Sei sulla pagina 1di 36

CMA PART 2

STUDY UNIT 1
STUDY UNIT 2
STUDY UNIT 3
STUDY UNIT 4
STUDY UNIT 5
STUDY UNIT 6
STUDY UNIT 7
STUDY UNIT 8
STUDY UNIT 9
STUDY UNIT 10
CMA PART 2
EHICS, FRAUD & RISK MANAGEMENTS
FINANCIAL MARKETS & TYPES OF SECURITIES
VALUATION METHODS & COST OF CAPITAL
MANAGING CURRENT ASSETS
CORPORATE RESTRUCTURING & INTERNATIONAL FINANCE
RATIO ANALYSIS
ACTIVITY MEASUSRES & FINANCING
INVESTMENT DECISIONS
CVP ANALYSIS
MARGINAL ANALYSIS & PRICING
VALUATIN OF METHOD ABD COST OF CAPITAL SU 3

IACS
1 EPS=
NO OF COMMON SHARE OUTSTANDING

CONSTANT GROWTH DIVIDEND DIVIDEND PER SHARE


2
DISCOUNT MODEL= DISCOUNT RATE - DIVIDEND GROWTH RATE

3 EXPECTED DIVIDEND= LAST ANNUAL DIVIDEND PAID X (1 + GROWTH RATE)t

DIVIDEND PER SHARE


4 PREFERRED STOCK VALUATION=
COST OF CAPITAL

MPS
5 PRICE/EBITDA RATIO=
EBITDA PER SHARE

CS EQUITY (TOTAL STOCKHOLDERS EQUITY - PREFERRED EQUITY)


6 BVPS=
NO OF COMMON SHARE

DIVIDEND DECLARED
7 DPS=
NO OF COMMON SHARES

DPS (DIVIDEND TO COMMON SHAREHOLDERS)


8 DP RATIO=
EPS (IACS)

MPS
9 PE RATIO=
EPS

EPS
10 EARNINGS YIELD=
MPS

DPS
11 DIVIDEND YIELD=
MPS

ENDING STOCK PRICE - BEGINNING STOCK PRICE - AN


12 SHAREHOLDER RETURN=
BEGINNING STOCK PRICE

MPS
13 MARKET TO BOOK RATIO (PRICE BO
BVPS

MPS
14 PRICE SALES RATIO=
SALES PER SHARE

COST OF CAPITAL:
DEBT CAPITAL (BOND & DEBENTURES)
I (1-T)
15 NEW=
NET AMOUNT RECEIVED

I (1-T)
16 CURRENT=
FACE VALUE OR CURRENT MV

PREFERENCE SHARE CAPITAL


D
17 NEW=
NET AMOUNT RECEIVED

D
18 CURRENT=
CURRENT MV

COMMON SHARE HOLDERS


D
19 NEW=
NET AMOUNT RECEIVED

D
20 CURRENT: WITH ZERO GROWTH =
CURRENT MV

D
21 CURRENT: WITH GROWTH RATE= (
CURRENT MV

22 WACC :
IT'S A COST OF COMBINED CAPITAL OF BOTH DEBT & EQUITY
FOLLOWINGS ARE THE STEPS TO CALCULATE WACC:
STEPS
1 CALCULATE THE PROPORTIONATE OF CAPITAL
2 CALCULATE EFFECTIVE COST OF CAPITAL
3 CALCULATE PRODUCT OF PROPORTIONS WITH THE RESPECTIVE COST OF CAPITAL
4 SUM OF STEP 3

EXAMPLE
LONG TERM DEBT 7000
PREFERENCE STOCK (100 SHARES) 1000
COMMON STOCK (200 SHARES) 7000

*BONDS CURRENTLY SELLING @80% OF PAR & CURRENT MARKET YIELD OF 9% WITH THE TAX RATE OF 40%
*PREFERRED STOCK SELLING @ PAR VALUE & PAYS 6% DIVIDEND.
*COMMON STOCK HAS A CURRENT MV OF $40 & EXPECTED PAY @ $1.2 PER SHARE DIVIDEND THIS FISCAL YEAR.
*DIVIDEND GROWTH IS EXPECTED TO BE 10% PER YEAR
SOLUTION STEP 1

