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General
Finance
Formulas

General
Finance
Formulas

Receivable turnover = annual sales / average receivable
Days of sales outstanding = 365 / receivable turnover
Inventory turnover = cost of goods sold / average inventory
Days of inventory on hand = 365 / inventory turnover
Payables turnover = purchases / average trade payables
Number of days of payables = 365 / payables turnover ratio
Total asset turnover = revenue / average total assets
Fixed asset turnover = revenue / average net fixed assets
Working capital turnover = revenue / average working capital

Activity
Ratios

Liquidity
ratios

Current ratio = current assets / current liabilities
*measuer of short-term debt-paying ability
Quick ratio =
(cash + marketable securities + receivables) / current liabilities
*ability to cover immediately all short-term commitments from readily realizable current assets
Cash ratio = (cash + marketable securities) / current liabilities
Defensive interval =
(cash + marketable securities + receivalbes) / average daily expenditures

Cash conversion cycle =
(days sales outstanding) + (days of inventory on hand) – (number of days of payables)

Debt-to-equity = total debt / total shareholders’ equity
Debt-to-capital = total debt / (total debt + total shareholders’ equity)
Debt-to-assets = total debt / total assets
Financial leverage = average total assets / average total equity
Interest coverage = earnings before interest and taxes / interest payments
Fixed charge coverage =
(earnings before interest and taxes + lease payments)
/ (interest payments + lease payments)

Solvency
Ratios

Profitability
Ratios

Net profit margin = net income / revenue
Gross profit margin = gross profit / revenue
Operating profit margin = EBIT (or operating income) / revenue
Return on assets (ROA) = net income / average total assets
Operating return on assets = operating income / average total assets
Return on total capital = EBIT / average total capital
Return on equity = net income / average total equity
Earnings per share (EPS) =
Profit after taxation & after perference dividends / number of ordinary share in issue *100 pence
*to estimate corporate value. How much money a company makes for each share of its stock
Dividend per share = Total ordinary dividends / number of ordinary shares in issue *100 pence
Dividend yield = ordinary dividends per share / current market price of one ordinary share * 100%
*the % of a company’s share price that it pays out in dividends each year
Dividend coverage =
profit after taxation & after preference dividends / total ordinary dividends
*assess how many times the total dividend could be paid out of current year profits after deducting all prior claims on these profits
Price / earnings ratio (PE ratio) =
market value of one ordinary share / EPS

Performance​

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