FORMULAS
D. Debt utilization ratios
CHAPTER 2
Earning available to common shareholders
Number of shares outstanding
1. Earnings per share (e.p.s.) = ________
Dividend per share
Earnings per share
2. Payout ratio = ____
Dividends per share
Market share price
Market value
Book value
MV
BV
Market share price
Earnings per share
3. P/E ratio = ____
(2–2)
4. Dividend yield = ____
Total debt
Total assets
11. Debt to total assets = ___
(2–1)
(2–3)
Market value per share
Book value per share
Income before interest and taxes
Interest
12. Times interest earned = ______
Income before fixed charges and taxes
Fixed charges
A
S1
L
S1
1. RNF = _(ΔS) - _(ΔS) - PS2(1 - D)
A. Profitability ratios
DT
P(1 - D) 1 + _
E
____
2. SGR =
DT
A
_
- P(1 - D) 1 + _
Net income
Sales
(
Gross profit
(3–1a) Gross profit margin = ___
(3–1b)
Sales
Net income
Sales
Sales
Total assets
Net income
Total assets
3. Return on equity (ROE) =
b. ___ × ___
Net income
Shareholders’ equity
c. ROA × Equity multiplier (3–3)
b. Equity multiplier = ___
(3–2)
Total assets
Equity
a. ____
Sales (credit)
Receivables
1. CM = P - VC
CM
EBIT
CM
EBT
Accounts receivable
Average collection period = _____
Average daily credit sales (3–4b)
Cost of goods sold
Sales
5. Inventory turnover = ____ or __
Inventory
Inventory
Inventory
Inventory holding period = ____
Average daily COGS
(3–5a)
(3–5b)
Cost of goods sold
Accounts payable
6. Accounts payable turnover = ____
FC
CM
2. BE = _
Sales
Capital assets
Sales
Total assets
8. Total asset turnover = ___
(3–7)
(3–8)
EBIT
EBT
4. DFL = _
(5–4)
(3–6a)
Current assets - Inventory
10. Quick ratio = _____ (3–10)
Current liabilities
(5–6)
6. DCL = DOL × DFL
(5–9)
Q(P - VC)
Q(P - VC) - FC
S - TVC
S - TVC - FC
8. DOL = ___ = ___
Q(P - VC)
Q(P - VC) - FC - I
EBIT
EBIT - I
9. DFL = __
S - TVC
S - TVC - FC - I
10. DCL = ____ = ____
CHAPTER 7
100 - P
P
365
d
1. __ × _ = r
3. EOQ =
2SO
√_
C
(
100 - P
P
2. 1 + __
(7–1a)
SO
Q
)
365
_
d
-1=r
CQ
2
4. TC = _ + _
(7–2)
(7–1b)
(7–3)
CHAPTER 8
d%
100% - d %
365
f (date) - d (date)
1. KDIS = ___ × ___
(8–1)
Amount needed
(1 - c)
2. Amount to be borrowed = ___
P
(3–9)
(5–7)
(5–10)
I
365
3. RANNUAL= — × _
C. Liquidity ratios
(5–2)
_____
Accounts payable
Accounts payables period = ______ (3–6b)
Average daily purchases (COGS)
7. Capital asset turnover = ___
(4–2)
(5–1)
3. DOL = _
7. DCL = _
(3–4a)
)
(4–1)
CHAPTER 5
S ×I -S ×I
SB - SA
4. Receivables turnover = ___
Current liabilities
E
B
A
A
B
5. EBIT* = ___
B. Asset utilization ratios
Current assets
9. Current ratio = ___
)
(
S1
2. Return on assets (investment) (ROA) =
a. ___
(3–13)
CHAPTER 4
(2–5)
CHAPTER 3
1. Profit margin = ___
(3–12)
13. Fixed charge coverage = _______
(2–4)
5. ___ = _ = _____
(3–11)
X
I
(1 - c)
5. RCOMP = __
d
(8–2)
(8–4)
i
_____
(1 - c)
2 × Annual number of payments × I
7. RINSTAL = _______
(Total number of payments + 1) × P
I
365
4. RDIS = _ × _
P-I
I
(P - B)
d
(8–3)
365
d
6. RCOMP = __ × _
(8–6)
(8–5)
CHAPTER 9
1. FV = PV(1 + i )n
(9–1)
2. (1 +
Xi )n - 1 = Effective interest rate (9–2)
1
3. PV = FV __n = FV(1 + i )-n (9–3)
(1 + i )
[ ]
(1 + i ) - 1
FV = A[
] (9–4a)
i
(1 + i ) - (1 + i )
FV = A [
]
i
D1
5. Ke = _ + g
P0
(1 + i/m)m - 1
4.
