CFA FSA Formulas

All FSA Formulas from the CFA Curriculum

Recievables Turnover

Annual sales /Average Recievables

Days of sales outstanding

365/Receivables Turnover

Inventory Turnover

COGS/average inventory

Payables turnover

purchases/average trade payables

Days of inventory on hand

365/inventory turnover

Number of days of payables

365/payables turnover ratio

Total asset turnover

Revenue/average total assets

Fixed asset turnover

revenue/average net fixed assets

Working capital turnover

Revenue/average working capital

Current ratio

Current assets/current liabilities

Quick ratio

(Cash + Marketable securities + Accounts receivables) / current liabilities

Cash ratio

(Cash + Marketable securities) / current liabilities

Defensive interval

(Cash + Marketable Securities + Receivables) / Average daily expenditure

Cash conversion cycle

Days of sales outstanding + Days inventory on hand - number of days of payables

Debt-to-equity

Total debt/total shareholders' equity

Debt-to-capital

Total debt/(total debt + total shareholders' equity)

Debt-to-assets (Total Debt)

Total debt/total assets

* Debt is long term only

Financial leverage

Average total assets/Average total equity

Interest coverage

EBIT/Interest payments

Fixed charge coverage

(EBIT + Lease payments) / (Interest payments + Lease payments)

Operating Cycle (OC)

Inventory Period + Accounts Receivable Period

Net profit margin

Net income/revenue

Gross profit margin

Gross profit/revenue

Operating profit margin

Operation income/revenue OR EBIT/revenue

Pretax margin

EBT/Revenue

Return on assets (ROA)

Net income/Average total assets

Return on assets (ROA)

(Net income + Interest expense*(1-tax rate)) / Average total assets

Operating return on assets

Operation income/ average total assets OR EBIT/average total assets

Return on total capital

After-Tax Operating Profit/Avg Long-Term Capital

Return on equity (ROE)

Net income/Average total equity

Return on Common Equity (ROCE)

(Net income - Preferred Dividends) / Average Common Equity

Net Working Capital (NWC)

Current Assets - Current Liabilities

Free Cash Flow to the Firm (FCFF)

NI + Int (1-t) +/- ΔNWC - CAPEX + Non-Cash Charges

Free Cash Flow to the Firm (FCFF)

CFO + Int (1-t) - CAPEX

Free Cash Flow to Equity (FCFE)

NI + Non-Cash Charges +/- ΔNWC - CAPEX + Net Borrowings

*Net Borrowings = Loan Issued - Loan Paid

Free Cash Flow to Equity (FCFE)

CFO - CAPEX + Net Borrowings

Common-size income statement ratios

Income statement account/Sales

Common-size balance sheet ratios

Balance sheet account/total assets

Basic EPS

(Net income - Preferred Dividends) / Weighted average number of common shares outstanding

Ending inventory

Beginning inventory + purchases - COGS

COGS under FIFO when a company uses LIFO

LIFO COGS - (Ending LIFO reserve - Beginning LIFO reserve)

Straight-line depreciation

(Cost - Salvage Value) / Useful Life

DDB Depreciation

(2/Useful life)*(Cost - Accumulated Depreciation)

Average age

Accumulated Depreciation / Annual Depreciation Expense

Total useful life

Historical cost (gross)/annual depreciation expense

Remaining useful life

Ending Net PPE / annual depreciation expense

Cash flow to revenue

CFO/net revenue

Cash return on assets

CFO/average total assets

Cash return on equity

CFO/average total equity

Cash to income

CFO/Operating income

Cash flow per share

(CFO - Preferred Dividends) / Weighted average number of common shares outstanding

Debt coverage

CFO/Total debt

Interest Coverage

(CFO + Interest Paid + Taxes Paid)/Interest Paid

Reinvestment

CFO / cash paid for long-term assets

Debt repayment

CFO/Cash paid for long-term debt repayment

Dividend payment

CFO/Dividends paid

Investing and financing

CFO / cash outflows from investing and financing activities

Indirect Method

Net Income + Non-Cash Exp +/- ΔNWC

Cash Received from Customers

Sales +/- ΔAR

Cash Paid to Suppliers

- COGS +/- ΔInventory +/- ΔAP

Cash Paid for Interest

+/- ΔInt Payable - Int Exp

Cash Paid for Taxes

+/-ΔTax Payable - Tax Exp +/- ΔDTL

Wages Paid

+/-ΔWages Payable - Wages Exp

Net Book Value (NBV)

PPE - AD

PPE T-Account

Ending PPE = Beg PPE + Purchases - Cost of Equipment Sold

Accumulated Depreciation T-Account

Ending AD = Beginning AD - AD on PPE Sold + Dep Exp

Profit on Disposal

Cash rec for sale of PPE - NBV

Dividends Paid

Beginning balance of retained earnings + NI - ending balance of retained earnings