Formulas

Question 1

Receivables Turnover

Answer 1

annual sales
= —————————-
average receivables

Question 2

Days of Sales Outstanding

Answer 2

365
= —————————–
receivables turnover

Question 3

Inventory Turnover

Answer 3

cost of goods sold
= ——————————–
average inventory

Question 4

Days of Inventory On Hand

Answer 4

365
= —————————–
inventory turnover

Question 5

Payables Turnover

Answer 5

purchases
= ——————————
average trade payables

Question 6

Number of Days of Payables

Answer 6

365
= —————————
payables turnover ratio

Question 7

Total Asset Turnover

Answer 7

revenue
= ————————-
average total assets

Question 8

Fixed Asset Turnover

Answer 8

revenue
= ———————————–
average net fixed assets

Question 9

Working Capital Turnover

Answer 9

revenue
= ——————————–
average working capital

Question 10

Current Ratio

Answer 10

current assets
= ———————————–
current liabilities

Question 11

Quick Ratio

Answer 11

cash + marketable securities + receivables
= ————————————————————————
current liabilities

Question 12

Cash Ratio

Answer 12

cash + marketable securities
= ——————————————————-
current liabilities

Question 13

Defensive Interval

Answer 13

cash + marketable securities + receivables
= ——————————————————————–
average daily expenditures

Question 14

Cash Conversion Cycle

Answer 14

(days sales outstanding) + (days of inventory on hand) - (number of days of payable)

Question 15

Debt-to-Equity

Answer 15

total debt
= ———————————
total shareholders’ equity

Question 16

Debt-to-Capital

Answer 16

total debt
= ——————————————————–
total debt + total shareholders’ equity

Question 17

Debt-to-Assets

Answer 17

total debt
= ——————————–
total assets

Question 18

Financial Leverage

Answer 18

average total assets
= ——————————————–
average total equity

Question 19

Interest Coverage

Answer 19

earning before interest and taxes
= ————————————————————–
interest payments

Question 20

Fixed Charge Coverage

Answer 20

earnings before interest and taxes + lease payments
= ——————————————————————————
interest payments + lease payments

Question 21

Net Profit Margin

Answer 21

net income
= ——————–
revenue

Question 22

Gross Profit Margin

Answer 22

gross profit
= —————————–
revenue

Question 23

Operating Profit Margin

Answer 23

operating income
= ——————————–
revenue

= EBIT
———————–
revenue

Question 24

Pretax Margin

Answer 24

EBT
= ——————–
revenue

Question 25

Return on Assets

Answer 25

net income + interest expense (1- tax rate) = ------------------------------------------------------------------- average total assets

Question 26

Operating Return on Assets

Answer 26

operating income = ------------------------ average total assets EBIT = ------------------- average total assets

Question 27

Return on Total Capital

Answer 27

EBIT = -------------------------------- average total capital

Question 28

Return on Equity

Answer 28

net income = ------------------------ average total equity

Question 29

Return on Common Equity

Answer 29

net income - preferred dividends = ------------------------------------------------------ average common equity

Question 30

FCFF

Answer 30

xxx

Question 31

FCFE

Answer 31

cash slows from operations - fixed capital investment + net borrowing

Question 32

Common-size Income Statement Ratios

Answer 32

income statement account = ------------------------------------------------- sales

Question 33

Common-size Balance Sheet Ratios

Answer 33

balance sheet account = --------------------------------------------------- total assets

Question 34

Common-size Cash Flow Ratios

Answer 34

cash flow statement account = ------------------------------------------------------ revenues

Question 35

Original DuPont Equation

Answer 35

ROE = (net profit margin) (asset turnover) (leverage ratio)

Question 36

Extended DuPont Equation

Answer 36

ROE = (net income/EBT)x(EBT/EBIT)x(EBIT/revenue)(revenue/total assets)x(total assets/total equity)

Question 37

Basic EPS

Answer 37

net income - preferred dividends = --------------------------------------------------- weighted ave number of common shares outstanding

Question 38

Diluted EPS

Answer 38

[(net income-preferred dividends)+(convertible preferred dividends) +(convertible debt interest)(1-t)] --------------------------------------------------------------------------------- [(weighted average shares) + (shares from conversion of conv.pfd. shares) + (shares from conversion of cov. debt) + (shares issuable from stock options)]

Question 39

Coefficients of Variation: | CV Sales

Answer 39

std of sales = -------------------------------- mean sales

Question 40

Coefficients of Variation: | CV Operating Income

Answer 40

std of operating income = ------------------------------------------ mean operating income

Question 41

Coefficients of Variation: | CV Net Income

Answer 41

std net income = --------------------------------- mean net income

Question 42

Ending Inventory

Answer 42

= beg inventory + purchases - COGS

Question 43

Straight Line Depreciation

Answer 43

[(cost - salvage value)/useful life]

Question 44

DDB Depreciation

Answer 44

(2/useful life) x (cost - accumulated depreciation)

Question 45

Units of Production Depreciation

Answer 45

[(original cost - salvage value)/ life in output units] x output units in the period

Question 46

Deferred Taxes

Answer 46

income tax expense = | (taxes payable) + changeDTL - changeDTA

Question 47

Debt Liabilities

Answer 47

interest expense = | mrk rate at issue) x (balance sheet value of liability at the beg of period

Question 48

Cash Flow-to-Revenue

Answer 48

CFO = ----------------------------- net revenue

Question 49

Cash Return-on-Assets

Answer 49

CFO = ----------------------------- average total assets

Question 50

Cash Return-on-Equity

Answer 50

CFO = ------------------------------ average total equity

Question 51

Cash-to-Income

Answer 51

CFO = -------------------------- operating income

Question 52

Cash Flow per Share

Answer 52

CFO - preferred dividends = ------------------------------------------------------ weighted avg number of common shares

Question 53

Debt Coverage

Answer 53

CFO = --------------------- total debt

Question 54

Interest Coverage

Answer 54

CFO + interest paid + taxes paid = -------------------------------------------------------------- interest paid

Question 55

Reinvestment

Answer 55

CFO = ---------------------------------------- cash paid for long term assets

Question 56

Debt Payment

Answer 56

CFO = --------------------------------------------- cash long term debt repayment

Question 57

Dividend Payment

Answer 57

CFO = --------------------------- dividends paid

Question 58

Coverage Ratios: Investing & Financing

Answer 58

CFO = --------------------------------------------------------------------------- cash outflows from investing and financing activities