Final Exam Formula Sheet PDF
| Title | Final Exam Formula Sheet |
|---|---|
| Course | Finance |
| Institution | California State University Fullerton |
| Pages | 9 |
| File Size | 249.2 KB |
| File Type | |
| Total Downloads | 8 |
| Total Views | 142 |
Summary
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Description
Final Exam Formula Sheet Chapter 1 Corporate Taxes = Pretax Income × Corporate Tax Rate Dividend Taxes = Dividend × Dividend Tax Rate Total Taxes = Corporate Taxes + Dividend Taxes = Pretax Income × Corporate Tax Rate + Dividend × Dividend Tax Rate Total Taxes of an S Corporation = Non-Dividend Income Taxes = Pretax Income × Non-Dividend Income Tax Rate
Chapter 2 Assets = Liabilities + Stockholders’ Equity Net Working Capital = Current Assets – Current Liabilities Market Value of Equity (Market Capitalization) = Market Price per Share × Number of Shares Market-to-Book (P/B) Ratio = Market-to-Book (P/B) Ratio =
( ) ℎ = ℎ
Enterprise Value = Market Value of Equity + Debt – Cash Debt = Short-Term Debt + Long-Term Debt Earnings per Share (EPS) =
ℎ
Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) = EBIT + D&A Cash Flow from Operating Activities = Net Income + D&A – ∆Accounts Receivable + ∆Accounts Payable – ∆Inventory Cash Flow from Investment Activities = – CAPEX – Other Assets Purchased or Investments NPPE t = NPPE t-1 + CAPEX t – D&A t Cash Flow from Financing Activities = – Dividends Paid + ∆Common Stock and Paid-in Surplus + ∆Debts Retained Earnings t = Retained Earnings t-1 + Net Income t – Dividends Paid t Payout Ratio =
∆Cash Balance = Cash Flow from Operating Activities + Cash Flow from Investment Activities + Cash Flow from Financing Activities ∆Stockholders’ Equity = ∆Retained Earnings + ∆Common Stock and Paid-in Surplus ∆Retained Earnings=Retained Earnings t – Retained Earnings t-1 = Net Income t – Dividends Paid t 1
∆Common Stock and Paid-in Surplus = Net Sales of Stock = Sales of Stock – Repurchases of Stock Gross Margin =
Operating Margin =
Net Profit Margin (Profit Margin) = Current Ratio =
Quick Ratio (Acid-Test Ratio) = Cash Ratio =
−
ℎ
Asset Turnover =
Fixed Asset Turnover =
Accounts Receivable Days (Average Collection Period, or Days Sales Outstanding) = / 365
Accounts Payable Days =
Inventory Turnover Ratio =
/ 365
Interest coverage ratio (Times interest earned ratio, or TIE ratio) =
Debt-to-Capital Ratio =
= / 365
Inventory Days = =
Debt-Equity Ratio =
= +
= Debt-to-Enterprise Value Ratio = + Net Debt = Total Debt – Cash and Short-Term Investments Equity Multiplier =
Price-Earnings Ratio (P/E) Ratio = P/E-to-Growth (PEG) Ratio =
ℎ = ℎ /
ℎ ×100
Enterprise Value-to-Sales Ratio =
2
=
Enterprise Value-to-Operating Income Ratio = Return on Equity (ROE) = Return on Assets (ROA) =
+
