Inventory Turn Time Calculator

Turn time refers to the period of time it takes a business to sell a product. The inventory turnover rate measures the number of times we have turned our inventory during the past 12 months.

The following formula determines the inventory turn time:

Inventory Turn Time = Cost of Goods Sold from Stock Sales during the Past 12 Months/ Average Inventory Investment during the Past 12 Months

Formula Notes:

• Cost of Goods Sold only includes orders shipped from a warehouse inventory. Direct shipments or special orders are not included because they are never "inventoried".
• Inventory turnover is based on what you pay for an item (acquisition cost), not the selling price.

To determine your average inventory investment:

• Calculate the total value of every product in inventory (quantity on-hand times cost) every month, on the same day of the month. Use consistent costing methods for COGS and average inventory investment.
• If your inventory levels fluctuate over a month time horizon, calculate your total inventory value on the first and fifteenth of every month.

Debt Service Ratio Calculator

The debt service coverage ratio (DSCR) is used by bank loan officers to determine income property loans. Most lenders require a minimum DSCR of 1.2.

A DSCR of 1.0 is called break even. A DSCR below 1.0 signals a net operating loss based on the debt structure. A DSCR over one means that the property is generating enough income to pay the debt obligations.

The following formula determines the debt service coverage ratio:

DSCR = Net Operating Income/Total Debt Service or DSCR = (Monthly Net Income)/ (Monthly Principal and Interest Payment on Loan)

Debt-to-Income Calculator

Debt-to-income ratio (DTI) determines the percentage of a consumer's monthly gross income that goes towards paying debts.

The following formula determines the DTI ratio for businesses involving property:

DTI = Monthly recurring debt expenses (including rental or mortgage expenses, interest and principal payments, OR line 11 + line 13 + principal payments)/monthly gross income

EBITDA Calculator

EBITDA is defined as earnings before interest, depreciation, taxes, and amortization. EBITDA measures profitability. It is important to note that EBITDA can be misleading as a cash flow evaluation tool because it does not take into account cash used to fund working capital or replace old equipment.

To calculate EBITDA see line 21 of your business income tax return and add back lines: 12, 13, 14a, or use the following formula:

EBITDA = Revenue - Expenses (excluding tax, interest, depreciation, and amortization)