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Fin0008 Managing Business Finance Formulae Sheet: N I, N 0 I, N N I, N 0 I, N N I, N 0 I, N

The document contains formulas for calculating various financial ratios and metrics used to evaluate business finance performance. It includes formulas for current ratio, quick ratio, inventory turnover, average age of inventory, average collection period, average payment period, total asset turnover, debt ratio, EBIT, times interest earned, gross profit margin, operating profit margin, net profit margin, earnings per share, return on assets, return on equity, price earnings ratio, book value per share, market to book ratio, dividend yield, EVA, NOPAT, net working capital, operating cycle, cash conversion cycle, cost of giving up cash discount, present value, future value, annuity calculations, initial investment, operating cash flow, terminal cash flow, net

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62 views2 pages

Fin0008 Managing Business Finance Formulae Sheet: N I, N 0 I, N N I, N 0 I, N N I, N 0 I, N

The document contains formulas for calculating various financial ratios and metrics used to evaluate business finance performance. It includes formulas for current ratio, quick ratio, inventory turnover, average age of inventory, average collection period, average payment period, total asset turnover, debt ratio, EBIT, times interest earned, gross profit margin, operating profit margin, net profit margin, earnings per share, return on assets, return on equity, price earnings ratio, book value per share, market to book ratio, dividend yield, EVA, NOPAT, net working capital, operating cycle, cash conversion cycle, cost of giving up cash discount, present value, future value, annuity calculations, initial investment, operating cash flow, terminal cash flow, net

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bn
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FIN0008 MANAGING BUSINESS FINANCE

FORMULAE SHEET

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 Receivables) / (Net Sales / 365)
Average Payment Period = (Accounts Payables) / (Annual Purchases / 365)
Total Asset Turnover = (Net sales) / (Total Assets)
Debt ratio = (Total Liabilities) / (Total Assets)
EBIT = Operating Profits
Times interest earned = EBIT / Interest
Gross Profit Margin = (Gross Profit) / (Net Sales)
Operating Profit Margin = EBIT / (Net sales)
Net Profit Margin = (Earnings available to common shareholders) / (Net Sales)
= (Earnings available to common shareholders) /
Earnings per share (EPS)
(number of common shares)
Return on Assets (ROA) = (Earnings available to common shareholders) / Assets
Return on Equity (ROE) = (Earnings available to common shareholders) / Equity
Price Earnings (P/E) ratio = (Market price per share) / EPS
Book Value per share = (Common stock equity) / (number of common shares)
Market/Book (M/B) ratio = (Market price per share) / (Book Value per share)
Dividend yield = (Dividend per share) / (Market Price per share)
EVA = NOPAT – (WACC) x (Capital Employed)
NOPAT = (Operating Profits) x (1 – Tax rate)
NWC = CA – CL
OC = AAI + ACP
CCC = OC – APP
CCC = AAI + ACP – APP
% discount 365
Cost of giving up cash discount =
100% - % discount × credit period - discount period
Interest = Principal x Rate x Time
FVn = PV x (FVIFi,n)
PV0 = FV x (PVIFi,n)
FVAn = A x (FVIFAi,n)
PVA0 = A x (PVIFAi,n)
FVAn (annuity due) = A x (FVIFAi,n) (1 + i)
PVA0 (annuity due) = A x (PVIFAi,n) (1 + i)
PV (perpetuity) =A/i
Initial Investment = Cost of the new asset + Change in NWC
OCF = (Revenue – Cost) (1-Tax rate) + (Depreciation) (Tax rate)
Terminal cash flow = After-tax proceeds from sale of asset + Change in NWC
Net Present Value (NPV) = PV (Cash Inflows) – PV (Cash Outflows)
Bond conversion price = (Par Value of Bond) / (Conversion ratio)

1
CAPM (Capital Asset Pricing Model) Formula :

Cost of Common Equity Formula :

where Ke = Cost of Equity


d0 = just paid dividend
d1 = next year’s dividend
g = constant growth rate of dividend
P0 = Common Stock price (trading ex -dividend)

Cost of Preferred Stock Formula =

where Kp = Cost of Preferred Stock


DP = Dividend of Preferred Stock
Pp = Current Preferred Stock Price

Weighted Average Cost of Capital (WACC) Formula =

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