# Basic Finance Equations

 Return on Assets ROA=asset turnover X profit margin Return on Equity ROE=(assets/equity) X asset turnover X profit margin X debt burden Future Value FV=(1+r)^tt=years, r=interest rate Present Value PV=1/(1+r)^t Annuity PV PV= (1/r) – 1/r(1+r)^t Annuity FV FV=[(1+r)^t -1]/r Effective Annual Rate EAR=[1 + (APR/m)]^m – 1m=compounding periods per year Real Value of CF Real Value of CF at time t=nominal CF/(1+inflation rate)^t Real interest rate Real Interest Rate=[(1+nominal rate)/(1+inflation rate)]-1 ~~nominal rate-inflation rate Market Value Added =market value of equity-book value of equity Market-to-Book Ratio =market value of equity/book value of equity ROE ROE=NI/Equity ROA ROA=(NI+interest)/total assets Return on Capital ROC=(NI+interest)/(Long-term debt+ Equity) EVA EVANI-cost of equityXequity Operating Profit Margin OPM=(NI+interest)/sales Asset Turnover sales/total beginning assets Inventory Turnover CoGS/beginning inventory Long-term Debt Ratio LT debt/(LT debt +equity) Times interest earned EBIT/interest payments Cash Coverage Ratio (EBIT+depreciation)/interest payments Net Working Capital to Total Assets NWC/Total assets Current Ratio current assets/current liabilities Quick Ratio (cash+marketable securities+receivables)/current liabilities Payout Ratio dividends/earnings Sustainable Growth (1-Payback Ratio) x ROE
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