Formulas Flashcards
Days Sales Outstanding
365 / Accounts Receivable Turnover Ratio
Ch 3
Accounts Receivable Turnover Ratio
Credit Sales / Accounts Receivable
Ch 3
Asset Turnover Ratio
Sales / Total Assets
Ch 3
Inventory Turnover Ratio
Cost of Goods Sold / Inventory
Ch 3
Working Capital
Current Assets - Current Liabilities
Ch 3
Current Ratio
Current Assets / Current Liabilities
Ch 3
Acid-Test Ratio
aka Quick Ratio
(Cash + Marketable Securities + Accounts Receivable) / Current Liabilities
Ch 3
Debt-to-Equity Ratio
Long-term Debt / Shareholders’ Equity
Ch 3
Debt-to-Assets Ratio
aka Debt Ratio
Total Liabilities / Total Assets
Ch 3
Net Profit Margin
Net Income / Sales
Ch 3
Return on Assets ROA
Net Income / Total Assets
Ch 3
Return on Equity. ROE
Net Income / Shareholders’ Equity.
Ch 3
Equity Multiplier.
Total Assets / Shareholders’ Equity.
Ch 3
DuPont Identity.
Net Profit Margin x Asset Turnover x Equity Multiplier.
Assignment 3.
Premium-to-Surplus Ratio.
Net Written Premiums / Policyholders’ Surplus.
Assignment 5.
Reserves-to-Surplus Ratio.
(Unearned Premium Reserve + Loss and LAE Reserves) / Policyholders’ Surplus.
Assignment 5.
Liquidity Ratio.
(Cash + Invested Assets) / (Unearned Premium Reserve + Loss and LAE Reserves).
Assignment 5.
Loss Ratio.
(Incurred Losses + LAE) / Earned Premiums.
Assignment 5.
Expense Ratio.
Underwriting Expenses / Written Premiums.
Assignment 5.
Combined Ratio.
Loss Ratio + Expense Ratio.
Assignment 5.
Investment Income Ratio.
Net Investment Income / Earned Premiums.
Assignment 5.
Operating Ratio.
Combined Ratio - Investment Income Ratio.
Assignment 5.
Investment Yield Ratio.
Net Investment Gain (Loss) / (Total Cash + Invested Assets).
Assignment 5.
Return on Policyholders’ Surplus.
Net Income / Policyholders’ Surplus.
Assignment 5.
Annual Rate of Return for a Bond.
(Interest + Capital Gain) / Bond price at the beginning of the year.
Assignment 7.
Annual Rate of Return for a Stock.
(Dividend + Capital Gain) / Share price at the beginning of the year.
Insurance Leverage.
Reserves / Policyholders’ Surplus = (Premiums Written / Policyholders’ Surplus) x (Reserves / Premiums Written).
Assignment 10.
