Formulas to Know Flashcards

1
Q
A
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2
Q

Fundamental balance sheet relationship

A

total assets = total liabilities + total equity

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3
Q

Enterprise Value

A

EV = Market Cap + Total Debt - Cash

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4
Q

Market Cap

A

Market Cap = Shares Outstanding * Stock Price

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5
Q

Market to Book Ratio

A

M-to-B = Market Cap / Book Value of Equity

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6
Q

Levered Free Cash Flow

A

EBITDA - Change NWC - Capital Expenditure - Debt

(amount of cash a company has after paying debts)

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7
Q

Unlevered Free Cash Flow

A

NOPAT + D&A - Increase in NWC - Capex

(Cash before debt payments are made)

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8
Q

PV of a Lump Sum

A

PV = FV / (1 + r/)^t

rate
time

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9
Q

FV of a Lump Sum

A

FV = PV / (1+i)^n

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10
Q

Present Value of Growing Perpetuity

A

Cash Flow at t = 1 / (Discount Rate - Growth Rate)

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11
Q

(PV) of a perpetuity with zero growth

A

Cash Flow / Discount Rate

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12
Q

NPV

A

NPV = R / (1+i)^t

R = net cash flow at time t
i = discount rate
t - time of the cash flow

you need to find sum of cash flows for different times

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13
Q

Rate of Return

A

Current Value - Original value / (original value)

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14
Q

weighted average cost of capital (WACC)

A

the average rate that a business pays to finance its assets

It is calculated by averaging the rate of all of the company’s sources of capital (both debt and equity), weighted by the proportion of each component.

WACC = [(Weightage of Equity X Cost of Equity) + (Weightage of Debt X Cost of Debt)] * (1 - Tax Rate)]

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15
Q
A
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16
Q
A