FSA Formulas

Interest Coverage Ratio (without capitalized interest)

EBIT / Interest Expense

Interest Coverage Ratio (with capitalized interest)

(EBIT + Amortization of deferred financing costs) / (Interest expense + Capitalized interest)

Change in Operating Cash Flow (without capitalized interest)

(New OCF / Old OCF) - 1

Change in Operating Cash Flow (with capitalized interest)

[(New OCF - New capitalized interest) / (Old OCF - Old capitalized interest)] - 1

Basic EPS

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

Diluted EPS when a company has convertible preferred stock outstanding

Net income / (Weighted average number of shares outstanding + New common shares that would have been issued at conversion)

Diluted EPS when a company has convertible debt outstanding

(Net income + After-tax interest on convertible debt - Preferred dividends) / (Weighted average number of shares outstanding + Additional common shares that would have been issued at conversion)

Diluted EPS with treasury stock

(Net income - Preferred dividends) / [Weighted average number of shares outstanding + (New shares that would have been issued at option price - Shares that could have been purchase with cash received upon exercise) * (Proportion of year during which the financial instruments were outstanding)]

Net profit margin

Net income / Revenue

Gross profit margin

Gross profit / Revenue

Operating profit margin

Operating income / Revenue

Pretax margin

EBT / Revenue

Current ratio

Current assets / Current liabilities

Quick ratio

(Cash + Marketable securities + Receivables) / Current liabilities

Cash ratio

(Cash + Marketable securities) / Current liabilities

Long-term debt-to-equity ratio

Total long-term debt / Total equity

Debt-to-equity ratio

Average total debt / Average total equity

Total debt ratio

Total debt / Total assets

Financial leverage ratio

Average total assets / Average total equity

Cash received from customers

Revenue - Increase in accounts receivable

Ending accounts receivable

Beginning accounts receivable + Revenue - Cash collected from customers

Cash paid to suppliers

Cost of goods sold + Increase in inventory - Increase in accounts payable

Ending inventory

Beginning inventory + Purchases - Cost of goods sold

Ending accounts payable

Beginning accounts payable + Purchases - Cash paid to suppliers

Cash paid to employees

Salary and wages expense - Increase in salary and wages payable

Ending salary and wages payable

Beginning salary and wages payable + Salary and wages expense - Cash paid to employees

Cash paid for other operating expenses

Other operating expenses - Decrease in prepared expenses + Increase in accrued liabilities

Cash paid for interest

Interest expense + Decrease in interest payable

Ending interest payable

Beginning interest payable + Interest expense - Cash paid for interest

Cash paid for income taxes

Income tax expense - Increase in income tax payable

Historical cost of equipment sold

Beginning balance equipment + equipment purchased - Ending balance equipment

Accumulated depreciation on equipment sold

Beginning balance accumulated depreciation + Depreciation expense - Ending balance accumulated depreciation

Cash received from sale of equipment

Historical cost of equipment sold - Accumulated depreciation on equipment sold + gain from sale of equipment

Dividends paid

Beginning retained earnings + Net income - Ending retained earnings

Free Cash Flow to the Firm

NI + NCC + Int(1 - Tax rate) - FCInv - WCInv

CFO + Int(1 - Tax rate) - FCInv

Free Cash Flow to Equity (FCFE)

CFO - FCInv + Net borrowing

CFO - FCInv - Net debt repayment

Cash flow to revenue ratio

CFO / Net revenue

Cash return on assets ratio

CFO / Average total assets

Cash return on equity ratio

CFO / Average shareholder’s equity

Cash to income

CFO / Operating income

Cash flow per share

(CFO - Preferred dividends) / Number of common shares oustanding

Debt coverage ratio

CFO / Total debt

Interest coverage ratio

(CFO + Interest paid + Taxes paid) / Interest paid

Reinvestment ratio

CFO / Cash paid for long-term assets

Debt payment ratio

CFO / Cash paid for long-term debt repayment

Investing and financing ratio

CFO / Cash outflows for investing and financing activities

Fixed asset turnover ratio

Total revenue / Average net fixed assets

Average remaining life of asset base

net PPE / depreciation expense

Inventory turnover ratio

Cost of sales / Average inventory

Days of inventory on hand (DOH)

Number of days in period / Inventory turnover

Receivables turnover ratio

Revenue / Average receivables

Days of sales outstandings (DSO)

Number of days in period / Receivables turnover

Payables turnover ratio

Cost of goods sold / Average trade payables

Number of days of payables

Number of days in period / Payables turnover

Working capital turnover ratio

Revenue / Average working capital

Total asset turnover ratio

Revenue / Average total assets

Defensive interval ratio

(Cash + Short-term marketable investments + Receivables) / Daily cash expenditures

Cash conversion cycle (net operating cycle)

DOH + DSO - Number of days of payables

Debt-to-assets ratio

Total debt / Total assets

Debt-to-capital ratio

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

Financial leverage ratio

Average total assets / Average total equity

Debt-to-EBITDA ratio

Total or net debt / EBITDA

Fixed charge coverage ratio

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

Operating ROA

Operating income / Average total assets

ROA

Net income / Average total assets

Return on invested capital

[EBIT * (1 - Effective tax rate)] / (Average total short- and long-term debt and equity)

ROE

Net income / Average total equity

Return on common equity

(Net income - Preferred dividends) / Average common equity

Adjusted ROA

[Net income + Interest Expense * (1 - Tax rate)] / Average total assets

ROE (2 components)

ROA * Leverage

ROE (3 components)

Net profit margin * Total asset turnover * Leverage

ROE (5 components)

Tax burden * Interest burden * EBIT margin * Total asset turnover * Leverage