Formulas

Finance & Accounting

Profitability Ratios

Gross Profit Margin
GPM = (Revenue – COGS) / Revenue
GPM Gross Profit Margin
Revenue Total Income from Sales
COGS Cost of Goods Sold

Net Profit Margin
NPM = Net Profit / Revenue
NPM Net Profit Margin
Net Profit Revenue minus All Expenses

Operating Profit Margin
OPM = Operating Income / Revenue
OPM Operating Profit Margin
Operating Income Profit from Core Operations
Revenue Total Income from Sales

Return on Investment
ROI = (Net Profit / Cost of Investment) x 100
ROI Return on Investment
Net Profit Profit from the Investment
Cost of Investment Total Amount Invested

Return on Equity
ROE = Net Income / Shareholder Equity
ROE Return on Equity
Net Income Total Profit
Shareholder Equity Assets minus Liabilities

Return on Assets
ROA = Net Income / Total Assets
ROA Return on Assets
Net Income Total Profit
Total Assets Everything the Company Owns

Return on Capital Employed
ROCE = EBIT / Capital Employed
ROCE Return on Capital Employed
EBIT Earnings Before Interest and Taxes
Capital Employed Total Assets minus Current Liabilities

Liquidity Ratios

Current Ratio
Current Ratio = Current Assets / Current Liabilities
Current Assets Assets Convertible to Cash within One Year
Current Liabilities Debts Due within One Year

Quick Ratio
Quick Ratio = (Current Assets – Inventory) / Current Liabilities
Current Assets Assets Convertible to Cash within One Year
Inventory Value of Stock on Hand
Current Liabilities Debts Due within One Year

Cash Ratio
Cash Ratio = Cash and Cash Equivalents / Current Liabilities
Cash and Cash Equivalents Liquid Assets
Current Liabilities Debts Due within One Year

Leverage Ratios

Debt to Equity Ratio
D/E = Total Liabilities / Shareholder Equity
D/E Debt to Equity Ratio
Total Liabilities All Debts and Obligations
Shareholder Equity Assets minus Liabilities

Debt to Asset Ratio
D/A = Total Liabilities / Total Assets
D/A Debt to Asset Ratio
Total Liabilities All Debts and Obligations
Total Assets Everything the Company Owns

Interest Coverage Ratio
ICR = EBIT / Interest Expense
ICR Interest Coverage Ratio
EBIT Earnings Before Interest and Taxes
Interest Expense Cost of Debt Servicing

Valuation

Simple Compound Annual Growth Rate
CAGR = (Ending Value / Beginning Value)^(1 / n) – 1
CAGR Compound Annual Growth Rate
Ending Value Value at the End of the Period
Beginning Value Value at the Start of the Period
n Number of Years

Net Present Value
NPV = Σ [CFt / (1 + r)^t] – Initial Investment
NPV Net Present Value
CFt Net Cash Inflow during Period t
r Discount Rate
t Number of Time Periods

Internal Rate of Return
NPV = 0 = Σ [CFt / (1 + IRR)^t] – Initial Investment
NPV Net Present Value
CFt Net Cash Inflow during Period t
IRR Internal Rate of Return
t Number of Time Periods

Earnings Per Share
EPS = Net Income / Weighted Average Shares Outstanding
EPS Earnings Per Share
Net Income Total Profit
Weighted Average Shares Outstanding Average Shares during Period

Price to Earnings Ratio
P/E = Market Value per Share / Earnings per Share
P/E Price to Earnings Ratio
Market Value per Share Current Stock Price
Earnings per Share Profit Allocated per Share

Operating Metrics

Burn Rate
Burn Rate = Cash Balance at Start of Period – Cash Balance at End of Period
Cash Balance at Start of Period Cash on Hand at the Beginning
Cash Balance at End of Period Cash on Hand at the End

Operating Cash Flow
OCF = Net Income + Non Cash Expenses – Change in Working Capital
OCF Operating Cash Flow
Net Income Total Profit
Non Cash Expenses Expenses like Depreciation
Change in Working Capital Change in Current Assets and Liabilities