Return on Invested Capital (ROIC) =
(1 − ) (1 − ) = +
Return on Equity (ROE) =(
Turnover × Equity Multiplier
)×( ) × (
) = Profit Margin × Asset
Chapter 3 = × (1 + ) =
(1 + )
Number of periods = Number of years × Number of periods per year Periodic interest rate = Annual percentage rate (APR, nominal interest rate) / Number of periods per year
Chapter 4 ( ) = 1 + 2 + ⋯ + = × (1 + )−1 + × (1 + 1 )−2 + ⋯ + × (1 + )0 = ×[(1 + ) − 1]
( ) = 0 + 1 + 2 + ⋯ + −1 = × (1 + ) + × (1 + )−1 + × (1 + )−2 + ⋯ + × (1 + )1 ( ) = ( ) × (1 + )
(1+)
( ) = 1 + 2 + ⋯ + 1 + = 2 + ⋯ + 1
× [1 −
1
(1+)
(1+)
(1+)
]
+ ⋯ + (1+)−1 ( ) = 0 + 1 + ⋯ + (1+) −1 0 += (1+)1 ( ) = ( ) × (1 + )
= × (1 + )
=
(1+) + (1+)3 (1+)2
() = 1 + 2 + 3 + 1⋯+ = (1+)
3
+⋯=
=
1 1+
( ) = 1 [1 ×−� −
1+
� ]
1 1+
( ) =− 1 [1 × − �1+ � ] × (1 + ) ( ) = −
1
(1+)
= =1 +1 ( ) − −
= × (1 + )
= (1+)
= × (1 + ) =
(1+)
Chapter 5 APR = r × m r=
EAR = (1 + ) − 1
1 + EAR = (1 + ) EAR = (1 +
)
1 + EAR = (1 +
−1
)
Equivalent n-period Discount Rate = (1 + ) − 1 1 + Real Interest Rate = Real Interest Rate =
1 + 1 +
1 + – 1 +
1=
–
Real Interest Rate ≈ Nominal Interest Rate – Inflation Rate = 0 × (1 + )
= =
(1+ ) 1
(1+1 )1
+
2 (1+2 )2
+…+
(1+ )
Chapter 6 4
1 +
Coupon Rate =
Coupon Payment (CPN) =
× =
Bond’s Value 0 = (1+)11 + (1+)22 + ⋯ +
+ = + (1+)2 (1+) (1+)1
Zero-Coupon Bond’s Value 0 = (1+)11 + (1+)22 + ⋯ +
+⋯+
+ (1+)
+ = (1+) (1+)
Chapter 7 Stock’s Value 0 = (1 + 1 ) = =
1 + 1 −1 0
Dividend Yield =
1 + 1
1 +
1 + 1 − 0 1 1 − 0 = + 0 0 0
=
1 0
Capital Gain Rate =
1 − 0 0
Total Return of the Stock = Dividend Yield + Capital Gain Rate = Total Return of the Stock =
1 0
+
1 − 0 0
Stock’s Value 0 = 1 + 2 + ⋯ + ( +1 + )+ =
+ (1 + )
Stock’s Value 0 = 1 + 2 + 13 ++⋯ + =(1 + 1 )22 + Stock’s Value 0 =
1
+1 +1
+
Payout Ratio =
= Earnings per Share (EPS) × Dividend Payout Rate Change in Earnings = New Investment × Return on New Investment New Investment = Earnings × Retention Rate Retention Rate = 1 – Dividend Payout Rate = 1 –
Dividend Payout Rate = 1 – Retention Rate 5
=
3
(1 + )3
−
1 or = = + 0
−
Stock’s Value =
12
(1 + )2
−
+⋯+
+⋯
Earnings Growth Rate =
ℎ =
Retention Rate × Return on New Investment
Dividend Growth Rate (g) = Retention Rate × Return on New Investment =
+1 −
Stock’s Value 0 = 1 + 2 + ⋯ + ( +1 + ) + =
+ (1 + )
12
(1 + )2
+ ⋯+
Preferred Stock’s Value 0 =
Preferred Stock’s Equity Cost of Capital = Total Return of the Preferred Stock = Dividend Yield of the Preferred Stock =
0
0
Capital Gain Rate of the Preferred Stock = 0 0 =
( ) ( ℎ) = ℎ 0 ℎ 0
Chapter 8 NPV = PV(Benefits) – PV(Costs) NPV = PV(Cash Flows) =
0
(1+)0
1 2 ∑ + (1+) + (1+) + ⋯ +(1+) =0(1+) = 1 2
1 2 0 ∑ +(1+) + + ⋯ +(1+) NPV = PV(Cash Flows) = (1+) = =0(1+) = 0 0 1 (1+)2
ℎ =
ℎ
(1+)
∑ =0(1+) =
− ∑ =0 (1+)
(1+)
