# Fomula

Topics: Financial ratios, Financial ratio, Dividend yield Pages: 4 (793 words) Published: December 18, 2012
Current ratio =Current assetsCurrent Liabilities
Quick ratio = Current assets – InventoryCurrent Liabilities Cash ratio = CashCurrent liabilities
Total debt ratio =Total assets – Total equityTotal assets
Debt-equity ratio =Total debtTotal equity
Equity multiplier =Total assetsTotal equity
Time interest earned ratio =EBITInterest expense
Cash coverage ratio =EBIT + DepreciationInterest expense
Inventory turnover =Cost of goods soldInventory
Day’s sales in inventory =365 daysInventory turnover
Total assets turnover = SalesTotal assets

Profit margin =Net incomeSales

Return on assets (ROA) = Net incomeTotal assets

Return on equity (ROE) = Net incomeTotal equity
= ROA x Equity multiplier

The Dupont identify = Net incomeSales×SalesTotal assets ROA×AssetsTotal equity

= Profit margin × Total assets turnover ×Equity multiplier Earnings per share (EPS) = Net incomeOutstanding
PE ratio (Price-earnings ratio) =Price per shareEarnings per share Dividend payout ratio =Cash dividendNet income

Retention ratio =Addition to retained earningsNet income

Internal growth rate =ROA X b1 – ROE X b
Sustainable growth rate =ROE x b1 – ROE x b
with b = 1 – equity multiplier
Chapter 4: Return and Risk
If the present value of the benefits just equals the cost, you would earn a rate of return equal to the discount rate If the present value of the benefits exceeds the cost, you would earn a rate of return greater than the discount rate If the present value of the benefits is less than the cost, you would earn a rate of return less than the discount rate

Required return on investment j = Real rate of return + Expected inflation premium + Risk premium for investment j
= Risk-free rate + Risk premium for investment j
Rj = r* + IP + RPj = RF + RPj
Risk-free rate = Real rate of return + Expected inflation premium RF = r* + IP
Holding period return (HPR) (Lợi suất kì nắm giữ) =Current income + Capital gain of lossBeginning investment value
HPR...