Free Cash Flow
FCF = Operating Cash Flow – Capital Expenditures
FCF Free Cash Flow
Operating Cash Flow Cash from Core Operations
Capital Expenditures Cash Spent on Assets

Marketing & Sales

Customer Acquisition & Value

Customer Acquisition Cost
CAC = Total Marketing and Sales Spend / Number of New Customers Acquired
CAC Customer Acquisition Cost
Total Marketing and Sales Spend All Expenses to Acquire Customers
Number of New Customers Acquired Total New Customers in a Period

Customer Lifetime Value
LTV = Average Purchase Value x Purchase Frequency x Customer Lifespan
LTV Lifetime Value
Average Purchase Value Average Revenue per Transaction
Purchase Frequency Number of Transactions per Customer per Period
Customer Lifespan Average Length of a Customer Relationship

LTV to CAC Ratio
LTV:CAC = LTV / CAC
LTV Customer Lifetime Value
CAC Customer Acquisition Cost

Time to Payback CAC
Time to Payback = CAC / (Average Revenue per Account x Gross Margin)
CAC Customer Acquisition Cost
Average Revenue per Account Average Revenue per Customer
Gross Margin Revenue minus COGS

Conversion & Engagement

Conversion Rate
Conversion Rate = (Number of Conversions / Total Number of Visitors) x 100
Number of Conversions Desired Actions Completed
Total Number of Visitors Total Audience Reached

Lead to Customer Conversion Rate
Conversion Rate = (Number of New Customers / Number of Leads) x 100
Number of New Customers Leads that Become Customers
Number of Leads Potential Customers Identified

Churn Rate
Churn Rate = (Customers at Start of Period – Customers at End of Period) / Customers at Start of Period
Customers at Start of Period Total Customers at the Beginning
Customers at End of Period Total Customers at the End

Net Promoter Score
NPS = % Promoters – % Detractors
NPS Net Promoter Score
% Promoters Percentage of Customers Rating 9 or 10
% Detractors Percentage of Customers Rating 0 to 6

Marketing Effectiveness

Marketing ROI
MROI = (Revenue from Marketing – Marketing Investment) / Marketing Investment
MROI Marketing Return on Investment
Revenue from Marketing Income Attributable to Marketing Efforts
Marketing Investment Total Cost of Marketing Campaign

Click Through Rate
CTR = (Clicks / Impressions) x 100
CTR Click Through Rate
Clicks Number of Times an Ad was Clicked
Impressions Number of Times an Ad was Shown

Cost Per Click
CPC = Total Ad Spend / Total Measured Clicks
CPC Cost Per Click
Total Ad Spend Amount Spent on Advertising
Total Measured Clicks Number of Clicks Generated

Cost Per Acquisition
CPA = Total Campaign Cost / Number of Acquisitions
CPA Cost Per Acquisition
Total Campaign Cost Total Spend on a Campaign
Number of Acquisitions Number of Conversions Generated

Return on Ad Spend
ROAS = Revenue from Ad Campaign / Cost of Ad Campaign
ROAS Return on Ad Spend
Revenue from Ad Campaign Income from the Campaign
Cost of Ad Campaign Amount Spent on the Campaign

Sales Performance

Sales Growth Rate
Sales Growth = (Current Period Sales – Prior Period Sales) / Prior Period Sales
Current Period Sales Revenue in Current Period
Prior Period Sales Revenue in Previous Period

Average Selling Price
ASP = Total Revenue / Number of Units Sold
ASP Average Selling Price
Total Revenue Income from Sales
Number of Units Sold Total Quantity Sold

Sales Target Achievement
Achievement % = (Actual Sales / Sales Target) x 100
Actual Sales Revenue Achieved
Sales Target Revenue Goal

Sales per Square Foot
Sales per Sq Ft = Total Net Sales / Total Square Footage
Total Net Sales Total Revenue
Total Square Footage Total Area of Selling Space

