Ratios + Leverage Formulas Flashcards
Year Over Year Growth (YOY)
(Revenue Year 2/Revenue Year 1) – 1
Compound Annual Growth Rate (CAGR)
(Revenue 2015)/(Revenue 2011) ^ (1/4) – 1
where 4 = 2015 - 2011
Net Profit Margin
Return on Assets (ROA)
Return on Equity
Receivables Turnover
Rule of Thumb: 30 or less is GOOD
Average Collection Period
HIGH = 31 days or more
LOW = 30 Days or less
Inventory Turnover
LOW = too much inventory, not selling fast enough
HIGH = may not have stock when need it, (Stock-outs)
Capital Asset Turnover
Rule of Thumb: less than 1 = BAD
Total Asset Turnover
Rule of Thumb: less than 1 = BAD
Quick Ratio (Acid Test)
Rule of Thumb: less than 1 = BAD
greater than 2 = GOOD
Current Ratio
Rule of Thumb: less than 1 = BAD
greater than 2 = GOOD
Total Debt to Total Assets (Debt to Equity Ratio)
Rule of Thumb: 50% or more = RISKY
Times Earned Interest
Rule of Thumb: less than 1 = TERRIBLE
greater than 5 = GREAT
Gross Profit
Revenue (Sales) - COGS (Sales)
