Section 3: Ratio Flashcards
Gross Margin
Gross Profit / Net Sales
Operating Profit Margin
Operating Profit / Net Sales
Free Cash Flow
NOPAT + Depreciation + Amortization - Capital Expenditures - Net Increases in Working Capital
Residual Income
Operating Profit - Interest on Investment
Interest on Investment = Invested Capital * Req. Rate of Return
Economic Value Added (EVA)
NOPAT - Cost of Financing
Cost of Financing = (Total Assets - Current Liabilities) * WACC
Economic Rate of Return on Common Stock
(Dividends + Change in Price) / Beginning Price
Return on Investment (based on assets)
Net Income / Total Assets (Or Avg. Invested Capital)
DuPont ROI
Return on Sales * Asset Turnover
Return on Sales
Net Income / Sales
Asset Turnover
Sales / Total Assets
Return on Assets
Net Income / Avg Total Assets
Return on Equity
Net Income / Avg. Common Stockholder’s Equity
Common Stockholder’s Equity = Stockholder’s Equity - Preferred Stock Liquidation Value
Receivable Turnover
Net Credit Sales / Avg A/R
Receivables Collection Period
Avg. A/R / Avg. Credit Sales per day
Inventory Turnover
COGS / Avg. Inventory
