Formulas Cover Sheet-Exam 1-Business Finance
Formulas Cover Sheet-Exam 1-Business Finance
| | |
|Current assets |Return Earnings available for common stockholders |
|Current ratio = ----------------------------------------------- |on total = ----------------------------------------------------- |
|Current liabilities |assets Total assets |
| | |
|Current assets - Inventory |Return Earnings available for common stockholders |
|Quick Ratio = ------------------------------------------------ |on common = ------------------------------------------------ |
|Current liabilities |equity Common stock equity |
| | |
| | |
|Costs of goods sold |Market price per share of common stock |
|Inventory turnover = ---------------------------------------- |Price/earnings = ---------------------------------------------(P/E) ratio |
|Inventory |Earnings per share |
| | |
|Accounts receivable |Book value Common stock equity |
|Average collection period = ------------------------------- |per share of = ------------------------------------------------ |
|Average sales per day |common stock Number of shares of common stock outstanding |
| | |
|Accounts receivable | |
|= ------------------------------ | |
|Annual sales | |
|-------------- | |
|365 | |
| | |
| |Market price per share of common stock |
| |Market/book = ----------------------------------------------- |
| |(M/B) ratio Book value per share of common stock |
| | |
|Accounts payable | |
|Average payment period = --------------------------------- |ROA = Net profit margin x Total asset turnover |
|Average purchases per day | |
| | |
|Accounts payable | |
|= --------------------------------- | |
|Annual purchases | |
|-------------- | |
|365 | |
|Note: may have to use COGS rather than purchases. | |
| | |
| |365 |
| |Average Age of Inventory = ----------------------- |
| |Inventory turnover |
| | |
|Sales | |
|Total asset turnover = --------------------------------------- | |
|Total assets | |
| | |
|Total liabilities | |
|Debt ratio = -------------------------------------------------- | |
|Total assets | |
| |
|Earnings before interest and taxes |
|Times interest earned ratio = --------------------------------------------------------- |
|Interest |
| |
| |
|[pic] |
| |
|Sales - Cost of goods sold Gross profits |
|Gross profit margin = -------------------------------------- = ------------------------ |
|Sales Sales |
| | |
|Operating profits | |
|Operating profit margin = ----------------------------- | |
|Sales | |
| |
|Earnings available for common stockholders |
|Net profit margin = ------------------------------------------------------------ |
|Sales |
| |
|Earnings available for common stockholders |
|Earnings per share = ----------------------------------------------------------- |
|Number of shares of common stock outstanding |
| |
DUPONT SYSTEM of ANALYSIS (especially the very last formula):
| |
| |
| |
|Earnings available for |
|common stockholders Sales Earnings available for common stockholders |
|ROA = -------------------------------- x ----------------------------- = --------------------------------------------------------- |
|Sales Total assets Total assets |
| |
|Or |
| |
|ROA = (EACS / Sales) x (Sales / TA) |
| |
|Earnings available for |
|common stockholders Sales Total Assets |
|ROE = -------------------------------- x ----------------- x -------------------------------- |
|Sales Total Assets Common stock equity |
| |
|(if there is no preferred stock, Common Equity = Total Equity) |
| |
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