Payback = Number of periods prior to full recovery +
ℎ
When future cash flows are equal (1 = 2 = ⋯ ), Payback =
ℎ ℎ
Discounted
payback
=
Number
of
periods
prior
ℎ
Profitability Index = =
Chapter 9 6
to
full
recovery
+
Depreciation =
− =
Incremental Earnings Before Interest and Taxes (EBIT) = Incremental Revenues – Incremental Costs – Depreciation Incremental Income Tax = Incremental EBIT × Marginal Corporate Tax Rate Incremental Earnings = Incremental EBIT – Incremental Income Tax Incremental Earnings = Incremental EBIT – Incremental Income Tax = Incremental EBIT – Incremental EBIT × Marginal Corporate Tax Rate = Incremental EBIT × (1 – Marginal Corporate Tax Rate) = (Incremental Revenues – Incremental Costs – Depreciation) × (1 – Marginal Corporate Tax Rate) Net Working Capital (NWC) = Current Assets – Current Liabilities = Cash + Inventory + Accounts Receivable – Accounts Payable. Incremental FCF = Incremental Earnings + Depreciation – CAPEX – ∆NWC = (Incremental Revenues – Incremental Costs – Depreciation) × (1 – Marginal Corporate Tax Rate) + Depreciation – CAPEX – ∆NWC Incremental FCF = (Incremental Revenues – Incremental Costs) × (1 – Marginal Corporate Tax Rate)– CAPEX – ∆NWC + Depreciation × Marginal Corporate Tax Rate After-Tax Cash Flow from Asset Sale = Sale Price − Capital Gain Tax = Sale Price − (Tax Rate × Capital Gain) Capital Gain = Sale Price – Book Value Book Value = Acquisition Cost - Accumulated Depreciation Units Sold (EBIT Break-Event Point for Sales) =
+ –
Chapter 11 =
1 + 1
+1 =
−1=
0
1 + 1 − 0 1 1 − 0 = + 0 0 0
+1 + +1
−1=
+1 + +1 − +1 − = + +1
1 + = (1 + 1 ) (1 + 2 ) … (1 + ) = (1 + 1 ) (1 + 2 ) … (1 + ) – 1
� = 1 (1 + 2 + … + ) Var(R) =
1
−1
� )2 + (2 − � )2 + … + ( −� )2 ] [(1 −
SD(R) = �() FVT = C × (1 + R1) × (1 + R2) × … × (1 + RT) � )T FVT = C × (1 + 7
� = �(1 + 1 ) (1 + 2 ) … (1 + )
− 1 = [(1 − 1+ 1 )(1 + 2 ) … (1 +
95% prediction interval = (average – 2 × standard deviation) to (average + 2 × standard deviation)
Chapter 12 = 1 1 + 2 2 + ⋯ + =
ℎ
[ ] = 1 [1 ] + 2 [2 ] + ⋯ + [ ] � , �( = � , � =
( , )
)( )
∑( − )( − ) −1
2 ( )2 + 2 ( )2 + 2 ( , )( ) ( ) � � = 2 1 2 1 2 1 2 1 1 2
� � = �� � =
( )×( ,( ) , ) = ( ) ( )
[ ] = + ([ ] − )
Market Risk Premium (also known as Equity Risk Premium or the Excess Return of the Market) = [ ] − Excess Return of the Stock = [ ] − = ([ ] − ) � � = + ([ ] − )
= 1 1 + 2 2 + ⋯ +
= ℎ
Chapter 13
Weight of Debt: = Weight of Equity: =
Weight of Common Stock: = Weight of Preferred Stock: =
8
Effective Cost of Debt: (1 − ) Cost of Common Stock: =
1 + 0
or =
+1
+
Cost of Common Stock: = + ([ ] − ) Cost of Preferred Stock: =
0
WACC = (1 − ) +
WACC = (1 − ) + +
1 2 0 ∑ + (1+) + (1+) + ⋯ +(1+) NPV = PV(Cash Flows) = (1+) =0 = 0 1 2
9
(1+)...
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