The payback period formula is one of the methods used to analyse investment projects. It’s time that needed to reach a break-even point, i.e. a period of time in which the cost of investment is expected to be covered with cash flows from this investment. Payback period (PP) is not used to … Read More about Payback Period Formula

## Days in Inventory Formula

The days in inventory formula calculates the ratio that is used to measure how fast a company transforms its inventory into sales. In other words, it’s a number of days that is needed for inventory to transform into cash. Days in inventory or inventory days of supply measures how many times a … Read More about Days in Inventory Formula

## Net Profit Margin Formula

The net profit margin formula (or profitability of sales) is a ratio that describes how much profit a company gets from its total revenue. It is a percentage of sales that is left after subtracting all operating expenses, taxes, interest and preferred stock dividends. Net profit margin is a … Read More about Net Profit Margin Formula

## Net Working Capital Formula

The formula for net working capital (NWC) calculates the amount of money that is left after a company pays its short-term liabilities with its current assets. In other words, it is a difference between a company’s current assets and its current liabilities. It’s used to find out if a company has … Read More about Net Working Capital Formula

## Return on Assets Formula

The return on assets formula calculates the net earnings generated by total assets during a period of time. Also known as ROA, this financial ratio shows how effectively a company uses its assets to generate money. It tells an investor or a manager how much after-tax profit each dollar of assets … Read More about Return on Assets Formula

## Debt Coverage Ratio Formula

The debt coverage formula ratio describes a company’s ability to generate enough net operating income to cover the expense of debt. The higher the ratio, the easier is to service the debt. Debt coverage ratio can be used to analyse companies, projects, or individual borrowers. How to calculate … Read More about Debt Coverage Ratio Formula

## Debt to Equity Ratio Formula

The debt to equity ratio formula compares a company’s total debt to total equity. In other words, it shows a relation between a percentage of company’s assets financed by creditors and percentage of assets financed by investors. This ratio informs about the level of indebtedness of the company's … Read More about Debt to Equity Ratio Formula

## Return on Investment Formula

Return on investment (ROI) is a financial ratio between net profit and cost of investment that describes the efficiency of an investment. As a simple method, ROI is mainly used at the initial stage of analysing the profitability of a project. It is used to compare company’s profitability and to … Read More about Return on Investment Formula

## Debt Ratio Formula

Debt ratio is a financial ratio representing the ratio of external financing (total liabilities and provisions) to total assets and is used in the analysis of the capital structure. It determines the extent to which the company is funded by external financing and to which by its own capital. This … Read More about Debt Ratio Formula

## Net Present Value Formula

Net Present Value (NPV) is a method of evaluation of economical effectiveness of investment. NPV is used to calculate the difference between the value of all present and future cash flows discounted to the present, both negative and positive, over the whole life of the investment. The NPV … Read More about Net Present Value Formula