In our April 3, 2014, installment of Beyond Google – Marketing and Managing on the Web Webinar Series, hosted by Virginia SBDC brought Ray Sidney-Smith, President and Web & Mobile Strategist at W3 Consulting, on to show you some fundamentals about business financial intelligence, as well as how to manage your business finances using some amazing Web-based tools! Here are the Webinar Resources that go with this Webinar:

Business Accounting Formulas

  • Profitability Ratios:
    • Return on Assets (ROA) = (income statement) net income / (balance sheet) total assets (shown as a percentage)
    • Return on Equity (ROE) = (income statement) net income / (balance sheet) owner’s equity (shown as a percentage)
    • Return on Sales (ROS) (net profit margin) = (income statement) net income / (income statement) total revenue (shown as a percentage)
    • Gross Profit Margin = (income statement) gross profit / (income statement) gross revenue (shown as a percentage)
    • Earnings Before Interest & Taxes (EBIT) margin (operating margin) = (income statement) EBIT / (income statement) gross or total revenue (shown as a percentage)
  • Operating Ratios:
    • Asset Turnover = (income statement) total revenue / (balance sheet) total assets
    • Receivable Days (days sales outstanding (DSO)) = last day’s accounts receivable / revenue by day of period that just ended (there are many methods; this is just one common method)
    • Days Payable (days payable outstanding (DPO)) = accounts payable / (income statement) cost of goods sold per day
    • Days in Inventory (DII) (inventory days) = (balance sheet) average inventory / (income statement) cost of goods sold per day
  • Liquidity Ratios:
    • current ratio = total current assets / total current liabilities
    • quick ratio (acid test) = total current assets – inventory / total current liabilities
  • Leverage Ratios:
    • Interest Coverage = EBIT / interest expense
    • Debt to Equity = total current liabilities / total owner’s equity

Tools We Discussed

Articles and other presentations online about small business financial management:

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