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