___
A
BGN
[
1
1 - __n
]
-n
[
[
7. PVA = ABGN
]
i
[
A
i
(11–4)
(11–6)
(11–8)
(11–9)
CHAPTER 12
(9–5b)
dTc 1 + 0.5r
1. PV of CCA tax shield = [Cpv - Spv ] _ __
[ ](
r+d
1+r
)
(12–1)
(9–6a)
CHAPTER 13
___
A
10.
Amount of lower-cost debt
% of debt in the capital structure
]
Pn
Pn
(11–7)
11. Z = ______
(9–5a)
[ (1 + i ) - 1 ]
A
= FV
[ (1 + i ) i- (1 + i ) ] (9–6b)
i
i
A = PV
= PV
1
1 - (1 + i ) ]
[
1
[ (1 + i ) ]
BGN
Va
10. X = ______
1
(1 + i ) - __
(1 + i ) - (1 + i )-n + 1
(1 + i )n-1
____
= ABGN ____
i
8. A = FVA __
n
9.
]
K
1-F
Retained earnings
% of equity in the capital structure
(9–4b)
1 - (1 + i )
(1 + i )
6. PVA = A __
= A ___
i
i
Va
P0
P0
j
8. Kjn = _ or Kjn = Kj _
(11–5)
( ) ( ) ( )
Va
( )
( )
1-F
Vp
Vd
Ve
9. Ka = _ Kd + _ Kp + _ Ke
__
A
n+1
5.
(11–3)
7. Kj = Rf + βj (Rm - Rf )
n
D1
_
+g
P
P0
D1
0
6. Kn = __ or Kn = _ + g _
__
1. D = ΣDP
n+1
__
__
___
-n
A
σ
__
3. V = —
D
(9–7a)
(13–1)
___________
__
2. σ = √Σ(D - D)2P
__
(13–3)
(13–2)
_
4. Dp = Σxi Di
(13–4)
n
i
i
11. ABGN = PVA ___ = PVA ____
-n+1
[
A
i
1
(1 + i ) - __
(1 + i )n-1
PMT
12. PV = — = _
i
A1
13. PV = _
]
[ (1 + i ) - (1 + i ) ]
(9–7b)
(9–9)
Ac
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14. PVn = A1 _
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CHAPTER 10
n
1. Pb =
I
P
∑__
+ __
(1 + Y )
(1 + Y )
t
n
t
n
(10–1)
t=1
Dp
Pp
3. Kp = _
(10–4)
(10–9) (11-3) (11–5)
D4
Ke - g
(10B–2)
7. P3 = __
(10–3)
D1
Ke - g
4. P0 = __
(10–8)
n
D1
P0
5. Ke = _ + g
Dp
Kp
2. Pp = _
6. P0 =
D
∑__
+ P __
(1 + K )
( 1 +1 K )
t
t
t=1
e
CHAPTER 11
1. Kd = Y(1 - T)
Dp /Pp
1-F
3. Kp = __
(11–1a)
(11–2a)
Y(1 - T )
(11–1b)
1-F
Dp
4. Kp = __ (11–2b)
Pp - F
2. Kd = __
n
e
n
(10B–1)
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