Accounting Formulas

1. Simple Interest formula

I = P \cdot r \cdot t

2. Compound Interest formula:

A = P \left(1 + \frac{r}{n}\right)^{nt}

3. Present Value formula:

PV = \frac{FV}{(1 + r)^t}

4. Future Value formula:

FV = PV \cdot (1 + r)^t

5. Net Present Value formula:

NPV = \sum_{t=0}^{n} \frac{CF_t}{(1 + r)^t} where

NPV = Net Present Value
CF = Cash flow at time t
r = discount rate
n = number of cash flows

6. Internal Rate of Return Formula

The internal rate of return (IRR) is the annualized effective compounded return rate that can be earned on the invested capital, making the net present value (NPV) of all cash flows from a particular project equal to zero.

Variables:

- PV: Present Value of cash inflows
- FV: Future Value of cash outflows
- n: Number of periods
- C0: Initial Investment

IRR = \frac{PV - FV}{C0}

7. Return on Investment Formula

Return on Investment (ROI) is the ratio between the net profit and the cost of investment, representing the gain or loss on the investment relative to the amount invested.

Variables:

- Net Profit: Total revenue minus total expenses
- Cost of Investment: Initial amount invested

ROI = \frac{Net\ Profit}{Cost\ of\ Investment} \times 100\%

8. Earnings Per Share Formula

Earnings per Share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock, providing a useful indicator of a company's profitability.

Variables:

- Net Income: Total profits after deducting expenses and taxes
- Average Number of Shares Outstanding

EPS = \frac{Net\ Income}{Average\ Number\ of\ Shares\ Outstanding}

9. Price-to-Earnings Ratio Formula

Price-to-Earnings (P/E) Ratio is a valuation metric used to compare a company's current share price to its earnings per share, indicating the price investors are willing to pay for each dollar of earnings.

Variables:

- Share Price: Current market price of a share
- Earnings Per Share (EPS)

P/E\ Ratio = \frac{Share\ Price}{EPS}

10. Debt-to-Equity Ratio Formula

Debt-to-Equity Ratio is a financial ratio indicating the relative proportion of equity and debt used to finance a company's assets, measuring both the short-term and long-term financial health of the business.

Variables:

- Total Debt: Sum of all financial obligations
- Shareholder's Equity: Total company assets minus liabilities

Debt-to-Equity\ Ratio = \frac{Total\ Debt}{Shareholder's\ Equity}

11. Inventory Turnover Ratio Formula

Inventory Turnover Ratio measures the number of times a company sells and replaces its stock of goods during a certain period, providing insights into how efficiently a company manages its inventory.

Variables:

- Cost of Goods Sold: Cost of goods sold during the period
- Average Inventory: Average value of inventory in stock

Inventory\ Turnover\ Ratio = \frac{Cost\ of\ Goods\ Sold}{Average\ Inventory}