EQUATIONS TO LEARN Flashcards
ROCE (as a %)
- profit before interest and tax / long term debt plus equity
- profit before interest and tax / total assets – current liabilities
CHAPTER 2
earnings per share (EPS)
profit after interest, tax and preference dividend (earnings for business, money available) / number of issued equity shares
CHAPTER 2
present value to perpetuity
cash flow / cost of capital
CHAPTER 2
total shareholder return (%)
dividend yield (%) + capital gain/loss (%)
= dividend per share / (original)share price + capital gain or loss / (original) share price
CHAPTER 2
price elasticity of demand (simple method)
new demand - initial demand / initial demand x 100
/
new price - initial price / initial price x 100
= % change in qd / % change in p
CHAPTER 3
price elasticity of demand (average method)
new demand - initital demand / average demand x 100
/
new price - initial price / average price x 100
CHAPTER 3
elasticity of supply
% change in quantity supplied / % change in price
CHAPTER 3
the multiplier (circular flow)
1 / 1 - MPC
CHAPTER 7
change in national income
1 / 1 - MPC x rise in injections
(or 1 / MPW)
CHAPTER 7
increase in deposits
initial cash deposit x credit multiplier
CHAPTER 14
credit multiplier
1 / reserve (liquidity) ratio
CHAPTER 14
discount factor (not necessary bc of the tables)
1 / (1 + r) power of n
CHAPTER 15
discount factor to perpetuity
1 / cost of capital
CHAPTER 15
repayments equation
present value / annuity factor (cumulative discount) = annuity
CHAPTER 15
multiplicative/additive models
time series = trend x seasonal variation
time series = trend + seasonal variation
CHAPTER 18
sum of a
Σy / n - b Σ x / n
CHAPTER 18
formula for compound interest
S = X (1 + r) power of n
S = sum generated by investment after n periods
X = original sum invested
r = interest rate (5% = 0.05)
n = number of periods
CHAPTER 15
bond yield formula
coupon / market price
running yield formula
interest earned / market price of bond
(interest earned = market price x % on bond (as a decimal))
value of investment?
share capital and retained earnings
consumer spending
a + bY
where a = autonomous consumption, b = marginal propensity to consume, Y = national income
dividend yield
annual dividend / share price
net dividend yield
annual dividend / market value x 100
number of ordinary shares
ordinary share / each nominal value of share
market value of bond
total value of bonds / number of bonds
adjusted value (multiplicative)
actual value / seasonal factor
proportion of business owned by shareholder
number of shares owned / total number of shares owned x 100
index number
value in any year x 100 / value in base year
marginal propensity to consume
change in consumption / change in income
adjusted value (additive)
time series - seasonal factor
effective annual rate
effective monthly rate ^ 12 - 1
effective monthly rate
effective annual rate / 12
marginal propensity to save
change in savings / change in income
time series
additive:
Y + T + S + C + R
multiplicative:
Y = T x S x C x R
