Managerial Finance FRL 3000 Formula Sheet

Managerial Finance FRL 3000

Formula Sheet

Prepared by P. Sarmas

(August 2018)

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

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

PV

=

FV (1 + r

)t

= FV

* PVIFr,t

FV

=

PV (1 +

r )m*t m

=

PV

*

FVIF r

, mt

m

PV

= FV (1 + r )m*t

= FV

* PVIFr ,mt

m

m

PV = FV * e-r*t

EAR = 1 + APR m - 1 m

FV = PV * er*t

PVA

=

C

*

1

r

-

r

*

1 (1 +

r)t

=

C

*

PVIFAr,t

FVA

=

C

*

(1 +

r)t r

- 1

=

C

*

FVIFAr,t

FVA =

Cdue

*

(1

+

r)t r

-

1

*

(1

+

r)

= Cdue

*

FVIFAr,t

* (1 +

r)

PVA

=

Cdue

*

1

r

-

r

*

1 (1 +

r)t

*

(1

+

r)

=

Cdue

*

PVIFAr,t

*

(1

+

r)

P0

=

D r

P0

=

D1 r-g

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.

r = D1 + g P0

Dn = D0 * (1 + g)n

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

Bond

Value

=

C

*

1

r

-

r

*

1 (1 +

r)t

+

FV (1 + r)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 r-

+1

gc

*

(1

1 +r

)

n

Coupon Rate = Coupon FV

Current Yield = Coupon VB

VB

=

C

*

1 YTM

-

YTM

1 * (1 + YTM )t

+

FV (1 + YTM )t

NPV

=

n t =1

CFt (1 + r)t

+ (CF0 )

n

t =1

CFt (1 + IRR)t

+ (CF0 ) = 0

n CFt

PI = t =1 (1 + r)t CF0

PBP = t + Cum CFt CFt +1

n

n

COFt

CIFt * (1 + rI )n-t = t =1

t =o (1 + rF )t

(1 + MIRR)n

PVPerpetuity

=

C r

n

Net Incomet

t =1

ARR =

Beginning Value

n Investment + Ending Value

Ivestment

2

Operating Cash Flow = (Sales?Variable Cost?Fixed Cost?Depreciation)(1-T) + Depreciation Operating Cash Flow = EBIT + Depreciation ? Taxes Operating Cash Flow = (Sales ? OC ? Depreciation)*(1-T) + Depreciation Operating Cash Flow = Net Income + Depreciation Operating Cash Flow = (Sales ? OC)*(1 ? T) + T*Depreciation Book Value of Asset = Original Cost ? Accumulated Depreciation

Straight - Line Depreciation = Original Cost - Salvage Value n

Return on Capital = Net Income + Interest + Preferred Dividnd Debt + Common Equity + Preferred Stock

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

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

Earnings Retention Ratio = b = 1 ? Dividend Payout Ratio

Dividend Yield = Dt +1 Pt

R = Dt + Pt - Pt-1 Pt -1

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

R = r + h

R(T ) = T - 1 ? Geometric Average + N - T ? Arithmetic Average

N -1

N -1

n

E(R) = Pr .s * Rs s =1

n

2 = Pr .s *[Rs - E(R)]2 s =1

n

= 2 = Prs *[Rs - E(R)]2 s =1

E(Rp) = WA*E(RA) + WB*E(RB)

R = E(R) + U

n

p = W j * j j =1

WA + WB + ..... + WN = 1

E(RA) = Rf + [E(RM) ? Rf]*A

Slope = E(R j ) - R f j

Pt

= C

1

RD

-

1 RD (1 + RD ) t

+

FV (1 + RD ) t

 ................
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