Capital Market
1 Market Dividend Yield = Dividend Paid
Market Price per share
2 Market Capitalization= Market Price x Number of shares
3
Margin= Customers Equity
Market Value of security
4 Market Value of securities= Loan
1-Maintenance Margin
5 For Short Selling
Market Value of securities = Initial Proceeds + Initial Margin
1 + Maintenance Margin
1 Book Value Approach of Valuation
Book Value = Total assets- Current Liabilities & Provisions
Book value per share = Book value/No. of shares
2 Net Assets Value Approach of Valuation
Value of assets
less
Outstanding Debt
Net Assets Value
Number of shares
NAV per share
Money Market
1 Current yield = Annual Coupon Payment
Current Price of bond
2 Coupon Bond
Bond Value= V
8
= INT + INT +. INT + M
(1+K
d
)
1
(1+K
d
)
2
(1+K
d
)
n
(1+K
d
)
n
3 Yield to Call = Annual Coupon + (Call Price PV)/N
(Call Price + PV)/2
4 Yield to Maturity = Annual Coupon + (FV-PV)/N
(FV+PV)/2
5 Market Value= V= Dividend
Interest Rate
6 Zero Coupon Bond
Bond Value = Maturity Value
(1+i)
n
7 Duration= %age Change in bond price
Yield Change in %
8 Interest Coverage Ratio= EBIT
Interest change on all bonds
9 Pretax Preferred Dividend requirement = Preferred Dividends
1 - Tax rate
10 Preferred Dividend Coverage = EBIT
Interest + (preferred dividend/1-tax rate)
11 Total Shareholder Return
= Ending Market Value of equity + Distributors (Dividends & share buyback) during the year
Beg. Market Value of Equity + Additional Equity rose during the year
(1+K
d
)
1
(1+K
d
)
2
(1+K
d
)
n
(1+K
d
)
n
= Ending Market Value of equity + Distributors (Dividends & share buyback) during the year
Beg. Market Value of Equity + Additional Equity rose during the year
1. NOPLAT
NOPLAT = EBIT - Taxes on EBIT
2. Return On Invested Capital
ROIC = NOPLAT Invested Capital
3. Invested Capital
Invested Capital = Total Assets - Non Operating Fixed Assets - Excess Cash & marketable securities
4. Net Investment
Net Investment= Gross Investment -Depreciation
Net Fixed assets at the end of the year
Add: Net Current Asset at the end Of the year
Less: Net Fixed assets at the beg. of the year
Less: Net Current assets at the beg. of the year
5. Free Cash Flow
FCF= NOPLAT - Net Investment
FCF= Gross Cashflow - Gross investment
6. Free Cash Flow Available to the firm (FCFF)
FCFF= NOPLAT - Net Investment + Non Operating Cashflow
7. Capital Expenditure
Fixed assets at the end of the year
less: Fixed assets at the beg. of the year
Add: Depreciation
8. Growth Rate
Growth rate= Net Investment invested capital x 100
9. Weighted Average Cost of Capital
Enterprise DCF Model
OR
WACC= r
E
(S/V) +r
P
(P/V) + r
D
(1-T) (B/V)
10. Value Of the Firm
Value of the firm = FCF (WACC-Growth Rate)
Invested Capital = Total Assets - Non Operating Fixed Assets - Excess Cash & marketable securities
1. Initial Outlay
Initial Outlay = Initial Investment + Increase in working Capital
2. Operating Cashflow
CFAT = (R-C) (1-TR) + D x TR
3.Terminal Cashflow
TCF= Salvage value + Increase in Working capital
4. Payback Period
Payback Period= Initial Outlay Annual Inflow
5. AROR
AROR= Net Profit ater tax Average Investment x 100
6. Average Investment
AI= Initial Outlay + Terminal Cashflow 2
7. Net Present Value
NPV= PV inflows - PV outflows
8. PV inflows
PVI = (A x PVFA) + (FV +PVF)
PVFA= 1-(1+i)
-n
i
PVF= FV
n
x 1
(1+i)
n
9. Probability Index
PI= PV Inflow PV Outflow
10. Internal Rate of Return
IRR= LR+ (HR-LR) x [NPVL (NPVL - NPVH)]
11. Cash Inflow
CFAT: MV-(MV-BV) x TR
BV= Cost - Acc. Depreciation
Capital Budgeting
12. Cash Outflow
Purchase Price
Add Capital Expenditures
Add Revenue Expenditures (1-TR)
Add Working Capital
Relative Valuation
1. Price to Earning Multiple
P
o
/E
1
= (1-b)
r ROE x b
2. Price to Bookvalue Multiple
P/B = ROE (1+g)(1-b)
r-g
3.P/S Multiple
P
o
/S
o
= NPM (1+g) (1-b)
r-g
4. Price to Earning Growth
PEG= (P/E) g
5. Value Ratio
Value Ratio = (P/B) ROE
6. PSM
PSM = (P/S) NPM
7. EV to EBITDA
EV/EBITDA = ROIC g x (1-DA) (1-t)
ROIC (WACC-g)
8. EV to EBIT
EV/EBIT = (1-t) (1- reinvestment rate)
WACC-g
9.EV to FCFF
EV/FCFF = 1 .
WACC-g
10. EV to Bookvalue
EV/BV = ROIC - g
WACC-g
11. EV to Sales
EV/Sales = After tax operating Margin (1+g) (1- Reinvestment rate)
WACC-g
