How can you tell how much equity the owners have in the business to calculate the Return on Equity KPI? How can you calculate the Receivables (Conversion) over Time? The result is in days-what data drives that KPI?

The equity is equal to the sum of the total assets MINUS the sum of the total liabilities as entered for 2018 or the final year of data. ROE is equal to pretax income divided by equity. Although insightful, this measure can be skewed by high levels of owner compensation (which reduce reported pretax income). This is why the cash flow to revenue ratio is the optimal indicator of owner-generated cash flows that are available to a hypothetical buyer - and therefore instrumental in determining probable fair market value.

The collection period is equal to 365 days divided by the A/R turnover ratio and the A/R turnover ratio is simply total revenues divided by total A/R in most current year. If the A/R turnover ratio is 10, the average collection period is 36.5 days.

The inventory turnover is simply total revenue divided by inventory (or average inventory from last two periods).

All of these ratios should be viewed both over time and in comparison to industry benchmarks.