Financial Statement Formulas
Assets = Liabilities + Equity or Assets – Liabilities = Equity or Liabilities + Equity – Assets = 0
Net Working Capital= (current assets – current liabilities)
Net Operating Capital= [current assets – cash] - [current liabilities – current debt]
Equity Acc
Common stock = shares sold x par value per share
Additional Paid in Capital = shares sold x [selling price – par value]
Total capital raised from shareholders = Common Stock + APIC (financing activities)
Current RE= Previous RE + Current Net Income – Current Dividends
Treasury Stock= #of repurchased shares x weighted average repurchase price
Minority interest Total common equity= total assets – total liabilities – minority interest
Book Value of Common Equity=Total Assets – Minority Interest - Total Liabilities
Market Value of Common Equity=Total Shares Outstanding x Price Per Share
Market to Book Ratio=Market Value / Book Value
Net Capital spending= [Previous PPE – Current PPE] – Current depreciation OR =change in PPE-Depreciation
Income Statement
EPS= Net income/ weighted average shares
Payout ratio=Dividend per share(DSP) / Earnings per share(EPS)
Payout ratio= Dividend / Net Income
Dividend per share=payout ratio x EPS
Dividend per Share=dividend / shares outstanding
LTM = “Latest 12 months”, TTM = “Trailing 12 months”
Cash Flow
Plus net change in cash (CFFO+CFFI+CFFF) = Ending Cash - Current Period Ending Balance Sheet
Operating CF (OCF)= EBIT + Depreciation & Amortization – Taxes (no F / I / ∆ OC )
Unlevered Free CF= Net Operating Profit After Tax (NOPAT) + Depreciation and Amortization - Capital Expenditures +/- Change in Operating
Capital (less any increase, plus any decrease)
o NOPAT=EBIT x (1-tax rate)
CFA(CF from Assets)= Cash Flow to Creditors + Cash Flow to Shareholders
CFA(CF from Assets)= OCF – Capital Expenditures +/- Changes in Working Capital
o OCF=EBIT + depreciation – taxes
o Capital investment=End net fixed assets-Beg. Net fixed asset + depreciation
o NWC investment= net change
Cash flow to Investors= Debt to holder + Equity to holder = CFA
o Debt to holders=interest + retirement of debt – new debt
o Equity to holder=dividends + stock repurchase – new stock issues
Ration Analysis Formulas
Growth: Periodic or Sequential Growth Rate=(New Value / Old Value) – 1
o future value = old value x (1+ growth rate)
Profitability: Gross profit/sales | EBIT/sales | EBITA/sales | Net Inc/sales
Working capital(Assets): COGS / Inventory | Inventory/COGS x 365 |Sales / AR | AR/Sales x 365
o LT and total turnover: Sales/Fixed assets | Sales/Total Assets
Working capital(liability): COGS/Accounts Payable | AP/COGS x 365
ROI
o Return on Assets (ROA)=Net Income/ Avg Total Assets | EBIT / Avg Total Assets
o Return on Invested Capital (ROIC)= (EBIT x (1-tax rate))/Avg (debt + equity)
o Return on Equity (ROE)= Net Income Margin x Asset Turnover x Equity Multiplier
Investment rate=Growth / ROIC
New required investment = NOPAT x Investment rate
Capital structure: Debt / Equity | Debt / (Debt + Equity) | Equity multiplier= Total Assets / Total Equity
Total invested capital= old invested capital + new invested capital
Current Ratio=current asset/current liabilities
Quick ratio=current assets-inventories / current liabilities
Capital Budgeting Formulas
PV= FV / (1+r%)^n
PV Factor=1 / (1+r%)^n PV=PV Factor x FV
WACC = [Ke x (E/(E+D)] + [(Kd x (D/(E+D)) x (1-T)]
CAPM Cost of Equity = Risk Free Rate + (Beta x Equity Market Premium) or Rf+ β(Rm - Rf)
Payback
o Cumulative CF=Prior year cumulative cash flow + current year project cash flow
o Stud payback= 1-(Last negative cumulative CF / First positive or stud period Project CF)
Profitability Index=PV of cash flows after investment / Initial investment
Break Even
o Total Variable Costs = Q x v
o Variable Cost Per Unit (v) = Total Variable Costs / Q
o Total Costs = Q x v + FC
o Accounting break-even: Q = (FC + D) / (P-v)
o OCF break even Q = (FC) / (P-v)
Capital Structure
Debt to Equity= D/E
Debt Ratio: Debt to Total Capital= D/(E+D)
ROE=Net income/Equity or EPS/stock price
EPS=Net income/#shares
W/o Tax
Proposition 1: VL=Vu
Proposition 2: WACC L=WACC u | KeL= KeU + D/E (KeU-Kd)
With Tax value of Levered firm goes up,
Proposition 1: VL = VU + Present Value of Tax shield
Proposition 2: WACC L < WACC u decreases | KeL = KeU + D/E x (1-T) x (KeU - Kd)
Tax-Shield
Tax Shield or tax benefit= Debt x Interest Rate x Tax Rate
Present Value of Tax Shield= (Debt x Interest Rate x Tax Rate) / Interest Rate OR D x Tax Rate
Value of a LEVERED firm= Value of Unlevered + PV Tax shield
Value of Equity $ + Value of debt $= Value of Firm
Value and Valuation
Enterprise/Firm value(EV)= Equity value + Net Debt + Preferred Stocks + Minority Interest
Non-equity claims=Net debt(Debt-cash) + Preferred Stocks + Minority Interest
Equity(MVE)= Residual value + Non-equity claims(EV)
o Equity= Enterprise/Firm Value - Net debt - Preferred stock – Minority Interest
o Equity=stock price x # of shares
Fully diluted shares= Basic + CSE
o CSE(Common Share Equivalents)=Employees stock option + convertible securities
Employee Stock Options: # of shares(option a) x Exercise price = Proceeds / P-current stock or market price =
(Repurchased shares) + # of shares(option a)= CSE
Convertible Securities= Face amount of convertible debt or senior note / conversion price
Conversion price(given)= Face Value / conversion ratio
Conversion ratio= #convertible shares
MVE= STOK PRICE x total fully diluted shares
M&A
Control Premium= (M&A agreed share price) x (share closed price at 1 or 30 days) – 1
Stock value per share= Exchange ratio x stock price
o Total consideration per share= CASH + Stock value per share
o Implied Enterprise value of transaction=total consideration per share x # shares=Implied Equity purchase price +debt – cash
