Rando Formulas

Question 1

growth formula

Answer 1

retention ratio x ROE

Question 2

Economic Value Added

Answer 2

EBIT(1 − t) − $WACC

NOPAT - $WACC

Question 3

Multi-Stage Residual Income Model

Answer 3

V0 = B0 + PV of interim high-growth RI + PV of continuing RI

Question 4

Price to Sales Multiple

Answer 4

P0 / S0 = [(E0 / S0)(1 - b)(1 + g)] / (r - g)

Question 5

growth via SBV

Answer 5

g = Retention Rate × Profit Margin × SBV of equity

Question 6

price of a t-period zero-coupon bond

Answer 6

P,t = 1 / (1+S,t)^T

Question 7

forward price (at t = j) of a zero-coupon bond maturing at (j + k)

Answer 7

F,(j,k)= 1 / [1+f(j,k)]^k

Question 8

forward pricing model

Answer 8

P,(j+k) = P,j * F,(j,k)

Question 9

Confidence Interval for slope coeff

Answer 9

Slope coeff + or - (critical t stat * standard error of slope)

Question 10

Degrees of freedom

Answer 10

n - k - 1

Question 11

Standard Error of Forecast

Answer 11

SEE^2 [1 + 1/n + (X

Question 12

SST (components)

Answer 12

RSS + SSE
aka
Total variation (SST) = explained (RSS) + unexplained (SSE)

Question 13

SST

Answer 13

(Yi - avg Y)^2

Question 14

Mean Squared Regression

Answer 14

RSS/k

Question 15

Mean squared error

Answer 15

SSE / (n - k - 1)

Question 16

K

Answer 16

of independent variables

Question 17

SEE

Answer 17

square root of (SSE/(n-k-1)) or Square root of MSE.

Question 18

R^2

Answer 18

RSS/SST = explained variation / total variation

Question 19

Net Fixed Capital Investment Adjustments

Answer 19

Additions - proceeds

Question 20

FCFE via FCFF

Answer 20

FCFF - Int(1-t) + net borrowing

Question 21

FCFF Formula

Answer 21

NI + NCC + int(1-t) - WC inv - FC inv

Question 22

FCFE Formula

Answer 22

NI + NCC - WC inv - FC Inv + Net borrowing

Question 23

FCFF long form mnemonic

Answer 23

N - net income
\+I - int (1-t)
-C (WC)
-E (capex)
-----\/ NCC ----
\+T DTL
\+I Impairment
-P (Premium)Discount
-G (gain)
\+L loss
\+A amort
\+D depreciation

Question 24

FCFE long form mnemonic

Answer 24

N - net income
-E (capex)
-W (WC)
\+B  Net Borrowing
-----\/ NCC ----
\+T DTL
\+I Impairment
-P (Premium)Discount
-G (gain)
\+L loss
\+A amort
\+D depreciation