Ratios

Free Cash Flow

Operating cash flow - net capital spending - change in NWC

Operating Cash Flow

EBIT + depreciation - taxes

Net Capital Spending

Ending Net Fixed Assets — beg net fixed assets + depreciation

Change IN NWC 

Ending NWC - Beg NWC

NWC

Current Assets - current Liabilities

Short Term Liquidity Ratios

• Current Ratio

• Quick Ratio

• Cash Ratio

• NWC to Total Assets 

• Interval Measure 

Current Ratio

Current Assets/Current Liabilities

Quick Ratio

Current Assets - Inventory/Current Liabilities

Cash ratio

Cash/Current Liabilities

NWC to total Assets

NWC/Total Assets

Interval Measure

Current Assets/Average Daily Operating Costs 

Long term Liquidity Ratios

• Total Debt Ratio

• Debt-Equity Ratio

• Equity Multiplier

• Times Interest earned

• Long term Debt Ratio

• Cash Coverage ratio

Total Debt Ratio

Total Assets -Total Equity/ Total Assets

Debt-Equity Ratio

Total Debt/Total Equity

Long term Ratio

Long term debt/ Long term debt + Total Equity

Times interest Earned

EBIT/Interest

Cash Coverage ratio

EBIT+Depreciation/interest

Asset Management or Turnover measures

• Inventory Turnover

• Day’s in Sales in Inventory

• Receivables Turnover

• Days in Sales in receivables

• Payable Turnover

• Day’s in Sales Payable

• NWC turnover

• Fixed Asset Turnover

• Total Asset Turnover

Inventory Turnover 

Cost of Goods Sold/Inventory

Days Sales in Inventory

365 Days/Inventory Turnover

Receivables Turnover

Sales/Account Receivable

Day’s Sales in Receivables

365 Days/Receivable Turnover

Payable Turnover 

Cost of Sales/Account Payable 

Day’s Sales in Payable 

365 days/Payable Turnover

NWC Turnover

Sales/NWC

Fixed Asset Turnover 

Sales/Net Fixed Assets 

Total Asset Turnover

Sales/Total Assets

Profitability Measures 

• Net profit margin

• Return on Assets 

• Return on equity 

Net profit Margin

Net Income/Sales

Return on Assets

Net Income/Total Assets

Return on Equity 

Net Income/Total Equity 

Market Value Measures

• Price Earnings ratio

• Price earnings growth ratio

• price-sales ratio

• Market to book ratio

• book value per share

• enterprise value

• EBITDA multiple

• Price to cash flow ratio

price earnings ratio 

price per share/earnings per share 

price earnings growth ratio

PE ratio/Expected future earnings growth rate

Price Sales Ratio

Price per share/Sales per share

Market to Book ratio

Market Value per share/book value per share

Book Value per share 

Total equity/number of shares outstanding

Enterprise Value

total market value of the stock + Book Value of All liabilities - cash

EBITDA Multiple

Enterprise Value/EBITDA

Price to cash flow ratio

price per share/operating cash flow per share

Dupont Identity

Return on Equity

Return on Equity 

Profit margin Total Asset Turnover  Equity Multiplier