LONG TERM DEBT = 80% ON 7000 7000 5600 38.36


PREFERENCE STOCK (100 SHARES) 1 1000 1000 6.85
COMMON STOCK (200 SHARES) (20 7000 8000 54.79
14600 100.00

INCOME STATEMENT
PATICULARS AMOUNT
SALES XXX
LESS: COGS XXX
GROSS PROFIT XXX
LESS: OPEX
ADMINISTRATIVE EXP. XXX
SELLING EXP. XXX
DISTRIBUTION EXP. XXX XXX
EBIT (OPERATING PROFIT) XXX
LESS: INTEREST (FINANCE COST) XXX
EBT XXX
LESS: TAX (%) XXX
NET INCOME XXX
LESS: DIVIDEND (PREFERENCE SHARE HOLDERS) XXX
IACS (INCOME AVAILABLE TO COMMON SHARE HOLDERS XXX

v CALCULATION OF COMMON SHARES OUTSTANDING:


SL. NO PATICULARS DATE OF ISSUE NO OF SHARES CALCULATIONS
1 ORIGINAL EXISTING SHARES 300000 /12

2 BONUS SHARES (STOCK 1-May-17 15000 X12/12


DIVIDENDS)

PREFERENCE SHARES CONVERTED


3 INTO COMMON SHARES 1-Jul-17 20000 X12/12
(NO OF FIXED DIVIDEND PAID
DURING THE YEAR)
BONDS CONVERTED INTO
COMMON SHARES
4 (INTEREST TO BE ADDED BACK TO 1-Aug-17 25000 X12/12
NET INCOME BY ADJUSTING THE
TAX)
I(1-T), [I = INTEREST, T = TAX]
SHARES ISSUED FOR CASH
5 1-Nov-17 5000 X2/12
(WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING)
DILLUTED EPS
CAPITAL SU 3 ANNEXURE

STANDING

ER SHARE
DEND GROWTH RATE

D X (1 + GROWTH RATE)t

FERRED EQUITY)
COMMON SHARE

D
RES

AREHOLDERS)
X 100

X100

X100

E - BEGINNING STOCK PRICE - ANNUAL DPS


EGINNING STOCK PRICE
ED

T MV

X 100
ED

X 100
ED

D
X 100) + G
ENT MV

H THE TAX RATE OF 40%

E DIVIDEND THIS FISCAL YEAR.


STEP 2 STEP 3 (STEP 1 *OR
STEP
STEP
2) 3 (STEP 1 * STEP 3)

5.4 2.07 30240


6 0.41 6000
13 7.12 104000
9.61 140240

STEP 4
9.61 140240

TOTAL
300000

15000

20000

25000
833.33

360833.33
MANAGING CURRENT ASSETS SU 4
EOQ (ECONOMIC ORDER QUANTITY) MODEL FOR CASH MANAGEMENT
Q= √2BT/I

Q=OPTIMAL CASH BALANCE


1
B=FIXED COST PER TRANSACTION
T= TOTAL DEMAND FOR CASH FOR THE PERIOD
I= INTEREST RATE ON MARKETABLE SECURITIES

RECEIVABLE MANAGEMENT
INCREMENTAL AVERAGE COLLECTION PERIOD
2 INCREMENTAL VARIABLE COSTS X
DAYS IN YEAR

PORTFOLIO MANAGEMENT
3 EXPECTED RATE OF RETURN= ∑PXR

D+ (I1 - I0)
ROI= X 100
I0
4
D= DIVIDEND
I1= INVESTED AMOUNT RECEIVED
I0= AMOUNT INVESTED

5 STANDARD DEVIATION= √VARIANCE

STANDARD DEVIATION
6 COEFFICIETT OF VARIATION=
EXPECTED RETURN OR RATE OF RETURN

7 COVARIANCE OF 2 STOCK PORTFOLIO= CORRELATION COEFFICIENT X STD DEV1 X STD DEV2

CAPM= CAPITAL ASSETS PRICING MODEL

8 EXPECTED RATE OF RETURN (Ṝ)= Rf + ẞ (Rm - Rf)

Rf= RISK FREE RATE OF RETURN


ẞ= BETA CO. EFF. (RISK)
Rm= MARKET RATE OF RETURN

RISK PREMIUM = ẞ (Rm - Rf)


