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Exam Formula Sheet

The document provides formula sheets that will be provided for exams 1, 2, and the final exam. It lists key formulas from various chapters covering topics such as financial statement analysis, valuation, capital budgeting, risk and return, and capital structure. The formulas relate to concepts like operating cash flow, capital expenditures, tax rates, valuation multiples, discounted cash flow models, portfolio returns, beta, and weighted average cost of capital.

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Yeji Kim
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343 views2 pages

Exam Formula Sheet

The document provides formula sheets that will be provided for exams 1, 2, and the final exam. It lists key formulas from various chapters covering topics such as financial statement analysis, valuation, capital budgeting, risk and return, and capital structure. The formulas relate to concepts like operating cash flow, capital expenditures, tax rates, valuation multiples, discounted cash flow models, portfolio returns, beta, and weighted average cost of capital.

Uploaded by

Yeji Kim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Exam 1 Formula Sheet Chapters 1-6: These WILL be provided on exam 1 and the final exam

Operating Cash Flow = EBIT – Taxes + Depreciation


CapEx = ΔNFA + Depreciation NWC = CA – CL
Average effective tax rate = tax expense / taxable income
‘Net Debt’ = Debt – Cash
Book Equity = A – L Market Cap = n * P
EPS = Net Income / n PE = P / EPS
Book Value per Share = Book Equity / n Market-to-Book = P / Book Value per Share
Price to Sales = Market Cap / Sales
ROE = NI / Book Equity = Market-to-Book ÷ PE ROA = NI / Assets
Profit Margin = NI / Sales
Asset Turnover = Sales / Assets Capital Intensity = Assets / Sales
Interest Coverage ‘TIE’ = EBIT / Interest
Total Debt Ratio = (Assets – BookEquity) / Assets
Leverage = Liabilities / BookEquity Equity Multiplier = A/E = 1 + L/E
Current Ratio = CA/CL
Retention ratio = b = Addition to Retained Earnings / NI
Internal Growth Rate  ROA  b
1 - ROA  b
Sustainable Growth Rate  ROE  b Implied Retention Ratio b = g / [ROE * (1 + g)]
1 - ROE  b
PV = V0 = CFT / (1+r)T FV = PV * (1+r)T r = (FV/PV)1/T – 1 T = ln(FV/PV) / ln(1+r)
m
PV 
PMT
APR  m (1  EAR) m - 1
1  APR 
EAR  1  1
r   m 
Fisher: Nominal Rate ≈ Real Rate + Expected Inflation Rate
Exact: (1 + Nominal) = (1 + Real) * (1 + Expected Inflation)

Final Exam Formula Sheet Chapters 16-18 &24: These WILL be provided on the final exam

Cash & Mkt Secs = – Accts Receivable – Inventory + Accts Payable + ST Debt
– LT Fixed Assets + LT Debt + Equity
Inventory TurnOver = COGS / Avg Inv Inventory period = 365 / Inv TO
Accounts Receivable TurnOver = Sales / Avg AR Receivables period = 365 / AR TO
Accounts Payable TurnOver = COGS / Avg AP Payables period = 365 / AP TO
Operating Cycle = Inventory period + Receivables period
Cash Cycle = Operating Cycle – Accounts Payable period
Q/2 = Average inventory T/Q = Orders per year
Carrying Costs = C (Q/2) Restocking Costs = F (T/Q)
Total Costs = C (Q/2) + F (T/Q) 2TF
EOQ * 
C
Float = available balance at bank – book balance
For credit terms 2/10 net 45, EAR = [1 + .02/(1–.02)]365/(45–10) – 1

Interest Rate Parity FFC per USD 1  rFC


  1  rFC  rUSD
S FC per USD 1  rUSD
Call Payoff at expiration T = max[ST–K,0]
Current Intrinsic value of call = max[S0–K,0]
Exam 2 Formula Sheet Chapters 7-12: These WILL be provided on exam 2 and the final exam

D1  P1 D1 D P D1 D2 D3 D Constant P  D1/m
P0  P0   2 22 P0    
1  r  1  r  1  r  1  r  1  r  1  r 
2 3
1  r  Dividends 0 r/m
Average Net Income
AAR 
Average Book Value
CF1 CF2 CF3 CFT
0  CF0    
1  IRR  1  IRR  1  IRR 
2 3
1  IRR T
NPV  Initial Investment NPV  CF0
PI  
Initial Investment  CF0
Operating Cash Flow = EBIT + Depr – Taxes = (Sales – Costs)(1 – T) + Depr*T
CapEx = ΔNFA + Depr After-tax Salvage = SalePrice – T*(SalePrice – Book)
rt+1 = (Dt+1 + Pt+1 – Pt) / Pt Dividend Yield = Dt+1 / Pt Capital Gains Yield = (Pt+1 – Pt) / Pt
Geometric Return = [(1+r1)(1+r2)∙∙∙(1+rT)]1/T – 1
Average Return = (r1+r2+∙∙∙+rT) / T
Variance = sum of squared deviations from average / (T–1)
Standard Deviation = square root of Variance = Volatility
Geometric average ≈ arithmetic average – ½ volatility2
Historical Risk Premium = Average Return – Average T-Bill Return
E[r] = p1 r1 + p2 r2 + …+ pn rn
Variance σ2 = p1(r1 – E[r1])2 + p2(r2 – E[r2])2 + …+ pn(rn – E[rn])2
Standard Deviation or Volatility σ = √Variance
rP = wA rA + wB rB +…+ wZ rZ
E[rP] = wA E[rA] + wB E[rB] +…+ wZ E[rZ]
σP < wA σA + wB σB +…+ wZ σZ
r = E[r] + m + ε
Total risk = Systematic risk + Unsystematic risk
σ σ
β i  ρiM i  iM
σ M σ 2M
βP = wA βA + wB βB +…+ wZ βZ
Risk premium = E[ri] – rF

Cost of debt rD ≤ Yield to Maturity After-tax cost of debt = rD (1 – TC) D = market value of debt
Cost of preferred rP = D1 / P0 Pfd = market value of preferred = number outstanding * price
Cost of equity: use DGM and/or CAPM
E = market value of common = number outstanding * current price
Market value of the firm V = D + Pfd + E

Final Exam Formula Sheet Chapters 13-15: These WILL be provided on the final exam

For only Debt and Equity (no Preferred):


No taxes: MM 1: V = D + E MM 2 : rE  rA  (rA  rD ) DE
With taxes: PV(Debt Tax Shields) = TC * Debt VL = VU + TC*D E = VL – D

Pex ≈ P – Cash Dividend

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