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Formulas

This document provides formulas for various corporate finance concepts. In 3 sentences: It lists formulas for calculating net income, operating cash flow, net cash flow, market value added, economic value added, current and quick ratios, inventory turnover, times interest earned ratio, fixed asset turnover, debt ratio, net profit margin, price-earnings ratio, market-to-book ratio, return on assets, return on equity, projected account balances, changes in retained earnings, additional funds needed, present and future value, annuities, loans, yields, weighted average cost of capital, and the internal rate of return, modified internal rate of return, net present value, and breakpoint. The formulas will help students in a corporate finance course

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Sana Khan
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© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
93 views

Formulas

This document provides formulas for various corporate finance concepts. In 3 sentences: It lists formulas for calculating net income, operating cash flow, net cash flow, market value added, economic value added, current and quick ratios, inventory turnover, times interest earned ratio, fixed asset turnover, debt ratio, net profit margin, price-earnings ratio, market-to-book ratio, return on assets, return on equity, projected account balances, changes in retained earnings, additional funds needed, present and future value, annuities, loans, yields, weighted average cost of capital, and the internal rate of return, modified internal rate of return, net present value, and breakpoint. The formulas will help students in a corporate finance course

Uploaded by

Sana Khan
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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FINC 3511 - Corporate Finance - Formulas

Net income = (EBIT - INT)(1 - tax rate) Operating cash flow = NOPAT + Dep

NOPAT = EBIT(1 - tax rate) Net cash flow = Net income + (Dep + Amort)

MVA = (shares outstanding)(stock price) - (total common equity)

EVA = EBIT(1 - tax rate) - (investor supplied capital)(percentage cost of capital)

Current assets = cash + marketable securities + inventory + accounts receivable

Current ratio = current assets Basic earning = EBIT
current liabilities power Total assets

Inventory turnover = sales Times interest = EBIT
ratio inventory earned Interest charges

Quick ratio = current assets - inventory Fixed asset = Sales
current liabilities turnover Net fixed assets

Days sales = receivables EBITDA Coverage = EBITDA + Lease Payments
outstanding (annual sales)/365 Ratio Interest + Principal + Lease
Charges pmts pmts

Debt ratio = total debt Total asset = Sales
total assets Turnover total assets

Net profit = Net income Price earnings = Price per share
margin sales ratio Earnings per share

Market/Book = Market price per share
ratio Book price per share


Return on total assets = Net income = (Net profit margin)(Total asset turnover)
Total assets

Return on common equity = Net income = (net profit margin)(total asset turnover)(1/(1 debt ratio))
common equity

projected account balance = (old account balance)[(new sales)/(old sales)]

Change in retained earnings = (net profit margin)(sales) dividends

Additional funds needed = projected assets (projected liabilities + projected equity)


p k =
k i i
n
=1 i
i


k
w =
k i
i
n
=1 i
P



b w = b i i
n
1 i=
P

k
i
= k
RF
+ b
i
(k
M
k
RF
)

,
_

m
i
+ 1 PV =
FV
m n*
n

,
_

,
_

m
i
+ 1
1
FV
= PV
m n*
n
) i + (1 PMT = FVA
t n-
n
1 = t
n


,
_

) i + (1
1
PMT = PVA
t
n
1 = t
n

,
_

m
i
+ 1 = EAR
m

,
_

,
_

,
_

,
_

m
k
+ 1
1
M +
m
k
+ 1
1

m
INT
=
V
b
m * N
b
t
m * N
1 = t
B

k
D
=
V
P
P


Current yield = (annual interest payment)/(current price)

Yield-to-maturity = current yield + capital gain/loss

g -
k
D
=
g -
k
g) + (1
D
=
P

s
1
s
0
0

) k
+ (1
g -
k
) g + (1
D
+
) k
+ (1
) g + (1
D
=
P

N
s
C S
C N
t
s
t
S
0
N
1 = t
0
S
S
S
1
]
1

,
_

,
_

)
k
+ (1
1
M +
)
k
+ (1
1
INT = FC) -
V
(
N B
d
t B
d
N
1 = t
B

k
D
= FC) -
V
(
ps
ps


g -
k
D
= FC) -
P
(
s
1
0

k w
+
k w
+ t) - (1
k w
= WACC
s s ps p
B
d d


structure capital the in equity of fraction
available earnings retained of amount dollar total
=
(equity)
Breakpoint


( )
IO
k 1
CF
NPV
n
1 t
t
t


( )

n
1 t
t
t
IRR 1
CF
IO
( )
( )
( )
n
n
0 t
t - n
t n
0 t
t
t
MIRR 1
k 1 CIF
k 1
COF
+
+

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