formulas Flashcards
Alpha
measures the reaction of news, events, related to a particular company.
Beta
measure the volatility of a particular stock compared to the market price.
Balance Sheet
Total liabilities + Net Worth= Total Assets
Current Assets
items that are cash or will be converted to cash in the upcoming 12 month period
Fixed Assets
items the company has or needs to produce it products or services
Other Assets- Intangible items such copyrights, patents, and good will.
Liabilities
must be paid in the upcoming 12 month period
Should be $2 in current assets for every $1 in current liabilities.
sum of liabilities
Total Liabilities + Total shareholders Equity
Debt to equity ratio
Total Liabilities / Total shareholders Equity
The Income Statement- (Profit and Loss Statement )
Shows amount the corporation revenues
Expenses that were paid
Amount of earning remaining after expenses over a period of time( 1 year)
the most important number on the Income Statement
Net Earning
Earning Per share
Net Earning / Common Shares Outstanding
Retained Earning
Net Earning – Dividends on common stock
Conservative Capital Structure
Large % common outstanding
Small % Bonds outstanding
Speculative Capital Structure
Large % Bonds Outstanding
Small % Common Outstanding
Net Working Capital
Current Assets- Current Liabilities
Current Ratio
Current Assets / Current Liabilities Must be 2:1
Acid Test Ratio
Current Assets Less Inventory / Current liabilities
Interest Coverage or Fixed Charge Coverage -
Operating profit / Interest Expense
Debt to Equity
Total Debt / Net Worth
Margin of Profit
Operating profit / Net Worth
Cash Flow
Net income+ Depreciation
Price Earning Ratio
Market price / Earning Per share(EPS)
Capitalization or Total Capital
Shareholders Equity + Bonds
Bond Ratio
Stated Value of Preferred / Capitalization
Preferred Stock Ratio
Stated value of Preferred / Capitalization
Common Stock Ratio
Value of Common + Paid in surplus + Retained Earning
Capitalization
Return on Assets
Net Income( net profits after tax) / Total Tangible Assets
Return On Equity
Net Income / Shareholders Equity
Outstanding share
Issued stock – treasury stock
Rights Calculation
OUTSTANDING SHARES / NEW SHARES = # of rights needs to purchase each new share of stock
Current Yield on Bonds
Annual Interest / Market price
Current Yield on Common Stock
Annual Dividend / Market Price = Current yield %
Conversion formula for a convertible bond
Par value /Conversion Price # of common shares
Corporate Equivalent Yield
Municipal Yield / (100% - Investors Tax rate) = Corporate Equivalent Yield
MC hammer
Municipal Equivalent Yield
Corporate Yield x (100% - investors tax rate)
Breakeven on a CALL
Strike price + Premium = Breakeven on a Call
Breakeven on a PUT
Strike price - Premium = Breakeven on a Put
NAV per share
(Total Assets of the fund – Total liabilities) /Total number of shares outstanding
Calculating parity price
Par Value / Conversion Price = common shares produced
Market price of bond or preferred stock / Common shares produced = parity price of common stock
-or-
Common Shares produced x Market price of stock= Parity of bond or preferred Stock
Dividends per share
Dividends paid to common shareholders / Outstanding common shares
Dividend Payout Ratio %
Dividends per share / Earnings Per Share
Price to Earning Ratio (P/E)
Market price / Earning Per share
Expense ratio
Operating Expenses / Average Net Assets
EPS
Net Earning / Outstanding common shares
