Master Financial Formulas: The Complete Guide

Access 45 essential financial formulas with detailed explanations, free calculators, and real-world applications. Used by 10,000+ finance professionals.

๐Ÿ”

Formula Categories

45 Formulas Found

๐Ÿ’ฐ

Compound Interest

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Calculate how your money grows over time with compound interest.

Formula:
A = P(1 + r/n)^(nt)
Variables:
  • AFuture value of investment/loan
  • PPrincipal investment amount
  • rAnnual interest rate (decimal)
  • nNumber of times interest compounds per year
  • tTime in years
๐Ÿฆ

Loan Payment (Amortization)

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Calculate monthly loan payments for any type of loan.

Formula:
PMT = P ร— [r(1+r)^n] / [(1+r)^n - 1]
Variables:
  • PMTMonthly payment
  • PPrincipal loan amount
  • rMonthly interest rate (annual rate รท 12)
  • nTotal number of payments
๐Ÿ“Š

Return on Investment (ROI)

๐Ÿ“ˆInvestment

Measure profitability of an investment relative to its cost.

Formula:
ROI = [(Gain - Cost) รท Cost] ร— 100%
Variables:
  • ROIReturn on Investment percentage
  • GainReturn from investment
  • CostCost of investment
๐Ÿ“ˆ

Net Present Value (NPV)

๐Ÿ“ˆInvestment

Determine present value of future cash flows.

Formula:
NPV = ฮฃ [CFโ‚œ รท (1 + r)^t] - Initial Investment
Variables:
  • NPVNet Present Value
  • CFโ‚œCash flow at time t
  • rDiscount rate
  • tTime period
โš–๏ธ

Break-even Point

๐Ÿ’ผBusiness

Find sales volume needed to cover all costs.

Formula:
Break-even Units = Fixed Costs รท (Price - Variable Cost)
Variables:
  • Fixed CostsCosts that dont change with production
  • PriceSelling price per unit
  • Variable CostCost per unit produced
๐Ÿ“‰

Profit Margin

๐Ÿ’ผBusiness

Calculate profitability as percentage of revenue.

Formula:
Profit Margin = (Net Profit รท Revenue) ร— 100%
Variables:
  • Net ProfitRevenue minus all expenses
  • RevenueTotal sales income
๐Ÿก

Mortgage Payment

๐Ÿ Real Estate

Calculate monthly mortgage payments.

Formula:
M = P ร— [r(1+r)^n] รท [(1+r)^n - 1]
Variables:
  • MMonthly mortgage payment
  • PPrincipal loan amount
  • rMonthly interest rate
  • nTotal number of payments
๐Ÿ’ฐ

Future Value of Annuity

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Calculate future value of regular deposits.

Formula:
FVA = PMT ร— [(1 + r)^n - 1] รท r
Variables:
  • FVAFuture Value of Annuity
  • PMTPeriodic payment amount
  • rInterest rate per period
  • nNumber of periods
๐Ÿ’ณ

Debt-to-Income Ratio

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Assess ability to manage monthly debt payments.

Formula:
DTI = (Total Monthly Debt รท Gross Monthly Income) ร— 100%
Variables:
  • DTIDebt-to-Income Ratio
  • Total Monthly DebtSum of all monthly debt payments
  • Gross Monthly IncomeMonthly income before taxes
๐ŸŽฏ

Customer Acquisition Cost

๐Ÿ’ผBusiness

Calculate cost to acquire a new customer.

Formula:
CAC = Total Marketing Costs รท Number of New Customers
Variables:
  • CACCustomer Acquisition Cost
  • Total Marketing CostsAll marketing and sales expenses
  • New CustomersCustomers acquired in period
๐Ÿ’ต

Gross Profit

๐Ÿ’ผBusiness

Calculate profit after cost of goods sold.

