C213 Formulas and Other Info in the Pre-assessment & Assessment

Free Cash Flow (FCF) equation

FCF = Operating Activities - Investing Activities

Current Ratio Equation

Current Ratio = Current Assets / Current Liabilities

Statement of Cash Flows Equation

+/- Cash Flow from Operating Activities +/- Cash Flow from Investing Activities +/- Cash Flow from Financing Activities = Net Change in Cash

Asset Turnover (AT)

AT = total sales/total assets

Balance Sheet Equation

Assets = Liabilities + Equity

Format of Balance Sheet

Assets, Liabilities, Equity in this order

Contribution Margin Ratio

CM/Sales

Paid in capital =

Capital Stock = Capital Contributions (all the same thing)

Cash Flow Adequacy Ratio

Cash from operations / cash required for investments

Cash Times Interest Earned Ratio

Cash from operations before interest and taxes / cash paid for interest

Cash Flow to Net Income Ratio

Cash from operations/Net income

Assets=Liabilities+Equity can be rearranged to ? to find equity

Equity = Assets - Liability

Gross Margin (or Gross Profit) Equation

Gross Margin = Revenues (sales) - Cost of Goods Sold (COGS)

Income Before Taxes Equation

Income Before Taxes = Operating Income +\- Non-operating expenses

Income from continuing operations

Income from continuing operations = Income before taxes - income tax expense

Net Income Equation

Net Income = Revenues (operational income) - Expenses (non-operational items)

Earnings Per Share (EPS) equation

Net income/shares outstanding

Operating Income Equation

Operating Income = Gross Profit - Operating Expenses

Return on Assets (ROA)

ROA = Net Income/Total Assets

Return on Equity (ROE)

ROE = Net Income / Stockholders' Equity

Return on Equity (ROE)

ROE = Return on Sales x Asset turnover x Assets to equity ratio

Return on Sales (profit margin) (ROS)

ROS = Net Income/Sales

Retained Earnings Equation

Retained Earnings = net income - dividends

Contribution Margin

Sales - Variable Costs (VC)

Break Even (BE) Equation

Sales - Variable Costs (VC) - Fixed Costs (FC) = -0- Profit

Target Income (for a specific target income level)

Sales - Variable Costs (VC) - Fixed Costs (FC) = Target Income

Debt Ratio Equation

debt ratio = total liabilities / total assets

Price to Earnings Ratio (P/E)

market of shares / net income