MARKET RISK PREMIUM= (Rm - Rf)

INVENTORY MANAGEMENT
9 EOQ (ECONOMIC ORDER QUANTITY)= √2ad/k

a = cost of placing an order


D = annual qty used in units (periodic demand in units)
k= annual cost of carrying 1 unit in stock (carrying cost per unit)

EOQ ↑ INCREASES WHEN ↑AD OR K ↓


EOQ ↓ DECREASES WHEN ↓AD OR K ↑

10 REORDER POINT= AVERAGE DEMAND X LEAD TIME ) X SAFETY STOCK QT


OR
CLASS FORMULA (CONSUMED QTY PER DAY [NO OF UNITS] X LEAD TIME) X SAFETY STO
ANNEXURE

RAGE COLLECTION PERIOD


YS IN YEAR

V1 X STD DEV2
demand in units)
ock (carrying cost per unit)

SAFETY STOCK QT

NITS] X LEAD TIME) X SAFETY STOCK QTY


CORPORATE RESTRUCTURING & INTERNATIONAL FINANCE SU 5
1 THE EXCHANGE RATE IS THE PRICE OF ONE CURRENCY STATED IN TERMS OF ANOTHER CURRENCY
2 IF THE $ APPRECIATES, IMPORT PRICE FALL IN USA AND PRICES FO US EXPORTS RISE
3 WHEN $ DEPRECIATES, IMPORT PRICE RAISE IN USA, EXPORT PRICE WILL FALL
4 DEMAND FOR $ BY FOREIGNERS, REFLECTS DEMAND FOR$ PRODUCTS & INVESTMENTS
5 TO SUPPLY OF $ TO FOREIGNERS BY US CITIZEN REFLECT US DEMAND OF FOREIGN GOODS, SERVICES & FOREIGN IN
6 EQULIBRIUM EXCHANGE RATE , THE $ PURCHASE EQUALS THO
E SU 5 ANNEXURE
R CURRENCY

OODS, SERVICES & FOREIGN INVESTMENTS


RATIO ANALYSIS - SU 6

1 NET WORKING CAPITAL= CURRENT ASSETS - CURRENT LIAIBLITIES

2 LIQUIDITY RATIOS:
CURRENT ASSETS
A CURRENT RATIO=
CURRENT LIABILITIES

CASH+MARKETABLE SECURITIES + NET RECEIVABLES


B QUICK RATIO OR ACID TEST RATIO =
CURRENT LIABILITIES

CASH + MARKETABLE SECURITIES


C CASH RATIO=
CURRENT LIABILITIES

CASH FLOW FROM OPERATIONS


D CASH FLOW RATIO=
CURRENT LIABILITIES

CURRENT ASSETS - CURRENT LIABILITIES


E NET WORKING CAPITAL RATIO=
TOTAL ASSETS

3 PROFITABILITY RATIOS:
NET SALES - COGS
A GROSS PROFIT MARGIN RATIO=
NET SALES

EBIT OR OPERATING INCOME


B OPERATING PROFIT MARGIN=
NET SALES

NET INCOME
C NET PROFIT MARGIN RATIO=
NET SALES

EBITDA
D EBITDA=
NET SALES

NET INCOME
E RETURN ON ASSETS (ROA/ROTA)=
TOTAL AVERAGE ASSETS

NET INCOME
F RETURN ON EQUITY (ROE)=
AVERAGE TOTAL EQUITY

G SUSTAINABLE GROWTH RATE= ROE X (1-DIVIDEND PAYOUT RATIO)

