1.
Current ratio=Current assets/current liabilities
2. Quick ratio=Quick assets/current liabilities
3. Working capital=Current assets-current liabilities
4. Cash flow from operations to current liabilities=Cash flows from operating
activities/current liabilities
5. Accounts receivable turnover rate=Net sales/Average accounts receivable
6. Days to collect average accounts receivable=365 days/Accounts receivable turnover
rate
7. Inventory turnover rate=Cost of goods sold/Average inventory
8. Days to sell the average inventory=365 days/Inventory turnover rate
9. Operating cycle=Days to sell inventory+Days to collect receivables
10. Free cash flow=Net cash from operating activities-Cash used for Investing Activities and
Dividends
11. Debt ratio=Total liabilities/total assets
12. Interest coverage ratio=Income before interest and taxes/Annual interest expense
13. Percentage changes; that is, in net sales and net income=Dollar amount of
change/financial statement amount in the earlier year.
14. Gross profit rate=Gross profit/net sales
15. Operating expense ratio=Operating expenses/net sales
16. Operating income=Gross profit-Operating expenses
17. Net income as a percentage of net sales=Net income/net sales
18. Earnings per share=Net income-preferred dividends/average number of common shares
outstanding
19. Return on assets=Operating income/average total assets
20. Return on equity=Net income/average total equity
21. Operating cycle=Days to sell inventory+Days to collect receivables
22. Free cash flow=Net cash from operating activities-Cash used for investing activities and
dividends
23. Debt ratio=Total liabilities/Total assets
24. Percentage of changes (in net sales and/or net income)=Dollar amount of
change/Financial statement amount in the earlier year.
25. Return on assets=Operating income/Average total assets
26. Return on equity=Net income/Average total equity
27. Return on common stockholders/ equity Net income-Preferred Dividends/Average
common stockholders’ equity.
28. Price-earnings ratio=Current stock price/earnings per share
29. Dividend yield=Annual dividend/Current stock price
30. Book value per share=Common stockholders’ equity/Shares of common stock
outstanding
31. Contribution margin(n total)=Sales revenue-total variable costs
32. Contribution margin (per unit)=Unit sales price-variable costs per unit.
33. Contribution margin ratio=Unit sales price-(variable costs per unit/unit sales price) OR
Sales-total variable costs/sales.
34. Required sales volume (in units)=(Fixed costs+target operating income)/contribution
margin per unit.
35. Required sales volume (in dollars)=(Fixed costs+target operating income)/contribution
margin per unit
36. Margin of safety=Actual sales volume-break-even sales volume
37. Operating income=Margin of safety*Contribution margin ratio.
38. Change in operating income=Change in sales volume*Contribution margin ratio
39. Return on investment=Operating income/Average total assets OR ROI=Capital
turnover*return on sales.
40. Expected return on average investment=average estimated net income/average
investment
41. Average investment=Original cost+salvage value/2
42. Residual income formula=Operating income-(minimum acceptable return*invested
capital)
43. Economic value added=After tax operating income-[(Divisions’s total assets-division’s
current liabilities)*average cost of capital].
44. Payback period=Amount to be invested/estimated annual net cash flow
45. Average investment=(Original cost+salvage value)/2
46. Price variance formula=Actual quantity*(Standard price-Actual price)
47. Quantity variance=Standard price*(Standard quantity-actual quantity)
48. Labor rate variance=Actual hours*(Standard hourly rate-actual hourly rate)
49. Efficiency variance=Standard hourly rate*(standard hours-actual hours).
50. Overhead spending variance=Budgeted overhead (at actual production level)-actual
overhead incurred
51. Volume variance=Applied overhead (at standard rate)-budgeted overhead (at actual
production level).
