FINC 3511 - Corporate Finance - Formulas

Net income = (EBIT - INT)(1 - tax rate)

Operating cash flow = NOPAT + Dep

NOPAT = EBIT(1 - tax rate)

Net cash flow = Net income + (Dep + Amort)

MVA = (shares outstanding)(stock price) - (total common equity)

EVA = EBIT(1 - tax rate) - (investor supplied capital)(percentage cost of capital)
Current assets = cash + marketable securities + inventory + accounts receivable
Current ratio = current assets
current liabilities

Basic earning = EBIT

power
Total assets

Inventory turnover =
sales
ratio
inventory

Times interest =
EBIT
earned
Interest charges

Quick ratio = current assets - inventory

current liabilities

Fixed asset =
Sales
turnover
Net fixed assets

Days sales =
receivables
outstanding (annual sales)/365

EBITDA Coverage =
EBITDA + Lease Payments
Ratio
Interest + Principal + Lease
Charges pmts
pmts

Debt ratio =

total debt
total assets

Total asset =
Turnover

Net profit =
margin

Net income
sales

Price earnings
ratio

Sales
total assets
= Price per share
Earnings per share

Market/Book = Market price per share

ratio
Book price per share

Return on total assets =

Net income
Total assets

= (Net profit margin)(Total asset turnover)

Return on common equity = Net income

= (net profit margin)(total asset turnover)(1/(1 debt ratio))
common equity
projected account balance = (old account balance)[(new sales)/(old sales)]
Change in retained earnings = (net profit margin)(sales) dividends
Additional funds needed = projected assets (projected liabilities + projected equity)

k i = k i pi

k P = wi k i

i =1

b P = wi b i

i=1

FVn = PV 1 +
m

n*m

ki = kRF + bi (kM kRF)

i=1

PV = FVn
n*m
1 + i
m

n
1

=
PMT
PVA n

t =1 (1 + i )

FVA n = PMT (1 + i )

n- t

t =1

EAR = 1 +
m

INT N*m
1
1
+M
VB =

t
N* m
m t=1 k b
1+ k b
1+ m
m

VP =

D
kP

Current yield = (annual interest payment)/(current price)

Yield-to-maturity = current yield + capital gain/loss

DNS (1 + gC)

t
NS
D0 (1 + gS ) k S - gC
+
P0 =
t
(1 + k s )
(1 + k s )NS
t =1

D0 (1 + g) = D1
P0 =
ks - g
ks - g
N

1
1
+ M

( VB - FC) = INT
B t

B N
t =1 (1 + k d )
(1 + k d )
(P0 - FC) =

D1
ks - g

( Vps - FC) =

D
kps

WACC = w d k Bd (1 - t) + w p kps + w s k s

Breakpoint total dollar amount of retained earnings available

=
(equity)
fraction of equity in the capital structure
n

NPV =
t =1

CFt

(1 + k )

IO

IO =
t =1

CFt

(1 + IRR )

COFt

(1 + k )
t= 0

CIF (1+ k )

n- t

t= 0

(1+ MIRR )n