FIN3403 Study Edge Module 7 Ratios

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40 Terms

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Current Ratio

Current assets/Current liabilities

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Quick (Acid Test) Ratio

(Current Assets - Inventory) / Current Liabilities

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Days Sales Outstanding (DSO)

Accounts Receivable/Average Credit Sales per Day

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Total Asset Turnover (TAT)

Sales/Total Assets

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Basic Earning Power (BEP)

EBIT/Total Assets

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Inventory Turnover

COGS/Inventory

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Fixed Asset Turnover

Sales/Net Fixed Assets

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Account Receivables Turnover

Sales/Account Receivables

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Times Interest Earned (TIE)

EBIT/Total Interest Expense

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EBITDA Coverage

(EBITDA + Lease Payments) / (Interest + Principal payments + Lease payments)

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Return on Assets (ROA)

Net Income/Total Assets

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Return on Equity (ROE)

Net Income/Common Equity

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Return on Invested Capital (ROIC)

NOPAT/Total Capital

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Profit Margin

Net Income/Sales

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Operating Profit Margin

EBIT/Sales

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Earnings Per Share (EPS)

Net Income/Shares Outstanding

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Price/Earnings Ratio (P/E)

Price per Share/Earnings per Share or P/EPS

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Book Value Per Share

Common Equity/Shares Outstanding

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Debt-to-Capital Ratio

Total Debt / (Total Equity + Total Debt)

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Debt Ratio

Total Debt/Total Assets

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Equity Multiplier (EM)

Total Assets/Common Equity

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Debt-to-Equity Ratio (D/E)

Total Debt/Total Equity

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Debt to-Equity Ratio

Equity Multiplier (EM) - 1

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Debt Ratio

1-(1/Equity Multiplier)

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Retention Rate

1- Div Pay Out Rate

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Levered ROE

Lev ROE = Unlev ROA + (ROA - rD)*(D/E) + (rD - ATrD)*(D/E)

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Leverage Effect

(ROA - rD)*(D/E)

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Tax Shelter Effect

(rD - ATrD)*(D/E)

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FCF

NOPAT - ∆NOWC - ∆NFA

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∆NOWC

∆COA - ∆COL

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COL (Current Operating Liabilities)

A/P + Accruals

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Perpetuity Formula

PV0 = PMT1 / (i-g)

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Value of Annuity Due (in terms of Ordinary Annuity)

Annuity Due = Ordinary Annuity*(1+i)

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Adjusted i

(1+i/1+g) - 1

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Eff % (Effective Interest Rate)

(1+inom/M)p-1

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Risk Free Rate (RRF)

r* + IP

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Quoted Interest Rate (Liquidity Preference Theory)

r* + IP + DRP + LP + MRP

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Continuous Compounding Rate Formula

EXP(inom*t)-1

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Steps for Growing Annuities

  1. Find Eff %

  2. Find Adj i

  3. BEG mode PV1

  4. TVM (if needed)

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Mortgage Points

Points (%) = Points ($) / Principal