Formula Sheet (exam reference sheet)

Formula Sheet (exam reference sheet) - Selected...

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Unformatted text preview: Selected Equatim‘is and Tables CHAPTER 3 Stockholders' equity = Paid-in capital + Retained earnings Stockholders' equity 2 Total assets — Total liabilities Net working capital = Current assets — (Payables + Accruals) Operating income (or EBIT) 2 Sales revenues — Operating costs FCF = (Elana — T) + Depreciation) — ( Individual Tax Rates in April 2008 Single Individuals If Your Taxable Income Is Up to $7,825 9, $7,825—$31,850 l $31,850—$77,100 $77,100—S160,850 $160,850—S349,700 Over $349,700 : If Your Taxable Income Is Up to $15,650 515,650—563,700 $63,700—S128,500 $128,500—S195,850 $195,850—S349,700 Over $349,700 Corporate Tax Rates as of January 2008 1 l lfaCorporation’s l Taxable Income ls 1 Up to $50,000 l $50,000—$75,000 ‘1 $75,000—$1oo,ooo l $100,000—5335,ooo $335,000—S10,000,ooo $10,ooo,ooo—$15,ooo,ooo ‘L S15,000,000—$18,333,333 Over $18,333,333 You Pay This Amount on the Base of the Bracket $ 0 ‘ 782.50 4,386.25 15,698.75 39,148.75 101,469.25 ' Married Couples Filing Joint Returns _ You Pay This Amount on the Base of the Bracket S 0 1 ,565.00 8,772.50 24,972.50 43,830.50 94,601 .00 It Pays This Amount on the Base of the Bracket S 0 7,500 1 3,750 22,250 1 13,900 3,400,000 5,1 50,000 6,41 6,667 Capital expenditures + Plus This Percentage on the Excess over the Base (Marginal Rate) 10.0% 15.0 25.0 28.0 33.0 35.0 Plus This Percentage on the Excess over the Base (Marginal Rate) 10.0% ' 15.0 25.0- 28.0 33.0 35.0 Plus This Percentage on the Excess over the Base (Marginal Rate) 15% 25 34 39 34 35 38 35 Increase in net working capital > Average Tax Rate at Top of Bracket 10.0% 13.8 20.4 24.3 29.0 35.0 Average Tax Rate at Top of Bracket 10.0% 13.8 19.4 22.4 27.0 35.0 Average Tax Rate at Top of Bracket 15.0% 18.3 22.3 34.0 34.0 34.3 35.0 35.0 CHAPTER 4 Current assets Current ratio = Current llabllltles Current assets — Inventories Current liabilities Quick, or acid test, ratio Sales Inventory turnover ratio = ———_- Inventories R ‘ bl Days, sales, outstanding (050) = ecewa es Sales Fixed assets turnover ratio 2 ~————— Net fixed assets Sales Total assets turnover ratio = —~—— Total assets Total debt Debt ratio = —————— Total assets EBIT Times-interest-earned (TIE) ratio = —-——— Interest charges D/A 1— D/A D/E 1+ D/E D/E = and D/A = EBITDA + Lease payments Appendix C Selected Equations and Tables Receivables Average sales per day 2 Annual sales/365 EBITDA coverage = operating margin 2 Operating Income (EBIT) Sales Profit margin 2 W Sales Return on total assets (ROA) = w EBlT Basic earning power (BEP) = m Net income+ Interest Return on investors’ 'capital (ROIC) = Debt +Equity Net income Return on common equity (ROE) = W Price per share Pr‘ Ear ' P E rat' 2 ————————-——— lce/ nmgs( / ) '0 Earnings per share Common equity Book value er share 2 ——-——-——- p Shares outstanding Market price per share Market/book ratio (M/B) 2 Book value per Share Interest + Principal payments + Lease payments ROE 2 Profit margin xTotaI assets turnover >< Equity multiplier Sales Total assets Net income X — >< Total assets Total common equity _ Sales EVA = EBIT(1 — Corporate tax rate) — (Total i'nvestors' capital) x (After-tax cost of capital) EVA = Net income — [Equity capital >< Cost of equity capital] 2 (Equity