Current Assets
Payable Turnover
Net Credit Purchases / Average Payables
Cash and Marketable Securities Turnover
COGS + Operating Expenses / Average Marketable Securities
Number of Days Operations Covered by Cash and Marketable Securities
360 days/Cash and Marketable Securities Turnover or Average cash and marketable securities / COGS - Operating Expenses excluding charges not requiring cash /360
Debt / Equity Ratio
Total Liabilities / Owner’s Equity
Equity / Debt Ratio
Owner’s Equity / Total Liabilities
Proprietary (Equity) Ratio or Owner’s Equity to total assets
Owner’s Equity / Total Assets
Debt Ratio or Total Liabilities to Total Assets
Total Liabilities / Total Assets
Fixed Assets to Total Owner’s Equity
Fixed Assets / Total Owner’s Equity
Fixed Assets to Total Equity (or total assets)
Fixed Assets / Total Liabilities and Owner’s Equity
Fixed Assets to Total Long-term liabilities
Fixed Assets / Total Long-term liabilities
Plant Turnover
Net Sales / Ave. Fixed Assets (net)
Book Value per share
Common Stock Equity (EBIT) / Number of common shares outstanding
Number of Times Interest is earned
Income before interest and taxes / Annual Interest Charges
No. of times preferred dividend requirement is earned
Net income after tax / preferred stock dividend requirement
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