Other Flashcards
Residual Income
Operating income x (Percentage cost of capital x average op assets)
Return on ivnestment
sales value - initial cost / initial cost
Economic value added
Net op profit after tax - (WACC x Capital invested)
Cash conversion cycle
Inv holding period + AR collection period - AP payable
Operating cycle
Inv holding period + customer collection
CM ratio
CM / Sales Value
Break-even dollars
Fixed / CM ratio
WACM per unit
Total CM/ Total Units
WACM ratio
Total CM / Total SALes
Interest Coverage Ratio
EBIT/Interest Expense
How easily a company can pay off interest on its outstanding debt
Net profit margin
Sales - COGS / Sales
ROA
Net Incoime / Total Assets
ROE
Net Income/ Total Equity
AR Turnover
Note: 365 / Credit Terms = how many times turnover will change
Cost of Equity - Common Equity
Risk Free return + (Beta x Market Risk Premium)
Cost of Equity - Preferred Shares
Annual PS Dividends paid / Total Market value of PS outstanding
WACC
(D/V)(Rd)(1-T) + (P/V)(Rp)+(E/V)(Re)
EAR
(1+i/n)^n-1
Accelerated investment incentive of Tax Shield
(Investment x CCA rate x Corporate tax rate)/(CCA rate + Discount rate) x (1+1.5x Discount/1 + Discount)
Temporary 100% deduction for eligible property and manu, processing and clean equipment
Investment x corporate tax rate / 1 + discount rate
PV of Lost Tax Shield on Salvage
Salvage proceeds x CCA rate x corporate tax rate / CCA rate + discount rate
Nominal Rate of Return
(1 + Nominal) = (1 + Real rate of return) x (1 + Inflation)
Rate of returns quoted on market = nominal rate