NET INCOME NET SALES


X
H DUPONT MODEL FOR ROA= NET SALES AVERAGE TOTAL ASSETS
(NET PROFIT MARGIN) (TOTAL ASSET TURNOVER)
NET INCOME NET SALES
X
I DUPONT MODEL FOR ROE= NET SALES AVERAGE TOTAL ASSETS
(NET PROFIT MARGIN) (TOTAL ASSET TURNOVER)

4 CAPITAL STRUCTURE RATIOS


TOTAL DEBT
A TOTAL DEBT TO TOTAL CAPITAL RATIO=
TOTAL EQUITY

TOTAL DEBT
B DEBT TO EQUITY RATIOS=
SHAREHOLDERS EQUITY

LONG TERM DEBT


C LONG TERM DEBT TO EQUITY RATIO=
SHAREHOLDERS EQUITY

TOTAL LIABILITIES
D DEBT TO TOTAL ASSETS RATIO=
TOTAL ASSETS

TOTAL DEBTS
E DEBT RATIO=
TOTAL ASSETS

5 EARNINGS COVERAGE
EBIT
A TIME INTEREST EARNED RATIO=
INTEREST EXPENSES

EBIT+INTEREST PORTION OF OPERATIN


B EARNINGS TO FIXED CHARGES RATIO=
INTEREST EXPENSES + INTEREST PORTION OF OPERATING LEASES + DI

PRE TAX OPERATING CASH FLO


C CASH FLOW TO FIXED CHARGES RATIO=
INTEREST EXPENSES + INTEREST PORTION OF OPERATING LEASES + DI

6 LEVERAGE:
PRE FIXED COST INCOME AMOUNT
A DEGREE OF LEVERAGE=
POST FIXED COST INCOME AMOUNT

DEGREE OF OPERATING LEVERAGE= CONTRIBUTION MARGIN


B
SINGLE PERIOD VERSION OPERATING INCOME OR EBIT

DEGREE OF OPERATING LEVERAGE= % CHANGE IN OPERATING INCOME OR EBIT


C
PERCENTAGE CHANGE VERSION % CHANGE IN SALES

DEGREE OF FINANCIAL LEVERAGE= EBIT


D
SINGLE PERIOD VERSION EBT

DEGREE OF FINANCIAL LEVERAGE= % CHANGES IN NET INCOME


F
PERCENTAGE CHANGE VERSION % CHANGES IN EBIT
6 ANNEXURE

+ NET RECEIVABLES
ILITIES

NET SALES
AVERAGE TOTAL ASSETS
OTAL ASSET TURNOVER)
NET SALES AVERAGE TOTAL ASSETS
X
AVERAGE TOTAL ASSETS AVERAGE TOTAL EQUITY
OTAL ASSET TURNOVER) (EQUITY MULTIPLIER)

BIT+INTEREST PORTION OF OPERATING LEASES


PORTION OF OPERATING LEASES + DIVIDENDS ON PREFERRED STOCK

PRE TAX OPERATING CASH FLOW


PORTION OF OPERATING LEASES + DIVIDENDS ON PREFERRED STOCK
ACTIVITY MEASURES AND FINANCING - SU 7
1 RECEIVABLES
NET CREDIT SALES
A ACCOUNTS RECEIVABLE TURNOVER=
AVERAGE ACCOUNTS RECEIVABLES

