Financial Accounting Formulas

Gross Profit rate

Gross profit/net sales

Inventory Turnover Ratio

COGS/Average Inventory

Days in Inventory Rate

365/inventory turnover

Profit Margin Rate

Net Income/ Revenue

Working Capital

Current assets-current liabilites

current ratio

current assets/current liabilities

account receivable turnover

net credit sales/ average net accounts receivable

average collection period

365/ accounts receivable turnover

debt to assets ratio

total liabilites/total assets

times interest earned

net income + interest expense + Income tax expense/ Interest expense

free cash flow

net cash provided by operatin activities - Capital expenditures - cash dividends

Earnings per share

Net income-prefered dividends/ weighted average common shares outstanding

price earnings ratio

Market price per share/ earnings per share

Return on assets

Net Income/ Average total assets

Asset Turnover

net sales/ average total assets

Payout ratio

cash dividends declared on common stock/ net income

Return on common stockholders equity

Net Income-preferred dividends/ average common stockholders equity