Financial Metrics & Ratios: Formula Cheat Sheet

Table of Contents:

• Growth Metrics

• Profitability Metrics

• Liquidity Metrics

• Solvency Metrics

• Efficiency Metrics

• Cost Metrics

• Valuation Metrics

• Cash Flow Metrics

• Coverage Metrics

• Employee Metrics

• Customer Metrics

• Project Metrics

• Supply Chain Metrics

• Risk and Return Metrics

• Market Share Metrics

Growth Metrics

Revenue Growth Rate = (Current Period Revenue - Previous Period Revenue) / Previous Period Revenue

Earnings Growth Rate = (Current Period Earnings - Previous Period Earnings) / Previous Period Earnings

Compound Annual Growth Rate (CAGR) = [(Ending Value/Beginning Value) ^ (1/Number of Years)] - 1

Customer Growth Rate = (Number of Customers at End of Period - Number of Customers at Start of Period) / Number of Customers at Start of Period

Net Profit Margin Growth = (Current Period Net Profit Margin - Previous Period Net Profit Margin) / Previous Period Net Profit Margin

Earnings Before Interest and Taxes (EBIT) Growth Rate = (Current Period EBIT - Previous Period EBIT) / Previous Period EBIT

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Growth Rate = (Current Period EBITDA - Previous Period EBITDA) / Previous Period EBITDA

Operating Income Growth Rate = (Current Period Operating Income - Previous Period Operating Income) / Previous Period Operating Income

Earnings Per Share (EPS) Growth Rate = (Current Period EPS - Previous Period EPS) / Previous Period EPS

Dividend Growth Rate = (Current Period Dividend - Previous Period Dividend) / Previous Period Dividend

Free Cash Flow Growth Rate = (Current Period Free Cash Flow - Previous Period Free Cash Flow) / Previous Period Free Cash Flow

Retained Earnings Growth Rate = (Current Period Retained Earnings - Previous Period Retained Earnings) / Previous Period Retained Earnings

Asset Growth Rate = (Total Assets at End of Period - Total Assets at Start of Period) / Total Assets at Start of Period

Equity Growth Rate = (Total Equity at End of Period - Total Equity at Start of Period) / Total Equity at Start of Period

Profitability Metrics

Gross Profit Margin = Gross Profit / Revenue * 100

Operating Profit Margin = Operating Profit / Revenue * 100

Net Profit Margin = Net Profit / Revenue * 100

Return on Assets (ROA) = Net Income / Average Total Assets

Return on Equity (ROE) = Net Income / Average Shareholder's Equity

Return on Investment (ROI) = (Gain from Investment - Cost of Investment) / Cost of Investment

Earnings Before Interest and Taxes (EBIT) Margin = EBIT / Revenue

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) Margin = EBITDA / Revenue

Operating Ratio = Operating Expenses / Revenue

Contribution Margin = (Sales - Variable Costs) / Sales

Price Earnings Ratio (P/E Ratio) = Market Price per Share / Earnings per Share

Earnings per Share (EPS) = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares

Cash Return on Assets (Cash ROA) = Cash Flow from Operations / Total Assets

Cash Return on Capital Invested (CROCI) = (Cash Flow from Operations - Depreciation) / (Total Assets - Current Liabilities)

Return on Sales (ROS) = Net Income / Sales

Return on Capital Employed (ROCE) = EBIT / (Total Assets - Current Liabilities)

Return on Invested Capital (ROIC) = (Net Income - Dividends) / (Debt + Equity)

Return on Research Capital (RORC) = (Gross Profit - R&D Expense) / R&D Expense

Asset Turnover Ratio = Sales / Average Total Assets

Equity Multiplier = Total Assets / Total Equity

Liquidity Metrics

Current Ratio = Current Assets / Current Liabilities

Quick Ratio (or Acid-Test Ratio) = (Current Assets - Inventory) / Current Liabilities

Cash Ratio = Cash and Cash Equivalents / Current Liabilities

Operating Cash Flow Ratio = Operating Cash Flow / Current Liabilities

Net Working Capital = Current Assets - Current Liabilities

Days Sales Outstanding (DSO) = (Accounts Receivable / Total Credit Sales) x Number of Days

Days Payable Outstanding (DPO) = (Accounts Payable / Cost of Goods Sold) x Number of Days

Days Inventory Outstanding (DIO) = (Average Inventory / Cost of Goods Sold) x Number of Days

