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Bus Man 142 Formulas
Business Management (Universiteit Stellenbosch)
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Chapter 2
Statements:
Cost of Sales = Opening Inventory + Purchases - Closing(final) Inventory
(The Following are based on the FAF’s):
Finance Costs = Mortgage Loan Interest + Long-term Loan Interest + Debentures
Interest + Overdraft Bank Interest
Financial Assets = Long-term Loans Granted + Share Invested
Intangible assets = Goodwill
None-Current Assets = PPE @ Carry Value + Intangible assets + Financial Assets
Distributable Reserves = General Reserves + Retained Earnings
Issue Price =
π°πππππππ ππ πΆππ
πππππ πΊπππππ πͺππππππ
π°πππππππ ππ
Ratios:
Profitability:
Return on Total Assets =
=
ππππππ‘πππ ππππππ‘+πΌππ£ππ π‘ππππ‘ πΌπππππ
π΄π£πππππ πππ‘ππ ππ π ππ‘π
∗ 100
ππππππ‘πππ ππππππ‘ + πΌππ£ππ π‘ππππ‘ πΌπππππ
∗ 100
0.5 (ππππ£πππ’π ππππ πππ‘ππ π΄π π ππ‘π + πΆπ’πππππ‘ ππππ πππ‘ππ π΄π π ππ‘π )
Return on Equity =
=
ππππππ‘πππ ππππππ‘+πΌππ£ππ π‘ππππ‘ πΌπππππ−πΉππππππ πππ π‘
π΄π£πππππ πΈππ’ππ‘π¦
ππππππ‘πππ ππππππ‘ + πΌππ£ππ π‘ππππ‘ πΌπππππ − πΉππππππ πππ π‘
0.5 (ππππ£πππ’π ππππ πππ‘ππ πΈππ’ππ‘π¦ + πΆπ’πππππ‘ ππππ πππ‘ππ πΈππ’ππ‘π¦)
∗ 100
∗ 100
Total Equity = Shares Issued Capital + None-Distributable Reserves + Distributable
(Retained Earnings + General Reserves)
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Cost of Debt =
πΉππππππ πππ π‘
π΄π£πππππ π·πππ‘ πΆππππ‘ππ
(Return on Debt Capital)
∗ 100
Debt Capital = Interest bearing borrowings =long-term loans
+mortgages+debentures+ Current Liabilities
Return on Financial Assets =
πΌππ£ππ π‘ππππ‘ πΌπππππ
π΄π£πππππ πΉππππππππ π΄π π ππ‘π
∗ 100
Profit Marins:
Gross Profit Margin =
Operating Profit =
EBIT - Margin =
π
ππ£πππ’π−πΆππ π‘ ππ ππππ (π.π.πΊπππ π ππππππ‘)
ππππππ‘πππ ππππππ‘
π
ππ£πππ’π
π
ππ£πππ’π
∗ 100
ππππππ‘ ππππππ πππ₯+πΉππππππ πΆππ π‘π
π
ππ£πππ’π
(EBIT = Earnings Before Interest and Tax)
Net Profit margin =
ππππππ‘ πππ‘ππ π‘ππ₯
π
ππ£πππ’π
∗ 100
∗
∗ 100
Liquidity:
Current Ratio =
πΆπ’πππππ‘ π΄π π ππ‘π
πΆπ’πππππ‘ πΏπππππππ‘πππ
Acid test Ratio (Quick Ratio) =
∗ 100
πΆπ’πππππ‘ π΄π π ππ‘π −πΌππ£πππ‘πππ¦−ππππππ¦ππππ‘π
πΆπ’πππππ‘ πΏπππππππ‘πππ
Turnover Ratios and Times:
Turnover ratio of Current Assets =
πππ‘ πππ£πππ’π
π΄π£πππππ πΆπ’πππππ‘ π΄π π ππ‘π
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∗ 100
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Turnover Time of Current Assets =
π΄π£πππππ πΆπ’πππππ‘ π΄π π ππ‘π
πππ‘ πππ£πππ’π
∗ 360
πππ‘ πππ£πππ’π
Turnover ratio of PPE =
π΄π£πππππ πππΈ @ πΆππππ¦πππ ππππ’π
π΄π£πππππ πππΈ @ πΆππππ¦πππ ππππ’π
Turnover Time of PPE =
πππ‘ πππ£πππ’π
