Rando Formulas Flashcards
growth formula
retention ratio x ROE
Economic Value Added
EBIT(1 − t) − $WACC
NOPAT - $WACC
Multi-Stage Residual Income Model
V0 = B0 + PV of interim high-growth RI + PV of continuing RI
Price to Sales Multiple
P0 / S0 = [(E0 / S0)(1 - b)(1 + g)] / (r - g)
growth via SBV
g = Retention Rate × Profit Margin × SBV of equity
price of a t-period zero-coupon bond
P,t = 1 / (1+S,t)^T
forward price (at t = j) of a zero-coupon bond maturing at (j + k)
F,(j,k)= 1 / [1+f(j,k)]^k
forward pricing model
P,(j+k) = P,j * F,(j,k)
Confidence Interval for slope coeff
Slope coeff + or - (critical t stat * standard error of slope)
Degrees of freedom
n - k - 1
Standard Error of Forecast
SEE^2 [1 + 1/n + (X
SST (components)
RSS + SSE
aka
Total variation (SST) = explained (RSS) + unexplained (SSE)
SST
(Yi - avg Y)^2
Mean Squared Regression
RSS/k
Mean squared error
SSE / (n - k - 1)
K
of independent variables
SEE
square root of (SSE/(n-k-1)) or Square root of MSE.
R^2
RSS/SST = explained variation / total variation
Net Fixed Capital Investment Adjustments
Additions - proceeds
FCFE via FCFF
FCFF - Int(1-t) + net borrowing
FCFF Formula
NI + NCC + int(1-t) - WC inv - FC inv
FCFE Formula
NI + NCC - WC inv - FC Inv + Net borrowing
FCFF long form mnemonic
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
FCFE long form mnemonic
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
