Name
Equation
Description
Asset Turnover
Average
Collection
Period
Inventory
Conversion
Period
Inventory
Conversion
Ratio
Inventory
Turnover
Payables
Conversion
Period
Receivables
Conversion
Period,
DSO Ratio
Receivables
Turnover Ratio
Basic Equations
Name
Equation
Description
Assets
Liabilites + Equity
EBIT,
Earnings
Revenue - Operating Expenses
Before Interest
and Taxes
Measures profit.
Equity
Assets - Liabilites
Measures a company's
assets, after liabilities are
paid.
Gross Profit
Liabilities
Assets - Equity
A financial obligation;
money to be paid.
Net Profit,
Net Income,
Income
Operating
Profit
Sales,
Revenue,
Sales
Revenue,
Net Sales
Debt Ratios
Name
Equation
Description
How much
equity vs debt is
being used to
pay for assets.
Debt Ratio
Debt compared
to assets.
Debt Service
Coverage Ratio
Cash available to
pay off debt.
Long-Term Debt to
Equity Ratio
Depreciation
Name
Book Value
Declining
Balance,
Reducing
Balance
Straight-Line
Method
Equation
Description
The value of
an asset on a
company's
balance
sheet.
Commonly
used method
of
accelerated
depreciation.
Easiest and
most
common
method of
depreciation.
Units of
Production
Depreciation
measured by
how many
units are
produced.
Liquidity Ratios
Name
Equation
Description
A quick way
to measure a
company's
liquidity.
Cash Ratio
Cash
compared to
liabilities.
Measures
ability to pay
short-term
liabilities.
Ability to pay
liabilities with
operating cash
flow.
Current Ratio,
Working Capital Ratio
Market Ratios
Name
Dividend Cover
Dividend Yield
Equation
Description
Earnings
compared to
dividends.
Dividends
compared to
market
capitalization.
Amount of
dividends for
each share.
Earnings Per
Share,
EPS
Amount of
earnings for
each share.
Payout Ratio
Dividends / Earnings
Dividends per
earnings.
Price of a
stock
compared to
company
growth.
Comparing a
stock to past
performace
and market.
PEG Ratio
Profibility Ratios
Equation
Descriptio
n
Measures
efficiency
of asset &
liability
usage.
Percentage
of revenue
left after
deducting
costs.
Operating Margin,
Operating Income
Margin,
Operating Profit Margin,
Return on Sales
Used to
evaluate
pricing.
Profit Margin,
Net Profit Margin,
Net Margin,
Net Profit Ratio
How much
revenue is
kept in
profit.
Return on Assets
Profit
compared
to assets.
Return on Capital
Profit
compared
to capital.
Return on Equity
Profit
compared
to equity.
Return on Investment,
ROI
Name
Efficiency Ratio
Measures
efficiency
of an
investment.
Income
compared
Net Income / (Fixed Assets + Working Capital)
to net
assets.
Risk-Adjusted Return on
Capital
ROI,
adjusted for
risk.