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)