Current Ratio *
Current Assets
= Current Ratio
Current
Liabilities
*It's also good to try to maintain a current ratio greater than 1. A number greater than 1
indicates that, if you had to, you could sell some assets to pay off your debts.
Debt to Equity Ratio
Debt
= Debt to Equity Ratio
Equity
Debt Ratio
Debt
x 100 = Debt Ratio
Assets
Gross Profit Margin
Gross Profit per
Unit
x 100 = Gross Profit Margin
Retail Price
Markup Percentage
Markup
x 100 = Markup Percentage
Wholesale
Cost
Payback
Start Up Costs
x 12 =
Net Profit Per
Mr. G 1 Current Ratio * |
Number of months it will take to recoup
your investment
Year
Profit Margin
Profit
x 100 = Profit Margin
Sales
Quick Ratio (Analyze a business' liquidity, ability to convert its assets into cash) *
Cash + Marketable Securities
= Quick Ratio
Current Liabilities
*Quick ratio should always be greater than 1, this means that you have enough cash at
your disposal to cover all your current short-term debts.
Return On Investment (ROI)
Ending Wealth - Beginning
Wealth
x 100 = ROI (XX%)
Beginning Wealth
Return on Sales (ROS)
Net Profit
x 100 = ROS
Total
Sales
This figure tells investors how much profit your business is making on every dollar it
brings in.
Rule of 72- How many years it takes for money to double in value? *
72
= Number of years it will takes for money to double in value
ROI
* The ROI might be equal to the interest rate, if the money is being held in a bank.
Mr. G 2 Profit Margin |
Break-Even (in Units)
Monthly Fixed Cost
= Break-Even Units
Gross Profit per
Unit
C = Cost
P = Price
M# = Magic Number
P = C x M#
C= P
M#
M# = ROI + 1
P – C x 100
C
ROI =
Mr. G 3
|