Change in Retained Earnings
Net Income - Dividends
Gross Profit
Revenue - Cost of Goods sold or Cost of Services
Earnings Before Interest and Taxes (EBIT)
Gross Profit - Operating Expenses
Net Income
Dividends + Change in Retained Earnings
New Retained Earnings
Old Retained Earnings + Change in Retained Earnings
New Retained Earnings, long version
Old Retained Earnings + Net Income - Dividends
change in cash for the year
cash flows from operations + cash flows from investing + cash flows from financing
Dividends
(Old Retained Earnings + Net Income) - New Retained Earning
Current Ratio
Current Assets / Current Liabilities
Quick Ratio
current assets - inventory / current liabilities
Average Collection Period
accounts receivables / daily credit sales
Accounts Receivables Turnover
credit sales / accounts receivables
inventory turnover
cost of goods sold / inventory
fixed assets
total assets minus current assets
total asset turnover
sales / total assets
fixed asset turnover
sales / fixed assets
Operating income return on investment
operating income / total assets
debt ratio
total debt / total assets
times interest earned
EBIT / interest expense
Return on Assets
net income / total assets
return on equity
net income / equity
gross margin
gross profit / sales
operating margin
EBIT / Sales
net margin
net income / sales
return on equity
net margin
total asset turnover
leverage multiplier
return on equity long version
(net income / sales)
(total sales / total assets)
(assets / equity)
free cash flow to the firm (FCFF)
EBIT - cash tax payments + depreciation - capital expenditure changes - increases to net working capital
net working capital
current assets - current liabilities
capital expenditures
gross property + plant + equipment
free cash flow to equity (FCFE)
Net income + depreciation - capital expenditure changes - increase to net working capital + increase to long term debt
Net fixed assets
Gross fixed assets - accumulated depreciation
Cash flow from operations
Net income + non cash expenses (depreciation) + decrease in operating assets accounts (other than cash) - increase in operating asset accounts + increase in operating liability accounts (othrr than notes payable) - decrease in operating liability accounts
Cash flow from investing
- increase in gross pp&e + decrease in gross pp&e or if net pp&e is used then its the change in net pp&e + depreciation expense
Leverage multiplier
Assets / Equity
current yield of bond
annual coupon payment / current market value
bond coupon payment
interest rate * face value
bond duration
measure of the interest rate sensitivity of a bond
what is the selling price of a bond if the coupon rate = discount rate
selling price will be equal to the par value
Present value of a perpetuity
Payment / Discount Rate
Effective yield
(Future value / present value) - 1
value of preferred stock
annual fixed dividend / discount rate or required rate of return
value of singe holding period model
value today = (value in 1 year + dividends) / (1 + required rate of return)
Gordon growth model value of common stock (constant dividend growth model)
Value today = (dividend paid now (1+constant growth rate) / (required rate of return - constant growth rate)
EVA
NOPAT - (WACC * Costly Capital)
EVA means Economic Value Added
NOPAT
0
After-tax cost of debt on a percentage basis
Interest % * (1-tax rate)
10% interest, in 34% tax bracket means
.10*(1-.34) = .066 meaning instead of paying 10% it's only 6.6% because you decreased your taxable income.
