Formulas Flashcards
Return on Invested Capital (ROIC)
ROIC=Income on Invested Capital/Avg. Invested Capital
(ROIC=RNOA)
Invested Capital
Total common stockholders’ equity
Plus: Financial obligations
Minus: Financial assets
Equals: Invested capital
(Invested Capital=NOA)
Net Operating Assets (NOA)
Operating assets
Minus: Operating liabilities
Equals: Net operating assets (NOA)
(NOA=Invested Capital)
Net Operating Profit after Taxes (NOPAT)
Net: Revenues less expenses
Operating: Only operating revenues &
expenses
Profit: A “bottom-line” measure
After Tax: Taxes are a cost that have to be
covered
(NOPAT=Income on Invested Capital)
Return on Net Operating Assets (RNOA)
RNOA=NOPAT/Avg. NOA
RNOA=NOPAT/Rev. * Rev./Avg. NOA
(RNOA=ROIC)
NOPAT Margin
NOPAT Margin=NOPAT/Rev.
Reflects managements ability to charge a premium.
Core NOPAT
Excludes “one-time” gains & losses that are not related to the ongoing operations.
NOA Turnover
NOA Turnover=Rev./Avg. NOA
Reflects how good management is at generating sales from the operations. It is driven by productivity & working capital management.
Operating Asset Turnover
Operating asset turnover=Rev./Avg.
operating asset
Fixed Asset Turnover
Fixed Asset Turnover=Rev./Avg. fixed assets
Working Capital (Net Working Capital)
Working capital=AR + Inventory - AP
Inventory Turnover
Inventory ratio=COGS/Avg. Inventory
(is a working capital ratio)
Accounts Receivable Turnover
AR Turnover=Net Rev./Avg. AR
(is a working capital ratio)
Accounts Payable Turnover
AP Turnover=Purchases/Avg. AP
(is a working capital ratio)
Purchases
Purchases=COGS + Ending inventory - Beg. inventory
Inventory Holding Period
Inv. Holding Period=365/Inv. turnover
(is a working capital ratio)
Days to Collect
Days to Collect=365/AR Turnover
(is a working capital ratio)
Days to Pay
Days to Pay=365/AP turnover
(is a working capital ratio)
Cash Conversion Cycle
Inventory holding period
+ Days to collect
- Days to pay
= Cash conversion cycle
One-year Growth Rate
=(Xt/X(t-1)-1
T-year Compound Annual Growth Rate (CAGR)
=(Xt/X(t-T))^(1/T)-1
(Also known as the geometric average growth rate)
Free Cash Flow (FCF)
NOPAT
Minus: Change in AR
Minus: Change in Inventory
Minus: Change in pre-paid assets
Minus: Change in fixed assets
Plus: Change in AP
Plus: Change in accrued expenses
Plus: Change in operating liabilities
Equals: Free cash flow
(FCF=NOPAT-(Change in NOA)
Net Financial Expense after Tax
Net financial expense before tax
Minus:(1-tax rate) times net fin. exp. bef. tax
Equals: Net financial expense after tax
Net Financial Obligations
Financial obligations
Minus: Financial assets
Equals: Net financial obligations
Free Cash Flow (calculated using finance method)
Net financial expense after tax
Minus: Change in net financial obligations
Plus: Dividends
Equals: Free cash flow (FCF)
Return on Equity (ROE)
ROE=Net Income - Preferred Dividends/Avg.
common equity
ROE=RNOA + (SPREAD * FLEV)
(ROE=RNOA, when there is no financial obligations & no financial assets)
Financial Leverage (FLEV)
Avg. net financial obligations
Divide: Common equity
Equals: Financial leverage (FLEV)
Spread
Spread=RNOA - Net financial rate (NFR)
Net Financial Rate (NFR)
Net financial expense after tax
Divide: Avg. net financial obligations
Equals: Net financial rate (NFR)
Current Ratio
Current assets
Divide: Current liabilities
Equals: Current ratio
Quick Ratio
Financial assets
Divide: Current liabilities
Equals: Quick ratio
Earnings per Share (EPS)
Net income - Preferred dividends
Divide: Weighted avg. shares outstanding
Equals: Earnings per share
