Formulas Flashcards
formulas from Marshall et. al Accounting: What the Numbers Mean and Lambert Financial Literacy for Managers (20 cards)
ROA
[Net income + (1 - tax rate) x Interest Expense]/ Total assets
Unlevered income
Net income + (1 - tax rate) x Interest expense
ROA
Profit margin x Asset turnover
Accounts receivable turnover
Sales / Average customer receivables
Inventory turnover
Cost of goods sold / Average inventory
Operating cycle
Days receivable + Days inventory
Return on equity
Net income / Average stockholders’ equity
Rate of return
Amount of return / Amount invested
Interest
Principal x Rate x Time
Return on investment
Net income / Average total assets
Return on investment
Operating income / Average operating assets
Return on investment (DuPont Adaptation)
Margin x Turnover
= (Net income / Sales) x (Sales / Average total assets)
Balance sheet equation
Assets = Liabilities + Stockholders’ equity
Working capital
Current assets - Current liabilities
Current ratio
Current assets / Current liabilities
Acid-test ratio
(Cash + Accounts receivable) / Current liabilities
Stockholders’ equity
Assets - Liabilities
Net assets
Stockholders’ equity
Margin
Net income / Sales
Turnover
Sales / Average total assets
