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    ACST252 - Formula Sheet

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    yolejosh479
    This document contains formulas for finance and accounting ratios, valuation of cash flows, capital budgeting techniques, portfolio theory models, and option pricing models. Key ratios included are current ratio, quick ratio, equity multiplier, debt-to-equity ratio, asset turnover, profit margins, and return on equity. Formulas are also provided for net present value, internal rate of return, weighted average cost of capital, and valuation of perpetual growth firms. The Black-Scholes option pricing model closes out the document.

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    ACST252 - Formula Sheet

    Uploaded by

    yolejosh479
    123 views5 pages
    This document contains formulas for finance and accounting ratios, valuation of cash flows, capital budgeting techniques, portfolio theory models, and option pricing models. Key ratios included are current ratio, quick ratio, equity multiplier, debt-to-equity ratio, asset turnover, profit margins, and return on equity. Formulas are also provided for net present value, internal rate of return, weighted average cost of capital, and valuation of perpetual growth firms. The Black-Scholes option pricing model closes out the document.

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    Formula Sheet

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    This document contains formulas for finance and accounting ratios, valuation of cash flows, capital budgeting techniques, portfolio theory models, and option pricing models. Key ratios included are current ratio, quick ratio, equity multiplier, debt-to-equity ratio, asset turnover, profit margins, and return on equity. Formulas are also provided for net present value, internal rate of return, weighted average cost of capital, and valuation of perpetual growth firms. The Black-Scholes option pricing model closes out the document.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    123 views5 pages

    ACST252 - Formula Sheet

    Uploaded by

    yolejosh479
    This document contains formulas for finance and accounting ratios, valuation of cash flows, capital budgeting techniques, portfolio theory models, and option pricing models. Key ratios included are current ratio, quick ratio, equity multiplier, debt-to-equity ratio, asset turnover, profit margins, and return on equity. Formulas are also provided for net present value, internal rate of return, weighted average cost of capital, and valuation of perpetual growth firms. The Black-Scholes option pricing model closes out the document.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    ACST252: Finance and Financial Reporting

    Formula Sheet
    V = PV of coupon payments + PV of face value

    1
    1− 𝐹𝐹𝐹𝐹
    (1+𝑟𝑟)𝑡𝑡
    = 𝐶𝐶 � � + (1+𝑟𝑟)𝑡𝑡
    𝑟𝑟

    D
    P0 =
    r

    Dt = D0 × (1 + g)t

    D0 × (1 + g)
    P0 =
    r−g

    D1
    P0 =
    r−g

    Current assets
    Current ratio =
    Current liabilities

    Current assets − Inventory


    Quick ratio =
    Current liabilities − Bank overdraft

    Note: if the company has Biological Assets in its Current Assets, this figure should also be subtracted
    in the numerator of the Quick Ratio.

    Equity multiplier = (Total assets) / (Total equity)

    Debt/Equity ratio = (Net interest-bearing debt) / Equity

    Asset turnover = (Total assets) / Sales

    Net profit after tax margin = NPAT / Sales


    ROA = (Net profit after tax) / (Total assets)

    1
    ROE = (Net profit after tax) / Equity
    Net profit Sales Assets
    ROE = × ×
    Sales Assets Equity

    = Profit margin × Total asset turnover × Equity multiplier

    = ROA × Equity multiplier.

    SGR =
    (ROE × R )
    (1 − ROE × R )
    average net profit
    ARR =
    average book value

    PV of inflows
    PVI =
    Initial cost

    NPV of inflows
    NPVI =
    Initial cost

    (1 + R) = (1 + r) × (1 + h)

    1
    Var(R) = × [(𝑅𝑅1 − 𝑅𝑅�)2 + ⋯ + (𝑅𝑅𝑇𝑇 − 𝑅𝑅�)2 ]
    (T − 1)

    𝑛𝑛

    E�R p � = � 𝑊𝑊𝑗𝑗 E�R j �


    𝑗𝑗=1

    E(Ri )−Rf
    Reward/Risk ratio =
    βi

    𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶: E(R i ) = R f + [E(R M ) − R f ] × βi

    βi = 𝐶𝐶𝐶𝐶𝐶𝐶(𝑅𝑅𝑖𝑖 , 𝑅𝑅𝑀𝑀 )⁄𝜎𝜎𝑀𝑀2

    ρ(iM) = 𝐶𝐶𝐶𝐶𝐶𝐶(𝑅𝑅𝑖𝑖 , 𝑅𝑅𝑀𝑀 )⁄(𝜎𝜎𝑖𝑖 × 𝜎𝜎𝑀𝑀 )

