Managerial Finance ch1-4 formulas

Current ratio =

Current assets � Current liabilities

quick ratio

(current assets-inventory)/current liabilities

Inventory turnover =

Cost of goods sold � Inventory

Average Age of Inventory =

365/Inventory turnover

average collection period=

Accounts recievable/(Annual Sales/365)

average payment period

accounts payable/(annual purchases/365)

Total asset turnover =

Sales � Total assets

Debt ratio =

Total liabilities � Total assets

Times interest earned ratio =

EBIT � interest

gross profit margin

(sales-COGS)/Sales

Operating profit margin =

Operating profits � sales

Net profit margin =

Earnings available for common stockholders(EBIT) � Sales

Earnings per share

earnings available for common stockholders/number of shares of common stock outstanding

Return on total assets (ROA) =

Earnings available for common stockholders � Total assets

Return on Equity (ROE) =

Earnings available for common stockholders � Common stock equity

Price Earnings (P/E) Ratio =

Market price per share of common stock � Earnings per share

market book

market price per share of common stock/book value per share of common stock

book value per share of common stock

common stock equity/number of shares common stock outstanding