Cash Conversion Cycle (CCC) = DSO + DIO - DPO

Solvency Metrics

Debt to Equity Ratio = Total Liabilities / Shareholder's Equity

Debt Ratio = Total Liabilities / Total Assets

Equity Ratio = Shareholder's Equity / Total Assets

Times Interest Earned Ratio (Interest Coverage Ratio) = Earnings Before Interest and Taxes (EBIT) / Interest Expense

Fixed Charge Coverage Ratio = (EBIT + Lease Payments) / (Interest Expense + Lease Payments)

Cash Flow to Debt Ratio = Operating Cash Flow / Total Debt

Efficiency Metrics

Inventory Turnover = Cost of Goods Sold / Average Inventory

Receivables Turnover = Net Credit Sales / Average Accounts Receivable

Payables Turnover = Cost of Goods Sold / Average Accounts Payable

Asset Turnover = Net Sales / Average Total Assets

Fixed Asset Turnover = Net Sales / Average Net Fixed Assets

Working Capital Turnover = Net Sales / Average Working Capital

Equity Turnover = Net Sales / Average Shareholders' Equity

Days Sales Outstanding (DSO) = (Average Accounts Receivable / Net Credit Sales) x Number of Days in Period

Days Inventory Outstanding (DIO) = (Average Inventory / Cost of Goods Sold) x Number of Days in Period

Days Payable Outstanding (DPO) = (Average Accounts Payable / Cost of Goods Sold) x Number of Days in Period

Cash Conversion Cycle (CCC) = DIO + DSO - DPO

Cost Metrics

Cost of Goods Sold (COGS) = Beginning Inventory + Purchases + Additional Costs - Ending Inventory

Total Cost = Fixed Costs + Variable Costs

Variable Cost = Variable Cost per Unit x Number of Units Produced

Fixed Cost: No specific formula as fixed costs remain constant regardless of the production volume.

Average Cost (or Average Total Cost) = Total Cost / Number of Units Produced

Marginal Cost = Change in Total Cost / Change in Quantity Produced

Direct Costs: These are costs that can be directly attributed to a product or service. Examples include raw materials and labor costs for production. The calculation would depend on the specific costs being considered.

Indirect Costs (or Overhead Costs) These are costs that are not directly tied to a specific product or service but are necessary for the business. Examples include rent, utilities, and salaries of non-production employees. The calculation would depend on the specific costs being considered.

Operating Costs (or Operating Expenses) = COGS + Operating Expenses (like rent, salaries, utilities, etc.)

Sunk Cost: A cost that has already been incurred and cannot be recovered. It's not calculated but rather recognized as a past expense.

Opportunity Cost: The value of the next best alternative that is forgone when a decision is made. It's a conceptual metric and doesn't have a standard formula, as it depends on the specific alternatives being considered.

Break-even Point (in units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Break-even Point (in sales) = Break-even Point (in units) x Selling Price per Unit

Valuation Metrics

Price-to-Earnings (P/E) Ratio = Market Price per Share / Earnings per Share (EPS)

Price-to-Sales (P/S) Ratio = Market Capitalization / Total Sales (or Revenue)

Price-to-Book (P/B) Ratio = Market Price per Share / Book Value per Share

Dividend Yield = Annual Dividends per Share / Market Price per Share

Enterprise Value (EV) = Market Capitalization + Total Debt - Cash and Cash Equivalents

EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization) = Enterprise Value / EBITDA

EV/Sales (Enterprise Value to Sales) = Enterprise Value / Total Sales (or Revenue)

EV/EBIT (Enterprise Value to Earnings Before Interest and Taxes) = Enterprise Value / EBIT

Price-to-Earnings Growth (PEG) Ratio = P/E Ratio / Annual EPS Growth Rate

Price-to-Free Cash Flow = Market Capitalization / Free Cash Flow

Price-to-Operating Cash Flow = Market Capitalization / Operating Cash Flow

Market Value to Replacement Cost (Tobin's Q) = (Market Value of Debt + Market Value of Equity) / (Replacement Cost of Total Assets)

Cash Flow Metrics

Operating Cash Flow (OCF) = Net Income + Non-Cash Expenses (like Depreciation and Amortization) - Changes in Working Capital

Free Cash Flow (FCF) = Operating Cash Flow - Capital Expenditures

Free Cash Flow to Equity (FCFE) = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment

Free Cash Flow to the Firm (FCFF) = EBIT x (1 - Tax Rate) + Depreciation & Amortization - Changes in Working Capital - Capital Expenditures

Cash Flow from Investing Activities: This is typically derived from the cash flow statement and includes cash inflows and outflows from investments like purchase or sale of long-term assets and other investments.

