38 terms

301 Ratios

Liquidity Formulas
current Ratio
current assets/current liabilities
quick ratio
(current assets-inventory)/(current liabilities)
Average collection period
AR/(credit sales/365)
A/R Turnover
Credit Sales/Accounts Receivable
Inventory Turnover
Efficiency Ratios
Total Asset Turnover
Sales/total Assets
Fixed Asset Turnover
sales/fixed Assets
operating income/total assets
Financing Ratios
Debt Ratio
Total Liabilities / Total Assets
Times Interest Earned
EBIT/Interest Expense
Profitability Ratios
Return on Assets (ROA)
NI/total assets
Return on Equity (ROE)
NI/total equity
Gross Margin
Gross Profit/sales
Operating Margin
Net Margin
Dupont Framework
ROE= Net Margin x Asset Turnover x Asset to Equity
Dupont Framework
ROE=NI/Sales x Sales/Assets x Assets/Equity
Other Formulas
Free Cash Flow to the Firm
FCFF=EBIT - Cash Tax Payments + Depreciation - CAPEX - Increases in NWC
NWC=current assets - current liabilities (changes from two balance sheets); CAPEX = gross PP&E changes from two balance sheets.
Economic Value Added
EVA = NOPAT - WACC(Costly Capital)
Free Cash Flow to Equity Holders
FCFE = NI + Depreciation - CAPEX - Increases in NWC + Increases in Long-term Debt
Discretionary Financing Needed (DFN)
DFN = Projected total assets - projected total liabilities - projected owners' equity
Future Value
Present Value x (1 + i) to the n'th power
Present Value
FV/(1 + i) to the n'th power
Present Value of a perpetuity
balance sheet
assets = liabilities + Owners' Equity
Retained Earnings
Change in RE = NI - Dividends ; Old RE = NEW RE + NI - Div
Net Income
Dividends + Change in RE
Dividends = (old RE + Net Income) - New RE
Sustainable Growth Rate (SGR)
SGR = ROE (1-b)=NI/Sales x Sales/Assets x Assets/Equity x (1-b)
Dividend payout rate (b)
Dividends/Net income
Cash Flow from Operations: Indirect method(CFO)
Net Income + Non-cash expense + decrease in operating asset accounts - increase in operating asset accounts + increase in operating liability accounts - decrease in operating liability accounts.
Cash flow from Investing (CFI)
net PP&E + depreciation expense