Turnover ratio of Trade Receivables =
∗ 360
πΆπππππ‘ π
ππ£πππ’π
π΄π£πππππ πππππ π
πππππ£πππππ
*Credit revenue = Revenue x % of sales made on cedit
Turnover Time of Trade Receivables =
Turnover ratio of Inventory =
Turnover Time of Inventory =
π΄π£πππππ πππππ π
πππππ£πππππ
πΆπππππ‘ π
ππ£πππ’π
∗ 360
πΆππ π‘ ππ ππππ
π΄π£πππππ πΌππ£πππ‘πππ¦
π΄π£πππππ πΌππ£πππ‘πππ¦
πΆππ π‘ ππ ππππ
∗ 360
Solvency:
Debt-to-Assets ratio [Debt ratio] =
=
π·πππ‘ πΆππππ‘ππ (π.π πππ‘ππ ππππππππ‘πππ )
πππ‘ππ π΄π π ππ‘π
π«πππ πͺππππππ (π. π π»ππππ πππππππππππ)
π»ππππ πͺππππππ
Coverage Ratios:
Finance cost coverage =
ππππππ‘ ππππππ πΉππππππ πΆππ π‘ πππ πππ₯
πΉππππππ πππ π‘
=
π·πππππ ππππππ πππ + πππππππ ππππ
πππππππ πͺπππ
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Ordinary Dividend Coverage =
=
πΈπππππππ πππ πβπππ
π·ππ£ππππππ πππ πβπππ
π·πππππ πππππ πππ − π·πππππππππ πΊπππππ π«ππππ
πππ
π
πΆππ
πππππ π«ππππ
πππ
π π«πππππππ
=
π¬πππππππ πππππ
π«ππππ
πππ
πππππ
Investment Ratios:
Earnings per share =
π΄π‘π‘ππππ’π‘ππππ πΈπππππππ
π΄π£πππππ ππ’ππππ ππ ππππππππ¦ πβππππ πΌπ π π’ππ
Attributable Earnings = Profit after Tax - Preference Shares Dividends
Earnings Yield =
πΈπππππππ πππ πβπππ
ππππππ‘ πππππ πππ πβπππ
Dividends per Share =
Dividends Yield =
× 100
ππππππππ¦ π·ππ£ππππππ π·πππππππ
π΄π£πππππ ππ’ππππ ππ ππππππππ¦ πβππππ πΌπ π π’ππ
π·ππ£ππππππ πππ πβπππ
ππππππ‘ πππππ πππ πβπππ
Price-earnings Ratio =
× 100
ππππππ‘ πππππ πππ πβπππ
Book Value per Share =
πΈπππππππ πππ πβπππ
πβπππβπππππ ′ π πππ’ππ‘π¦−ππππππππππ πβππππ −πππ‘πππππππ ππ π ππ‘π
ππ’ππππ ππ ππππππππ¦ πβππππ πΌπ π π’ππ
ALL Averages for chapter 2 Calculations = 0.5(Initial Value + Closing Value)
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Chapter 3
a.) Price Weighting Method:
πππ [π΄ππ ππ π£πππ’ππ ππ π΄πππππππππ π·ππ‘π]
πππ [π΄ππ ππ π£πππ’ππ ππ π΅ππ π π·ππ‘π]
πΌππππ₯ ππππ’π
=
πππ [π΄ππ ππ π£πππ’ππ ππ π΄πππππππππ π·ππ‘π] − πππ [π΄ππ ππ π£πππ’ππ ππ π΅ππ π π·ππ‘π]
π₯100
πππ [π΄ππ ππ π£πππ’ππ ππ π΅ππ π π·ππ‘π]
b.) Equal Weighting
πππ [
ππππ‘πππππ ππππ’π
π₯ ππ(π΄πππππππππ πππ‘π)]
ππ (π΅ππ π π·ππ‘π)
c.) Market Capitalisation
πππ[ππ’ππππ ππ π βππππ (πππ π΄πππ π βπππ) × {ππ(π΄πππ. π·ππ‘π) − ππ(π΅ππ π π·ππ‘π)} ]
πππ[ππ’ππππ ππ π βππππ (πππ π΄πππ π βπππ) × ππ(π΅ππ π π·ππ‘π)]
Moving Total (X-term): SUM(Shares for X term)
X-Term Moving average = Moving Total/ X
Net Change = Today’s Advancing Shares - Today’s Declining Shares
Cumulative Change= Yesterdays Cumulative Change + Todays Cumulative Change
Closing Price = Closing price on specific day
πΆβππππ = πππ€ πΆπππ πππ πππππ − ππππ£πππ’π πππ¦ ′ π πΆπππ πππ πππππ = π6 − π5
πΊπππ = πΆβππππ > 0 πππ π πΊπππ = 0
πΏππ π = πΆβππππ < 0 πππ π πΏππ π = 0
