Managerial Fin 1
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Managerial Finance FRL 300
Formula Sheet Prepared by P. Sarmas
Average Tax Rate =
Tax Liability Taxable Income
Cash Flow from Assets = Cash Flow to Creditors + Cash Flow to Stockholders Operating Cash Flow - ∆Net Working Capital - Net Capital Spending Cash Flow from Assets EBIT + Depreciation - Taxes Operating Cash Flow
Interest Paid Dividend Paid - Net New Borrowing - Net New Equity Cash Flow to Creditors Cash Flow to Stockholders Ending Net Fixed Assets - Beginning Net Fixed Assets + Depreciation . Net Capital Spending
Ending Net Working Capital (CA – CL) - Beginning Net Working Capital (CA-CL) Change in Net Working Capital Ending L.T. Debt - Beginning L.T. Debt Net New Borrowing
Current Ratio =
Quick Ratio =
Ending Equity - Beginning Equity - Addition to Retained Earnings Net New Equity
Current Assets Current Liabilities
Current Assets - Inventories Current Liabilities
Cash Ratio =
Cash Current Liabilities
Total Debt Ratio =
Total Debt Total Assets - Total Equity = Total Assets Total Assets
Debt - to - Equity Ratio =
Total Debt Total Equity
Time Interest Earned =
EBIT Interest
Cash Coverage Ratio =
EBIT + Depreciation Interest
Fixed Charge Coverage Ratio =
Equity Multiplier =
Total Assets Equity
or
EBIT + Lease Pmt. Sinking Funds Interest + Lease Pmt. + 1−T EM = 1 +
Total Assets Turnover =
Sales Total Assets
Fixed Assets Turnover =
Sales Net Fixed Assets
D = E
1 1−
D TA
Inventory Turnover =
ACP or DSO =
Sales Cost of Goods Sold OR Inventory Inventory
Receivables Sales 365
Profit Margin (ROS) =
Net Income Sales
ROA =
Net Income Total Assets
ROE =
Net Income Common Equity
Return on Capital =
Net Income + Interest + Preferred Dividnd Debt + Common Equity + Preferred Stock
Basic Earnings Power =
Earnings per Share =
EBIT Total Assets
Net Income No. Shares Outstanding
Price - Earnings Ratio =
Market Price per Share EPS
Dividend Payout Ratio = Dividends ÷ Net Income ROADuPont = Profit Margin * Total Assets t/o Market Value - Book Value Ratio =
Market Price per Share Book Value per Share
ROEDuPont = Profit Margin * Total Assets t/o * Equity Multiplier Internal Growth Rate =
ROA * b 1 - (ROA * b)
Sustainable Growth Rate =
ROE * b 1 - (ROE * b)
Earnings Retention Ratio = b = 1 – Dividend Payout Ratio FV = PV (1 + r ) t = PV * FVIFr , t PV =
FV (1 + r ) t
FV = PV (1 +
PV =
= FV * PVIFr , t r m *t ) = PV * FVIF r , mt m m
FV = FV * PVIF r r m *t , mt m (1 + ) m
EAR = (1 +
r m ) −1 m
FV = PV * e r *t PV = FV * e − r *t (1 + r ) t − 1 FVA = C * = C * FVIFAr , t r 1 1 PVA = C * − = C * PVIFAr , t t r r * (1 + r )
PVPerpetuity =
C r
(1 + r ) t − 1 FVA = Cdue * * (1 + r ) = C due * FVIFAr , t * (1 + r ) r
1 1 * (1 + r ) = C due * PVIFAr , t * (1 + r ) PVA = Cdue * − t r * ( 1 ) r r +
Reminder:
In the case of frequent compounding or discounting, divide the nominal rate (APR) by “m” and multiply period by “m”. “m” is number of times interest is compounded/discounted in one period. Also, annuity interval must match the frequency (m) of compounding or discounting.
1 1 FV Bond Value = C * − + t t r r * (1 + r ) (1 + r ) (1+R) = (1+r)*(1+h)
Coupon FV Coupon Current Yield = VB Coupon Rate =
1 1 FV + − VB = C * t t YTM YTM * (1 + YTM ) (1 + YTM )
P0 = P0 =
D1 (1 + r )1 D1 (1 + r )1
+ +
D2 (1 + r ) 2 D2 (1 + r ) 2
D r D P0 = 1 r−g D r= 1+g P0 P0 =
Dn = D0 * (1 + g ) n
+ +
D3 (1 + r ) 3 D3 (1 + r ) t
+ ........ + ..... +
Dn +1 1 * + (1 + r ) n r − g c (1 + r ) n Dn
n
NPV = ∑ t =1
CFt + (CF0 ) (1 + r ) t
CFt
n
∑ (1 + IRR) t =1
PBP = t +
+ (CF0 ) = 0
Last Negative Cum. CF CFt +1
CFt
n
PI =
t
∑ (1 + r ) t =1
t
CF0
n
∑ Net Income t =1
ARR =
n Beginning Value Investment + Ending Value Ivestment 2 n
n
COFt
∑ (1 + r ) t =o
t
t
=
∑ CIF * (1 + r ) t =1
n −t
t
(1 + MIRR) n
Operating Cycle = Inventory Period + Accounts Receivable Period Cash Cycle = Operating Cycle – Accounts Payable Period
Inventory Turnover =
Inventory Period =
Cost of Goods Sold Average Inventory
365 Inventory Turnover
Receivable Turnover =
Credit Sales Average Accounts Receivable
Receivable Period =
365 Receivable Turnover
Payable Turnover =
Cost of Goods Sold Average Payable
Payable Period =
Average =
365 Payable Turnover
