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financial ratio formulas

Sandra  •  Messages: 1  •  Years on forum: 9.4 07:51 AM 05/08/2016
hello,
I really need to know what are the formulas of some statement and why we use them
1) Total revenue/sale
2) Inventory/sale
3) EBIT Growth
4) EBIT/equity
5) operating cash growth

Thank u
Best regards.

Jimmy White  •  Messages: 18  •  Years on forum: 11.3 03:50 PM 05/19/2016
Hellow Sandra,

1) This formula doesn't make a lot of sense, as revenues and sales are the same thing
2) This is inventory turnover, i.e. how many "turns" or home many times your inventory is sold out in a year. There is a similar number, but in days:

365*Sales/Inventory

To calculate it you take revenue (=sales) from an income statement and inventory from a balance sheet.

3) EBIT = Operating income, you take it from an income statement

EBIT growth = (EBIT (year 2) - EBIT (year 1)) / EBIT (year 1)

This is how fast an operating profit is growing

4) Equity - you take it from a balance sheet

This is ROE - or Return on Equity

4) probably you mean operating cash flow growth



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