Ratio Formulas Flashcards
What is the Asset Turnover Ratio?
Net Sales divided by Average Assets
What is Return on Assets?
Net Income plus Interest expense (Net of Tax) Divided by Average Total Assets
What is Return on Common Stock Equity?
Net Income less Preferred Dividends divided by Average Common Stock Equity
What is PE Ratio?
Market Price per Common Share divided by Earning Per Share
What is Dividend Yield?
Dividend per common share divided by Market price per common share
What is Profit Margin on Sales?
Net Income divided by Sales
What is Debt to Equity Ratio?
Total Liabilities divided by Shareholders Equity
What is Equity Ratio?
Total Stockholders Equity divided by Total Assets
What is times earned interest?
Net Income before Taxes/Interest Expense divided by Interest Expense
What is Quick Ratio?
Current Assets (Net of Inventory and Prepaid) Divided by Current Liabilities
What is Earnings Per Share if NO Preferred Stock Outstanding?
Net Income divided by Weighted Average Common Shares Outstanding.
What is Earnings Per Share if there IS Preferred Stock Outstanding?
(Net Income minus Preferred Dividends) divided by Weighted Average Common Shares Outstanding
What is Basic EPS calculation?
(Net Income minus Dividends on preferred Stock) divided by Weighted average common stock
What is Diluted EPS calculation
(Net Income minus Dividends on preferred stock plus Potential Common Stock Adjustments) Divided by Weighted average common stock plus Weighted potential common stock
How to calculate Incremental Shares
(Market Price minus Exercise Price) divided by Market Price
What is step 1 in calculating the Gross Profit Method?
Sales=300 Beginning Inv=40 Net Purchases=220 Gross Profit as a % of sales=25%
1) Calculate COGS Available
Beginning Inventory plus Purchases
40+220=260
What is step 2 in calculating the Gross Profit Method?
Sales=300 Beginning Inv=40 Net Purchases=220 Gross Profit as a % of sales=25%
Compute Gross Profit
Sales times Gross Profit as a % of Sales
300 X 25% = 75
What is step 3 in calculating the Gross Profit Method?
Sales=300 Beginning Inv=40 Net Purchases=220 Gross Profit as a % of sales=25%
Calculate Cost of Goods Sold
Sales minus Gross Profit
300 - 75 = 225 OR 300 X (1-0.25) = 225
What is step 4 in calculating the Gross Profit Method?
Sales=300 Beginning Inv=40 Net Purchases=220 Gross Profit as a % of sales=25%
Determine Ending Inventory
Cost of Goods Available for Sale minus Cost of Goods Sold
260-225 = 35
How to convert Gross Profit from % of Sales to % of Cost. example - GP as % of sales is 25%
Gross Profit as a % of Cost divided by (1 plus Gross profit as a % of Cost)
0.25 divided by 1.25 = 0.20
How do you calculate net income? Multi Step
Gross Sales minus Sales Returns = Net Sales
Net Sales minus Cost of Goods Sold = Gross Profit
Gross Profit minus S&A expenses = Operating Income
Operating Income plus Other Income (Gains/Dividends) minus other expenses (Loss from Trading/Interest in LT Debt)= Income before Taxes
Income before Taxes minus Provision for Taxes = Income from Continuing Operations
Income before continuing operations minus discontinued operations = Net Income
What is the Defense Interval Ratio?
Liquidity ratio
Quick Ratio divided by average daily cash expenditures