Beginning + End 2
Formula Sheet Prepared by P. Sarmas
Average Tax Rate =
Tax Liability Taxable Income
Cash Flow from Assets = Cash Flow to Creditors + Cash Flow to Stockholders Operating Cash Flow - ∆Net Working Capital - Net Capital Spending Cash Flow from Assets EBIT + Depreciation - Taxes Operating Cash Flow
Interest Paid Dividend Paid - Net New Borrowing - Net New Equity Cash Flow to Creditors Cash Flow to Stockholders Ending Net Fixed Assets - Beginning Net Fixed Assets + Depreciation . Net Capital Spending
Ending Net Working Capital (CA – CL) - Beginning Net Working Capital (CA-CL) Change in Net Working Capital Ending L.T. Debt - Beginning L.T. Debt Net New Borrowing
Current Ratio =
Quick Ratio =
Ending Equity - Beginning Equity - Addition to Retained Earnings Net New Equity
Current Assets Current Liabilities
Current Assets - Inventories Current Liabilities
Cash Ratio =
Cash Current Liabilities
Total Debt Ratio =
Total Debt Total Assets - Total Equity = Total Assets Total Assets
Debt - to - Equity Ratio =
Total Debt Total Equity
Time Interest Earned =
EBIT Interest
Cash Coverage Ratio =
EBIT + Depreciation Interest
Fixed Charge Coverage Ratio =
Equity Multiplier =
Total Assets Equity
or
EBIT + Lease Pmt. Sinking Funds Interest + Lease Pmt. + 1−T EM = 1 +
Total Assets Turnover =
Sales Total Assets
Fixed Assets Turnover =
Sales Net Fixed Assets
D = E
1 1−
D TA
Inventory Turnover =
ACP or DSO =
Sales Cost of Goods Sold OR Inventory Inventory
Receivables Sales 365
Profit Margin (ROS) =
Net Income Sales
ROA =
Net Income Total Assets
ROE =
Net Income Common Equity
Return on Capital =
Net Income + Interest + Preferred Dividnd Debt + Common Equity + Preferred Stock
Basic Earnings Power =
Earnings per Share =
EBIT Total Assets
Net Income No. Shares Outstanding
Price - Earnings Ratio =
Market Price per Share EPS
Dividend Payout Ratio = Dividends ÷ Net Income ROADuPont = Profit Margin * Total Assets t/o Market Value - Book Value Ratio =
Market Price per Share Book Value per Share
ROEDuPont = Profit Margin * Total Assets t/o * Equity Multiplier Internal Growth Rate =
ROA * b 1 - (ROA * b)
Sustainable Growth Rate =
ROE * b 1 - (ROE * b)
Earnings Retention Ratio = b = 1 – Dividend Payout Ratio FV = PV (1 + r ) t = PV * FVIFr , t PV =
FV (1 + r ) t
FV = PV (1 +
PV =
= FV * PVIFr , t r m *t ) = PV * FVIF r , mt m m
FV = FV * PVIF r r m *t , mt m (1 + ) m
EAR = (1 +
r m ) −1 m
FV = PV * e r *t PV = FV * e − r *t (1 + r ) t − 1 FVA = C * = C * FVIFAr , t r 1 1 PVA = C * − = C * PVIFAr , t t r r * (1 + r )
PVPerpetuity =
C r
(1 + r ) t − 1 FVA = Cdue * * (1 + r ) = C due * FVIFAr , t * (1 + r ) r
1 1 * (1 + r ) = C due * PVIFAr , t * (1 + r ) PVA = Cdue * − t r * ( 1 ) r r +
Reminder:
In the case of frequent compounding or discounting, divide the nominal rate (APR) by “m” and multiply period by “m”. “m” is number of times interest is compounded/discounted in one period. Also, annuity interval must match the frequency (m) of compounding or discounting.
1 1 FV Bond Value = C * − + t t r r * (1 + r ) (1 + r ) (1+R) = (1+r)*(1+h)
Coupon FV Coupon Current Yield = VB Coupon Rate =
1 1 FV + − VB = C * t t YTM YTM * (1 + YTM ) (1 + YTM )
P0 = P0 =
D1 (1 + r )1 D1 (1 + r )1
+ +
D2 (1 + r ) 2 D2 (1 + r ) 2
D r D P0 = 1 r−g D r= 1+g P0 P0 =
Dn = D0 * (1 + g ) n
+ +
D3 (1 + r ) 3 D3 (1 + r ) t
+ ........ + ..... +
Dn +1 1 * + (1 + r ) n r − g c (1 + r ) n Dn
n
NPV = ∑ t =1
CFt + (CF0 ) (1 + r ) t
CFt
n
∑ (1 + IRR) t =1
PBP = t +
+ (CF0 ) = 0
Last Negative Cum. CF CFt +1
CFt
n
PI =
t
∑ (1 + r ) t =1
t
CF0
n
∑ Net Income t =1
ARR =
n Beginning Value Investment + Ending Value Ivestment 2 n
n
COFt
∑ (1 + r ) t =o
t
t
=
∑ CIF * (1 + r ) t =1
n −t
t
(1 + MIRR) n
Operating Cycle = Inventory Period + Accounts Receivable Period Cash Cycle = Operating Cycle – Accounts Payable Period
Inventory Turnover =
Inventory Period =
Cost of Goods Sold Average Inventory
365 Inventory Turnover
Receivable Turnover =
Credit Sales Average Accounts Receivable
Receivable Period =
365 Receivable Turnover
Payable Turnover =
Cost of Goods Sold Average Payable
Payable Period =
Average =
365 Payable Turnover
Beginning + End 2
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