Assignment

Corporate Finance BFIN 7236 Prof. Andrew Schwartz

List of Financial Ratios

Profitability Ratios

1. Earnings Margin: 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝑆. 𝑎𝑙𝑒𝑠

2. Gross Margin: (𝑆𝑎𝑙𝑒𝑠 − 𝐶𝑂𝐺𝑆) 𝑆. 𝑎𝑙𝑒𝑠

3. Operating Margin: 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑆. 𝑎𝑙𝑒𝑠

4. Return on Assets: 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝐴. 𝑣𝑔.𝐴𝑠𝑠𝑒𝑡𝑠

5. Return on Equity: 𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 𝐴. 𝑣𝑔. 𝐸𝑞𝑢𝑖𝑡𝑦

Liquidity Ratios

6. Current Ratio: 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 𝐶. 𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

7. Acid Test (Quick) Ratio: (𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦) 𝐶. 𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

8. Cash Ratio: (𝐶𝑎𝑠ℎ + 𝑀𝑎𝑟𝑘𝑒𝑡𝑎𝑏𝑙𝑒 𝑆𝑒𝑐𝑢𝑟𝑖𝑡𝑖𝑒𝑠) 𝐶. 𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

9. Operating Cash Flow Ratio: 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐶𝑎𝑠ℎ 𝐹𝑙𝑜𝑤𝑠 𝐶. 𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Turnover Ratios

10. Inventory Turnover: 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑 𝐴. 𝑣𝑔. 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

11. Inventory Days: 365 ∗ 𝐴𝑣𝑔.𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐶. 𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑

12. Receivables Turnover: 𝑆𝑎𝑙𝑒𝑠 𝐴. 𝑣𝑔.𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

13. Receivable Days: 365 ∗ 𝐴𝑣𝑔.𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑆. 𝑎𝑙𝑒𝑠

14. Payables Turnover: 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑 𝐴. 𝑣𝑔.𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑃𝑎𝑦𝑎𝑏𝑙𝑒

15. Payable Days: 365 ∗ 𝐴𝑣𝑔.𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑃𝑎𝑦𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑.

16. Cash Conversion Cycle: 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝐷𝑎𝑦𝑠 + 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐷𝑎𝑦𝑠 − 𝑃𝑎𝑦𝑎𝑏𝑙𝑒 𝐷𝑎𝑦𝑠

17. NWC Turnover: 𝑆𝑎𝑙𝑒𝑠 𝐴𝑣𝑔.𝑁𝑒𝑡 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙.

18. Asset Turnover: 𝑆𝑎𝑙𝑒𝑠 𝐴𝑣𝑔. 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠.

Leverage Ratios

19. Debt-to-Equity Ratio: 𝐿𝑜𝑛𝑔𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡 𝑂𝑤𝑒𝑛𝑒𝑟𝑠!𝐸𝑞𝑢𝑖𝑡𝑦.

20. Leverage Ratio: 𝐿𝑜𝑛𝑔𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡 𝐴𝑠𝑠𝑒𝑡𝑠.

21. Interest Coverage Ratio: 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐸𝑥𝑝𝑒𝑛𝑠𝑒.