FORMULAS

Ashareholder ratio ACTIVITY RATIOS

AGE OF INVENTORY
Age of Inventory = Number of Days in a Year / Inventory Turnover Ratio Inventory Turnover Ratio = Cost of Goods Sold / Inventory

COLLECTION PERIOD
Collection Period = Number of Days in a Year / Accounts Receivable Turnover Ratio Accounts Receivable Turnover Ratio = Net Sales (Credit) / Accounts Receivable

PAYMENT PERIOD
Payment Period = Number of Days in a Year / Accounts Payable Turnover Ratio Accounts Payable Turnover Ratio = Net Sales (Credit) / Accounts Payable

OPERATING CYCLE
Operating Cycle = Accounts Receivable Turnover Ratio in Days + Inventory Turnover Ratio in Days.

LIQUIDITY RATIOS
CURRENT RATIO
Current Ratio = Current Assets / Current Liabilities

WORKING CAPITAL
Working Capital = Current Assets Current Liabilities

ACID TEST RATIO (OR) QUICK RATIOS

Acid Test Ratio (OR) Quick Ratios = Current Assets Inventories / Current Liabilities

ACID TEST RATIO (OR) QUICK RATIOS (MORE CONSERVATIVE)

Acid Test Ratio (OR) Quick Ratios (more conservative) = Cash + Marketable Securities + Accounts Receivables / Current Liabilities

SALES TO WORKING CAPITAL

Sales to Working Capital = Net Sales / Working Capital

CASH RATIO (OR) ABSOLUTE LIQUID RATIO

Cash Ratio (OR) Absolute Liquid Ratio = Cash + Marketable Securities / Current Liabilities

PROFITABILITY
NET PROFIT MARGIN
Net Profit Margin = Net Income before Minority Share of Earnings and Nonrecurring Items / Net Sales

TOTAL ASSET TURNOVER

Total Asset Turnover = Net Sales / Total Assets

RETURN ON ASSETS
Return on Assets = Net Income before Minority Share of Earnings and Nonrecurring Items / Total Assets

DUOPONT RETURN ON ASSETS

DuoPont Return on Assets = Net Profit Margin Total Asset Turnover

OPERATING INCOME MARGIN

Operating Income Margin = Operating Income / Net Sales

OPERATING ASSET TURNOVER

Operating Asset Turnover = Net Sales / Operating Assets

RETURN ON OPERATING ASSETS

Return on Operating Assets = Operating Income / Operating Assets

DUOPONT RETURN ON OPERATING ASSETS

DuoPont Return on Operating Assets = Operating Income Margin Operating Asset Turnover

SALES TO FIXED ASSETS

Sales to Fixed Assets = Net Sales / Net Fixed Assets

RETURN ON INVESTMENT
Return on Investment = Net Income before Minority Share of Earnings and Nonrecurring Items + [(Interest Expense) (1- Tax Rate)] / Long-Term Liabilities + Equity

RETURN ON TOTAL EQUITY

Return on Total Equity = Net Income before Nonrecurring Items Dividends on Redeemable Preferred Stock / Total Equity

RETURN ON COMMON EQUITY

Return on Common Equity = Net Income before Nonrecurring Items Preferred Dividends / Common Equity

GROSS PROFIT MARGIN

Gross Profit Margin = Gross Profit / Net Sales

INVESTMENT Amanagement ratio

DEGREE OF FINANCIAL LEVERAGE
Degree of Financial Leverage = Earnings before Interest and Tax / Earnings before Tax

BASIC EARNING PER COMMON SHARE

Basic Earnings per common share = Net Income Preferred Dividend / Number of Common Shares Outstanding

PRICE/ EARNING RATIO

Price / Earnings Ratio = Market price per Share / Earning per share

PERCENTAGE OF EARNINGS RETAINED

Percentage of Earnings Retained = Net Income All Dividends / Net income

DIVIDEND PAY OUT

Dividend Pay Out = Dividends per common share / Earnings per share

DIVIDEND YIELD
Dividend Yield = Dividends per common share / Market price per common share

BOOK VALUE PER SHARE

Book Value per Share = Total Stockholders Equity Preferred Stock Equity / Number of Common Shares Outstanding

LONG-TERM DEBT PAYING ABILITY Creditors ratio

TIMES INTEREST EARNED
Time Interests Earned = Recurring Earnings, Excluding Interest Expenses, Tax Expense, Equity Earnings and Minority Earnings / Interest Expense

FIXED CHARGE COVERAGE

Fixed Charge Coverage = Recurring Earnings, Excluding Interest Expenses, Tax Expense, Equity Earnings and Minority Earnings + Interest Portion of Rentals / Interest Expense

DEBT RATIO
Debt Ratio = Total Liabilities / Total Assets

DEBT / EQUITY RATIO

Debt / Equity Ratio = Total Liabilities / Shareholders Equity

DEBT TO TANGIBLE NET WORTH

Debt to Tangible Net Worth = Total Liabilities / Shareholders Equity Intangible Assets