The yield to maturity formula, also known as book yield or redemption yield, is used in finance to calculate the yield of a bond at the current market price. It is calculated to compare the attractiveness of investing in a bond with other investment opportunities. YTM (Yield to Maturity) is the annual income level or […]

## Debt Ratio Formula

Debt ratio is a financial ratio representing the ratio of external financing (total liabilities and provisions) to total assets and is used in the analysis of the capital structure. It determines the extent to which the company is funded by external financing and to which by its own capital. This financial indicator is very often […]

## Annual Percentage Yield Formula

APY (Annual Percentage Yield) is a compound interest rate owned on a deposit over one year. It accounts the interest earned on principal as well as interest earned on other earnings and is referenced as the effective annual rate in finance. Annual Percentage Yield assumes that all the funds will remain in the investment and […]

## Present Value of Annuity Due Formula

The Present Value of Annuity Due formula is used to calculate the present value of a series of cash flows, or periodic payments, that are generated by an investment in the future. These payments are expected to be made on predetermined future dates and in predetermined amounts. Present Value of Annuity is based on Time […]

## Future Value of Annuity Formula

The future value of annuity formula is used to calculate the value of a series of periodic payments at a future date. This can be useful in determining how much you would have in future if you know how much you’re able to invest per period. It can also be helpful to compute the total […]

## Net Present Value Formula

Net Present Value (NPV) is a method of evaluation of economical effectiveness of investment. NPV is used to calculate the difference between the value of all present and future cash flows discounted to the present, both negative and positive, over the whole life of the investment. The NPV illustrates an important concept – that money […]

## Current Ratio Formula

The current ratio is one of the liquidity ratios which measures a company’s ability to pay its short term liabilities with its assets. This is a good way to measure overall liquidity as short-term liabilities are due within the next year, giving the company only a short amount of time to raise funds to pay […]

## Quick Ratio Formula

Quick ratio or acid test ratio is one of the liquidity ratios which measures a company’s ability to pay its short-term, current liabilities with its most liquid (or quick) assets. Quick assets are current assets which can be converted to cash quickly (within 90 days). Examples of quick assets include cash equivalents like treasury bills […]

## Annuity Payment Formula

The annuity payment formula is used to calculate the regular payment on an annuity – a series of payments received at a future date. This is the exact same formula used in loan payments. Where P = the payment, PV = the present value, r = the rate per loan period, and n = the […]

## Loan Payment Formula

A loan payment is required monthly payment for a loan. By definition, loan is the amount of money (or sometimes other goods) given to a borrower in exchange for consistent future payments, which usually consist of principal (original sum of borrowed money), interest and sometimes other additional fees and charges. Therefore, the loan payment can […]