Finance Formulas

Formulas for Exam 1

Net Working Capital

Current Assets - Current Liabilities

Cash Flow From Assets (CFFA)

Cash Flow from Creditors + Cash Flow from Stockholders

Common Balance Sheet

% of Total Assets

Common Income Statement

% of Sales

Current Ratio

Current Assets/Current Liabilities

Quick Ratio “Acid Test”

(Current Assets-Inventory)/Current Liabilities

Cash Ratio

Cash/Current Liabilities

Interval Measure

Current Assets/Avg Daily Operating Costs

Average Daily Operating Costs

COGS/365

Total Debt Ratio

Total Liabilities/Total Assets

Debt-Equity Ratio

Total Debt/Total Equity

Equity Multiplier

Total Assets/Total Equity

Long Term Debt Ratio

Long Term Debt/Long Term Debt + Total Equity

Times Interest Earned

EBIT/Interest

Cash Coverage Ratio

EBIT+Dep/Interest

Inventory Turnover

COGS/Inventory

Days Sales in Inventory

365/Inventory Turnover

Receivables Turnover

Sales/AR

Days Sales in Receivables

365/Receivables Turnover

NWC Turnover

Sales/NWC

Fixed Asset Turnover

Sales/Net Fixed Assets

Total Asset Turnover

Sales/Total Assets

Capital Intensity Ratio

1/Total Asset Turnover

Profit Margin

Net Income/Sales

Return on Assets

Net Income/Total Assets

Return on Equity

Net Income/Total Equity

Earnings Per Share

Net Income/# of Shares Outstanding

Price-Earnings Ratio

Price Per Share/Earnings Per Share

Price Earnings Growth Ratio

Price Earnings Ratio/Expected Earnings Growth Rate

Price-Sales Ratio

Price Per Share/Sales Per Share