capital)(Net income/Equity capital — Cost of equity capital) = (Equity capita|)(ROE — Cost of equity capital) A-33 A-34 Appendix C Selected Equations and Tables CHAPTER 5 Future value = FVN = PV(1 + l)N Present value 2 PV 2 FVN N (1 + I) FVAN = PMTU +')N_1 + PMT(1 + I)“—2 + PMT(1 + 0”—3 +. = PMT[———-—(1 + :)N_1] FVAdue = FVAordinary(1 ‘1") PVAN = PMT/(1+l)1+ PMT/(1+l)2 +-~-+PMT/(1+|)N 1‘ 11I" =PMT ———(+) PVAdue = PVAordinary(1 + I) p PV of a perpetuity = E W— CF1 CF2 CFN N CFt 1+ 2+"’ N_Z It (1+!) (1+0 (1+0 t=1(1+) Stated annual rate _l M Number of payments per year / Periodic rate (IPER) — Number of periods = (Number of years)(Periods per year) ' ' M Effective annual rate (EFF%) = (1 +—N%> — 1,0 --+ PMT(1+I)° =NM CHAPTER 6 Quoted interest rate (r) = r* + IP + DRP + LP + MRP = I'm: +DRP + LP + MRP rT-bill = rRF = r* + W rT-boncl = r: + [Pt + MRPt robond: r: + lPt + MRPt -l- DRP: + LPt rRF with cross-product term 2 r*+ l + (r*>< I) CHAPTER 7 I _ INT lNT L _M_ Bond 5 value (VB) — ——(1 + “)1 + “(1 + rd)2 + + (1+ rd)N + (1+ rd)»: _:”: lNT + M (=1(1+rd)‘ (1+rd)” N lNT u. - Price of callable band 2 E __t + Ca PrlC: t=1 (1+ rd) (1+ rd) 2N INT/2 M VB " E t l 2N t=1 (1+ rd/Z) (1+ rd/z) CHAPTER 8 Expected rate of return (f) = P1 n + le’z + ' ‘ ' + PNrN N : Z Piri i=1 CHAPTER 9 Value of stock (Ea) = PV of expected future dividends — ———D' + D2 + + ————D°° (1+ rs)1 (1+ r5)2 (1 + rs)°° w . = Z L t=1 (1 'l' rs)‘ . A D 1 ‘ D 1 2 D 1 °° Constant growth stock: P0 = M + °( +9) + + jig.)— (1 +r5)l (1 + r92 (1 + rs)°° : D00 +9) : D1 rs — 9 rs — 9 Expected rate _ Expected Expected growth rate, or of return _ dividend yield capital gains yield r D' + s — Po 9 Growth rate = (1 — Payout ratio)ROE ~ D Zero growth stock: P0 = —r- 5 A D Horizon value = PM = “+1 rs ” g A D1 D2 DN DN+1 Doc NonconstantzPo=————+—--—+---+ + +-~l (1+ rs)‘ (1 + rs)2 : (1+ rs)“ (1 + rs)“+‘ (1+ rs)” D1 Dz DN [SN — + . --+ + (1+ r5)1 (1 + r5)2 (1+ rs)" (1+ r5)” = PV of nonconstant dividends+PV of horizon value, ISM Market value V 2 of company ( Company) PV of expected future free cash flows _ mm + FCF2 + + FCFOO (1+WAcc)‘ (1+WACC)2 (1+WAcc)°° Horizon value (VCompany at t=N) = FCFN+l/(WACC_ gFCF) Market value of equity = Book value + PV of all future EVAs D VD:—p rp FF22 VP CHAPTERIO _ % After-tax % of Cost of % of Cost of WACC = of cost of + preferred preferred + common common debt _ debt stock stock equity equity 2 wdrd(1 — T) + WPrP + . wcrs After-tax cost of debt : Interest rate on new debt — Tax savings = rd — rdT = rd(1 — T) DP Component cost of preferred stock 2 rp = P— p Required rate of return 2 Expected rate of return rs :rRF+RP=D1/Po+g=Fs r5 = rRF —— (RPM)bi = I'm: -- (I'M - rRF)bi A D1 D2 Doc P =——-———+ +---+———— ° 0+m‘ U+nf u+om i 0‘ 1:=1(1+r5)t A D1 p = . o rs‘g . D rs=rs=—1+Expectedg Po Cost ofe uit from new stock—r — D1 + q Y —e—Po(1_F) 9 Addition to retained earnings for the year Equity fraction Retained earnings breakpoint = CHAPTERII CF CF NPV=CFo+ ‘1+CF22+---+ “N (1+r) (1+r) (1+r) t=o(1+")t CFo+—C—F—1—,+———Cfl—2+...+——EFN—N=0 . (1+IRR) (1+IRR) (1+lRR) i CFt _ t=0(1+IRR)‘ N t=0 TV PV costs = (1 + MIRR)N Unrecovered cost Number of at start of year Cash flow during full recovery year Payback 2 years prior to + full recovery ...
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Formula Sheet (exam reference sheet) - Selected...

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