BEC Formulas (STUDY) Flashcards
Effective Interest Rate Equation
Interest Paid per Period / Net Proceeds of Loan
Annual Percentage Rate (APR)
Effective Interest Rate x Number of Periods
Effective Annual Percentage Rate (EAR)
[1 + (i / p)]^p -1
Value of a Firm
PV of FCFs / WACC
WACC
(CE % x CE Cost) + (PE % x PE Cost) + [Debt (1 - Tax)]
Weighted-Avg Interest Rate (Debt WACC)
Interest Payments / Debt Outstanding
Cost of Preferred Stock (PE WACC)
Dividends Paid / Net Proceeds of Preferred Stock
Cost of Common Stock (RE) - 3 Methods for WACC
- CAPM
- DCF
- BYRP
- RF Rate + (Beta x (Mkt Return - RF Rate))
- (D1) / (P0) + G
- Pretax Cost of LT Debt x (Mkt Return - RF Rate)
DCF Method - Finding D1 if not given
D0 x (1 + G)
DCF Method - Finding G if not given
ROE x *(1 - Payout)
*Retention
Payout Rate
Dividends per CS / Earnings per CS
ROX
X= Assets, Equity
NI / Average Total X
ROI (2 Methods)
Profit Margin x Investment Turnover
or
NI / Avg Invested Capital
ROS (Sales)
EBIT / Net Sales
Operating Leverage
FC / VC
Financial Leverage (2 methods)
% Change EBT or EBS / % Change EBIT
or
Assets / Equity
Equity Multiplier
TA / TE
Times Interest Earned Ratio
EBIT / Int Expense
Quick Ratio
CA - Inventory / CL
Cash Conversion Cycle
Days in Inventory + Days Sales in AR - Days of Payables Outstanding
Days in X Ratio
X= Inventory, Sales, Payables
Ending X / Avg *COGS per Day
*Would be Sales for “Sales in AR”
X Turnover Ratio
1) AR/WC
2) AP/Inventory
AR/WC = (Net) Sales / Avg X AP/Inv= COGS / Avg X
Profitability Index
PVFCF’s / Cost of Initial Investment
APR of Quick Payment Discount
[360 / (Pay Period - Discount Period)] x [Discount / (100 - Discount)]
WARNING: NO DECIMALS
