Formulas

Question 1

What is formula for Return on Equity?

Answer 1

= Net profit / Equity

Question 2

What is formula for Return on Assets?

Answer 2

= Profit before financial expenses / Total assets

Question 3

What is formula for Return on Operating Net Assets?

Answer 3

= Operating profit / Operating net assets

Question 4

What is formula for Return on capital employed?

Answer 4

= Profit before financial expenses / Capital employed

Question 5

What is formula for Capital Employed?

Answer 5

= Equity + Interest-bearing debt

Question 6

What is formula for Debt equity ratio?

Answer 6

= Total liabilities / total equity

Question 7

What is formula for Dib equity ratio?

Answer 7

= Interest-bearing debt / total equity

Question 8

What is formula for Net debt equity ratio?

Answer 8

= (Interest-bearing debt – financial assets) / total equity

Question 9

What is formula for Interest coverage ratio?

Answer 9

= Profit before interest expenses / interest expenses

Question 10

What is formula for EBITDA coverage?

Answer 10

= EBITDA / interest expenses

Question 11

What is the DuPont formula for ROA?

Answer 11

(Profit before financial expenses / Sales) * (Sales / Total assets)

Question 12

What is the DuPont formula for ROCE?

Answer 12

(Profit before financial expenses / Sales) * (Sales / Capital employed)

Question 13

What is the DuPont formula for RONA?

Answer 13

(Operating profit / Sales) * (Sales / Operating net assets)

Operating net assets = Total assets – Dnib – Financial assets

Question 14

What is formula for Operating net assets?

Answer 14

Operating net assets = Total assets – Dnib – Financial assets

Question 15

What is the Solvency ratio?

Answer 15

Solvency = Equity/Assets

Question 16

What are the Debt-to-equity ratios?

Answer 16

D/E , Dib/E , ND/E

Dib = Interest bearing debt
ND = Net debt = Lib - (Cash + marketable securities)

Question 17

What is Net Debt?

Answer 17

Net Debt = Lib - (Cash + marketable securities)

Question 18

What is the formula for Current ratio?

Answer 18

= Current assets / Current liabilities

Question 19

What is the formula for Quick ratio?

Answer 19

= (Current assets - Inventory) / Current liabilities

Question 20

What is the formula for Cash availability?

Answer 20

= (Cash + Marketable securities) / Sales

Question 21

What is the formula for Capex ratio?

Answer 21

= Cash flow from operations / Net investments

Question 22

What is the formula for Defensive interval?

Answer 22

= ((Liquidt assets + accounts receivable) / Projected expenditures) * 365

Question 23

What is the formula for Number of days in inventory?

Answer 23

(Average inventory / COGS) * 365

Question 24

What is the formula for Number of credit days customers?

Answer 24

(Average accounts receivables / Sales) * 365

Question 25

What is the formula for Number of credit days suppliers?

Answer 25

(Average accounts payables / Purchases) * 365 Purchases = CGS + Inventory CB – Inventory OB

Question 26

What is the ROA leverage formula?

Answer 26

ROE = (1-t) * [ROA + (ROA - COD) * D/E]

Question 27

Which part of the leverage formula (ROA) shows return from capital financed by creditors?

Answer 27

(ROA - COD) * D/E (in other words: "spread" * leverage)

Question 28

Which part of the leverage formula (ROA) shows return from own capital?

Answer 28

ROA

Question 29

Which part of the leverage formula (ROA) shows operating risk?

Answer 29

ROA

Question 30

What is the formula for purchases?

Answer 30

Purchases = CGS + Inventory CB – Inventory OB

Question 31

Which part of the leverage formula (ROA) shows financial risk?

Answer 31

D/E

Question 32

What is the ROCE leverage formula?

Answer 32

ROE = (1-t) * [ROCE + (ROCE - CODib) * Dib/E]

Question 33

What is the growth formula?

Answer 33

∆E / E = ROE – (DIV / E) + (Newly issued shares / E)

Question 34

What is the interest coverage ratio?

Answer 34

Interest coverage ratio = Profit before interest expenses / interest expenses

Question 35

What is EBITDA coverage?

Answer 35

EBITDA coverage = EBITDA / interest expenses

Question 36

What is the Cash Conversion Cycle?

Answer 36

CCC = Number of days in inventory + number of credit days customers - number of credit days suppliers

Question 37

What is the ROCE DuPont identity?

Answer 37

ROCE = PM * TOCE

Question 38

What is TOCE?

Answer 38

TOCE = Turnover of Capital Employed = Sales/CE CE = Equity + Lib = Assets - Lnib - financial assets

Question 39

What is the earnings ratio?

Answer 39

P/E = Share price at time t / Earnings in period t+1

Question 40

What is the market to book ratio?

Answer 40

M/B = Stock market value of equity at time t / book value of equity at time t

Question 41

What is residual income (RI)?

Answer 41

RI = EBIT - (cost of capital*capital invested) Cost of capital = WACC

Question 42

What is Economic Value Added (EVA)?

Answer 42

EVA = NOPAT - (cost of capital * capital invested) NOPAT = Net operating profit - Tax Note: EVA is a modern version of RI

Question 43

What is the WACC formula?

Answer 43

WACC = Dib / (E + Dib) * ( 1 –T ) * CODib + E / (D + E) * re

Question 44

What is the alternate EVA formula?

Answer 44

EVA = (ROCE (1–T) – WACC) * CE

Question 45

What is working capital (WC)?

Answer 45

WC = Cash + accounts receivable + inventory - accounts payable

Question 46

What is the formula for COD?

Answer 46

= Interest expense / All debt = Interest expense / Liabilities

Question 47

What is the formula for CODib?

Answer 47

= Interest expense / Interest bearing debt

Question 48

What is the formula for COND?

Answer 48

= Fin expense – Fin income / ND (i.e. Dib – Fin assets) In other words, COND = Net financial expenses / Net debt

Question 49

What is the formula for NOPAT?

Answer 49

NOPAT = Net operating profit - Tax | Note: EVA is a modern version of RI

Question 50

What is the formula for projected expenditures?

Answer 50

= net expenses (i.e. cost of goods sold + sales and administrative costs + other operating expenses - other operating revenue) minus depreciation and amortization