Fin cheat sheet

Current assest – current liabilities = net working capital

Earnings before interest and taxes (EBIT) = total revenues + other income – costs – depreciation

Average tax rate = total tax bill / total income

Market capitalization: total market value of equity = share price * number of share outstanding

Market value added (MVA) = market cap – book value of equity

Market – to – book ratio = market value of equity/book value of equity

Economic value added (EVA):. = net income – a charge for the cost of capital employed

= after tax interest + net income – (cost of capital * total capitalization)

= after tax operating income – (cost of capital * total capitalization)

Total capitalization = long term debt + shareholders equity

After-tax operating income = (1 - tax rate) × interest expense + net income

Return on Capital (ROC) = after tax operating income/total capitalization

Return on assets (ROA) = after tax operating income/total assets

Return on equity (ROE) = net income/equity

Asset turnover ratio = sales/total assets at the start of the year

Inventory turnover = cogs/inventory at the start of the year

average days in inventory = inventory at the start of the year/daily cogs

Receivables turnover = sales/receivables at the start of the year

average collection period = receivables at the start of the year/average daily sales

Profit margin = net income/sales

Operating profit margin = after tax operating income/sales

Long term debt ratio = long term debt/(long term debt +equity)

Long term debt equity ratio = long term debt/ratio

Total debt ratio = total liabilities/total assets

Times interest earned = EBIT/interest payments

Cash coverage ratio = (EBIT + depreciation)/interest payments

Net working capital to assets = net working capital/total assets

Current ratio = current assets/current liabilities

Quick ratio = (cash + marketable securities + receivables)/current liabilities

Cash ratio = (cash + marketable securities)/current liabilities

Interest (after one year) = initial investment * (1 + r)

Future value (FV) = initial investment* (1+r)

present value (PV) = future value / interest rate

discount factor is 1/(1+r)t

PV of t-value annuity = C[(1/r)-(1/(r(1+r)t))]

T- year annuity factor ( in the brackets)

Future value of an annuity = PV of annuity * (1+r)t= (((1+r)t-1)/r)

PV annuity factor = [1-(1/(1+r)t)-1]/r

FV annuity factor = [(1+r)t-1]/r

Cash payment from perpetuity = r * PV

PV of perpetuity = cash payment/r

PV of annuity due = PV of ordinary annuity * (1+r)

FV of annuity due = FV of ordinary annuity * (1+r)

1 + effective annual interest rate = (1+monthly rate)12

Monthly interest rate = APR/12

R = nominal rate; r = real rate; h = inflation rate

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