Accounting Calculator
Calculate accounting ratios and equations.
Activity Ratios (Efficiency Ratios)
Name Equation Description
Asset Turnover Net Sales / Total Assets Shows relationship between revenue & assets.
Average Collection Period Accounts Receivable / (Annual Credit Sales / 365) The time it takes for receivables to be paid.
Cash Conversion Cycle Inventory Conversion Period + Receivables Conversion Period - Payables Conversion Period Length of time for investment to increase sales.
Inventory Conversion Period 365 / Inventory Turnover Ratio Measures time between purchasing inventory and selling it.
Inventory Conversion Ratio (Sales x 0.5) / Cost of Goods Sold Shows how much borrowing is available after inventory becomes a receivable.
Inventory Turnover Sales / Average Inventory How many times inventory is sold to customers and replaced by the company.
Payables Conversion Period (Accounts Payable / Purchases) x 365 Time it takes to pay accounts payable.
Receivables Conversion Period,
DSO Ratio
(Receivables / Net Sales) x 365 Time it takes to collect accounts receivable.
Receivables Turnover Ratio Net Credit Sales / Average Net Receivables Measures how effectively a company uses its assets.
Basic Equations
Name Equation Description
Assets Liabilites + Equity Anything of value owned by a company.
EBIT,
Earnings Before Interest and Taxes
Revenue - Operating Expenses Measures profit.
Equity Assets - Liabilites Measures a company's assets, after liabilities are paid.
Gross Profit Revenue - Cost of Goods Sold Measures profit after cost of goods sold are paid.
Liabilities Assets - Equity A financial obligation; money to be paid.
Net Profit,
Net Income,
Income
Gross Profit - Operating Expenses - Taxes - Interest Measure of profit after all associated costs are paid.
Operating Profit Gross Profit - Operating Expenses Profit earned from a company's main activities; does not include investments.
Sales,
Revenue,
Sales Revenue,
Net Sales
Gross Sales - Sales of Returns and Allowances Measures sales, before costs and taxes are accounted for.
Debt Ratios
Name Equation Description
Debt to Equity Ratio Total Liabilities / Shareholders Equity How much equity vs debt is being used to pay for assets.
Debt Ratio Total Liabilities / Total Assets Debt compared to assets.
Debt Service Coverage Ratio Net Operating Income / Total Debt Service Cash available to pay off debt.
Long-Term Debt to Equity Ratio Long-Term Liabilities / Equity Equity vs long-term debt.
Depreciation
Name Equation Description
Book Value Acquisition Cost - Depreciation The value of an asset on a company's balance sheet.
Declining Balance,
Reducing Balance
Depreciation Rate x Book Value at Beginning of Year Commonly used method of accelerated depreciation.
Straight-Line Method (Cost of Fixed Asset - Residual Value) / Useful Life of Asset (in years) Easiest and most common method of depreciation.
Units of Production [(Cost of Asset - Redidual Value) / Estimated Total Production] x Actual Production Depreciation measured by how many units are produced.
Liquidity Ratios
Name Equation Description
Acid Test Ratio,
Quick Ratio
(Current Assets - Inventories) / Current Liabilities A quick way to measure a company's liquidity.
Cash Ratio (Cash + Marketable Securities) / Current Liabilities Cash compared to liabilities.
Current Ratio,
Working Capital Ratio
Current Assets / Current Liabilities Measures ability to pay short-term liabilities.
Operating Cash Flow Ratio Operating Cash Flow / Total Debts Ability to pay liabilities with operating cash flow.
Market Ratios
Name Equation Description
Dividend Cover Earnings per Share / Dividends per Share Earnings compared to dividends.
Dividend Yield Annual Dividends per Share / Price per Share Dividends compared to market capitalization.
Dividends Per Share Dividends Paid / Number of Shares Amount of dividends for each share.
Earnings Per Share,
EPS
Net Earnings / Number of Shares Amount of earnings for each share.
Payout Ratio Dividends / Earnings Dividends per earnings.
PEG Ratio Price per Earnings / Annual EPS Growth Price of a stock compared to company growth.
Price / Sales Ratio Price per Share / Revenue per Share Comparing a stock to past performace and market.
Profibility Ratios
Name Equation Description
Efficiency Ratio Non-Interest Expense / Revenue Measures efficiency of asset & liability usage.
Gross Profit Margin,
Gross Margin Percentage,
Gross Profit Ratio,
Gross Profit Rate
Gross Profit / Revenue Percentage of revenue left after deducting costs.
Operating Margin,
Operating Income Margin,
Operating Profit Margin,
Return on Sales
Operating Income / Revenue Used to evaluate pricing.
Profit Margin,
Net Profit Margin,
Net Margin,
Net Profit Ratio
Net Profit / Revenue How much revenue is kept in profit.
Return on Assets Net Income / Total Assets Profit compared to assets.
Return on Capital EBIT(1 - Tax Rate) / Invested Capital Profit compared to capital.
Return on Equity Net Income / Average Shareholder Equity Profit compared to equity.
Return on Investment,
ROI
(Gain from Investment - Cost of Investment) / Cost of Investment Measures efficiency of an investment.
Return on Net Assets Net Income / (Fixed Assets + Working Capital) Income compared to net assets.
Risk-Adjusted Return on Capital Expected Return / Economic Capital ROI, adjusted for risk.