Cash Flow from Financing Activities: This is also derived from the cash flow statement and includes cash inflows and outflows from financing activities like issuing or buying back stock, borrowing, or repaying debt.

Net Change in Cash = (Cash Flow from Operating Activities) + (Cash Flow from Investing Activities) + (Cash Flow from Financing Activities)

Cash Flow Margin = Operating Cash Flow / Net Sales

Cash Flow Return on Investment (CFROI) = Cash Flow from Operations / (Total Assets - Current Liabilities)

Cash Flow per Share = Operating Cash Flow / Number of Shares Outstanding

Coverage Metrics

Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT) / Interest Expense

Debt Service Coverage Ratio (DSCR) = Net Operating Income / Total Debt Service

Fixed Charge Coverage Ratio = (EBIT + Lease Payments) / (Interest Expense + Lease Payments)

Cash Coverage Ratio = (EBIT + Depreciation) / Interest Expense

Asset Coverage Ratio = (Total Assets - Intangible Assets) / Total Debt

Times Interest Earned Ratio = EBIT / Interest Expense

Cash Flow to Debt Ratio = Operating Cash Flow / Total Debt

Employee Metrics

Employee Turnover Rate = (Number of employees who left during the period / Average number of employees during the period) x 100

Cost Per Hire = Total recruitment costs / Number of hires in a given period

Average Training Cost Per Employee = Total training costs / Number of employees trained

Revenue Per Employee = Total revenue / Average number of employees during the period

Profit Per Employee = Net profit / Average number of employees during the period

Overtime Expense = Number of overtime hours x Overtime hourly rate

Employee Productivity = Output or revenue produced / Number of employees

Compensation Ratio = Total compensation (salaries, benefits, bonuses) / Total revenue

Benefits Cost Per Employee = Total cost of employee benefits / Average number of employees during the period

Absenteeism Rate = (Number of days absent / (Number of employees x Number of workdays)) x 100

Utilization Rate (common in consulting or service industries) = (Billable hours / Total working hours) x 100

Employee Satisfaction Index = (Number of satisfied responses / Total number of responses) x 100

Employee Engagement Rate = (Number of engaged responses / Total number of responses) x 100

Customer Metrics

Customer Acquisition Cost (CAC) = Total cost spent on acquiring new customers / Number of customers acquired

Customer Lifetime Value (CLTV or LTV) = (Average purchase value x Average purchase frequency) x Average customer lifespan

Customer Retention Rate = (Number of customers at the end of the period - Number of new customers during the period) / Number of customers at the start of the period x 100%

Churn Rate (or Attrition Rate) = (Number of customers lost during the period / Number of customers at the start of the period) x 100%

Net Promoter Score (NPS) = % of Promoters - % of Detractors Note: Promoters are customers who rate the business 9 or 10 out of 10, and Detractors are those who rate it 0 to 6.

Average Revenue Per User (ARPU) = Total revenue / Number of users

Customer Profitability Score = Customer Profitability Score = Net profit from a customer / Total revenue from that customer x 100%

Customer Concentration = Customer Concentration = Revenue from a specific customer / Total revenue x 100%

Customer Equity = Sum of CLTV of all customers

Customer Payback Period = CAC / (Gross margin per customer x Monthly transactions per customer)

Customer Referral Rate = Number of new customers acquired through referrals / Total number of new customers x 100%

Customer Satisfaction Score (CSAT) = (Number of satisfied customers / Total number of survey respondents) x 100%

Project Metrics

Net Present Value (NPV) = Sum of (Cash inflow for period t / (1 + r)^t) - Initial Investment Where:

• t = time period (e.g., year 1, year 2, etc.)

• r = discount rate

Internal Rate of Return (IRR): The IRR is the discount rate (r) at which NPV = 0. It's typically solved using iterative methods or software, as it's not a straightforward formula.

