Financial Ratio Formulas

Financial Ratio Formulas Prepared by Pamela Peterson Drake 1. Operating cycle InventoryInventoryNumber of days of inventory Average day's cost of goods soldCost of goods sold / 365== Accounts receivableAccounts receivableNumber of days of receivables Average day's sales on creditSales on credit / 365== Accounts payableAccounts payableNumber of days of payables Average day's purchasesPurchases / 365== Note: Cost ofEnding BeginningPurchases = goods sold inventory inventory++ Number of days Number of daysOperating cycle of inventoryof receivables=+ purchases ofdaysofNumber sreceivable ofdaysofNumber inventory ofdays ofNumber cycle operatingNet += 2. Liquidity sliabilitieCurrent assetsCurrent ratioCurrent = sliabilitieCurrent Inventory - assetsCurrent Ratio Quick= SalessliabilitieCurrent - assetsCurrent Ratio sales to capital workingNet = 3. Profitability Gross incomeGross profit margin Sales= Operating incomeOperating profit margin = Sales Financial Ratio formula sheet, prepared by Pamela Peterson-Drake 1 Net incomeNet profit margin Sales= 4.

Accounts receivable Accounts receivable Number of days of receivables Average day's sales on credit Sales on credit / 365 == Accounts payable Accounts payable Number of days of payables Average day's purchases Purchases / 365 == Note: Cost of Ending Beginning Purchases = goods sold inventory inventory ++ Number of days Number of days Operating ...

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  Account, Financial, Payable, Accounts payable accounts payable

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