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M&A Exam 2 Formulas & Ratios Questions and Answers
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WACC formula = Ke (E/E+D) + Kd (D/D+E) (1 - t) CAPM (Capital Asset Pricing Model) = Rf + B (Rm - Rf) Equity Value Formula = Basic Shares Outstanding + ITM Options & Warrants + ITM Convertible Securities Enterprise Value formula = Equity Value + Total Debt + Pref Stock + Non-Controlling Interests...

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  • August 14, 2024
  • 3
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

  • ma exam 2 formulas ratios questions and answers
  • wacc formula ke eed kd dde 1 t
  • capm capital asset pricing model rf b rm

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  • M&A Modeling
  • M&A Modeling

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M&A Exam 2 Formulas & Ratios
Questions and Answers
WACC formula ✅= Ke (E/E+D) + Kd (D/D+E) (1 - t)

CAPM (Capital Asset Pricing Model) ✅= Rf + B (Rm - Rf)

Equity Value Formula ✅= Basic Shares Outstanding + ITM Options & Warrants + ITM
Convertible Securities

Enterprise Value formula ✅= Equity Value + Total Debt + Pref Stock + Non-Controlling
Interests - Cash & Cash Equivalents

Perpetuity Growth Model ✅= FCFn ( 1+ g)/ (r-g)

Exit Multiple Method ✅= EBITDA(n) * Exit Multiple

Exchange Ratio (ER) ✅- number of acquisition shares per target share

Premium Paid ✅= Offer price per share/unaffected share price - 1

Fully Diluted Shares Outstanding ✅= # Basic Shares Outstanding + # ITM options &
warrants + # ITM convertible securities

ROE ✅Return on Equity
- measures firm's profitability in terms of stockholders' equity
- NI/Stockholders' Equity

ROA ✅Return on Assets
- how much money a company earns by putting its assets to use
- NI/Total Assets

ROIC ✅Return on Invested Capital
- measures return an investment generates for those who provided the capital - for ALL
investors
- NOPAT/Invested Capital

Profit Margin ✅- the amount by which revenue from sales exceeds costs in a business.
- NI/Sales (or Revenue)

Dividend Yield ✅- estimate of dividend only return of a stock investment

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