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