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Receivables Turnover & Ratio Type

sales/Avg. Receivables **(Activity Ratio)

Days Sales Outstanding & Ratio Type

365/Receivables Turnover **(Activity Ratio)

Inventory Turnover & Ratio Type

COGS/Avg. Inventory **(Activity Ratio)

Days Inventory on Hand & Ratio Type

365/Inventory Turnover **(Activity Ratio)

Payables Turnover & Ratio Type

Purchases/Avg. Trade payables **(Activity Ratio)

Number of Days Of Payables & Ratio Type

365/Payables Turnover ratio **(Activity Ratio)

Total Asset turnover & Ratio Type

Revenue/Avg. Total Assets **(Activity Ratio)

Fixed Asset Turnover & Ratio Type

Revenue/Avg Net Fixed Assets **(Activity Ratio)

Working Capital Turnover & Ratio Type

Revenue/Avg. Working Capital **(Activity Ratio)

Current Ratio & Ratio Type

Current Assets/Current Liabilities **(Liquidity)

Quick Ratio & Ratio Type

(Cash + Marketable Securities+Receivables)/Current Liabilities **(Liquidity)

Cash Ratio & Ratio Type

(Cash + Marketable Securities)/Current Liabilities **(Liquidity)

Defensive Interval & Ratio Type

(Cash + Marketable Securities + Receivables)/Average daily Expenditures **(Liquidity)

Cash Conversion Cycle & Ratio Type

(Days sales Outstanding) + (Days of Inventory on hand) - (Number of days of Payables) **(Liquidity)

Debt to equity & Ratio Type

Total Debt/Total Shareholders Equity **(Solvency)

Debt to capital & Ratio Type

total debt/(Total Debt + Shareholders equity) **(Solvency)

Debt to assets & Ratio Type

Total debt/Total assets **(Solvency)

Financial Leverage & Ratio Type

Average total assets/average total equity **(Solvency)

Interest Coverage & Ratio Type

(EBIT + Lease payments)/(Interest Payments + Lease payments) **(Solvency)

Fixed Charge Coverage & Ratio Type

(EBIT + lease Payments)/(Interest Payments + lease Payments) **(Solvency)

Net Profit Margin & Ratio Type

Net Income/Revenue **(Profitability)

Gross Profit Margin & Ratio Type

Gross Profit/revenue **(Profitability)

Operating Profit Margin & Ratio Type

EBIT (or Op.Income)/revenue **(Profitability)

Pretax Margin & Ratio Type

EBT/Revenue **(Profitability)

ROA & Ratio Type

Net Income/Avg. total assets **(Profitability)

Extended ROA & Ratio Type

(Net Income + Interest Expense (1-tax rate))/Average Total Assets **(Profitability)

Operating Return on assets & Ratio Type

EBIT/Avg. Total Assets **(Profitability)

Return on Total capital & Ratio Type

EBIT/Avg Total Capital **(Profitability)

Return on equity & Ratio Type

Net Income/Average Total Equity **(Profitability)

Return On Common Equity & Ratio Type

(Net Income - Preferred Dividends)Average Common Equity **(Profitability)


Net Income + Non Cash Charges + [Interest Expense * (1 - Tax rate)] - Fixed capital Investment - Working Capital Investment

FCFF (short Version)

Cash Flow from Operations + [Interest Expense * (1-Tax rate)]- fixed Capital Investment

FCFE (Free cash flow to equity)

Cash Flow From Ops - Fixed Capital Investment + Net Borrowing

Common Size Income Statement Ratios

Statement Item/sales

Common Size Balance Sheet Ratios

Statement Item/Total Assets

Common Size Cash Flow ratios

Cash FLow sttement account/Revenues

Original DuPont Equation (ROE)

(Net Profit Margin)*(Asset Turnover)(Leverage Ratio)

Extended Dupont Equation

[Tax Burden][Interest Burden][EBIT Margin][Asset Turnover][Financial Leverage]

Tax Burden

Net Income/EBT

Interest Burden


EBIT Margin


Basic EPS

(Net Income - Preferred Dividends)/Weighted Avg # shares outstanding

Diluted EPS

([Net income-Preferred Dividends]+[Convertable Preferred Dividends]+[Convertable debt Interest (1-Tax rate)])/
([Weighted Avg Shares]+[Shares from converted Preferred Shares]+[Shares from conversion of debt]+[Shares from stock options])

DDB Depreciation

(2/Useful Life)*(cost - Accumulated Depreciation)


(Cost - Residual Value)/Useful life

Net Increase in Common from Stock option Exercise (Quick Method)

[(Avg Market Price - Exercise Price)/Avg Mkt Price] * Shares that can be converted

Quick check of Preferred Dilution

(Par Rate)/Share Conversion *(if < basic EPS it is dilutive)

Payback Period

(Pv of future cash flow/CF₀) or 1+(NPV/CF₀)



After tax cost of debt

Kd (1-t)

Cost of preferred stock


Three formulas for the cost of common equity

Risk free+Beta(market return-Risk free)
Bond yield + risk premium

Unlevered asset beta

Beta(of equity)*(1/(1+(1-t)(d/e)))

Project beta

Beta(of asset)*[1+[1-t)(D/E))]

Cost of common equity with a country risk premium

Risk Free +beta(market return-risk free + country risk premium)

Break Point (in cap structure)

amount of capital at which the components cost of capital changes/weight of the component in the capital structure

Degree of operating leverage


Break even quantity of sales

(Fixed operating costs + fixed financing costs)/(price-variable cost per unit)

% discount (think bonds)

(face value-Price)/Face value

Discount basis yield


Money Market Yield

((face - price)/price)(360/days)

Bond Equivalent Yield

Holding period yield*(360/days)

Margin call price

P₀(1-initial margin/1-Maintenance margin)

Price weighted Index

Sum of stock Prices/Number of stocks in index (adjusted for splits)

Market Cap weighted index

sum[(price)(shares)]/sum[(price in base year)(shares)] * base year index value

Preferred Stock valuation model



% Change in bond Price/Yield change in %

% Price change (duration)

-Duration * (yield change in %)

Explain duration

The percentage in price for a 1% change in yield

Credit Spread

yield on a default free bond - Yield on a risky bond

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