Mark E. Buckley

Financial Ratios and Formulas

Profit Margin = 
	Net Income / Sales
Return on Assets = 
	Net Income / Total Assets
Return on Equity = 
	Net Income / Stockholders Equity
Receivables Turnover = 
	Sales Credit / Receivables
Average Collection Period = 
	Accounts Receivable / Average Daily Credit Sales
Inventory Turnover = 
	Sales/ Inventory
Fixed Asset Turnover = 
	Sales/ Fixed Assets
Total Asset Turnover = 
	Sales / Total Assets
Current Ratio = 
	Current Assets / Current Liabilities
Quick Ratio = 
	(Current Assets - Inventory) / Current Liabilities
Debt to Total Assets = 
	Total Debt / Total Assets
Times Interest Earned = 
	Income before interest and taxes / Interest
Fixed Charge Coverage = 
	Income before fixed charges and taxes / Fixed Charges
Break Even Units = 
	Fixed Costs / (Price - Variable Cost per unit)
Degree of Operating Leverage = 
	(Sales - Total Variable Costs ) / 
	(Sales - Total Variable Costs - Fixed Costs )
Degree of Financial Leverage = 
	Earnings before interest and taxes / 
	( Earnings before interest and taxes - Interest )
Degree of Combined Leverage = 
	( Sales - Total Variable Costs ) / 
	( Sales - Total Variable Costs - Fixed Costs - Interest )
Stock Price = 
	Annual Dividend / Required Rate of Return
Required Rate of Return = 
	Annual Dividend / Stock Price
Stock Price = 
	Annual Dividend / ( Required Rate of Return - Growth Rate)