CHAP 2

1. THE BALANCE SHEET IDENTIFY

'
ASSETS=LIABILITIES +SHAREHOLDE R S EQUITY
2. NET WORKING CAPITAL
NET WORKING CAPITAL=CURRENT ASSETS−CURRENT LIABILITIES

3. THE INCOME STATEMENT IDENTIFY

NET INCOME =TOTAL REVENUE∨SALES −TOTAL EXPENSES

4. GROSS PROFIT
GROSS PROFIT ∨GROSS MARGIN =TOTAL SALES−COGS

5. OPERATING INCOME
OPERATING INCOME =( GROSS PROFIT ∨GROSS MARGIN )−( SELLING , GENERAL ,∧ ADMINISTRATIV

6. EARNING BEFORE INTEREST AND TAXES

EBIT =OPERATING INCOME +OTHER INCOME (IF AVAILABLE)

7. NET INCOME
NET INCOME =EBIT−INTEREST EXPENSE−TAXES

8. COGS
COGS=BEGINNING INVENTORY + PURCHASES−CLOSING INVENTORY

9. CORPORATION TAX IN VN IS A FLAT-RATE TAX

Average tax rate=Marginal tax rate

10. CORPORATION TAX IN THE US IS NOT A FLAT-RATE TAX

Average tax rate≠Marginal tax rate

11. STATEMENT OF CASH FLOW

STATẸMENT OF CASH FLOW =SOURCES OF CASH +USES ∨APPLICATION OF CASH

12. INDIRECT METHOD

Definition
 A method of calculating cash in which net income is adjusted with both
cash and non-cash transactions
13. DIRECT METHOD
 Definition
 A method of generating a cash flow statement that details the sources of a
company’s cash flows and the destination of (or reason for) cash outflows
Detail formula of direct method
 CASH RECEIPTS ¿ CUSTOMER
¿ SALE REVENUE+ DECREASE∈ ACCOUNT RECEIVABLE∨(−INCREASE)∈ ACCOUNT RECEIVABLE ¿
 CASH PAID ¿ SUPPLIERS
¿ COGS+ INCREASE(−DECREASE)∈INVENTORY + DECREASE∨(−INCREASE)∈ ACCOUNT PAYABLE
 CASH PAID FOR OPERATING EXPENSE(INCLUDE RESEARCH ∧DEVELOPMENT )
¿ OPERATING EXPENSES+ INCREASE∨(−DECREASE)∈PREPAID EXPENSE+ DECREASE∨(−INCREASE
 CASH PAID ¿ EMPLOYEES
¿ WAGE EXPENSES+ DECREASE∨(−INCREASE)∈WAGES PAYABLE
 CASH PAID FOR INTEREST
¿ INTEREST EXPENSE−INCREASE∨(+ DECREASE)∈INTEREST PAYABLE+ AMORTIZATION OF BOND PR
 CASH PAYMENTS FOR INCOME TAXES
¿ INCOMETAXES + DECREASE∨(−INCREASE)∈INCOME TAXES PAYABLE

14. Cash flow identify

CASH FLOW ¿ ASSETS=CASH FLOW ¿ CREDITORS ( BONDHOLDERS ) +CASH FLOW ¿ STOCKHOLDER

15. FREE CASH FLOW TO FIRM

FREE CASH FLOW ¿ FIRM =OPERATING CASH FLOW ( OCF )−NET CAPITAL SPENDING−CHANGE∈

16. OCF
OCF=EBIT + ( DEPRECIATION + AMORTIZATION )−TAXES

17. Khấu hao

Tổng giá trị nguyên giá
Khấu hao=
10
OCF >0 : đủ để trang trải các CP

OCF <0 : dấu hiệu nguy hiểm của DN, 0 đủ để trang trải các CP

18. NET CAPITAL SPENDING

NET CAPITAL SPENDING=ENDING NET ¿ ASSETS−(BEGINNING NET ¿ ASSETS −DEPRECIATION )

19. NET OPERATING WORKING CAPITAL

NOWC=OPERATING CURRENT ASSETS−OPERATING CURRENT LIABILITIES

20. CHANGE IN NOWC

CHANGE∈ NOWC =ENDING NOWC −BEGINNING NOWC
 21. CASH FLOW TO CREDITORS/BONDHOLDERS
CASH FLOW ¿ CREDITORS=INTEREST PAID−NET NEW BORROWING

