Financial Ratios Formulae

Description
The document includes topics like probability ratios,liquidity ratios,leverage ratios and activity ratios

RATIOS Profitability Ratios 1 Return on Total Assets (ROA)
(= profit after taxes / total assets)

2 3 4 5 6 7 8

Return on Equity (ROE)
(= profit after taxes / total stockholders' equity)

Gross Profit Margin
[= (sales - cost of goods sold) / sales]

Operating Profit Margin (EBITDA)
[= (sales - cost of goods sold - operating expenses) / sales]

Net Profit Margin (EAT)
[= (EBITDA - Interest - Taxes) / sales]

Earnings Per Share (EPS)
[= (Profits after taxes - prefered stock dividends) / no. of outstanding common shares ]

Price Earnings Ratio (P/E ratio)
[= current market price per share / EPS ]

Cash flow per share
[= profits after tax + depreciation / no. of outstanding common shares ]

Liquidity Ratios 1 Current Ratio
[= current assets / current liabilities ]

2 3

Quick (Acid-test) Ratio
[= (current assets - inventory) / current liabilities ]

Super Quick Ratio
[= (super quick assets) / current liabilities ]

Leverage Ratios 1 Debt-assets ratio
[= (super quick assets) / current liabilities ]

2 3

Debt-equity ratio
[= (super quick assets) / current liabilities ]

Times interest earned
[= (profits before interest and taxes) / total interest charges ]

Activity Ratios 1 Inventory Turnover Ratio
[= annual cost of goods sold / average inventory value ]

2 3

Debtors Turnover Ratio
[= net annual credit sales / average accounts receivable]

Creditors Turnover Ratio
[= net annual credit purchases / average accounts payable]



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