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FORMULAS > FM (RATIOS) > Flashcards

FM (RATIOS) Flashcards

1
Q

CURRENT RATIO

A

CURRENT ASSETS
÷ CURRENT LIABILITIES

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2
Q

QUICK RATIOS

A

(CURRENT ASSETS - INVENTORY)
÷ CURRENT LIABILITY

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3
Q

Total Asset Turnover

A

Sales
÷ Total Avarage of Assets

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4
Q

Inventory Turnover

A

Sales
÷ Average Inventory

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5
Q

Fixed Asset Turnover

A

Sales
÷ Average Net Fixed Asset

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6
Q

Days Sales Outstanding
(1)

A

Accouns Receivable
÷ (Net Sales / 365)

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7
Q

Debt to Capital Ratio

A

Total Liability
÷ Total Capital

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8
Q

Time Interest Earned

A

EBIT
÷ Interest Charge

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9
Q

Operating Margin

A

EBIT
÷ Sales

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10
Q

Profit Margin

A

Net Income
÷ Net Sales

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11
Q

ROA
(1)

A

Net Income /
Avrage Total Assets

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12
Q

ROA
(2)

A

Profit Margin
x Asset Turnover

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13
Q

ROE
(1)

A

Net Income
÷ Average Common Equity

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14
Q

ROE
(2)

A

ROA
x Equity Multiplier

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15
Q

Dupont Equation

A

ROE = ROA x Equity Multiplier
PM x Asset Turnover x EM
NI S TA
S Total Asset CE

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16
Q

Price Per Share aka

A

Market Price

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17
Q

EPS AKA

A

Net Income - Pref. Dividend
÷ Outstanding Shares

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18
Q

BOOK VALUE

A

Common Equity
÷ Outstanding Shares

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19
Q

Market/Book Ratio

A

Market Price
÷ Book Value

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20
Q

EV/EBITDA

A

EV
÷ EBITDA OR EBIT

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21
Q

Enterprise Value

A

MV of Lia + MV of E + 0 - CCE
TOTAL CAPITAL

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22
Q

MV OF LIA

A

DI KASAMA ANG CURRENT

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23
Q

BEP

A

EBIT
÷ Total Assets

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24
Q

DSO (20)

A

365
÷ ARTO

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25
Q

ARTO
(20)

A

Net Credit Sales
÷ Average AR (net)

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26
Q

STOCK PRICE AKA

A

MARKET

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27
Q

PM(11)

A

ROA
÷ Asset Turnover

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28
Q

CABRERA
ACID TEST

A

Total Quick Assets
÷ Total Current Liabilities

Total Quick Assets = Cash + Marketable Securities+ AR

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29
Q

CABRERA

WORKING CAPITAL TO TOTAL ASSETS

A

WORKING CAPITAL
÷ TOTAL ASSETS

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30
Q

CABRERA

WORKING CAPITAL

A

CURRENT ASSETS
- CURRENT LIABILITIES

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31
Q

CABRERA

CASH FLOW LIQUIDITY RATIO

A

(CASH + MARKETABLE SECURITIES+ CASH FLOW FROM OP ACTS)
÷CURRENT LIABILITIES

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32
Q

CABRERA

DEFENSIVE INTERVAL RATIO

A

QUICK ASSETS
÷ PROJECTED DAILY OPERATIONAL EXPENSES

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33
Q

CABRERA

TRADE RECEIVABLE TURNOVER

A

NET CREDIT SALES OR NET SALES
÷ AVERAGE TRADE RECEIVABLE (net)

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34
Q

CABRERA
AVE. COLLECTION PERIOD

A

Accounts Receivable
÷ (NET SALES / 360)

