UNB Fredericton, ADM2413 FRL, Formula Sheet v1.22.25
Student Name: __________________________
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Student ID: ____________
Shareholders’ equity = total assets – total liabilities
Changes in cash and cash equivalents = cash flow from operating activities + cash flow
from investing activities + cash flow from financing activities
Changes in cash and cash equivalents = cash and cash equivalents at the end of the year
– cash and cash equivalent at the beginning of the year.
Cash flow from assets = cash flow from operating activities + cash flows from investing
activities.
Free cash flow = cash flow from operating activities + cash flow from investing activities
Free cash flow = net income + depreciation + cash flow from changes in working capital
+ net cash flow from investing activities. Hints: Please use negative (-) sign for if the cash
flow is outflow and positive (+) sign if the cash flow is inflow. For example, decrease in
net working capital is cash inflow, therefore takes (+) sign.
Operating profit margin ratio = NOPAT/sales
Asset turnover ratio = total assets/sales
Debt ratio = total debt/total assets
Equity multiplier = total assets/equity or 1/(1-Debt ratio) or (1+ debt-equity ratio)
Debt-equity ratio = total debt/total equity
ROE = profit margin ratio x asset turnover ratio x equity multiplier.
ROA = profit margin ratio x asset turnover ratio or NOPAT/total assets.
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Present value, 𝑃𝑉 = ($%&)! . Hints: For lump sum cash flow.
& (
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Effective annual rate, 𝐸𝐴𝑅 = )1 + (, − 1 where m is number of compounding
periods within a year and r is the annual interest rate or annual percentage rate (APR).
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Present value of annuity, 𝑃𝑉𝐴 = 𝐶 ∗ 0& − &($%&)! 1 where C refers to periodic cash flow, r
$
$
is period rate and t is number of periods.
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$
$
Present value of annuity due, 𝑃𝑉𝐴)*+ = 𝐶 ∗ 0& − &($%&)! 1 ∗ (1 + 𝑟)
$
$
OR 𝑃𝑉𝐴)*+ = 𝐶 ∗ )1 + 0& − &($%&)!"# 1,
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Present value of perpetuity, 𝑃𝑉,-&.-/01/2 = &
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Present value of growing perpetuity, 𝑃𝑉 = &45 where g is the constant growth rate.
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Future value, 𝐹𝑉 = 𝑃𝑉 ∗ (1 + 𝑟)/
($%&)! 4$
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Future of annuity, 𝐹𝑉𝐴 = 𝐶 ∗ 0
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Future of annuity due, 𝐹𝑉𝐴)*+ = 𝐶 ∗ 0
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Value of a bond or Bond price at t=0, 𝐵6 = 𝑃𝑉 𝑜𝑓 𝐶𝑜𝑢𝑝𝑜𝑛𝑠 + 𝑃𝑉 𝑜𝑓 𝑓𝑎𝑐𝑒 𝑣𝑎𝑙𝑢𝑒
$
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1
($%&)! 4$
&
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OR 𝐵6 = 𝐶𝑜𝑢𝑝𝑜𝑛 𝐴𝑚𝑜𝑢𝑛𝑡 ∗ 0& − &($%&)! 1 +
1 ∗ (1 + 𝑟)
!78- "7:0($%&)!
where r is the yield to maturity or
discount rate or the interest rate and t is number of period to maturity. Hints: If the
bond pays semiannual coupons, adjust the coupon amount, YTM and t accordingly.
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Price or value of stock today, 𝑃6 =
dividend growth model.
)$ ($%5)
&45
1
. Hints: This is the formula for constant
UNB Fredericton, ADM2413 FRL, Formula Sheet v1.22.25
Student Name: __________________________
Student ID: ____________
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, 4,
$
$
$
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Expected return on stock, 𝑟 = ,# + 𝑔 𝑜𝑟 ,# + #, $
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OR 𝑟𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝑠𝑡𝑜𝑐𝑘, 𝑟 = 𝑑𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑦𝑖𝑒𝑙𝑑 + 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑔𝑎𝑖𝑛 𝑦𝑖𝑒𝑙𝑑
)#
)%
)& %,&
Price of stock for holding period of h = 𝑃6 = ($%&)
+ ($%&)
+ ⋯ + ($%&)
%
&
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NPV of a project, 𝑁𝑃𝑉 = 𝑃𝑉 𝑜𝑓 𝑐𝑎𝑠ℎ 𝑖𝑛𝑓𝑙𝑜𝑤𝑠 − 𝑐𝑜𝑠𝑡
3#
3%
3'
Or 𝑁𝑃𝑉 = 𝐶6 + ($%&)
+ + ($%&)
+ ⋯ + ($%&)
where n is the life of the project.
#
%
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Equivalent Annual Cost, 𝐸𝐴𝐶 = 7>>01/2 <78/;& =
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Expected return on a stock, 𝐸 [𝑟] = ∑>1A$ 𝑟1 ∗ 𝑝1 Hints: For probabilistic data
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Average return on stock, 𝑟̅ = > . Hints: For historical data.
Variance of stock returns, 𝜎 C = ∑[𝑝1 ∗ (𝑟1 − 𝐸(𝑟))C ]. Hints: For probabilistic data
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Variance of stock returns, 𝜎 C =
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Standard deviation, 𝜎 = √𝜎 C .
Expected return of a portfolio, 𝐸 [𝑟, ] = ∑>1A$ 𝑟1 ∗ 𝑤1 . Hints: wi refers to proportion of
investment in stock i. Here the subscript P refers to portfolio, not the probability.
Variance of a portfolio, 𝜎,C = 𝜎FC 𝑤FC + 𝜎GC 𝑤GC + 2𝜌FG 𝜎F 𝜎G 𝑤F 𝑤G . For two stocks, A & B.
Variance of a portfolio, 𝜎,C = 𝜎FC 𝑤FC + 𝜎GC 𝑤GC + 2𝐶𝑜𝑣(𝐴, 𝐵)𝑤F 𝑤G . For two stocks, A&B
C3;H(F,G)
Correlation coefficient, 𝜌FG = J J
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," ;< 8;=/=
," ;< 8;=/=
#
#
@
( ((#*()!
? 4
∑&
∑(&, 4&̅ )% ]
>4$
. Hints: For historical data
- .
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Cash conversion cycle = Inventory conversion period + accounts receivable period –
accounts payable period
Operating cycle = Inventory conversion period + accounts receivable period
1>H->/;&2
Inventory conversion period = 7>>07: 8;=/ ;< 5;;K 5;:K/MNO. Hints: if you are given opening
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and closing balances of inventories, use the average inventories.
788;0>/= &-8-1H7P:-=
Accounts receivable period = 7>>07: =7:-=/MNO . Hints: if you are given opening and
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closing balances of accounts receivable, use the average receivables.
788;0>/= .727P:Accounts payable period = 7>>07: 8;=/ ;< 5;;K 5;:K/MNO. Hints: if you are given opening and
closing balances of accounts payable, use the average payables.
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CFQ
Economic order quantity, 𝐸𝑂𝑄 = X 3 where A is annual quantity, O is ordering cost
per order and C is carrying cost per unit.
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MNO
Annual percentage rate or cost of trade credit, APR = $664) × 3,4), where D is discount
percent, CP is credit period and DP is discount period. Note: use 10 for 10%, not the
0.10.
F,R
MNO/(3,4),)
Effective annual rate or cost of trade credit, EAR = )1 + (3,4),,
2
−1