Other Important Calculations

Question 1

How do you calculate Free Cash Flow (to the firm)?

Answer 1

Cash Flow from Operations - Dividends - Capital Expenses

Question 2

How do you calculate EBIT?

Answer 2

Sales - COGS - SG&A Expenses - R&D Expenses - Depreciation & Amortisation

Question 3

How do you calculate EBITDA?

Answer 3

Sales - COGS - SG&A Expenses - R&D Expenses - Depreciation & Amortisation. Then + D&A back in.

Or

EBIT + Depreciation & Amortisation

Question 4

How do you calculate the Effective Tax Rate

Answer 4

Income Tax Expense / Income Before Tax

Question 5

How do you calculate NOPAT aka EBIAT

Answer 5

EBIT x (1-Tax Rate)

Question 6

How do you calculate the market cap?

Answer 6

Price per Share x Number of Shares Outstanding

Question 7

How do you calculate Purchases?

Answer 7

Ending Inventory + COGS - Beginning Inventory

Question 8

How do you calculate the Earnings Retention Ratio?

Answer 8

1- (Dividends Paid (+ share buybacks) / Net Income)

Question 9

How do you calculate the Sustainable Growth Rate?

Answer 9

ROE x Earnings Retention Rate