Formula:
Gross Profit = Revenue - Cost of Goods Sold
Variables:
  • RevenueTotal sales
  • COGSCost of Goods Sold
๐Ÿ“Š

EBITDA

๐Ÿ’ผBusiness

Earnings before interest, taxes, depreciation, amortization.

Formula:
EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization
Variables:
  • Net IncomeProfit after all expenses
  • InterestInterest expenses
  • TaxesTax expenses
  • DepreciationDepreciation expenses
  • AmortizationAmortization expenses
๐Ÿ’ผ

Working Capital

๐Ÿ’ผBusiness

Measure short-term financial health.

Formula:
Working Capital = Current Assets - Current Liabilities
Variables:
  • Current AssetsAssets convertible to cash within year
  • Current LiabilitiesDebts due within year
๐Ÿ“‹

Current Ratio

๐Ÿ’ผBusiness

Measure ability to pay short-term obligations.

Formula:
Current Ratio = Current Assets รท Current Liabilities
Variables:
  • Current AssetsAssets convertible to cash within year
  • Current LiabilitiesDebts due within year
โš–๏ธ

Debt-to-Equity Ratio

๐Ÿ’ผBusiness

Measure financial leverage.

Formula:
D/E = Total Liabilities รท Shareholders Equity
Variables:
  • Total LiabilitiesAll debts and obligations
  • Shareholders EquityAssets minus liabilities
๐Ÿฆ

Return on Equity

๐Ÿ“ˆInvestment

Measure profitability relative to equity.

Formula:
ROE = (Net Income รท Shareholders Equity) ร— 100%
Variables:
  • Net IncomeProfit after all expenses
  • Shareholders EquityAssets minus liabilities
๐Ÿ“‰

Weighted Average Cost of Capital

๐Ÿ“ˆInvestment

Calculate average cost of capital.

Formula:
WACC = (E/V ร— Re) + (D/V ร— Rd ร— (1 - Tc))
Variables:
  • EMarket value of equity
  • VTotal market value
  • ReCost of equity
  • DMarket value of debt
  • RdCost of debt
  • TcCorporate tax rate
๐Ÿ’น

Discounted Cash Flow

๐Ÿ“ˆInvestment

Value investment based on future cash flows.

Formula:
DCF = ฮฃ [CFโ‚œ รท (1 + r)^t]
Variables:
  • CFโ‚œCash flow at time t
  • rDiscount rate
  • tTime period
๐Ÿ“ฆ

Inventory Turnover

๐Ÿ’ผBusiness

Measure how quickly inventory sells.

Formula:
Turnover = Cost of Goods Sold รท Average Inventory
Variables:
  • COGSCost of Goods Sold
  • Average Inventory(Beginning + Ending Inventory) รท 2
๐Ÿ“ฌ

Accounts Receivable Turnover

๐Ÿ’ผBusiness

Measure collection efficiency.

Formula:
Turnover = Net Credit Sales รท Average Accounts Receivable
Variables:
  • Net Credit SalesSales on credit minus returns
  • Average AR(Beginning + Ending AR) รท 2
๐Ÿท๏ธ

Markup Calculation

๐Ÿ’ผBusiness

Calculate selling price based on cost and markup.

Formula:
Selling Price = Cost ร— (1 + Markup %)
Variables:
  • CostCost of product
  • Markup %Desired profit percentage
๐Ÿงพ

Tax Calculation

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Calculate income tax based on brackets.

Formula:
Tax = (Income - Deductions) ร— Tax Rate
Variables:
  • IncomeGross income
  • DeductionsAllowable deductions
  • Tax RateApplicable tax bracket rate
๐Ÿ 

Property Tax

๐Ÿ Real Estate

Calculate annual property tax.

Formula:
Property Tax = Assessed Value ร— Tax Rate
Variables:
  • Assessed ValueValue determined by assessor
  • Tax RateLocal property tax rate
๐Ÿ“ˆ

Capital Gains Tax

๐Ÿ“ˆInvestment

Calculate tax on investment profits.