22. CASH FLOW TO OWNERS/STOCKHOLDERS

CASH FLOW ¿ STOCKHOLDERS=DIVIDENDS PAID−NET NEW EQUITY RAISED

CHAP 3:
1. INTERNAL GROWTH RATE
ROA × b
INTERNALGROWTH RATE=
1−ROA ×b
ROA: the return on assets
B: the plowback, or retention ratio (1- dividend payout ratio)
2. SUSTAINABLE GROWTH RATE
ROE ×b
SUSTAINABLE GROWTH RATE=
1−ROE × b
ROE: the return on equity
3. ROE
NET PROFIT
ROE= =PROFIT MARGIN ×TOTAL ASSET TURNOVER× EQUITY MULTIPLIER
TOTAL EQUITY
4. PLOWBACK RATIO
RETURN EARNING
PLOWBACK RATIO=
NET INCOME
CHAP 5:
1. INTEREST RATE: SIMPLE INTEREST
Pn=P 0+ P 0 × r × n=P 0 ×(1+r ×n)
Pn: the amount of money at the end of year n

P0: Original/Initial principal

r : simple interest

n : the number of period

2. COMPOUND INTEREST
n
Pn=P 0 ×(1+r )
Pn: the amount of money in year n

P0: the original principal

r : Compound interest

n : The number of periods

3. FUTURE VALUE OF MONEY

THE FUTURE VALUEOF MONEY =THE PRESENT VALUE OF MONEY + ACCMULATED INTEREST ON

4. THE FUTURE VALUE OF MONEY

t
FV =PV (1+r )
FV : the future value of money

PV : the present value of money

r : Compounding interest

t : the number of periods

5. THE PRESENT VALUE OF MONEY

FV
PV = t
(1+r )

6. THE PRESENT VALUE OF MONEY

n
CF t
PV =∑
t =1 (1+ r)t
PV : The present value of mutiple cash flows
CF t : Cash flow in period t

r : Discount rate

n : The number of periods

7. THE PRESENT VALUE OF ORDINARY ANNUITY

PV =CF ×
[ 1
−
1
r r ( 1+ r ) n
] 1 1
=CF × − ×
1
[
r r (1+ r)n ]
8. THE PRESENT VALUE OF ANNUITY DUE

PV =CF ×
[ 1
−
1
r r ( 1+ r )n ]
×(1+r )
 9. THE PRESENT VALUE OF PERPETUITY
CF
PV =
r
10. THE PRESENT VALUE OF GROWING PERPETUITY ( THANH TOÁN ĐỀU)
CF
PV =
r−g
11. THE FUTURE VALUE OF CASH FLOW (ORDINARY)

[ ] [ ]
n
(1+ r) 1 1 1 CF
FV ANNUITY =CF × − =CF × (1+r )n × − = × [(1+r )n−1 ]
r r r r r

12. THE FUTURE VALUE OF CASH FLOW (ANNUITY)

[ [ ]] [ [ ]] [ ]
n
(1+ r) 1 1 1 CF
FV ORDINARY = CF × − × ( 1+r )= CF × (1+r )n × − × ( 1+ r )= × [(1+ r)n −1 ] × ( 1+r )
r r r r r

13. FUTURE VALUE OF MUTIPLE CASH FLOWS

n
FV =∑ CF t ×(1+ r)n −t
t=0

FV : The present value of mutiple cash flows

r : Compound rate

14. FV PERPETUITY
A
FV PERPETUITY =
L
AFTER 3 YEARS
A 3
FV = × ( 1+ r )
L
15. THE FUTURE VALUE WITH CONTINUOUS COMPOUNDING
rt
FV =P ×e
P: the initial principle

r : the annual interest rate

e : the base of the natural logarithm

16. THE PROPERTY FORMULA

 NET OPERATING INCOME
PROPERTY VALUE=
CAPITAL RATE %
17. ANNUAL EFFECTIVE RATE OF INTEREST

( )
n
r
EAR= 1+
n
*r có thể là APR
18. CONTINOUS COMPOUNDING
APR
EAR=e −1
CHƯƠNG 6
1. COUPON RATE
ANNUAL COUPON
COUPON RATE=
FACE VALUE
2. CAPITAL GAIN YEILD: BOND’S PRICE APPRECIATION RATE
(P ¿ ¿ n−P0 )
CGY =CHANGE∈ PRICE ¿
BEGINNING PRICE (P¿¿ 0)¿

