Class notes
Foundations of Finance class summary
- Course
- Institution
This summary is made from summarising the finance classes. It includes formulas and the theory behind it. This is for the Nyenrode Business University.
[Show more]
Seller
Follow
fleur8817
Content preview
Summary FinanceFleur Bongers
1
,Table of Contents
Summary Finance...............................................................................................................1
Fleur Bongers.....................................................................................................................1
Powerpoint 1/2............................................................................................................................3
Income statement...........................................................................................................................................3
Balance sheet..................................................................................................................................................4
Profit and Loss.................................................................................................................................................6
CAPM Model Capital Asset Pricing Model......................................................................................................7
Preformance Measures.................................................................................................................8
Return on Capital, EVA, and Return on Equity................................................................................................8
Profit Margin and Market-to-Book Ratio........................................................................................................9
Efficiency measures......................................................................................................................9
Leverage Measures.....................................................................................................................10
Liquidy Measures........................................................................................................................10
Powerpoint 3..............................................................................................................................12
Discounting.................................................................................................................................12
Bonds.........................................................................................................................................14
Bond Valuation..............................................................................................................................................15
Powerpoint 4..............................................................................................................................16
Simple interest VS. Compound interest........................................................................................................16
Future Value..................................................................................................................................................16
Growing Perpetuities....................................................................................................................................16
When Compounding.....................................................................................................................................17
Powerpoint 5/6..........................................................................................................................19
DCF................................................................................................................................................................19
Free Cash Flow..............................................................................................................................................20
Discount Factor.............................................................................................................................................20
Discounted Free Cashflow Valuation............................................................................................................21
Estimating Free Operating Cashflow.............................................................................................................21
Dividend discount models............................................................................................................................22
Estimating Dividend Yield.............................................................................................................................22
Payout Ratio / Plowback ratio and ROE........................................................................................................23
Key Concept: The Opportunity Cost of Capital.............................................................................................24
Key Concept: Weighted Average Cost of Capital..........................................................................................24
Growth and Horizon Stage............................................................................................................................24
Powerpoint 7/8..........................................................................................................................25
2
, Powerpoint 1/2
Definition Finance:
The management of money. Includes activities such as…
• Investing
• Borrowing & Lending
• Saving & Budgeting
• Forecasting
Main topics to know
• Income Statement and Balance Sheet Equations
(Net Income and ALOE)
• Net Present Value and Discounted Cashflow
(NPV and DCF)
• Capital Asset Pricing Model (CAPM)
The Profit & Loss Statement summarizes the firm’s
results of operation for the period
Net Income = Revenues – Expenses
Begins with Revenues
Deducts Expenses
Ends with Net Income
Income statement
Net Income = Revenues – Expenses
Calculate profits by deducting costs and
expenses from revenues.
The bottom-line figure, Net Income is
transferred to the statement of retained
earnings.
Expenses are matched with revenues on
the income statement.
EX: Cost of Goods Sold is an expense
matched with Sales.
Calculate Retained Earnings by adding Net Income and deducting Dividends from the
previous retained earnings.
Continues the story where the
Income Statement ends
Begins with previous period
Retained Earnings
Adds Net Income or deducts
Net Loss
Deducts Dividend
3
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller fleur8817. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.04. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67474 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now