Accounting Formulas

The table below contains major accounting formulas used for various computations, such as financial ratios and other measurements. In accounting, these formulas will be used in many instances for identifying certain financial characteristics and ratios of a company.

When reviewing the table please note that:

Measurement stands for what the formula or the ratio is looking for. In other words, it is the name of the formula.

Method stands for the actual formula or the ratio.

Purpose defines why and when the formula or the ratio is used.

You can download the PDF format of this table.

Measurement	Method
Current Ratio
Quick Ratio
Working Capital
Net Cash Provided by Operating Activities	After all adjustments to net income are accounted for, what's left over is the Net Cash Provided by Operating Activities, also known as Operating Cash Flow. This number is not a replacement for net income, but it does provide a great summary of how much cash a company's core business has generated.
Cash Flow from Operations to Current Liabilities
Receivables Turnover Rate
Days to Collect Average Accounts Receivable
Inventory Turnover Rate
Days to Sell the Average Inventory
Operating Cycles
Free Cash Flow	Net Cash from Operating Activities - Cash Used for Investing Activities & Dividends
Debt Ratio
Trend in Net Cash Provided by Operating Activities	Appears in comparative statements of cash flows
Interest Coverage Ratio
Percentage Changes; that is, in nest sales and net income
Gross Profit Rate
Operating Expense Ratio
Operating Income
Net Income as a Percentage of Net Sales
Earnings Per Share
Return on Equity
Return on Assets
Return on Common Stockholders’ Equity
Market Value of Financial Instruments	Quoted in financial press or disclosed in financial statements
Price-earnings Ratio
Dividend Yield
Book Value Per Share