Formula:
Capital Gains = Sale Price - Purchase Price - Costs
Variables:
  • Sale PricePrice asset sold for
  • Purchase PriceOriginal purchase price
  • CostsAssociated costs and fees
โš™๏ธ

Operating Leverage

๐Ÿ’ผBusiness

Measure sensitivity of operating income to sales.

Formula:
DOL = %ฮ” EBIT รท %ฮ” Sales
Variables:
  • DOLDegree of Operating Leverage
  • EBITEarnings Before Interest and Taxes
  • SalesRevenue
๐Ÿ’ธ

Free Cash Flow

๐Ÿ’ผBusiness

Calculate cash available for expansion, dividends.

Formula:
FCF = Operating Cash Flow - Capital Expenditures
Variables:
  • Operating Cash FlowCash from operations
  • Capital ExpendituresInvestments in fixed assets
๐Ÿ’ก

Economic Value Added

๐Ÿ’ผBusiness

Measure true economic profit.

Formula:
EVA = NOPAT - (WACC ร— Capital)
Variables:
  • NOPATNet Operating Profit After Tax
  • WACCWeighted Average Cost of Capital
  • CapitalTotal capital invested
โณ

Present Value

๐Ÿ“ˆInvestment

Calculate present value of future sum.

Formula:
PV = FV รท (1 + r)^n
Variables:
  • PVPresent Value
  • FVFuture Value
  • rDiscount rate
  • nNumber of periods
๐Ÿ“Š

Internal Rate of Return

๐Ÿ“ˆInvestment

Calculate rate that makes NPV zero.

Formula:
0 = ฮฃ [CFโ‚œ รท (1 + IRR)^t] - Initial Investment
Variables:
  • CFโ‚œCash flow at time t
  • IRRInternal Rate of Return
  • tTime period
โฑ๏ธ

Payback Period

๐Ÿ“ˆInvestment

Calculate time to recover investment.

Formula:
Payback Period = Initial Investment รท Annual Cash Flow
Variables:
  • Initial InvestmentTotal initial investment
  • Annual Cash FlowYearly cash inflow
๐Ÿข

Gross Rent Multiplier

๐Ÿ Real Estate

Measure property value relative to rent.

Formula:
GRM = Property Price รท Gross Annual Rent
Variables:
  • Property PricePurchase price
  • Gross Annual RentYearly rental income
๐Ÿ 

Cap Rate

๐Ÿ Real Estate

Calculate return on real estate investment.

Formula:
Cap Rate = NOI รท Property Value
Variables:
  • NOINet Operating Income
  • Property ValueCurrent market value
๐Ÿ’ฐ

Cash-on-Cash Return

๐Ÿ Real Estate

Measure return on cash invested.

Formula:
CoC = Annual Pre-tax Cash Flow รท Total Cash Invested
Variables:
  • Annual Pre-tax Cash FlowYearly cash flow before tax
  • Total Cash InvestedInitial cash investment
๐Ÿฆ

Loan-to-Value Ratio

๐Ÿ Real Estate

Measure loan amount relative to property value.

Formula:
LTV = Loan Amount รท Property Value
Variables:
  • Loan AmountMortgage amount
  • Property ValueAppraised property value
๐Ÿ“‹

Debt Service Coverage Ratio

๐Ÿ’ผBusiness

Measure ability to service debt.

Formula:
DSCR = NOI รท Total Debt Service
Variables:
  • NOINet Operating Income
  • Total Debt ServiceTotal debt payments
โšก

Quick Ratio

๐Ÿ’ผBusiness

Measure immediate liquidity.

Formula:
Quick Ratio = (Current Assets - Inventory) รท Current Liabilities
Variables:
  • Current AssetsAssets convertible to cash within year
  • InventoryValue of inventory
  • Current LiabilitiesDebts due within year
๐Ÿ”„

Asset Turnover

๐Ÿ’ผBusiness

Measure efficiency in using assets.

