Managerial Finance FRL 300 Formula Sheet

Managerial Finance FRL 300

Formula Sheet

Prepared by P. Sarmas

(revised September 2012)

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

Interest Paid

Dividend Paid

- Net New Borrowing - Net New Equity

Cash Flow to Creditors Cash Flow to Stockholders

EBIT + Depreciation - Taxes Operating Cash Flow

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

Ending Equity - Beginning Equity - Addition to Retained Earnings Net New Equity

Internal Growth Rate ROA* b 1- (ROA* b)

Sustainable Growth Rate ROE* b 1- (ROE* b)

Earnings Retention Ratio = b = 1 ? Dividend Payout Ratio

Current Ratio Current Assets Current Liabilitie s

Cash Ratio

Cash

Current Liabilitie s

Quick Ratio Current Assets - Inventorie s Current Liabilitie s

NWC Ratio NWC Total Assets

Interv al Measure

Current Assets

AverageDaily OperatingCost

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

EBIT Lease Pmt. Interest Lease Pmt. Sinking Funds

1T

Long Term Debt Ratio

Long Term Debt

Long Term Debt Equity

Equity Multiplier

TotalAssets or EM 1 D

Equity

E

1 1D

TA

Total Assets Turnover

Sales

Total Assets

Fixed Assets Turnover

Sales

Net Fixed Assets

Inventory Turnover Sales OR Cost of GoodsSold

Inventory

Inventory

Days' Sales in Inventory

365

Inventory t / o

Re ceivableTurnover

Sales

Account Re ceivable

Days'Salesin Receivables

365

Receivablet/o

Payable Turnover Costof Goods Sold Accounts Payable

Days'Purchasesin Payable

365

Payable t/o

Operating Cycle = Inventory Period + Accounts Receivable Period

Cash Cycle = Operating Cycle ? Accounts Payable Period

NWC Turnover Sales NWC

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 EBIT Total Assets

Earnings per Share

Net Income

No.Shares Outstandin g

Price - Earnings Ratio Market Price per Share EPS

Market Value - Book Value Ratio Market Price per Share Book Value per Share

Dividend Payout Ratio = Dividends Net Income ROADuPont = Profit Margin * Total Assets t/o 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

InventoryTurnover Costof GoodsSold AverageInventory

InventoryPeriod

365

InventoryTurnover

ReceivableTurnover

Credit Sales

AverageAccountsReceivable

ReceivablePeriod

365

ReceivableTurnover

PayableTurnover Cost of Goods Sold AveragePayable

PayablePeriod

365

PayableTurnover

Average Beginning End 2

FV PV(1 r)t PV * FVIFr,t

PV

FV (1 r)t

FV * PVIFr,t

FV

PV(1 r )m*t m

PV * FVIFr ,mt

m

PV

FV (1 r )m*t

FV * PVIFr ,mt

m

m

FV PV * er*t

PV FV * e r*t EAR (1 r )m 1

m

FVA C * (1 r)t 1 r

C * FVIFAr,t

PVA C * 1 r

1 r * (1 r)t

C * PVIFAr,t

PVPerpetuity

C r

FVA Cdue * (1

r)t r

1 * (1

r)

Cdue * FVIFAr,t * (1

r)

PVA

Cdue *

1 r

1 r * (1

r)t

* (1

r)

Cdue * PVIFAr,t * (1

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.

Bond Value C * 1 r

1 r * (1 r)t

FV (1 r)t

(1+R) = (1+r)*(1+h)

CouponRate Coupon FV

CurrentYield Coupon VB

VB

C* 1 YTM

1 YTM * (1 YTM )t

FV (1 YTM )t

P0

D1 (1 r)1

D2 (1 r)2

D3 (1 r)3

........

P0

D1 (1 r)1

D2 (1 r)2

D3 (1 r)t

.....

Dn (1 r)n

Dn 1 r gc

* (1

1 r)n

P0

D r

P0

D1 rg

r D1 g P0

Dn D0 * (1 g)n

NPV

n CFt t 1 (1 r)t

(CF0 )

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