DAYS IN YEAR
B DAYS SALES OUTSTANDING IN RECEIVABLES=
ACCOUNTS RECEIVABLE TURNOVER

2 INVENTORY
COGS
A INVENTORY TURNOVER=
AVERAGE INVENTORY

DAYS IN YEAR
B DAYS SALES INVENTORY=
INVENTORY TURNOVER

3 PAYABLES
PURCHASES
A ACCOUNTS PAYABLE TURNOVER=
AVERAGE ACCOUNTS PAYABLES

DAYS IN YEAR
B DAYS PURCHASES IN ACCOUNTS PAYABLE=
ACCOUNTS PAYABLE TURNOVER

5 OPERATING CYCLE= DAYS SALES OUTSTANDING IN RECEIVABLES + DAYS SALES I

6 CASH CYCLE= OPERATING CYCLE - DAYS PURCHASES IN ACCOUNTS PAYAB

SALES
7 WORKING CAPITAL TURNOVER=
WORKING CAPITAL

NET SALES
8 FIXED ASSETS TURNOVER RATIO=
AVERAGE NET PROPERTY,PLANT & EQUIPMENT

NET SALES
9 TOTAL ASSETS TURNOVER RATIO=
AVERAGE TOTAL ASSETS

SHORT TERM FINANCING

1
A DISCOUNT TAKEN= INVOICE AMOUNT X (1.0-DISC%)

DR DAYS IN YEAR
B COST OF NOT TAKING DISCOUNT= X
100-DR NET PERIOD - DISCOUNT PERIOD

2 EFFECTIVE INTEREST RATE ON A LOAN


NET INTEREST EXPENSES
A ERI=
USABLE FUNDS

SRI
B ERI ON DISCOUNTED RATE=
(100-SRI)

3 SIMPLE INTEREST LOANS

A INTEREST EXPENSES= LOAN AMOUNT X STATED RATE

4 DISCOUNTED LOANS

USABLE FUNDS
A LOAN AMOUNT=
(100-SRI)

5 LOANS WITH COMPENSATING BALANCE

USABLE FUNDS
A LOAN AMOUNT=
(100-CB%)

SRI
B EFFECTIVE RATE WITH CB =
(100-CB%)

SRI
C EFFECTIVE RATE WITH CB ON DISCOUNTED RATE=
(100-SRI-CB%)

6 LINES OF CREDIT

INTEREST EXPENSES ON AVERAGE BALANCE + COMMITME


A ANNUAL COST=
(AVERAGE BAL X SRI) + (CREDIT LIMIT -AVERAGE BALANCE)

7 MARKET BASED INSTRUMENTS

FACE VALUE - NET PROCEEDS


A ANNUALIZED RATE= X NUMBER OF TERMS PE
NET PROCEEDS
SU 7 ANNEXURE

ECEIVABLES + DAYS SALES INVENTORY

HASES IN ACCOUNTS PAYABLE

ES
LANT & EQUIPMENT

ES
L ASSETS

DAYS IN YEAR
IOD - DISCOUNT PERIOD
GE BALANCE + COMMITMENT FEE ON UNUSED PORTION
LIMIT -AVERAGE BALANCE) X COMMITMENT FEE%)

X NUMBER OF TERMS PER YEAR


INVESTMENT DECISIONS - SU 8

INITIAL NET INVESTMENT


1 PAYBACK PERIOD=
ANNUAL EXPECTED CASH FLOW

PV OF FUTURE CASH FLOWS


2 PROFITABILITY INDEX=
NET INVESMENT

3 NET PRESENT VALUE= (AFTER TAX CASH FLOW * PRESENT VALUE OF AN ANNUITY)-NET INVESTMENT

4 INTERNAL RATE OF RETURN= INITIAL INVESTMENT / NET CASH INFLOWS


E OF AN ANNUITY)-NET INVESTMENT

S
CVP ANALYSIS FORMULAS SU 9
1 BEP FOR SINGLE PRODUCTS

A UNIT CONTRIBUTION MARGIN=

B BEP IN UNITS=

C CONTRIBUTION MARGIN RATIO=

D BEP IN $ =

E MARGIN OF SAFETY =

F MARGIN OF SAFETY RATIO =

G TARGET INCOME IN UNITS =

H TARGET INCOME CALC. AFTER TAX=

I OTHER TARGET INCOME

2 BEP FOR MUTLIPLEPROCUT

A MUTLI PROCUCTIONS CALC IN UNITS =

B WEIGHTED AVERAGE CONTRIBUTION MARGIN RATIO=

3 Class Formulas:
A CONTRIBUTION =
B PROFIT =
C FIXED COST
D CONTRIBUTION =
E CONTRIBUTION MARGIN RATIO =
F BEP:
G BEP in Units

H BEP in Qty

I Target Profit

J TP after tax

K Sales required in $ amount for TP:

L Sales required to get AFTER TAX TP

M Multi Product BEP:


