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

## Current Ratio Formula

The current ratio is one of the liquidity ratios which measures a company’s ability to pay its short term liabilities with its assets. This is a good way to measure overall liquidity as short-term liabilities are due within the next year, giving the company only a short amount of time to raise … Read More about Current Ratio Formula

## Quick Ratio Formula

Quick ratio or acid test ratio is one of the liquidity ratios which measures a company’s ability to pay its short-term, current liabilities with its most liquid (or quick) assets. Quick assets are current assets which can be converted to cash quickly (within 90 days). Examples of quick assets … Read More about Quick Ratio Formula

## Weighted Average Formula

A weighted average is the average value of a set of numbers, with different levels of relevance. This relevance of each number is referred to as its weight, and is represented as a percentage of the total relevancy. All weights in a weighted average formula calculation should be equal to 100%, or … Read More about Weighted Average Formula

## Return on Equity Formula

What Is Return on Equity? Return on Equity (ROE) is a financial measure of profitability which illustrates how effectively a company manages Shareholders’ Equity and gets profit from it. By using Return on Equity investors can see if they’re getting a good return on their investments, while a … Read More about Return on Equity Formula