    2
    E(RM )−Rf
    CML: E�R p � = R f + × σp
    σM

    SML: E(R i ) = R f + [E(R M ) − R f ] × βi

    Variance= 𝜎𝜎𝐴𝐴 2 𝑊𝑊𝐴𝐴2 + 𝜎𝜎𝐵𝐵2 𝑊𝑊𝐵𝐵2 + 2𝑊𝑊𝐴𝐴 𝑊𝑊𝐵𝐵 𝐶𝐶𝐶𝐶𝐶𝐶𝐴𝐴𝐴𝐴

    Variance= 𝜎𝜎𝐴𝐴 2 𝑊𝑊𝐴𝐴2 + 𝜎𝜎𝐵𝐵2 𝑊𝑊𝐵𝐵2 + 2𝜌𝜌𝐴𝐴𝐴𝐴 𝑊𝑊𝐴𝐴 𝑊𝑊𝐵𝐵 𝜎𝜎𝐴𝐴 𝜎𝜎𝐵𝐵

    Inventory
    Days Inventory = × (Days in year)
    COGS

    Trade Receivables
    Days accounts receivable = × (Days in year)
    Sales
    Trade Payables
    Days accounts payable = × (Days in year)
    COGS

    Operating cycle = Inventory period + Accounts receivable period

    Cash cycle = Operating cycle − Accounts payable period

    𝐷𝐷1
    𝑅𝑅𝐸𝐸 = + 𝑔𝑔
    𝑃𝑃0

    R 𝐸𝐸 = R f + βE × [R 𝑀𝑀 − R f ]

    D
    RP =
    𝑃𝑃0

    E 𝐷𝐷
    WACC = � � × 𝑅𝑅𝐸𝐸 + ( ) × 𝑅𝑅𝐷𝐷 × (1 − 𝑇𝑇𝐶𝐶 )
    V 𝑉𝑉

    𝐸𝐸 𝐷𝐷
    𝑓𝑓𝐴𝐴 = × 𝑓𝑓𝐸𝐸 + × 𝑓𝑓𝐷𝐷
    𝑉𝑉 𝑉𝑉

    Project cost(ingoring flotation costs)


    True cost of project =
    (1 − 𝑓𝑓𝐴𝐴 )

    t
    Franking Credit = Dividend × × (% franked)
    1−t

    3
    𝐷𝐷
    𝑅𝑅𝐸𝐸 = 𝑅𝑅𝐴𝐴 + (𝑅𝑅𝐴𝐴 − 𝑅𝑅𝐷𝐷 ) × � � × (1 − 𝑡𝑡)
    𝐸𝐸

    𝐷𝐷
    𝛽𝛽𝐸𝐸 = 𝛽𝛽𝐴𝐴 (1 + × (1 − 𝑡𝑡))
    𝐸𝐸

    𝑉𝑉𝐿𝐿 = 𝑉𝑉𝑈𝑈 + 𝑇𝑇𝐶𝐶 𝐷𝐷

    𝐷𝐷
    𝑅𝑅𝐸𝐸 = 𝑅𝑅𝑈𝑈 + (𝑅𝑅𝑈𝑈 − 𝑅𝑅𝐷𝐷 ) × � � × (1 − 𝑇𝑇𝑐𝑐 )
    𝐸𝐸

    EPS = (NPAT – Preference Dividends) / (Number of Shares on Issue)

    𝐶𝐶𝑡𝑡 = 0 𝑖𝑖𝑖𝑖 (𝑆𝑆𝑡𝑡 − 𝐸𝐸) ≤ 0

    𝐶𝐶𝑡𝑡 = 𝑆𝑆𝑡𝑡 − 𝐸𝐸 𝑖𝑖𝑖𝑖 (𝑆𝑆𝑡𝑡 − 𝐸𝐸) > 0

    𝑡𝑡
    𝐶𝐶0 = 𝑆𝑆0 × 𝑁𝑁(𝑑𝑑1 ) − 𝐸𝐸/�1 + 𝑅𝑅𝑓𝑓 � × 𝑁𝑁(𝑑𝑑2 )

    • 𝐶𝐶0 = 𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜 𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣


    • 𝑆𝑆0 = 𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝
    • 𝑁𝑁(𝑑𝑑1 ) = 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑡𝑡ℎ𝑒𝑒 𝑠𝑠ℎ𝑎𝑎𝑎𝑎𝑎𝑎 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑖𝑖𝑖𝑖 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟
    𝑡𝑡
    • 𝐸𝐸 ⁄�1 + 𝑅𝑅𝑓𝑓 � = 𝑃𝑃𝑃𝑃 𝑜𝑜𝑜𝑜 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝
    • 𝑁𝑁(𝑑𝑑2 ) = 𝑠𝑠𝑠𝑠𝑠𝑠𝑠𝑠 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑡𝑡ℎ𝑒𝑒 𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒𝑒 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑖𝑖𝑖𝑖 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝

    1
    �ln(𝑆𝑆0 ⁄𝐸𝐸 ) + (𝑅𝑅𝑓𝑓 + × 𝜎𝜎 2 ) × 𝑡𝑡�
    𝑑𝑑1 = 2
    𝜎𝜎 × √𝑡𝑡

    𝑑𝑑2 = 𝑑𝑑1 − 𝜎𝜎 × √𝑡𝑡

    4
    5

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