FINA 3000 Financial Ratios and Formulas

Vocabulary flashcards covering financial ratios and formulas from Chapters 1-5 of FINA 3000.

Current Ratio

$$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$$

Quick Ratio

$$\text{Quick Ratio} = \frac{\text{Current Assets} - \text{Inventory}}{\text{Current Liabilities}}$$

Cash Ratio

$$\text{Cash Ratio} = \frac{\text{Cash}}{\text{Current Liabilities}}$$

Days Sales Outstanding (DSO)

$$\text{DSO} = \frac{365}{\frac{\text{Sales}}{\text{Receivables}}}$$

Days Inventory Outstanding (DIO)

$$\text{DIO} = \frac{365}{\frac{\text{COGS}}{\text{Inventory}}}$$

Days Payable Outstanding (DPO)

$$\text{DPO} = \frac{365}{\frac{\text{COGS}}{\text{Accounts Payable}}}$$

Fixed Assets Turnover

$$\text{Fixed Assets Turnover} = \frac{\text{Sales}}{\text{Net Fixed Assets}}$$

Total Assets Turnover

$$\text{Total Assets Turnover} = \frac{\text{Sales}}{\text{Total Assets}}$$

Total Debt to Total Capital Ratio

$$\text{Total Debt to Total Capital Ratio} = \frac{\text{Total Debt (Excluding A/P \& Accruals)}}{\text{Total Debt} + \text{Equity}}$$

Debt to Equity Ratio

$$\text{Debt to Equity Ratio} = \frac{\text{Total Debt}}{\text{Total Equity}}$$

Times Interest Earned (TIE) Ratio

$$\text{TIE Ratio} = \frac{\text{EBIT}}{\text{Annual Interest Charges}}$$

Gross Profit Margin

$$\text{Gross Profit Margin} = \frac{\text{Sales} - \text{COGS}}{\text{Sales}}$$

Operating Margin

$$\text{Operating Margin} = \frac{\text{EBIT}}{\text{Sales}}$$

Profit Margin

$$\text{Profit Margin} = \frac{\text{Net Income}}{\text{Sales}}$$

Return on Assets (ROA)

$$\text{ROA} = \frac{\text{Net Income}}{\text{Total Assets}}$$

Return on Common Equity (ROE)

$$\text{ROE} = \frac{\text{Net Income}}{\text{Common Equity}}$$

Return on Invested Capital (ROIC)

$$\text{ROIC} = \frac{\text{EBIT} \times (1 - T)}{\text{Total Invested Capital}}$$

Basic Earning Power (BEP)

$$\text{BEP} = \frac{\text{EBIT}}{\text{Total Assets}}$$

Price to Earnings Ratio (P/E)

$$\text{P/E} = \frac{\text{Price Per Share}}{\text{Earnings Per Share}}$$

Price to Sales Ratio (P/S)

$$\text{P/S} = \frac{\text{Price Per Share}}{\text{Sales Per Share}}$$

Price to Operating Cash Flow Ratio (P/C)

$$\text{P/C} = \frac{\text{Price Per Share}}{\text{Operating CF Per Share}}$$

Market to Book Ratio (M/B)

$$\text{M/B} = \frac{\text{Price Per Share}}{\text{Book Value Per Share}}$$

Free Cash Flow to Enterprise Value Yield

$$\text{FCF to Enterprise Value Yield} = \frac{\text{FCF}}{\text{MVE} + \text{MVD} - \text{Cash \& Equivalents}}$$

Capital Intensity Ratio

$$\text{Capital Intensity Ratio} = \frac{\text{Total Assets}}{\text{Sales}}$$

Capex to Cash Flow Ratio

$$\text{Capex to Cash Flow Ratio} = \frac{\text{Capex}}{\text{CFO}}$$

Net Operating Profit After Taxes (NOPAT)

$$\text{NOPAT} = \text{EBIT} \times (1 - T)$$

Net Operating Working Capital (NOWC)

$$\text{NOWC} = (\text{Current Assets} - \text{Excess Cash}) - (\text{Current Liabilities} - \text{N/P})$$

Total Liabilities

$$\text{Total Liabilities} = \text{Total Debt} + \text{A/P} + \text{Accruals}$$

Free Cash Flow (FCF - "To the Firm")

$$\text{FCF} = [\text{NOPAT} + \text{Depr. \& Amort.}] - [\text{CapEx} + \text{Chg. In NOWC}]$$

Free Cash Flow to Equity (FCFE - "To Equity Holders")

$$\text{FCFE} = \text{FCF} - \text{Chg. In Debt (L/T and N/P)}$$

Market Value Added (MVA)

$$\text{MVA} = \text{Market Value of Equity} - \text{Book Value of Equity}$$

Economic Value Added (EVA)

$$\text{EVA} = \text{NOPAT} - (\text{Total Invested Capital} \times \text{After Tax Cost of Capital})$$