THE FINANCIAL ANALYSIS CHEAT SHEET
5 EBITDA RATIOS
EBITDA MARGIN
Formula: EBITDA / Revenue
How much Revenue was
turned to EBITDA?
INTEREST COVERAGE
Formula: EBITDA / Interest
How many times over can
EBITDA pay for Interest
Expense on debt obligations?
DEBT SERVICE COVERAGE
Formula: EBITDA / (Scheduled
Principal + Interest)
How many times over can
EBITDA pay for Interest
expense and scheduled debt
payments?
FIXED CHARGE COVERAGE
Formula: (EBITDA + Fixed
Charges - Cash Taxes -
Unfunded CAPEX -
Shareholder
Distributions)/(P+1+ Fixed
Charges)
How many times over can net
EBITDA pay for all fixed
payment obligations (rent,
debt, dividends)
FUNDED DEBT TO EBITDA
Formula: Total Funded Debt/
EBITDA
How many years will it take to
repay all outstanding
financed debt if 100% of
EBITDA went towards
principal payments
PROFITABILITY 5 CASH FLOW RATIOS
Gross Profit Margin = (Gross CASH FLOW MARGIN
Profit / Total Revenue)* 100% Cash Flow Margin = (Cash Flow from
Operating Profit Margin = Operations/Net Sales) x 100
(Operating Profit/Revenue)* 100%
FREE CASH FLOW MARGIN
Net Profit Margin = (Net Profit / Free Cash Flow Margin = (Free Cash
Total Revenue)* 100% Flow / Net Sales) x 100
Return on Assets = (Net Income / CASH FLOW COVERAGE RATIO
Total Assets) * 100%
Cash Flow Coverage Ratio = Cash
Return on Equity = (Net Income / Flow from Operations/ (Principal +
Interest)
Equity) * 100%
@wallstreetoasis
Return on Capital Employed = OPERATING CASH FLOW RATIO
Earnings before Interest and Operating Cash Flow Ratio = Cash
Tax/(Long Term Debt + Equity) Flow from Operations / Current
Liabilities
Return on Investment = (Net
Profit / Investment) * 100% CASH CONVERSION EFFICIENCY
(CCE)
Earnings per Share = Net Income / Cash Conversion Efficiency Ratio =
# of outstanding shares Net Sales / Average Working Capital
LIQUIDITY @wallstreetoasis
Current Ratio = Current Assets / Current Liabilities
Quick Ratio = (Current Assets - Inventory)/Current Liabilities
Net Profit Margin = (Net Profit / Total Revenue) * 100%
Days Sales Outstanding (DSO) = (Average Accounts Receivable / Total Credit
Sales) Number of Days in Period
Days Inventory Outstanding (DIO) = (Average Inventory/ Cost of Goods Sold)
Number of Days in Period
Days Payables Outstanding (DPO) = (Average Accounts Payable/Purchases)
Number of Days in Period
Cash Conversion Cycle (CCC) = Days of Sales Outstanding (DSO)+ Days of
Inventory Outstanding (DIO) - Days of Payables Outstanding (DPO)
Net Working Capital Ratio = (Current Assets - Current Liabilities)/Total Assets
SOLVENCY EFFICIENCY SENSITIVITY ANALYSIS @wallstreetoasis
Debt to Assets = Total Accounts Receivable
Debt / Total Assets Turnover = Net
Credit Sales / Average
Debt to Equity = Total Accounts Receivable
Debt / Total Equity
Inventory Turnover =
Debt Service Coverage Cost of Goods Sold /
Ratio = EBITDA / Average Inventory HORIZONTAL ANALYSIS/ INCOME
(Scheduled Principal +
STATEMENT TREND ANALYSIS
Interest Debt Accounts Payable
Payments) Turnover = Purchases
/ Average Accounts
Return on Capital Payable
Employed = EBIT/ (Long
Term Debt + Equity) Asset Turnover = Net
Sales / Average Total
Fixed Charge Coverage Assets
Ratio = (EBITDA + Fixed
Charges) / (Fixed Fixed Asset Turnover
VERTICAL ANALYSIS/ COMMOM SIZE
Charges + Scheduled = Net Sales / Average
Principal + Scheduled Net Fixed Assets INCOME STATEMENT
Interest)
Working Capital
Interest Coverage Ratio Turnover = Net Sales
= EBITDA / Interest / Average Working
Expenses Capital

Tangible Net Worth **Note that in all

Ratio = Total Liabilities/ applicable ratios,
(Total Equity- Intangible EBITDA can be
Assets - Prepaid Assets - replaced with EBIT or
Due from Related Operating Cash Flow
Parties) for a different
@wallstreetoasis

perspective which
Funded Debt to includes D&A
EBITDA = Total Interest expenses
Bearing Debt/EBITDA

THE FINANCIAL
ANALYSIS SCORE CARD