Transcription of Financial Ratio Formulas - James Madison University
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Financial Ratio Formulas - James Madison University
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.
Financial ratio formulas Prepared by Pamela Peterson Drake 1. Operating cycle ... Liquidity Current liabilities Current assets Current =ratio Current liabilities ... Fixed -charge coverage ratio + + = Financial ratio formula sheet, prepared by Pamela Peterson-Drake 2 . 6. Shareholder ratios
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