OR

365
÷ AR TURNOVER

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35
Q

CABRERA

MERCHANDISE TURNOVER

A

COGS
÷ AVE. MERCHANDISE INVENTORY

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36
Q

CABRERA

FINISHED GOODS INVENTORY

A

COGS
÷ AVE. FINISHED GOODS INVENTORY

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37
Q

CABRERA

GOODS IN PROCESS INVENTORY TURNOVER

A

COGM
÷ AVE. GOODS IN PROCESS INVENTORY

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38
Q

CABRERA

RAW MATERIALS TURNOVER

A

RAW MATERIALS USED
÷ AVE. RAW MATERIALS INVENTORY

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39
Q

CABRERA

DAYS SUPPLY IN INVENTORY

A

360
÷ INVENTORY TURNOVER

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40
Q

CABRERA

WORKING CAPITAL TURNOVER

A

NET SALES
÷ AVE. WORKING CAPITAL

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41
Q

CABRERA

PERCENT OF EACH CURRENT ASSET

A

AMOUNT OF EACH CA
÷ TOTAL CURRENT ASSETS

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42
Q

CABRERA

CURRENT ASSETS TURNOVER

A

(COS + OPEX + INC TAXES + OTHER EXP (EXCLUDING DEPRE & AMORT) )
÷ AVE. CURRENT ASSETS

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43
Q

CABRERA

PAYABLE TURNOVER

A

NET PURCHASES
÷ AVERAGE ACCOUNTS PAYABLE

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44
Q

CABRERA

OPERATING CYCLE

A

AVE. COVERSION PERIOD OF INVENT.+ AVE. COLLECTION PERIOD OF RECEIVABLES + DAYS CASH

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45
Q

CABRERA

DAYS CASH

A

AVE. CASH BALANCE
÷ (CASH OPERATING COST / 365)

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46
Q

CABRERA

FREE CASH FLOW

A

NET CASH FROM OPE ACTS
- CASH USED FOR INV ACTS AND DIVIDEND

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47
Q

CABRERA

INVESTMENT OR ASSET TURNOVER

A

NET SALES
÷ AVE. TOTAL INVESTMENT OR TOTAL ASSETS

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48
Q

CABRERA

SALES TO FIXED ASSETS (PLANT ASSETS TURNOVER)

A

NET SALES
÷ AVE. FIXED ASSETS (NET)

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49
Q

CABRERA

AR TURNOVER

A

NET SALES
÷ AVE. AR BALANCE

50
Q

CABRERA

AVE. SALE PERIOD

A

365
÷ INVENTORY TURNOVER

51
Q

CABRERA

CAPITAL INTENSITY RATIO

A

TOTAL ASSETS
÷ NET SALES

52
Q

CABRERA

EQUITY RATIO

A

TOTAL EQUITY
÷ TOTAL ASSETS

53
Q

CABRERA

DEBT TO EQUITY

A

TOTAL LIABILITY
÷ TOTAL EQUITY

54
Q

CABRERA

FIXED ASSET TO TOTAL EQUITY

A

FIXED ASSET (NET)
÷ TOTAL EQUITY

55
Q

CABRERA

BV PER ORD SHARE

A

ORDINARY SHAREHOLDERS EQUITY
÷ NO. OF OUTSTANDING SHARES

56
Q

CABRERA

TIE

A

EBIT
÷ ANNUAL INTEREST CHARGE

57
Q

CABRERA
TIMES PREFERRED DIVIDEND REQUIREMENT EARNED

A

NET INCOME AFTER TAX
÷ PREFERRED DIVIDEND REQ.