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π΄π£πππππ πΊπππ =
=
=
ππ’π 14 πππ¦π (πππππ )
i. e. P15
14
OR
ππππ£πππ’π π΄π£πππππ πΊπππ × 13 + ππ’πππππ‘ πβππππ
14
π΄π£πππππ πΏππ π =
ππ’π 14 πππ¦π (πΏππ π )
i. e. P15
14
OR
ππππ£πππ’π π΄π£πππππ πππ π × 13 + ππ’πππππ‘ πβππππ
14
π
π =
π΄π£πππππ πππππ ππ π’π πππππππ
π΄π£πππππ πππ π ππ πππ€π πππππππ
π
ππΌ = 100 −
100
1 + π
π
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Chapter 5
Buyer
Seller
Transaction Amount (TA)
Transaction Cost
Brokerage Fee [TA x 1.4% (minimum = R150)]
Strate Settlement Cost
Investor Protection Levy (TA x 0.000 2 %)
()
(*the value for vat not Include TA only above 3 costs are used)
Value for VAT
VAT (15% x Value for vat)
STT (0.25% x TA)
Total Value of Transaction (Including Cost)
STT Value
TA + T
Transaction Ammount
TA < R176 000
R176 000 ≤ TA ≤ R1 200 000
TA > R1 270 000
0
TA - T
Strate Fee
R10.19
0.005787% of TA
R73.49
Chapter 6
Single Period:
π1 = πππππ πππππ
π
ππ‘π ππ π
ππ‘π’ππ =
(π1 − π0 ) + π·1
× 100
π0
π0 = ππ’ππβππ π πππππ
π·1 = πππ‘ππ π·ππ£ππππππ ππππππ£ππ
Risk:
π
πππ π
ππ‘π’ππ ππ π
ππ π =
(1 + πππππππ π
ππ‘π ππ π
ππ‘π’ππ)
−1
(1 + πΌπππππ‘πππ)
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Systemic Risk:
Market Risk
Probability That the Market Price of investment differ from intrinsic value due to
irrational investor behaviour
MP > Intrinsic βOvervalued
MP < Intrinsic β Undervalued
Debt Capital [increase] :
• Financial Risk: increase
• Exposure to interest Rate Risk: Increase
Financial Lerverage:
• Positive: cost < return on assets
• Negative: cost > return on assets
π½ > 1;
πβπππ ππππ π πππ ππ‘ππ£π π‘βππ ππππππ‘
π½ < 1;
πβπππ πππ π π πππ ππ‘ππ£π π‘βππ ππππππ‘
π. π π½ = 1.5: ππ΄ππππ‘ πβππππ = 10% = πππππ πβππππ 15%
π. π π½ = 0.5: ππ΄ππππ‘ πβππππ = 10% = πππππ πβππππ 5%
π½ = 1;
πβπππ πππ£ππ π€ππ‘β ππππππ‘
π. π π½ = 1: ππ΄ππππ‘ πβππππ = 10% = πππππ πβππππ 10%
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πβπππ πΆβππππ (%) = ππππππ‘ πβππππ (%) × π½
π½=
πβπππ πΆβππππ(%)
ππππππ‘ πΆβππππ (%)
Preferred π½:
- Bull market → High π½
- Bear Market → Low π½
ππππ’ππ‘πππ =
πππ ππ − πΌππ‘ππππ ππ ππππ’π
× 100
πΌππ‘ππππ ππ ππππ’π
Market MP > Intrinsic β Overvalued
Market MP < Intrinsic β Undervalued
πΈπ₯ππππ‘ππ π
ππ‘π’ππ = πΌππ‘ππππ π‘ π
ππ‘π × ππππππππππ‘π¦ ππ ππππππ ππ‘πππ
3 Measurements to Determine Risk:
1. Variance or Standard Deviation of expected returns
2. Range of returns ( Highest - lowes expected return)
3. View only returns lower than expected return (lower than mean) (i.e semivariance)
πΉπππ ↑
→ π¬πππππππ
πΉπππππ ↑
(higher risk means higher expected returns)
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