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Financial Ratios Formula Key

This document defines formulas for key financial ratios used to analyze a company's liquidity, leverage, coverage, profitability, and efficiency. It includes ratios such as the current ratio, quick ratio, debt-to-equity ratio, operating profit margin, return on equity, accounts receivable days, and fixed asset turnover. These ratios measure aspects such as a company's ability to meet short-term obligations, use of leverage, earnings, and how efficiently it uses its assets.

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100% found this document useful (6 votes)
8K views1 page

Financial Ratios Formula Key

This document defines formulas for key financial ratios used to analyze a company's liquidity, leverage, coverage, profitability, and efficiency. It includes ratios such as the current ratio, quick ratio, debt-to-equity ratio, operating profit margin, return on equity, accounts receivable days, and fixed asset turnover. These ratios measure aspects such as a company's ability to meet short-term obligations, use of leverage, earnings, and how efficiently it uses its assets.

Uploaded by

Heidi
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Financial Ratios Formula Key

Liquidity Ratios
= Total Current Assets / Total
Current Ratio
Current Liabilities
= (Cash + Accounts Receivable)
Quick Ratio
/ Total Current Liabilities
= Total Current Assets - Total
Working Capital
Current Liabilities
Financial Leverage / Coverage
Ratios
Debt-to-Equity Ratio = Total Liabilities / Total Equity
= Current Long Term Debt +
Estimated Debt Service*
Interest
Debt Service Coverage
= EBITDA / Debt Service
Ratio*
Interest Coverage Ratio = EBITDA / Interest Expense
Senior Debt to Cash Flow* = Senior Debt / EBITDA
Debt to Cash Flow* = Long Term Liabilities / EBITDA
= Total Liabilities / (Total
Debt to Capitalization
Liabilities + Total Equity)
Profitability Ratios
Operating Profit Margin = Operating Profit / Sales
= Adjusted Net Profit before
Net Profit Margin
Taxes / Sales
Return on Equity* = Net Income / Total Equity
Return on Assets* = Net Income / Total Assets
Activity / Efficiency Ratios
= (Accounts Receivable / Sales) *
Accounts Receivable Days*
365
Accounts Payable Days* = (Accounts Payable / COGS) * 365
Inventory Days* = (Inventory / COGS) * 365
Fixed Asset Turnover* = Sales / Gross Fixed Assets

* These formulas have been scaled to approximate annual statistics

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