58
Q

CABRERA

TIMES FIXED CHARGES EARNED

A

EBIT
÷ FIXED CHARGES

FIXED CHARGES= RENT + INTEREST + SINKING FUND PAYMENT BEFORE TAXES

59
Q

CABRERA

GP MARGIN

A

GP
÷ NET SALES

60
Q

CABRERA

OPERATING PROFIT MARGIN

A

OPERATING PROFIT
÷ NET SALES

61
Q

Net Profit Margin or Return on sales

A

Net Income
÷ Net Sales

62
Q

CABRERA

CASH FLOW MARGIN

A

CF FOR OP ACTS
÷ NET SALES

63
Q

CABRERA

ROA

A

NET INCOME
÷ AVE. TOTAL ASSETS
or
ASSET TURNOVER X NET PROFIT MARGIN

64
Q

CABRERA

ROE

A

NET INCOME
÷ AVE. ORD EQUITY

65
Q

CABRERA

EPS

A

(NET INCOME - PREF DIVIDEND)
÷ AVE. ORD SHARES OUTSTANDING

66
Q

CABRERA

PRICE/EARNING RATIO

A

MV / EPS

67
Q

CABRERA

DIVIDEND PAYOUT

A

DIVIDEND PER SHARE
÷ EPS

68
Q

CABRERA

DIVIDEND YIELD

A

ANNUAL DIVIDEND PER SHARE
÷ MV

69
Q

CABRERA

DIVIDEND PER SHARE

A

DIVIDEND PAID/DECLARED
÷ ORD SHARES OUTSTANDING

70
Q

CABRERA

RATE OF RETURN ON AVE. CURRENT ASSETS

A

NET INCOME
÷ AVE. CURRENT ASSETS

71
Q

CABRERA

RATE OF RETURN PER TURNOVER OF CURRENT ASSETS

A

RATE OF RETURN ON AVE. CURRENT ASSETS
÷ CURRENT ASSETS TURNOVER

72
Q

CM Ratio

A

CM / Sales

73
Q

Break-even point (units)

A

Total Fixed Costs /
CM per unit

74
Q

Break-even point (pesos)

A

Total Fixed Costs/
1- (Variable Cost / Sales)

75
Q

Break-even sales for multi products firm (combined units)

A

Total Fixed Costs/
Weighted Average CM

76
Q

Weighted CM per unit

A

(Unit CM x No. of units per mix) + (Unit CM x No. of units per mix) /
Total no. of units per sales mix

77
Q

Break-even sales for multi products firm (combined pesos)

A

Total Fixed Costs/
Weighted CM ratio

78
Q

Weighted CM ratio

A

Total Weighted CM (pesos) /
Total Weighted Sales (pesos)

79
Q

(Target ) Sales in units

A

Total Fixed Costs + Desired Profit/
CM Per unit

80
Q

(Target ) Sales in peso

A

Total Fixed Costs + Desired Profit/
CM ratio

81
Q

Variable Expense Ratio

A

Variable Expense/ Selling Price

82
Q

Expected increase in CM

A

Increase in sales x CM Ratio

83
Q

Degree of Operating Leverage

A

CM / Net Operating Income

84
Q

Degree of Operating Leverage
(alternative)

A

Percent change in operating income /
Percent change in unit volume

85
Q

Margin of safety (peso)

A

Total sales - Break-even sales

86
Q

Margin of safety (percentage)

A

Margin of safety in peso / Total sales

87
Q

Expected increase in operating income

A

Expected increase in sales x degree of operating leverage

88
Q

Degree of Financial Leverage

A

Percent change in EPS / Percent change in EBIT

89
Q

Degree of Financial Leverage
(computation)

A

EBIT / EBIT - 1

90
Q

Degree of combined leverage

A

Percent Change in EPS /
Percent Change in sales (or vol)

91
Q

Degree of combined leverage
(compu other)

A

Quantity ( SPrice per unit - VC ) /
Quantity ( SPrice per unit - VC ) - FC - Interest

92
Q

Sales Budget

A

Units x price per unit = total sales revenue

93
Q

Production Budget

A

Units to be sold
+ Desired ending inventory
Total
- Beginning inventory
= units to be produced

94
Q

Direct Labor Budget

A

No. units to be produced x Direct labor cost per unit

95
Q

GP MARGIN

A

GP ÷ SALES

96
Q

COSTS (Cash outflows) include:

