Formula Sheet

RoE & Sustainable Growth

Profit or Loss Profit or Loss Total Assets Profit or Loss Revenue
RoE = = RoA × Equity Multiplier = × RoA = ×
Equity Total Assets Equity Revenue Total Assets
NOPAT + NIPAT Interest Expense After Tax
RoE = −
Equity Equity
 
NOPAT + NIPAT NOPAT + NIPAT Interest Expense After Tax Debt
= + − ×
Invested Capital Invested Capital Debt Equity
=RoIC + (RoIC − Interest Rate After Tax) × Financial Leverage = RoIC + Spread × Financial Leverage
NOPAT NIPAT
RoIC = +
Invested Capital Invested Capital
NOPAT Net Operating Assets NIPAT Non-Operating Investments
= × + ×
Net Operating Assets Invested Capital Non-Operating Investments Invested Capital
Net Operating Assets Non-Operating Investments
=RNOA × + Return on Non-Operating Investments ×
Invested Capital Invested Capital
NOPAT Revenue
RNOA = ×
Revenue Net Operating Assets
 
Cash Dividends paid
Sustainable Growth Rate = RoE × 1 − = RoE × (1 − Dividend Payout Ratio)
Profit or Loss

Operating/Investment/Financial Management
Revenue − Cost of Sales NOPAT EBITDA
Gross Profit Margin = NOPAT Margin = EBITDA Margin =
Revenue Revenue Revenue
OWC Revenue
OWC to Sales Ratio = OWC Turnover =
Revenue OWC
Revenue 360
Receivables Turnover = Days’ Receivables =
Receivables Receivables Turnover
Cost of Sales Cost of Material 360
Inventory Turnover = or Days’ Inventories =
Inventories Inventories Inventories Turnover
Purchases Cost of Sales Cost of Material 360
Payables Turnover = or or Days’ Payables =
Payables Payables Payables Payables Turnover
Cash Conversion Cycle =Days’ Inventories + Days’ Receivables − Days’ Payables
Revenue Revenue
Net Non-Current Operating Asset Turnover = Net PP&E Turnover =
Net Non-Current Operating Assets Net PP&E
Current Assets Cash + Receivables Cash
Current Ratio = Quick Ratio = Cash Ratio =
Current Liabilities Current Liabilities Current Liabilities
Operating CF Total Liabilities
Operating CF Ratio = Liabilities-to-Equity Ratio =
Current Liabilities Equity
Current & Non-Current Debt Current & Non-Current Debt
Debt-to-Equity Ratio = Debt-to-Capital Ratio =
Equity Current & Non-Current Debt + Equity
Profit or Loss + Interest Expenses + Tax Expenses Operating CF + Interest Paid + Taxes Paid
Interest Coverage = or
Interest Expenses Interest Paid
Profit or Loss + Interest & Lease Expenses × (1 − Tax Rate)
Debt Coverage =
Interest & Lease Expenses × (1 − Tax Rate) + Debt Repayments
Abbreviations
Operating Working Capital (OWC), Cash Flow (CF), Return on Equity (RoE), Return on Assets (RoA), Return on Invested
Capital (RoIC), Return on Net Operating Assets (RNOA), Net Operating Profit After Tax (NOPAT), Net Investment Profit
After Tax (NIPAT), Earnings Before Interest/Tax/Depreciation/Amortization (EBITDA), Plants/Property & Equipment
(PP&E)