F2-M8 (Ratios)

Days in Inventory- What is the formula and what does it represent?

Ending Inventory / COGS/365

It represents the number of days required to sell a given inventory level.

Days Sales in AR- What is the formula and what does it represent?

Ending AR / Sales/365

It represents the average amount of our sales that is sitting in AR, right now.

AR Turnover

Sales / Average AR

It represents how many times you turn over your average amount of AR.

Inventory Turnover- What is the formula and what does it represent?

COGS / Average Inventory

It represents how many times your inventory is sold. COGS represents how much inventory is being sold.

Cash Converstion Cycle- What is the formula and what does it represent?

Days of sales in AR + Days in Inventory - Days of Payables Outstanding

It represents the days it takes for a payment made for inventory to be turned into a cash sale. You subtract Payables because you hadn’t spent the cash yet.

Times Interest Earned- What is the formula and what does it represent?

Earnings before Int + Taxes / Int Exp

It represents how many times a company can cover its interest charges with its earnings before interest and taxes.

Equity Multiplier- What is the formula and what does it represent?

Total Assets / Total Equity

It represents the portion of assets funded by equity.

Total Debt Ratio- What is the formula and what does it represent?

Liabs / Assets

It represents the amount of assets that are financed by creditors/debt.

Dividend Payout Ratio

Yearly Dividends / EPS (NI to each share)