A

 Purchase price of the asset, net of any related cash discount
 Incidental project-related expenses such as freight, insurance, handling, installation, test-runs
 Additional working capital needed to support the operation of the project at the desired level.
(NOTE: At the end of the project’s life, additional working capital shall be recaptured as part of the
project’s terminal cash flow, along with any salvage value of the project)
 Market value of existing idle assets to be used in the operation of the proposed capital project.
 Training cost, net of related tax

97
Q

SAVINGS (Cash inflows) include:

A

 Proceeds from sale of an old asset disposed, net of related tax
 Trade-in value of the old asset (in case of replacement)
 Avoidable cost of immediate repairs on the old asset to be replaced, net of related tax

98
Q

Capital Budgeting
Non-discounted methods

A

Payback Period
Payback Reciprocal
Bail-out Payback
ARR

99
Q

Capital Budgeting
Discounted methods

A

NPV
Probability Index
IRR
Discounted Payback

100
Q

Net Returns aka & computation

A

Net Income (Accrual basis)
Net Cash Flows (Cash basis)

Direct Method (Net Cash Inflows):
Cash Inflows - CashOut flows

Indirect Method (Net Cash Inflows):
Net income + Noncash Expenses (e.g., depreciation)

101
Q

the ___ the payback period, the less risky the project and the greater the liquidity

A

shorter

102
Q

Advantage of Payback Period

A

simple to compute, easy to understand, useful in evaluating liquidity of the project, a good surrogate
for risk – a quick or short payback period indicates a less risky project.

103
Q

Disadvantage of Payback Period

A

ignores time value of money, ignores salvage value and cash flows after payback period, more
emphasis on return OF investment instead of ROI, maximum payback period may be arbitrary

104
Q

is a payback method wherein cash recoveries include not only the annual net cash inflows but also the estimated salvage value realizable at the end of each year of the project life.

A

BAIL-OUT PAYBACK PERIOD

105
Q

book rate of return, simple rate of return, unadjusted rate of return,
financial statement rate of return, measures the profitability from accounting standpoint by relating the required investment to the future annual net income.

A

ACCOUNTING RATE of RETURN

106
Q

ARR formula

A

Average Annual Income
÷ Original or Average Investment

107
Q

NPV
CASH INFLOWS include

A

annual net cash inflows infused by the capital investment project and any cash
realizable at the end of the project life (e.g., salvage value, return of working capital requirements).

108
Q

NPV
CASH OUTFLOWS is usually based on the

A

net investment cost required at the inception of the project.

109
Q

Advantage of NPV

A

emphasizes cash flows, considers time value of money, computes the true return of the projec

110
Q

Disadvantage of NPV

A

cult to compute for uneven cash flows, requires estimation of cash flows over a long period of
time, assumes IRR as reinvestment rate, may not be meaningful if a project has negative earnings.
NOTE: Determination of a project’s exact IRR may require an interpolation process. Trial and error
technique and the payback reciprocal method may also be used to approximate the IRR.

111
Q

Indirect Method CF
Depreciation Expense & Amortization

A

Add

112
Q

Indirect Method CF
Decrease Liability

A

Minus

113
Q

Indirect Method CF
Decrease Asset

A

Add

114
Q

Indirect Method CF
Increase Asset

A

Minus

115
Q

Indirect Method CF
Increase Liability

A

Add

116
Q

Indirect Method CF
Gain on sale of equipment (mga Gain)

A

Minus

117
Q

Indirect Method CF
Expenses e.g Interest, Income Tax

A

Minus

118
Q

Cost of Preference

A

Dividend per share
÷ IP - Floatation Cost

119
Q

Cost of Common Equity
CAPM

A

risk free
+ beta x market rate - risk free

120
Q

Cost of new ordinary equity
Kn

A

Current Dividend per share
÷ (Current stock price - FC)
+ Growth Rate

FORMULAS (2 decks)

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