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Fabm Formula

This document defines and provides formulas for several common financial ratios used to analyze businesses and their financial statements. These ratios include debt service coverage, debt ratio, equity ratio, debt to equity, equity-debt ratio, debt to capitalization, gross profit margin, return on sales, operating profit margin, return on assets, return on equity, working capital, current ratio, quick ratio, accounts receivable turnover, average collection period, inventory turnover, average sales period, operating cycle, collection period, average age of inventory, and times interest earned.

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Myles Infante
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1K views2 pages

Fabm Formula

This document defines and provides formulas for several common financial ratios used to analyze businesses and their financial statements. These ratios include debt service coverage, debt ratio, equity ratio, debt to equity, equity-debt ratio, debt to capitalization, gross profit margin, return on sales, operating profit margin, return on assets, return on equity, working capital, current ratio, quick ratio, accounts receivable turnover, average collection period, inventory turnover, average sales period, operating cycle, collection period, average age of inventory, and times interest earned.

Uploaded by

Myles Infante
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DEBT SERVICE COVERAGE= DEBT RATIO=

NET PROFIT B4 INTEREST / PAYMENTS ON PRINCIPAL AND INTEREST


TOTAL LIABILITIES / TOTAL ASSETS

EQUITY RATIO= DEBT TO EQUITY=


OWNER’S EQUITY / TOTAL ASSETS TOTAL DEBT (LIABILITIES) / OWNER’S EQUITY

EQUITY - DEBT RATIO= DEBT TO CAPITALIZATION=


OWNER’S EQUITY / TOTAL LONG TERM DEBT (NCL) TOTAL DEBT / TOTAL LONG TERM DEBT + EQUITY

GROSS PROFIT MARGIN= RETURN ON SALES (NET PROFIT MARGIN)=


GROSS PROFIT / NET REVENUES OR SALES NET PROFIT AFTER TAXES/ NET REVENUES OR SALES

OPERATING PROFIT MARGIN = RETURN ON ASSETS=


OPERATING INCOME / NET SALES NET PROFIT AFTER TAX / TOTAL ASS

RETURN ON EQUITY=
NET PROFIT AFTER TAXES/ OWNER’S EQUITY
WORKING CAPITAL = CURRENT RATIO =
CURRENT ASSETS - CURRENT LIABILITIES CURRENT ASSETS / CURRENT LIABILITIES

QUICK RATIO / ACID TEST RATIO = ACCOUNTS RECEIVABLE TURNOVER=


QUICK ASSETS / CURRENT LIABILITIES NET CREDIT SALES / AVE. TRADE RECEIVABLES

AVERAGE COLLECTION PERIOD= AVERAGE COLLECTION PERIOD=


360 DAYS / RECEIVABLE TURNOVER AVE. RECEIVABLES / AVE. DAILY SALES

INVENTORY TURNOVER = AVERAGE SALES PERIOD=


COST OF GOODS SOLD / AVE. INVENTORY 360 DAYS / INVENTORY TURNOVER

OPERATING CYCLE= COLLECTION PERIOD =


COLLECTION PERIOD DAYS + AVE. AGE INVENTORY 365 DAYS / RECEIVABLE TURNOVER

AVE. AGE OF INVENTORY= TIMES INTEREST EARNED=


365 DAYS / INVENTORY TURNOVER NET PROFIT B4 INTEREST & INCOME TAXES/ INTEREST EXPENSE

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