KEY FORMUALE FOR RATIOS
Stockholder’s equity = Paid up capital + Retained earnings
Stockholder’s equity = Total assets – Total liabilities
Net working capital = Current assets – Current liabilities
Net operating working capital = Operating current assets – Operating current liabilities
Net operating working capital = (Current assets – Cash and bank balances) – (Current liabilities – Notes
payable)
Current ratio = Current assets / Current liabilities
Quick ratio = (Current assets – Inventories) / Current liabilities
Inventory turnover ratio = Cost of goods sold / Average inventory
Receivables turnover ratio = Sales / Average receivables
Payables turnover ratio = Cost of goods sold / Average payables
Days inventory outstanding (DIO) = 365 / Inventory turnover ratio
Days sales outstanding (DSO) = 365 / Receivable turnover ratio
Days payables outstanding (DPO) = 365 / Payable turnover ratio
Operating Cycle = DSI + DSO
Cash Conversion Cycle (Net working capital cycle) = DSI + DSO - DPO
Total assets turnover ratio = Sales / Average total assets
Fixed assets turnover = Sales / Average fixed assets
Total debt to capital = Total debt / (Total debt + Total equity)
Debt Ratio = Total Debt/ Total Assets
Long term Debt Ratio = LT Debt/ Total Assets
Times interest earned ratio = EBIT / Interest charges
Gross profit margin = Gross profit / Sales
Operating margin = Earnings before interest and tax (EBIT) / Sales
Net profit margin = Net profit / Sales
Return on assets = Net profit / Average assets
Return on equity = Net profit / Average equity
Return on invested capital = EBIT(1-t) / Total invested capital
Basic earning power (BEP) = EBIT / Average total assets`
Book value per share = Total common equity / Number of shares outstanding
Market / Book ratio = Market price per share / Book value per share
EBITDA (Earnings before interest, tax, depreciation and amortization) = EBIT + depreciation expense +
amortization expense
Earnings per share = Net profit / outstanding shares
Price to Earnings ratio = Price per share / Earnings per share
Dividend yield ratio: DPS / Market value per share
Dividend pay-out ratio: DPS / EPS
