SUMMARY OF FORMULA FOR RATIO ANALYSIS

LIQUIDITY RATIOS

Current Assets
CURRENT RATIO =
Current Liabilities

Quick Assets*
QUICK RATIO =
Current Liabilities

*Quick assets = cash + receivables + marketable securities

Quick Assets
DEFENSIVE INTERVAL =
Average Daily Expenditures

Cash + Marketable Securities

CASH RATIO =
Current Liabilities

NET WORKING CAPITAL = Current Assets less Current Liabilities

OPERATING CYCLE = Collection Period plus Inventory Period

CASH CONVERSION CYCLE = Operating Cycle less Deferral Period

EFFICIENCY RATIOS

Credit Sales
RECEIVABLE TURNOVER =
Average Trade Receivables

INVENTORY TURNOVER* = Cost of Goods Sold

(Merchandiser) Average Inventory

INVENTORY TURNOVER* = FG Turnover + WIP Turnover + RM Turnover

(Manufacturer)

Cost of Goods Sold

FINISHED GOODS TURNOVER =
Average FG Inventory

Cost of Goods Manufactured

WORK IN PROCESS TURNOVER =
Average WIP Inventory

Raw Materials Used

RAW MATERIALS TURNOVER =
Average RM Inventory

Credit Purchases
PAYABLE TURNOVER =
Average Trade Payable

Revenue
ASSET TURNOVER =
Average Total Assets

Revenue
FIXED ASSET TURNOVER =
Average Fixed Assets
 Revenue
WORKING CAPITAL TURNOVER =
Average Working Capital

COLLECTION PERIOD = 365 or 360

(Days sales outstanding) Receivable Turnover

OR

COLLECTION PERIOD = Average Receivable

(Days sales outstanding) Average Daily Credit Sales

INVENTORY PERIOD = 365 or 360

(Days of inventory outstanding) Inventory Turnover

OR

INVENTORY PERIOD = Average Inventory

(Days of inventory outstanding) Average Daily Cost of Goods Sold

PAYABLE PERIOD = 365 or 360

(Deferral Period) Payable Turnover

OR

PAYABLE PERIOD = Average Payable

(Deferral Period) Average Daily Credit Purchases

LEVERAGE RATIOS

Total Liabilities
DEBT-TO-EQUITY
Total Equity

Total Liabilities
DEBT RATIO
Total Assets

Total Equity
EQUITY RATIO
Total Assets

EQUITY MULTIPLIER = 1
(Financial Leverage Ratio) Equity Ratio

EQUITY MULTIPLIER = Average Total Assets

(Financial Leverage Ratio) Average Total Equity

INTEREST COVERAGE RATIO = EBIT

(Times Interest Earned) Interest Payments

DEGREE OF FINANCIAL LEVERAGE = EBIT

(Financial Leverage Factor) EBIT - Interest Payments
PERFORMANCE RATIOS

Profit
PROFIT MARGIN =
Revenue

Gross Income
GROSS PROFIT MARGIN =
Revenue

Operating Income
OPERATING PROFIT MARGIN =
Revenue

Profit
RETURN ON SALES =
Sales

RETURN ON ASSET = Profit

(General Formula) Average Total Assets

RETURN ON ASSET =
Return on Sales (ROS) X Asset Turnover (ATO)
(Du Pont Model)

RETURN ON EQUITY = Profit

(General Formula) Average Total Equity

RETURN ON EQUITY =
ROS X ATO X EQUITY MULTIPLIER
(Du Pont Model)

FREE CASH FLOW (FIRM) = Operating CF + After Tax Interest - Capital Expenditures

FREE CASH FLOW (EQUITY) = Operating CF - Capital Expenditures + Net Borrowing

MARKET PROSPECT RATIOS

Net Income to Ordinary Stockholders

EARNINGS PER SHARES (EPS) =
No. of Outstanding Ordinary Shares

Dividend per Share (DPS)

Dividend Yield =
Market Value per Share (MVPS)

MVPS
Price Earnings Ratio (P/E) =
EPS

DPS
Dividend Payout =
EPS

Dividends Declared
Dividend Payout =
Net Income

Retention/Plowback Ratio = 100% less Payout Ratio

OTHER RATIOS

Average Total Assets

CAPITAL INTENSITY RATIO
Sales

EBITDA
DEBT SERVICE COVERAGE RATIO
Interest Plus Principal Repayment