All Introductory Formulas
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
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| show | 1 - Payout Ratio | The percentage of net income that is retained to grow the business, rather than being paid out.
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| Internal Growth Rate | show | The maximum growth rate a firm can achieve without resorting to external financing.
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| Sustainable Growth Rate | show | The annual percentage of increase in sales defined by Retention, Profitability, Efficiency, and Leverage
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| show | NI / Sales | The amount of net income earned with each dollar of sales generated.
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| show | Sales / Beginning Assets | The total sales generated per dollar of assets.
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| Financial Leverage (aka. Equity Multiplier) | Begin Assets / Beginning Equity | show 🗑
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| Gross Margin | Gross Profit / Sales | show 🗑
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| Operating Margin | Operating Profit / Sales | show 🗑
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| show | Net Income / Sales | Indicates how much profit each dollar of sales generates.
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| show | Net Income / Beginning Assets | Indicates how efficiently a company is utilizing its assets.
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| show | Net Income / Beginning Equity | An indication of profitability per dollar of beginning equity.
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| Return On Beginning Equity (ROBE) (DuPont Model) | show | A measure which integrates Profitability, Efficiency, and Leverage, indicating profitability per dollar of equity.
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| show | Net Income / Ending Equity | An indication of profitability per dollar of ending equity.
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| show | EBIT * (1-Tax Rate) / Interest-bearing debt + Equity | Reflects how well a company is using its money to generate returns. It is used to assess a company's efficiency at allocating the capital under its control to profitable investments.
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| Pretax Return on Invested Capital | EBIT / Interest-bearing debt + Equity | show 🗑
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| Asset Turnover | Sales / Assets | show 🗑
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| Fixed Asset Turnover | Sales / Net PP&E | show 🗑
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| show | Sales / Inventory | How many times a company has sold and replaced inventory during a given period.
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| show | (Average Inventory / COGS) * 365 | The average number of days required to turn inventory into sales.
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| show | (Average Accounts Receivable / Credit Sales) * 365 | The average number of days it takes to receive payments owed.
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| Cash Conversion Cycle | Days In Inventory + Collection Period - Payables Period | show 🗑
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| Payables Period | show | The average number of days taken to pay suppliers.
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| Current Ratio | Current Assets / Current Liabilities | show 🗑
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| Quick Ratio | show | Also known as the "acid-test" ratio, a more conservative reflection of the ability to pay short-term liabilities with short-term assets (excluding assets, such as inventory, which are more challenging to liquidate).
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| Cash Ratio | (Cash + ST Securities) / Current Liabilities | show 🗑
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| Interval Measure | (Cash + Securities + Receivables / Operations Costs) * 365 | show 🗑
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| Debt Ratio | (Interest Bearing Debt + Leases) / (Int. Bearing Debt + Leases + Equity) | show 🗑
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| Times-Interest Earned Ratio | EBIT / Interest | show 🗑
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| EBITDA Margin | EBITDA / Total Revenue | show 🗑
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| Times-burden Covered | EBIT / Interest + (Principle Payments / 1 - Tax Rate) | show 🗑
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| Debt To Equity | show | Assessment of financial leverage. The extent to which a company is taking on debt as a means of leveraging its assets.
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| Equity To Asset Ratio | show | The percentage of assets acquired without debt.
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| show | Fixed Costs / Variable Costs | A measure of risk, indicating the balance of fixed and variable costs
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| show | Sales / Fixed Costs | The revenue generated per dollar of fixed costs.
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| Contribution Margin | show | The marginal revenue generated per dollar of sales.
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| Payout Ratio | Dividends / Net Income | show 🗑
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| Days' Sales in Receivables | show | The number of days it takes a company to collect cash from its credit sales
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| show | 365 / Inventory Turnover | The number of days it takes to sell the inventory on hand.
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| Payout Ratio (per share) | Dividends Per Share / Earnings Per Share | show 🗑
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| show | (Cash + Securities) / (Sales / 365) | On average, the number days of average sales a company keeps in highly-liquid assets.
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Created by:
jvanderwal
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