Economics & Strategy

Pricing

Price Elasticity of Demand
PED = (% Change in Quantity Demanded) / (% Change in Price)
PED Price Elasticity of Demand
% Change in Quantity Demanded Percentage Change in Units Sold
% Change in Price Percentage Change in Selling Price

Break Even Point in Units
Break Even Units = Fixed Costs / (Sales Price per Unit – Variable Cost per Unit)
Fixed Costs Costs that Do Not Change with Volume
Sales Price per Unit Selling Price per Item
Variable Cost per Unit Cost to Produce One Additional Unit

Break Even Point in Dollars
Break Even Dollars = Fixed Costs / Contribution Margin Ratio
Fixed Costs Costs that Do Not Change with Volume
Contribution Margin Ratio Contribution Margin per Unit divided by Sales Price

Contribution Margin
Contribution Margin = Sales Price per Unit – Variable Cost per Unit
Sales Price per Unit Selling Price per Item
Variable Cost per Unit Cost to Produce One Additional Unit

Markup Percentage
Markup % = (Selling Price – Cost) / Cost
Selling Price Price Charged to Customer
Cost Cost to Acquire or Produce

Gross Margin
Gross Margin = (Revenue – COGS) / Revenue
Revenue Total Income from Sales
COGS Cost of Goods Sold

Market Analysis

Market Share
Market Share = (Company Sales / Total Market Sales) x 100
Company Sales Revenue of the Company
Total Market Sales Total Revenue of All Companies in the Market

Market Penetration
Market Penetration = (Customers / Total Addressable Market) x 100
Customers Number of Current Customers
Total Addressable Market Total Potential Customers

Operations & Logistics

Efficiency & Productivity

Inventory Turnover Ratio
ITR = Cost of Goods Sold / Average Inventory
ITR Inventory Turnover Ratio
Cost of Goods Sold Cost to Produce Goods Sold in a Period
Average Inventory (Beginning Inventory + Ending Inventory) / 2

Days Sales of Inventory
DSI = (Average Inventory / COGS) x 365
DSI Days Sales of Inventory
Average Inventory Average Stock on Hand
COGS Cost of Goods Sold

Employee Productivity
Productivity = Output / Input
Output Goods or Services Produced
Input Labor Hours Worked

Capacity Utilization
Capacity Utilization = (Actual Output / Maximum Possible Output) x 100
Actual Output Current Production Level
Maximum Possible Output Highest Sustainable Production Level

Order Fulfillment Cycle Time
Cycle Time = Order Delivery Date – Order Received Date
Order Delivery Date Date Customer Receives Order
Order Received Date Date Company Receives Order

Supply Chain

Economic Order Quantity
EOQ = √ [ (2 x D x S) / H ]
EOQ Economic Order Quantity
D Annual Demand in Units
S Ordering Cost per Order
H Holding Cost per Unit per Year

Reorder Point
ROP = Lead Time Demand + Safety Stock
ROP Reorder Point
Lead Time Demand Average Daily Usage x Lead Time
Safety Stock Extra Stock for Uncertainty

Human Resources

Employee Metrics

Employee Turnover Rate
Turnover Rate = (Number of Separations / Average Number of Employees) x 100
Number of Separations Employees who Left the Company
Average Number of Employees (Employees at Start + Employees at End) / 2

Revenue Per Employee
RPE = Total Revenue / Total Number of Employees
RPE Revenue Per Employee
Total Revenue Company Income
Total Number of Employees Average Full Time Staff

Profit Per Employee
PPE = Net Profit / Total Number of Employees
PPE Profit Per Employee
Net Profit Company Profit
Total Number of Employees Average Full Time Staff

Employee Absenteeism Rate
Absenteeism Rate = (Number of Days Absent / Total Workdays) x 100
Number of Days Absent Total Days Employees were Absent
Total Workdays Total Possible Work Days in Period

