Professional Documents
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Topic 1. Investment
Topic 1. Investment
Investment
P = Principle or original debt
I = Interest only
R = rate of interest per annum
T = time in years or time period
S = the total sum of principle and Interest or the accumulated amount
Important Formula
1. I = Prt
2. S = P + I
3. S = P(1 + rt)
From formula 1.
P=
rt
r=
t=
Pt
I
Pr
From formula 2.
I=SP
P= S - I
From formula 3.
P=
S
1+
rt
S
P
-1
t=
S
-1
P
r=
t
r nt
1+ 1
n
r nt
S
1+ p=
n
S=P
( ( ))
log
t=
( sp )
r
log 1+
n
n I =SP
Investment
Buying Price
Dividend
Preference Shares = dividend rate x nominal@par value x no of shares x no of years
Ordinary Shares = (Y1 rate + Y2 rate + ) x nominal@par value x no of shares
Total Profit
x 100
Original Investment
Formula (Stocks)
Unit Price =
Price
100
Nominal value =
Total Interest
x 100
Market Price
Price
100
Investment
Buying Price
Cost
@Total Cost=Total Income
SPVC
Break-even Profit = 0
** If certain non-cash charges, such as depreciation, must be subtracted from the fixed costs.
gross profit
x 100
net sales
gross prifit
x 100
cost of sales
Overhead expenses
x 100
net sales
net profit
x 100
net sales
net profit
x 100
cost of sales
net profit
x 100
Average capital employed
Comment : The company returned a profit of _______% of the average capital employed.
Average stock =
Rate of stockturn =
COGS
Average Stock
Working capital ratio of _____ which is more/less than 2, indicates that the current liabilities are well/not cover by
the current asets.The business owns more/less current assets to pay off its short term liabilities.
Current assetsstock
Current liabilitiesoverdraft
Total borrowings
Net Worth
Low/high gearing company, ____% of the firm finance is provided by the proprietor.
balance
x 12 months
cash flow for the year 2
**If the payback period is shorter than the maximum desirable payback period, accept the project
otherwise reject it.
Net Present Value (NPV)
Net Presect Value (NPV) =
+ NPV
x (r 2r 1)
+ NPV (NPV )
@ A+
C
x ( B A)
CD
(returncost )
return
@
average cost
no . of years
no . of years
Average profit
Average investment
**If the ARR is found to be higher than minimum standard ARR, accept the project otherwise reject the
project.
Topic 6. Bankruptcy
Formula
Assets as a fraction of liabilities =
Percentage =
assets
liabilities
assets
x 100
liabilities
Rate in $ (dividend)=
assetssecured creditorsexpenses
unsecured creditors
amount received
rate$
Total depreciation
x 100
Cost
Annual depreciation
x 100
Cost
Annual Depreciation
Total Depreciation
Rate of depreciation =
Cost (C) =
Rate (r) = 1 -
Year (n) =
S
S
@1
C
C
( )
Rate of Depreciation = 1
? ? )
1/n
log SC
log (1r )
NBVS = NBVn X
NBV n
n
NBV s
NBV n
NBV s
NBV n
nNBV n
P1
Po
Quantity relative =
x 100 @
Q1
Qo
P1
P0
x 100 @
Q1
Q0
3 Shift ^
Weight index =
P 1 Q x 100 @ WI
PoQ
W
***
Total income
Total quantity