CVP ANALYSIS FORMULAS SU 9

UNIT SELLING PRICE - UNIT VARIABLE COST

FIXED COSTS
UNIT CONTRIBUTION MARGIN

UNIT CONTRIBUTION MARGIN


UNIT SELLING PRICE

FIXED COST
CONTRIBUTION MARGIN RATIO

PLANNED SALE - BREAKEVEN SALES

MARGIN OF SAFETY
PLANNED SALES

FIXED COST + TARGET OTHER INCOME


UNIT CONTRIBUTION MARGIN

FIXED COST + (TARGET NET INCOME / (1.0 - TAX RATE)


C

SALES - VARIABLE COST- CONRIBUTION

FIXED COST
WEIGHTED AVERAE COST -WEIGHTTED AVERAGE VARIABLE COST

WEIGHTED AVERAGE CONTRIBUTION MARGIN RATIO


WEIGHTED AVERAGE UNIT SELLING PRICE

SALES - VARIABLE COST (C=S-V)


SALES- VARIABLE COST - FIXED COSTS (P= S-V-F)
CONTRIBUTION - PROFIT (F = C-P)
FIXED COSTS + PROFIT (C = F+P)
CONTRIBUTION/SALES*100 (CMR = C/S*100)
FIXED COST + VARIABLE COST (TS = FC+VC)
FIXED COST/UNIT COST (SALES -VARIABLE COST) [=FC/UC(S-VC]

FIXED COST/UNIT COST PER UNIT (FC/UC PER UNIT)

FIXED COST+ P*/COST PER UNIT (P* INDICATES TARGET PROFIT) (= FC + P*/CPU (*INDICATES TARGET PROFIT)

= F+ [P/1-T]/CPU (IF TAX 40% = 1-T =1-0.40)

#NAME?

= F + [P/1-T]/CMR

INFORMATION REQUIRED:
1.       SP OF PRODUCTS
2.       VC OF PRODUCTS
3.       FC OF TOTAL PRODUCTS
4.       SMR (SALES MIXED RATIO)
STEPS:
1.       CALCULATE CONTRIBUTION (S-V) ALL PRODUCTS
2.       CALCULATE PROPORTIONATE CONTRIBUTION OF EACH PRODUCT USING SMR
3.       CALCULATE THE TOTAL UNIT CONTRIBUTION OF MULTI PRODUCT
4.       APPLY THE FORMULA = FC/COMBINED CPU
5.       AFTER GETTING TOTAL BEP IN UNITS MULTIPLY WITH THE INDIVIDUAL PRODUCT SMR TO GET ITEMIZED BEP.
ANNEXURE
TEMIZED BEP.
MARGINAL ANALYSIS & PRICING SU 10

1 ECONOMIC COSTS= EXPLICIT COST + IMPLICIT COST

*EXPLICIT COSTS ARE ACCOUNTING COST


*IMPLICIT COSTS ARE OPPORTUNITY COSTS

2 ACCOUNTING PROFIT= REVENUE - EXPLICIT COSTS

3 ECONOMIC PROFIT= ACCOUNTING PROFIT - IMPLICIT COSTS

PRICE ELASTICITY OF DEMAND


% ∆QD (% CHANGE IN QUANTIY DEMANDED)
4 Ed (% METHOD)=
% ∆P (% CHANGE IN PRICE)

(Q1-Q0) / (Q1+Q0)
5 MID POINT METHOD (ACCURATE)=
(P1-P0) / (P1+P0)

4 COMMON COST PLUS PRICING FORMULAS


1 PRICE= TOTAL COST + (TOTAL COST X MARKUP %)
2 PRICE= ABSORPTION MANUFACTURING COST + (ABS.MFG. COST X MARKUP %)
3 PRICE= VARIABLE MANUFACTURING COST + (VAR.MFG. COST X MARKUP %)
4 PRICE= TOTAL VARIABLE COST + (TOT. VAR. COST X MARKUP %)
ANNEXURE

ABS.MFG. COST X MARKUP %)


.MFG. COST X MARKUP %)
X MARKUP %)

Potrebbero piacerti anche