Cost Per Hire
CPH = (Internal Recruiting Costs + External Recruiting Costs) / Total Hires
Internal Recruiting Costs Costs of Internal HR Team
External Recruiting Costs Costs of Agencies and Advertising
Total Hires Number of People Hired

Training ROI
Training ROI = (Benefits – Costs) / Costs
Benefits Monetary Value of Training Benefits
Costs Total Cost of Training Program

e Commerce

Online Metrics

Shopping Cart Abandonment Rate
Abandonment Rate = (Number of Completed Purchases / Number of Shopping Carts Created) x 100
Number of Completed Purchases Successful Transactions
Number of Shopping Carts Created Carts Started by Customers

Bounce Rate
Bounce Rate = (Total Number of Bounces / Total Number of Visits) x 100
Total Number of Bounces Single Page Visits
Total Number of Visits Total Sessions on Website

Average Order Value
AOV = Total Revenue / Number of Orders
AOV Average Order Value
Total Revenue Income from Sales
Number of Orders Total Transactions

Customer Retention Rate
Retention Rate = ((CE – CN) / CS)) x 100
CE Customers at End of Period
CN New Customers Acquired during Period
CS Customers at Start of Period

Real Estate

Property Metrics

Capitalization Rate
Cap Rate = Net Operating Income / Current Market Value
Cap Rate Capitalization Rate
Net Operating Income Annual Income minus Operating Expenses
Current Market Value Purchase Price or Appraised Value

Cash on Cash Return
CoC Return = Annual Pre Tax Cash Flow / Total Cash Invested
Annual Pre Tax Cash Flow Net Income from Property
Total Cash Invested Down Payment and Closing Costs

Loan to Value Ratio
LTV = Mortgage Amount / Appraised Property Value
LTV Loan to Value Ratio
Mortgage Amount Amount of the Loan
Appraised Property Value Value of the Property

Debt Service Coverage Ratio
DSCR = Net Operating Income / Total Debt Service
DSCR Debt Service Coverage Ratio
Net Operating Income Income from Property
Total Debt Service Annual Mortgage Payments

Gross Rent Multiplier
GRM = Property Price / Gross Annual Rental Income
GRM Gross Rent Multiplier
Property Price Purchase Price
Gross Annual Rental Income Total Rent before Expenses

General Business

Fundamental Calculations

Net Income
Net Income = Total Revenue – Total Expenses
Total Revenue All Income
Total Expenses All Costs

Gross Profit
Gross Profit = Revenue – Cost of Goods Sold
Revenue Total Income from Sales
Cost of Goods Sold Direct Costs of Production

Operating Income
Operating Income = Gross Profit – Operating Expenses
Gross Profit Revenue minus COGS
Operating Expenses Costs of Running the Business

Working Capital
Working Capital = Current Assets – Current Liabilities
Current Assets Short Term Assets
Current Liabilities Short Term Debts

EBITDA
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
Net Income Total Profit
Interest Interest Expenses
Taxes Tax Expenses
Depreciation Non Cash Expense for Assets
Amortization Non Cash Expense for Intangibles

Project Management

Performance Metrics

Estimate at Completion
EAC = Budget at Completion / Cost Performance Index
EAC Estimate at Completion
Budget at Completion Original Project Budget
Cost Performance Index CPI

Cost Variance
CV = Earned Value – Actual Cost
CV Cost Variance
Earned Value Value of Work Completed
Actual Cost Cost Incurred for Work Completed

Schedule Variance
SV = Earned Value – Planned Value
SV Schedule Variance
Earned Value Value of Work Completed
Planned Value Value of Work Planned

Cost Performance Index
CPI = Earned Value / Actual Cost
CPI Cost Performance Index
Earned Value Value of Work Completed
Actual Cost Cost Incurred for Work Completed

Schedule Performance Index
SPI = Earned Value / Planned Value
SPI Schedule Performance Index
Earned Value Value of Work Completed
Planned Value Value of Work Planned