| ACCOUNTING EQUATIONS | |
| Assets | Capital + Liabilities |
| Assets | Capital Introduced + (Income -Expenses ) -Drawings + Liabilities |
| Shareholders’ Equity | Capital Stock + Retained Earnings |
| NET INCOME EQUATIONS | |
| Net Income | Revenue – Expenses |
| Net Income | Income from Operations + Interest Income -Income Taxes |
| BREAK EVEN POINT | |
| Break Even Point | Sales-Fixed Costs-Variable Costs |
| CASH RATIO EQUATION | |
| Cash Ratio | Cash ÷ Current Liabilities |
| FINANCIAL RATIO | |
| Liquidity Ratio | |
| Current Ratio | Current Assets ÷ Current Liabilities |
| Quick Ratio | (Cash + Marketable Securities + Accounts Receivable) ÷ Current Liabilities |
| Cash Ratio | Cash and Cash Equivalents ÷ Current Liabilities |
| Defensive Interval Ratio | Current Assets ÷ Daily Expenditures |
| Working Capital | Current Assets – Current Liabilities |
| Activity/Turnover Ratio | |
| Accounts Receivable Turnover Ratio | Net Credit Sales ÷ Average Accounts Receivable |
| Average Receivable Collection Day | 365 ÷ Account Receivable Turnover |
| Inventory Turnover Ratio | Cost of Goods Sold ÷ Average Inventory |
| Average days inventory in stock | 365 ÷ Inventory Turnover |
| Payable Turnover | Purchase ÷ Average Accounts Payable (Purchase = COGS +Change in inventory) |
| Average days payable outstanding | 365 ÷ Payable Turnover |
| Operating Cycle | Receivables Collection Days + Inventory Holding Days |
| Net Trade Cycle (Cash Cycle) | Operating Cycle – Average Days Payable Outstanding |
| Working Capital Turnover | Net Sales ÷ Average Working Capital |
| Fixed Asset Turnover | Net Sales ÷ Average Net Fixed Assets |
| Asset Turnover | Net Sales ÷ Average Total Assets |
| Average PPE Age | Accumulated Depreciation ÷ Depreciation Expense |
| Profitability Ratios | |
| Return on Equity | Net Income ÷ Shareholder’s Equity |
| Return on Assets | Net Income ÷ Total Assets |
| Return on Capital Employed | Earning Before Income and Tax (EBIT) ÷ Capital Employed (Capital Employed = Total Assets – Current Liabilities) |
| Gross Margin Ratio | Gross Profit ÷ Total Revenue (Gross Profit = Total Revenue – Cost of Goods Sold(COGS)) |
| Operating Profit Margin | Operating Profit(EBIT) ÷ Total Revenue (EBIT = Total Revenue -COGS- Operating Expenses-Depreciation & Amortization) |
| Operating Ratio | Operating Cost ÷ Net Sales |
| Expense Ratio | Total Expenses ÷ Net Sales |
| Earning Per Share (EPS) | (Net Income-Preferred Dividend) ÷Weighted Common Share outstanding |
| Price to Earnings Ratio | Share Price ÷ Earnings Per Share |
| Market to Book Ratio | Market value to Stock ÷ Book Value of equity |
| Dividend Yield | Cash Dividend paid per share of common equity ÷ Price Per Share |
| Dividend pay-out Ratio | Dividend Per Share ÷ Earning Per Share |
| Book value per share | Common Shareholders’ Equity ÷ Average Common Shares |
| Solvency Ratios | |
| Debt to Total Assets | Total Debt ÷ Total Assets |
| Debt to Equity Ratio | (Short term debt + Long term debt + Other fixed Payments)÷ Shareholder’s Equity |
| Equity Ratio | Shareholders Equity ÷ Total Assets |
| Debt Ratio | (Short term debt + Long term debt) ÷ Total Assets |
| Financial Leverage | Total (Average) Assets ÷ Total (Average) Shareholders’ Equity |
| Time Interest Earned Ratio | Earnings Before Interest & Taxes ÷ Interest Expense |
| Time Interest (Cash-Basis) Earned Ratio | Adjusted Operating Cash Flow ÷ Interest Expense |
| Operating Cash Flow Ratio | Cash Flow From Operations ÷ Current Liabilities |
| Debt to Capital Employed Ratio | Long Term Debt ÷ Capital Employed |
| Proprietary Ratio | Shareholders’ Fund ÷ Capital Employed ( Net Assets ) |
| Interest Coverage Ratio | Earning before Interest and Tax ÷ Interest on long-term debts |
| Cash Coverage Ratio | (EBIT + Depreciation) ÷ Interest |
| The Du Pont Identity | Profit Margin ✖ Total Asset Turnover ✖ Equity Multiplier |
| Equity Multiplier | Total Asset ÷ Total Equity |
| Capital Intensity Ratio | Total Assets ÷ Sales |
