Financial Ratios - Formula Sheet

RATIOS - FORMULA SHEET - FINANCIAL MANAGEMENT (A)

(B)

PROFITABILITY RATIOS

ASSET MANAGEMENT/ACTIVITY RATIOS

( i n r e l a ti ti o n t o s a l e s )  

Profit after Tax NET PROFIT RATIO/ PROFIT MARGIN

=

DEBTORS TURNOVER

=

Sales

Gross Profit GROSS PROFIT RATIO

Credit Sales

= Sales

Average Debtors

DAYS SALES OUTSTANDING/ COLLECTION PERIOD = (days)

Operating Profit* OPERATING PROFIT RATIO

=

Average Debtors X 360 Credit Sales

Credit Purchases CREDITORS TURNOVER

=

Sales

Average Creditors

 ( i n r e l at at i o n t o i n v e s t m e n t )  

Profit after Tax RETURN ON EQUITY (ROE)

= Common Equity**

Average Creditors X 360 PAYMENTS PERIOD (days)

= Credit Purchases

Operating Profit* RETURN ON CAPITAL EMPLOYED (ROCE)

RETURN ON TOTAL  ASSETS (ROA)

=

INVENTORY TURNOVER

=

Capital Employed***

Average Inventory

Profit after Tax

Average Stock X 360

=

BASIC EARNING POW ER =  (B  ( BEP)

Cost of Sales

STOCK PERIOD (days)

=

Average Total Assets Assets

Cost of Sales

Operating Profit*

Sales TOTAL ASSET TURNOVER

=

Average Total Assets

Average Total Assets

(C) SHAREHOLDER'S FUNDS/MARKET VALUE RATIOS Dividends per share DIVIDEND YIELD

= Market Price per share

EARN EARNIN ING GS PER SHA SHARE

Profit after Tax - Pref. Div.

Notes 

# of Ord. shares in issue

* Operating Operating Profit = Profit before Interest and Taxes

=

Profit after Tax - Pref. Div. DIVIDEND COVER

** Common Equity = Ordinary Shares + All Reserves or Total Assets - Total Debt

= Ordinary dividends

Market price per share

Note - Long-Term Debt includes Preference Shares Shares because they belong to "outside'' owners who are given  preference (to ordinary shareholders) along with debt holders when a company is liquidated.

PRIC PRICE E EARN EARNIN INGS GS RAT RATIO IO = Earnings per share

***Capital Employed=Common Equity+Long-Term Debt  or Total Assets - Short-Term Debt  or Fixed Assets + Working Capital 

Market price per share MARKET TO BOOK VALUE RATIO

Common Equity 

**** Book Value per share

= Book value per share****

= # of Ord. shares in issue

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RATIOS - FORMULA SHEET - FINANCIAL MANAGEMENT (D) DEBT RATIOS TIMES-INTEREST-EARNED/ INTEREST COVER

Operating Profit = Interest chagres

Operating profit + EBITDA Coverage Ratio

 Depreciation + Lease payments =

Interest + principal pmts + lease pmts

Net Cash Flow from CASH FLOW INTEREST COVERAGE

Operating Activities + = Interest Paid+Taxes Paid Interest Paid

Net Cash Flow from

Operating Activities

OPERATING CASH FLOW TO SALES

Sales Net Cash Flow from

Operating Activities

OPERATING CASH FLOW TO NET PROFIT

Profit after Tax

Long-Term Debt GEARING RATIO

=  Capital Employed***

Total Debt DEBT RATIO/ DEBT TO ASSET RATIO

= Total Assets

Total Debt DEBT TO EQUITY

= Common Equity

(E) LIQUIDITY RATIOS Current Assets CURRENT RATIO

Current Assets - Stock

=

QUICK RATIO

=

Current Liabilities

Current Liabilities

Net Cash Flow from Operating Activities OPER OPERAT ATIN ING G CAS CASH H FLO FLOW W TO CURR CURREN ENT T LIA LIABI BILI LIT TIES IES

= Average Current Liabilities

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