Summary
Summary Finance formulas
- Course
- Institution
Finance formulas at a glance.
[Show more]
Seller
Follow
annelieslager
Reviews received
Content preview
Formules Finance.1. Real risk-free interest rate = risk- free rate – inflation premium
2. Real risk-free fisher = real rate + rate of inflation + real rate x inflation
3. Nominal interest rate = reel risk-free rate + inflation premium + default risk premium +
maturity risk premium + liquidity risk premium
4. Nominal interest rate = Real rate of interest + inflation risk premium
5. Sales – expenses = profits
6. Gross profit margin = gross profits/sales x 100 =
7. Operating profit margin = operating income / sales x 100 =
8. Net profit margin = net income/ sales x 100 =
9. Beginning retained earnings + net income the year – dividends paid during the year =
ending retained earnings
10. debt ratio = total liabilities/total assets
11. Current ratio = current assets/current liabilities
12. Net working capital = current assets – current liabilities
13. Cash collections from sale = sales – change in accounts receivable
14. Net income + depreciation +/- Increase/decrease in accounts receivable +/-
increase/decrease inventory +/- increase/decrease other current assets +/-
increase/decrease in accounts payable +/- decrease/increase accured expenses =
cashflow from operations
15. ACID-test = cash + accounts receivable/current liabilities
16. Days in receivables = accounts receivable/daily credit sales of accounts receivable/annual
credit sales/365
17. Annual credit sales/accounts receivable = receivable turn over ratio
18. Days inventory inventory/daily cost of goods sold = inventory/annual costs of goods
sold /365
19. Operating return on assets = operating profits/total assets x 100
20. operating return on assets = operating profits/sales x sales/total assets
21. Operating profit margin = operating profit/sales
22. Fixed assets turnover = sales/net fixed assets
23. Debt ratio = total debt/total assets x 100
24. Times interest earned = operating profits/interest expense
25. Return on equity (ROE) = net income/total common equity x 100
26. Market values ratio P/E = market price per share/earnings per share
27. Price book ratio = market price per share/equity book value per share
28. Effective annual rate (EAR) = (1+ APR or quoted annual rate/ compounding periods per
year (M) =
29. Periodic rate = APR or quoted annual rate/compounded periods per year
30. Investor’s required rate of return = K(cost of capital) = return/investment
31. After-tax cost of debt = bondholders required rate of return x 1 – tax rate
32. Net proceeds = issue price – flotation cost
33. Cost of preferred stock = Dp/Pn = preferred stock dividend per share/net proceeds (issue
price – flotation costs)
34. Investors rate of return (retained earnings) K = D1/P + g = K = dividends expected one
year hence/price of common stock + growth rate
35. Investors rate of return (new issues) K = D1/NP + G = K = dividends expected one year
hence/ net proceeds per share + growth rate
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 annelieslager. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.92. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
56326 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now