Formula Exam 1

1. Net Working Capital

Net Working Capital = Total Current Assets - Total Current Liabilities

2. Market Value Added (MVA)

MVA = (P₀ × Shares Outstanding) - Book Value of Common Equity

3. Economic Value Added (EVA)

EVA = EBIT(1 - T) - [Total Capital - (A/P + Accruals)] × WACC

4. Net Cash Flow

Net Cash Flow = Net Income + Depreciation

5. Operating Cash Flow

Operating Cash Flow = EBIT(1 - T) + Depreciation

6. Free Cash Flow

Free Cash Flow = EBIT(1 - T) + Depreciation - (Change in Net FA + Depreciation) - Change in CA + Change in A/P + Accruals

7. NOPAT

NOPAT = EBIT(1 - T)

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8. Current Ratio

Current Ratio = Current Assets / Current Liabilities

9. Quick Ratio (Acid Test Ratio)

Quick Ratio = (Current Assets - Inventories) / Current Liabilities

10. Inventory Turnover

Inventory Turnover = Sales / Inventories

11. Days Sales Outstanding (DSO)

DSO = Receivables / (Annual Sales / 365)

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12. Fixed Assets Turnover

Fixed Assets Turnover = Sales / Net Fixed Assets

13. Total Assets Turnover

Total Assets Turnover = Sales / Total Assets

14. Debt to Total Capital Ratio

Debt to Total Capital Ratio = Total Debt / (Total Debt + Equity)

15. Total Liabilities to Assets Ratio

Total Liabilities to Assets Ratio = Total Liabilities / Total Assets

16. Debt to Equity Ratio

Debt to Equity Ratio = Total Debt / Equity

17. Times Interest Earned (TIE)

TIE = EBIT / Interest Charges

18. EBITDA Coverage

EBITDA Coverage = (EBITDA + Lease Payments) / (Interest + Principal Payments + Lease Payments)

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19. Operating Margin

Operating Margin = EBIT / Sales

20. Profit Margin

Profit Margin = Net Income / Sales

21. Return on Total Assets (ROA)

ROA = Net Income / Total Assets

22. Return on Common Equity (ROE)

ROE = Net Income / Common Equity

23. Return on Invested Capital (ROIC)

ROIC = EBIT(1 - T) / Total Invested Capital

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24. Basic Earning Power (BEP)

BEP = EBIT / Total Assets

25. Price/Earnings Ratio (P/E)

P/E = Price per Share / Earnings per Share

26. Price/Cash Flow

Price/Cash Flow = Price per Share / Cash Flow per Share

27. Book Value per Share

Book Value per Share = Common Equity / Shares Outstanding

28. Market/Book Ratio (M/B)

Market/Book Ratio = Market Price per Share / Book Value per Share

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29. ROE Formula Using ROA and Equity Multiplier

ROE = ROA × Equity Multiplier

30. ROA Formula Using Profit Margin and Total Assets Turnover

ROA = Profit Margin × Total Assets Turnover

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