# Fomula

**Topics:**Financial ratios, Financial ratio, Dividend yield

**Pages:**4 (793 words)

**Published:**December 18, 2012

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...

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