3. CURRENT YIELD: THE INTEREST RATE REQUIRED IN THE MARKET ON

A BOND IF HOLD FOR ONE COUPON PERIOD
ANNUAL COUPON
CY =
CURRENT BOND PRICE
4. YIELD TO MATURITY: THE INTEREST RATE REQUIRED IN THE
MARKET ON A BOND IF HOLD UNTIL MATURITY
YTM =EXPECTED TOTAL RETURN =EXPECTED CY + EXPECTED CGY

YTM IS USED AS THE DISCOUNT RATE

5. BOND VALUTATION
BOND VALUE=PRESENT VALUEOF THE COUPON + PRESENT VALUE OF THE FACE AMOUNT
n
C F
V B= ∑ +
t=1 (1+YTM ) ( 1+YTM )n
t

n : periods to maturity

6. BOND VALUE OF ZERO COUPON BOND

F
V B= n
(1+YTM )
 7. BOND VALUE OF PERPETUAL BOND
C
BONDVALUE OF PERPETUAL BOND=
YTM
8. AS YTM GOES UP, BOND PRICE (VALUE) GO DOWN AND VICE VERSA
9. YTM =COUPON RATE → BOND PRICE=FACE VALUE
10. YTM > COUPON RATE → BOND PRICE < FACE VALUE
11. YTM < COUPON RATE → BOND PRICE > FACE VALUE
12. DIVIĐEN GROWTH RATE
DIVIDEND t−DIVIDEND t −1
gt =
DIVIDEND t −1

13. DIVIDEND YIELD

D1
DIVIDEND YIELD t=
P0

14. CAPITAL GAIN YEILD

P1−P0
CGY t =
P0

15. TOTAL RATE OF RETURN

TOTAL RATE OF RETURN =DIVIDEND YIELD+CAPITAL GAIN YEILD

16. STOCK VALUATION

Dt Pn
P 0= t
+ n
(1+ r s ) (1+r s )

Dt : the expected dividend paid in year t

Pn: the expected selling stock price in year n

17. DIVIDEND DISCOUNT MODE (DDM)

D1 D2
P 0= + +…
1+k (1+ k)2

D 1: The dividend a stockholder expected to receive at the end of each Year t

k: The required rate of return (Discount rate)

18. DIVIDEND DISCOUNT MODE OF ZERO GROWTH
 D
P 0=
k
19. CONSTANT GROWTH
D0 × ( 1+ g ) D
P 0= = 1
k−g k −g
20. NONSTANT GROWTH – TWO STAGE GROWTH
D1 D2 Dt Dt +1 /(k −g2)
P 0= + 2
+ …+ t
+ t
1+k (1+ k) ( 1+ k ) (1+k )

CHƯƠNG 7
1. RATE OF RETURN
D1 P1−P 0
R= +
P0 P0

2. EXPECTED RETURN
n
E ( R ) =∑ Pi × R i
i

Pi: probability of scenario i

Ri : the return if scenario i happens (%)

n : the number of possible profitability scenario

3. PORTFOLIO EXPECTED RETURN

n
E ( R P )=∑ W i × E(Ri )
i

W i : weight of invesment i

E(R i): the expected return of investment (%)

4. VARIANCE
T
1
× ∑ [ Rt −R ]
2 2
σ =
T −1 t=1
Rt : the rate of returns in the i(th) period

R : the average returns

T : time
 ¿> STANDARD :σ =√ σ 2
5. VARIANCE AND STANDARD DEVIATION – PROJECTED FUTURE
RETURNS
n
σ 2=∑ Pi × [ Ri−E ( Ri) ]
2

6. STANDARD
σ =√ σ
2

7. COVARIANCE
Cov ( R A ; R B ) =∑ Pi × ( R A ;i−E ( R A ) ) × ( RB ;i −E ( RB ) )

Cov> 0: Returns of stock A&B move in the same direction

Cov< 0: opposite direction

Cov=0 : no relation

8. CORRELATION
Cov ( R A ; RB )
Corr ( R A ; R B )=ρ ( R A ; R B ) =
σ ( R A) × σ ( RB)

−1=¿Correlation=¿ 1

The smaller the absolute value of Correlation, the weaker the linear relationship
n
σ 2P=∑ P i × [ E ( RPi ) −E(R P ) ]
i

2
σ P: Portforlio variance

E(R P ): The overall expected return

E ( R Pi ): The portfolio expected return if scenario I happens

9. BETA COEFFICIENT
Cov (Ri ; Rm )
B etai=
Var ( Rm )

10. SECURITY MARKET LINE

E ( Ri ) =r f + βi [ E ( R M )−r f ]