FIN602 formulas

Earnings per share = earnings available to common shareholders/number of common shares outstanding Dividend per share = dividends paid to common shareholders/number of common shares outstanding Current ratio=current assets/current liabilities Quick ratio= (current assets-inventory)/current liabilities Inventory turnover = COGS/inventory Average age of inventory=365/inventory turnover Average collection period=accounts receivable/(annual sales/365) Average payment period=accounts payable/(annual purchases/365) Total asset turnover=sales/total assets Debt ratio=total liabilities/total assets Times interest earned ratio=EBIT/interest Gross Profit Margin = (sales-COGS)/sales Operating profit margin=operating profits/sales Net profit margin=earnings available to common shareholders/sales Return on Assets= earnings available to common shareholders/total assets Return on Equity = earnings available to common shareholders/common stock equity Price/Earnings Ratio= market price per share/EPS Market/Book ratio = market price per share of common stock/book value per share of common stock Book value per share=common equity/shares outstanding ROIC= NOPAT/operating capital MVA=total market value-total investor-supplied capital = (market value of stock + market value of debt) – total investor-supplied capital EVA = market value of stock-equity capital supplied by shareholders = (shares outstanding)(market price)-total common equity EVA = NOPAT- (WACC)(Capital) NOPAT=EBIT(1-T) NOWC = operating current assets – operating current liabilities Total net operating capital = NOWC + operating long term assets Free Cash Flow = NOPAT – net investment in operating capital Net fixed asset investment = change in net fixed assets + depreciation Net current asset investment = change in current assets – change in accounts payable – change in accruals Dividend yield = D1/P0 Perpetuity=CF/r Capital gains yield = (P1-P0)/P0 Dividend yield + capital gains = total return Intrinsic value = EPS * P/E G= (1-payout rate)*ROE FVN = PV(1 + I)N Continuous compounding: FV=PV*e(r*n) Effective annual rate=EAR=(1+ rm)m-1 Return: Expected return: Standard deviation: Coefficient of Variation: Portfolio return: Portfolio beta: Capm: rj = RF + [bj (rm – RF)] sample standard deviation: Before tax cost of debt: After tax cost of debt: ri = rd (1 – T) Cost of preferred stock: Cost of preferred stock: rp=Dp/(P0(1-F)) Constant growth model: D1=D0*(1+g) Cost of new common stock: Cost of retained earnings: rr = rs cost of existing common stock: rs = RF + [b (rm – RF)] or WACC: ra = (wi ri) + (wp rp) + (ws rr or n) WACC: R=wd*rd*(1-T) + wp * rp + ws * rs