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Common Financial & Accounting Ratios & Formulas Cheat Sheet (DRAFT) by [deleted]

This is a draft cheat sheet. It is a work in progress and is not finished yet.


Accounting ratios are widely used tools of financial analysis. If properly analyzed, they help identify areas on the financial statement needing further analysis.

A ratio is a mathem­atical relation between two quantities expressed as a percen­tage, a rate or propor­tion.

Short Term Solvency or Liquidity Ratios

Current Ratio = Current Assets / Current Liabil­ities
Quick Ratio = (Current Assets – Inventory) / Current Liabil­ities
Cash Ratio = Cash / Current Liabil­ities
Net Working Capital = Net Working Capital / Total Assets
Internal Measure = Current Assets / Average Daily Operating Costs
Percentage of Debt to Asset Formula = Long Term Liabil­ities ⁄ Total Assets x 100%
Debt to Equity Ratio Formula = Total Liabil­ities ⁄ Total Equity

Long Term Solvency or Financial Leverage Ratios

Total Debt Ratio = (Total Assets – Total Equity) / Total Assets
Debt to Equity Ratio = Total Debt / Total Equity
Equity Multiplier = Total Assets / Total Equity
Long Term Debt Ratio = Long Term Debt / (Long Term Debt + Total Equity)
Times Interest Earned = Earnings before Interest & Taxes / Interest
Cash Coverage Ratio = (Earnings before Interest & Taxes + Deprec­iation) / Interest

Asset Use or Turnover Ratios

Inventory Turnover = Cost of Goods Sold / Inventory
Days’ Sales in Inventory = 365 days / Inventory Turnover
Receiv­ables Turnover = Sales / Accounts Receivable
Days’ Sales in Receiv­ables = 365 days / Receiv­ables Turnover
Net Working Capital (NWC) Turnover = Sales / Net Working Capital
Fixed Asset Turnover = Sales / Net Fixed Assets
Total Asset Turnover = Sales / Total Assets

Profit­ability Ratios

Profit Margin = Net Income / Sales
Return on Assets (ROA) = Net Income / Total Assets
Return on Equity (ROE) = Net Income / Total Equity
ROE = (Net Income / Sales) x (Sales / Assets) x (Assets / Equity)

Market Value Ratios

Price to Earnings Ratio = Price per Share / Earnings per Share
Market­-to­-Book Ratio = Market Value per Share / Book Value per Share

Cash Flow Ratios

Cash Flow Solvency Ratio Formula = Actual Cash Flow from Operations ⁄ Total Liabil­ities
Cash Flow Margin Ratio Formula = Actual Cash Flow from Operations ⁄ Revenues from Sales
Cash flow ROA Ratio Formula = Actual Cash Flow from Operations ⁄ Average Total Assets