WACC
(C/V)
Kcs + (D/V)
Kd(1-t) + (P/V) * Kp
V (value of capital)
C + D + P ( C and P = cost per share
number of shares), (D = face value
market value percentage)
CAPM (capital asset pricing model)
Kcs = Rrf + B(Rm-Rrf) where Rrf = risk free rate, B = beta, Rm = return on the market, Rm-Rrf = risk premium
Vallue cost of preferred stock
Kps = Dividend / NPps (net price perferred stock)
NPps = price per share - flotation costs
NPV of a project
net present value = present value of all cash flows from a project - initial outlay
Profitability Index
present value of all cash flows from a project / initial outlay
Value of common stock for a single holding period
Value now = value at time 1 + dividend paid in time 1 / (1 + required rate of return or discount rate)
value of common stock - 2 stage growth model
PV(of stage 1 growth) + PV(of stage 2 growth)
Change in Retained Earnings
Net Income - Dividends
Gross Profit
Revenue - Cost of Goods sold or Cost of Services
Earnings Before Interest and Taxes (EBIT)
Gross Profit - Operating Expenses
Net Income
Dividends + Change in Retained Earnings
New Retained Earnings
Old Retained Earnings + Change in Retained Earnings
New Retained Earnings, long version
Old Retained Earnings + Net Income - Dividends
change in cash for the year
cash flows from operations + cash flows from investing + cash flows from financing
Dividends
(Old Retained Earnings + Net Income) - New Retained Earning
Current Ratio
Current Assets / Current Liabilities
Quick Ratio
current assets - inventory / current liabilities
Average Collection Period
accounts receivables / daily credit sales
Accounts Receivables Turnover
credit sales / accounts receivables
inventory turnover
cost of goods sold / inventory
fixed assets
total assets minus current assets
total asset turnover
sales / total assets
fixed asset turnover
sales / fixed assets
Operating income return on investment
operating income / total assets
debt ratio
total debt / total assets
times interest earned
EBIT / interest expense
Return on Assets
net income / total assets
return on equity
net income / equity
gross margin
gross profit / sales
operating margin
EBIT / Sales
net margin
net income / sales
return on equity
net margin
total asset turnover
leverage multiplier
return on equity long version
(net income / sales)
(total sales / total assets)
(assets / equity)
free cash flow to the firm (FCFF)
EBIT - cash tax payments + depreciation - capital expenditure changes - increases to net working capital
net working capital
current assets - current liabilities
capital expenditures
gross property + plant + equipment
free cash flow to equity (FCFE)
Net income + depreciation - capital expenditure changes - increase to net working capital + increase to long term debt
Net fixed assets
Gross fixed assets - accumulated depreciation
Cash flow from operations
Net income + non cash expenses (depreciation) + decrease in operating assets accounts (other than cash) - increase in operating asset accounts + increase in operating liability accounts (othrr than notes payable) - decrease in operating liability accounts
Cash flow from investing
- increase in gross pp&e + decrease in gross pp&e or if net pp&e is used then its the change in net pp&e + depreciation expense
Leverage multiplier
Assets / Equity
current yield of bond
annual coupon payment / current market value
bond coupon payment
interest rate * face value
bond duration
measure of the interest rate sensitivity of a bond
what is the selling price of a bond if the coupon rate = discount rate
selling price will be equal to the par value
Present value of a perpetuity
Payment / Discount Rate
Effective yield
(Future value / present value) - 1
value of preferred stock
annual fixed dividend / discount rate or required rate of return
value of singe holding period model
value today = (value in 1 year + dividends) / (1 + required rate of return)
Gordon growth model value of common stock (constant dividend growth model)
Value today = (dividend paid now (1+constant growth rate) / (required rate of return - constant growth rate)
EVA
NOPAT - (WACC * Costly Capital)
EVA means Economic Value Added
NOPAT
0
After-tax cost of debt on a percentage basis
Interest % * (1-tax rate)
10% interest, in 34% tax bracket means
.10*(1-.34) = .066 meaning instead of paying 10% it's only 6.6% because you decreased your taxable income.
WACC
(C/V)
Kcs + (D/V)
Kd(1-t) + (P/V) * Kp
V (value of capital)
C + D + P ( C and P = cost per share
number of shares), (D = face value
market value percentage)
CAPM (capital asset pricing model)
Kcs = Rrf + B(Rm-Rrf) where Rrf = risk free rate, B = beta, Rm = return on the market, Rm-Rrf = risk premium
Vallue cost of preferred stock
Kps = Dividend / NPps (net price perferred stock)
NPps = price per share - flotation costs
NPV of a project
net present value = present value of all cash flows from a project - initial outlay
Profitability Index
present value of all cash flows from a project / initial outlay
Value of common stock for a single holding period
Value now = value at time 1 + dividend paid in time 1 / (1 + required rate of return or discount rate)
value of common stock - 2 stage growth model
PV(of stage 1 growth) + PV(of stage 2 growth)