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  • Fabm Formula

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    Myles Infante
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    This document defines and provides formulas for several common financial ratios used to analyze businesses and their financial statements. These ratios include debt service coverage, debt ratio, equity ratio, debt to equity, equity-debt ratio, debt to capitalization, gross profit margin, return on sales, operating profit margin, return on assets, return on equity, working capital, current ratio, quick ratio, accounts receivable turnover, average collection period, inventory turnover, average sales period, operating cycle, collection period, average age of inventory, and times interest earned.

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    FABM FORMULA.docx

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    This document defines and provides formulas for several common financial ratios used to analyze businesses and their financial statements. These ratios include debt service coverage, debt ratio, equity ratio, debt to equity, equity-debt ratio, debt to capitalization, gross profit margin, return on sales, operating profit margin, return on assets, return on equity, working capital, current ratio, quick ratio, accounts receivable turnover, average collection period, inventory turnover, average sales period, operating cycle, collection period, average age of inventory, and times interest earned.

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    © All Rights Reserved
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    469 views2 pages

    Fabm Formula

    Uploaded by

    Myles Infante
    This document defines and provides formulas for several common financial ratios used to analyze businesses and their financial statements. These ratios include debt service coverage, debt ratio, equity ratio, debt to equity, equity-debt ratio, debt to capitalization, gross profit margin, return on sales, operating profit margin, return on assets, return on equity, working capital, current ratio, quick ratio, accounts receivable turnover, average collection period, inventory turnover, average sales period, operating cycle, collection period, average age of inventory, and times interest earned.

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    © All Rights Reserved
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    DEBT SERVICE COVERAGE= DEBT RATIO=

    NET PROFIT B4 INTEREST / PAYMENTS ON PRINCIPAL AND INTEREST


    TOTAL LIABILITIES / TOTAL ASSETS

    EQUITY RATIO= DEBT TO EQUITY=


    OWNER’S EQUITY / TOTAL ASSETS TOTAL DEBT (LIABILITIES) / OWNER’S EQUITY

    EQUITY - DEBT RATIO= DEBT TO CAPITALIZATION=


    OWNER’S EQUITY / TOTAL LONG TERM DEBT (NCL) TOTAL DEBT / TOTAL LONG TERM DEBT + EQUITY

    GROSS PROFIT MARGIN= RETURN ON SALES (NET PROFIT MARGIN)=


    GROSS PROFIT / NET REVENUES OR SALES NET PROFIT AFTER TAXES/ NET REVENUES OR SALES

    OPERATING PROFIT MARGIN = RETURN ON ASSETS=


    OPERATING INCOME / NET SALES NET PROFIT AFTER TAX / TOTAL ASS

    RETURN ON EQUITY=
    NET PROFIT AFTER TAXES/ OWNER’S EQUITY
    WORKING CAPITAL = CURRENT RATIO =
    CURRENT ASSETS - CURRENT LIABILITIES CURRENT ASSETS / CURRENT LIABILITIES

    QUICK RATIO / ACID TEST RATIO = ACCOUNTS RECEIVABLE TURNOVER=


    QUICK ASSETS / CURRENT LIABILITIES NET CREDIT SALES / AVE. TRADE RECEIVABLES

    AVERAGE COLLECTION PERIOD= AVERAGE COLLECTION PERIOD=


    360 DAYS / RECEIVABLE TURNOVER AVE. RECEIVABLES / AVE. DAILY SALES

    INVENTORY TURNOVER = AVERAGE SALES PERIOD=


    COST OF GOODS SOLD / AVE. INVENTORY 360 DAYS / INVENTORY TURNOVER

    OPERATING CYCLE= COLLECTION PERIOD =


    COLLECTION PERIOD DAYS + AVE. AGE INVENTORY 365 DAYS / RECEIVABLE TURNOVER

    AVE. AGE OF INVENTORY= TIMES INTEREST EARNED=


    365 DAYS / INVENTORY TURNOVER NET PROFIT B4 INTEREST & INCOME TAXES/ INTEREST EXPENSE

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