EBIT = Earnings before interest and taxes = Sales revenues - Operating costs

EBITDA = Earnings before interest, taxes, depreciation, and amortization

= EBIT+ Depreciation+ Amortization

Net cash flow = Net income+ Depreciation and amortization

NOWC = Net operating working capital = Operating current assets - Operating current liabilities
Total net operating capital = Net operating working capital + Operating long-term assets
NOPAT = Net operating profit after taxes = EBIT(l - Tax rate)
Free cash flow (FCF) = NOPAT - Net investment in operating capital

Operating cash flow = NOPAT+ Depreciation and amortization

Gross investment in Net investment
operating capital . operat·mg cap1·ta1+ Depreciation
m
FCF = Operating cash flow - Gross investment in operating capital

NOPAT
Return on invested capital (ROIC) =
. capita
Tota1 net operating • 1
MVA = Market value of stock - Equity capital supplied by shareholders

EVA= Net operating profit after taxes (NOPAT) - (Total net operating capital) (WACC)

Current assets
Current ratio=---- - - ­ Total assets
Current liabilities Equity multiplier= .
Common eqmty
Current assets - Inventories
Quick, or acid test, ratio=
1.
Current 1.iab.1 1hes
. EBIT
Times-interest-earned (TIE) ratio=
Cost of goods sold Interest c11arges
Inventory turnover ratio= ---- -- ­
Inventories EBITDA + Lease payments
EBITDA coverage ratio=
Receivables Interest + Principal payments + Lease payments
DSO = Days sales outstanding=
Average sa1es per day
Net income available to common shareholders
Payables Net profit margin=
APP= Average payables period= . Sa1es
Annua1 operating costs1365
Net income available to common shareholders
Return on tota1 assets (R0A) =
Sales Tota1 assets
Fixed assets turnover ratio=
Net f.1xed assets EBIT
Basic earning power (BEP) ratio=
Tota1 assets
Sales
Total assets turnover ratio= ROA= Profit margin X Total assets turnover
Tota1 assets
Total debt Net income Sales
Debt ratio= ---- ­ R 0A=----- X -- - - -
Total assets Sales Total assets

Total debt Return on common Net income available to common shareholders

Debt-to-equity ratio= . equity (ROE) Common equity
Tota1 common eqmty

. Price per share

R OE = ROA X Equity multiplier Price/cash flow rat10 =
Cash flow per share
= Profit margin X Total assets turnover X Equity multiplier
Common equity
Net income x---
Sales - Total assets Book value per share
=-----
Sales
- x------ Shares outstanct·mg
Total assets Common equity
=

Market price per share

Price per share Market/book (M/B) ratio =
Price/earnings (P/E) ratio = .
Earnings per share Book value per sl1are
 N
INT M
FVN = PV(l + I)N =
� +
VB (1 + r ) t (1 + r d)N
t=l d
FVN
PV = . N INT Call price
(1 + I)N Pnce of callable bond �(=
t +

.!_] _ [ t=1l+rd) (l+rd).N

(1 + I)N _ (1 + I)N - 1 Annual interest
FVAN _
- PMT [ - PMT ] . ld
Current yie =
I I I Bond's current price
FVAdue = FVA ordinary(l + I) 2N INT/2 M
= +
VB �1 (1 +raf2)t (1 + raf2)2N
= M/(l+ raf2) 2N

[1 - 1. l
1 1 (1 + I)N Vzerocouponbond
PVAN = PMT [
I - I(l + I)N ] = PMT
I rd = r* + IP + DRP + LP+MRP
PVAN due = PVA ordinaril + I) rRF = r*+IP
rd = rRF+DRP+LP+MRP
PMT
PV of a perpetuity = --
1 n
Expected rate of return r �
i =l pli
= =
N CFt
PVUnevenstrearn =; +
(1
1 �rt
t=l
Historical average, rAvg
FVunevenstrearn = L
t l
=
CFt(l + I) N -t
n
n

ariance = a-2 �(ri - r) Pi

= 2
V i=l
INOM
!PER = 1V{
Standard deviation = u= -Ji� (ri - r) 2Pi
APR = (IPER)M

Number of periods = NM
1NOM MN
FVN = PV(l + I�)Number of periods = Pv(1 + )
M Historical estimated u = S =
n-1
IN M M
EFF% = (1 + � ) - 1.0

a
CV = ­
r

hp= � wibi
i =l
ap -�(r pi - rp) pi
= 2
Required return on stock marke
t = rM 1=1

Market risk premium = RPM = rM - rRF RPi = �(i\_t - i\,Avg)(rj,t - rj,Avg)

t= l
(rM - rRF)bi =
(RPM)bi
Estimated p = R = ,=
n
===========
n
�(ri,t - ri,Avl�(rj,t - rj,Avl
SML = ri = rRF + (rM - rRF)bi t= l t=l
= rRF + RPMbi ri
= rRF + (rl - rRF)bil
+ ... + (rj - rRF)bij rp =
wArA + (1 + wA)r8
Portfolio SD= ap = Y wiai + (1 - wA) 2 a� + 2wA(l - wA) PABaAaB