Payback Period Formula

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 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