FINANCE ASSIGNMENT

BA 303 009 Winter 2016 1

Return on Equity (%) Net Income / Stockholders' Equity

= (Total Asset Turnover) x (Net Profit Margin) x (Financial Leverage Multiplier)

Net Profit Margin (%) Net Income / Sales

Gross Profit Margin (%) Gross Profit / Sales

Operating Profit Margin (%) EBIT /Sales

Total Asset Turnover Sales / Total Assets

Collection Period (days) Accounts Receivable / Average Sales per Day

Average Sales per Day Sales / Number of days in accounting period

Age of Inventoy (days) Number of days in accounting period / Inventory Turnover

Inventory Turnover Cost of Goods Sold / Inventory

Average Payment Period Accounts Payable / Average Daily Purchases

Average Daily Purchases* Purchases* / Number of days in accounting period

* use Cost of Goods Sold if Purchases is not available

Financial Leverage Multiplier Total Assets / Stockholders' Equity

Debt Ratio Total Liabilities / Total Assets

Other Ratios Liquidity

Working Capital Current Assets - Current Liabilities

Current Ratio Current Assets / Current Liabilities

Quick Ratio (Acid Test) (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities

Market Ratios

Dividends per Share Dividends / Number of common shares issued and outstanding

Earnings per Share (EPS) Net Income / Number of common shares issued and outstanding

Market capitalization Current Stock Price x Number of common shares issued and outstanding

Market / Book Market Capitalization / Book Value

= Market Capitalization per Share / Book Value per Share

Price Earnings Ratio (P/E Ratio) Current Stock Price / Earnings per Share