17 Investment Analysis (formulas only!)

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16 Terms

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net working capital

current assets - current liabilities

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current ratio

current assets / current liabilities

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interest coverage ratio

EBIT / interest expense

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debt to equity ratio

total debt / total shareholders equity

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inventory turnover

annual cogs / year end inventory

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accounts receivable turnover ratio

annual sales / year end accounts receivables

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book value per common share

common equity - intangibles / # common shares outstanding

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bond ratio

value of outstanding bonds / total long term debt + shareholders equity

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acid test / quick ratio

current assets - inventory / current liabilities

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alpha

actual return - expected return

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advance / decline index

advances - declines / total issues

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CAPM return

risk-free return + risk premium

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EPS

  • EBIT - Interest Expense - Tax - Preferred dividend / shares

  • market price / PE ratio

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short interest ratio

number of short positions / average daily trading volume

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PE ratio

  • most common ratio used for valuation

  • current market price / annual earnings

  • share price / EPS

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market capitalization

share price x number of outstanding common stock shares