Formula:
Asset Turnover = Revenue รท Total Assets
Variables:
  • RevenueTotal sales
  • Total AssetsAverage total assets
๐Ÿ“Š

Earnings Per Share

๐Ÿ“ˆInvestment

Calculate profit per share.

Formula:
EPS = (Net Income - Preferred Dividends) รท Outstanding Shares
Variables:
  • Net IncomeTotal profit
  • Preferred DividendsDividends to preferred shareholders
  • Outstanding SharesNumber of common shares
๐Ÿ’น

Price-to-Earnings Ratio

๐Ÿ“ˆInvestment

Measure stock valuation.

Formula:
P/E = Stock Price รท EPS
Variables:
  • Stock PriceCurrent market price per share
  • EPSEarnings Per Share
๐Ÿ“ˆ

Dividend Yield

๐Ÿ“ˆInvestment

Calculate dividend return.

Formula:
Dividend Yield = Annual Dividend รท Stock Price
Variables:
  • Annual DividendYearly dividend per share
  • Stock PriceCurrent market price
๐Ÿ’Ž

Millionaire Calculator

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Calculate how long it takes to become a millionaire with your current savings and investments.

Formula:
Years = [ln(Million) - ln(Principal)] รท [ln(1 + Annual Return)]
Variables:
  • YearsTime needed to reach $1 million
  • PrincipalInitial investment amount
  • Annual ReturnExpected annual return rate
  • Monthly ContributionsRegular monthly investments
๐Ÿ–๏ธ

Early Retirement Calculator

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Calculate how much you need to save to retire early based on your desired lifestyle.

Formula:
Retirement Savings = Annual Expenses ร— 25 (4% Rule)
Variables:
  • Retirement SavingsTotal needed for retirement
  • Annual ExpensesYearly living expenses in retirement
  • Safe Withdrawal RatePercentage you can withdraw annually (typically 4%)
  • Years to RetirementTime until planned retirement
๐Ÿ“‰

Inflation-Adjusted Calculator

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Calculate the real value of money over time accounting for inflation.

Formula:
Future Value = Present Value ร— (1 + Inflation Rate)^Years
Variables:
  • Future ValueAmount needed in future to equal todays value
  • Present ValueCurrent amount of money
  • Inflation RateAnnual inflation rate
  • YearsNumber of years into the future
๐Ÿข

Rent Increase Calculator

๐Ÿ Real Estate

Calculate future rent costs and total payments with annual increases.

Formula:
Future Rent = Current Rent ร— (1 + Annual Increase)^Years
Variables:
  • Future RentMonthly rent after specified years
  • Current RentCurrent monthly rent
  • Annual IncreaseYearly rent increase percentage
  • YearsNumber of years
๐Ÿ“ฑ

Subscription Cost Calculator

๐Ÿ‘จโ€๐Ÿ‘ฉโ€๐Ÿ‘งโ€๐Ÿ‘ฆPersonal Finance

Calculate total annual and lifetime costs of your subscriptions.

Formula:
Annual Cost = ฮฃ(Monthly Subscription ร— 12)
Variables:
  • Annual CostTotal yearly subscription expenses
  • Monthly SubscriptionCost of each monthly service
  • Number of ServicesTotal subscription services
  • YearsDuration of subscriptions
๐Ÿ“š

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Why Master Financial Formulas?

๐ŸŽฏ

Make Better Decisions

Quantify risks and returns to make informed financial choices with confidence.

๐Ÿ“ˆ

Improve Analysis

Understand the numbers behind business performance and investment opportunities.

๐Ÿ’ผ

Advance Your Career

Master financial analysis skills valued by employers across all industries.

๐Ÿ’ฐ

Increase Wealth

Apply formulas to optimize investments, reduce debt, and grow your net worth.