Payback Period = Time taken for the cumulative cash inflows to equal the initial investment

Discounted Payback Period = Time taken for the cumulative discounted cash inflows to equal the initial investment

Profitability Index (PI) = Present Value of Future Cash Flows / Initial Investment

Return on Investment (ROI) = (Net Profit from the Project / Cost of the Project) x 100%

Benefit-Cost Ratio (BCR) = Total Expected Benefits / Total Expected Costs

Earnings Before Interest and Taxes (EBIT) = Revenue - Operating Expenses (excluding interest and taxes)

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) = Revenue - Operating Expenses (excluding interest, taxes, depreciation, and amortization)

Break-Even Point = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)

Sensitivity Analysis: This isn't a formula per se, but a method. It involves changing one variable at a time (e.g., discount rate, project costs, expected revenues) to see how sensitive the project's NPV or other metrics are to changes in that variable.

Scenario Analysis: Like sensitivity analysis, scenario analysis doesn't have a specific formula. It involves evaluating a project under different scenarios (e.g., best case, worst case, most likely case) to understand potential outcomes and risks.

Supply Chain Metrics

Inventory Turnover = Cost of Goods Sold / Average Inventory

Days Inventory Outstanding (DIO) = (Average Inventory / Cost of Goods Sold) x 365

Days Sales Outstanding (DSO) = (Accounts Receivable / Total Revenue) x 365

Days Payable Outstanding (DPO) = (Accounts Payable / Cost of Goods Sold) x 365

Cash Conversion Cycle (CCC) = DIO + DSO - DPO

Fill Rate = (Number of Orders Fulfilled / Total Number of Orders) x 100

Stockout Rate = (Number of Stockouts / Total Number of Orders) x 100

Order Lead Time = Date Goods Received - Date Order Placed

Inventory Carrying Cost = (Average Inventory Value x Carrying Cost Percentage) / Time Period

Return on Assets (ROA) for Supply Chain = Net Income / Average Total Assets

Supply Chain Operating Cost as a Percentage of Sales = (Total Supply Chain Costs / Total Sales) x 100

Perfect Order Rate = (Number of Perfect Orders / Total Number of Orders) x 100

Freight Cost as a Percentage of Sales = (Total Freight Costs / Total Sales) x 100

Average Inventory Level = (Beginning Inventory + Ending Inventory) / 2

Order Accuracy Rate = (Number of Accurate Orders / Total Number of Orders) x 100

Risk and Return Metrics

Expected Return Calculation: Sum of (Probability of each return * Corresponding return)

Variance = Sum of [Probability of each return * (Return - Expected Return)^2]

Standard Deviation (Volatility) = Square root of Variance

Beta (β) = Covariance(Return of the asset, Return of the market) / Variance(Return of the market)

Alpha (α) = Actual Return - [Risk-free rate + Beta * (Market Return - Risk-free rate)]

Sharpe Ratio = (Expected Return of the asset - Risk-free rate) / Standard Deviation of the asset's return

Sortino Ratio = (Expected Return of the asset - Risk-free rate) / Standard Deviation of the negative asset return

Treynor Ratio = (Expected Return of the asset - Risk-free rate) / Beta

R-squared (R^2) = Square of the correlation between the asset's returns and the market's returns

Information Ratio = (Return of the portfolio - Return of the benchmark) / Tracking Error

Tracking Error = Standard Deviation of (Portfolio returns - Benchmark returns)

Maximum Drawdown = Maximum peak-to-trough decline in the value of a portfolio or asset

Value at Risk (VaR) = Maximum potential loss at a given confidence level over a specific time horizon

Conditional Value at Risk (CVaR) or Expected Shortfall = Expected loss given that the loss is beyond the VaR level

Market Share Metrics

Market Share by Units = (Number of Units Sold by the Company / Total Units Sold in the Market) x 100%

Market Share by Revenue = (Company's Sales Revenue / Total Sales Revenue in the Market) x 100%

Relative Market Share = Company's Market Share / Largest Competitor's Market Share

Market Concentration = Sum of the Market Shares of the Top N Companies (often used for the top 3, 4, or 5 companies)

Market Share Growth = ((Market Share in Current Period - Market Share in Previous Period) / Market Share in Previous Period) x 100%

Gain or Loss in Market Share = Market Share in Current Period - Market Share in Previous Period

Share of Wallet = (Company's Sales to a Specific Customer / Total Expenditure by that Customer) x 100%

Share of Segment = (Company's Sales in a Specific Segment / Total Sales in that Segment) x 100%