Formulas Sheet

Corporate Finance
A = L + SE

GAEY
IC

MB

MVE
BVE

DE

TD
TE

E R

DA

TD
TA

rs = r f + RPs

EBIT
IE

ICR

P(C) = P(A+B) = P(A)+P(B)

FVt C 1 r n

PVt

EV = MVE + D - C

Cn

1 r n
N

NI
SO

PVt

OI
TS

FVt PV 1 r n

EPS
OM

E GAEY
IC

NPM

NI
TS

Cn

1 r
n 0

PVt

C
r

CR

CA
CL

PVt

C
r

QR

CAEI
CL

FVt

C
1 r N 1
r

PVt

C
rg

PVt

C
r-g

FVt

C
1 r N 1 g N
rg

ARD

AR
ADS

ROE

NI
BVE

MC
SP
P/E

NI
EPS

1 r N

1 - 1 + g

1+ r

RE = NI D
NPV = PV(ACF)

NPV PV PMT

1
RATE

1 RATE

P(S) = PV(CF)

Page 1 of 5

NPER

FV

1 RATE N

P
1
1
1

r
1 r N

r t 1 r n 1

rt

APR
k

APR

1 EAR 1

rr

r i
r i
1 i

r r r 1

EVAn = Cn rI n-1 - Dn

NPV
PI
RC
IT EBIT C

UNI EBIT 1 c R E D 1 c
NWC = CA CL = C + I + AR AP

CPN

FCF R E 1 c CE NWC c D
CG = SP BV
ATCF = SP (C x CG)

FV

1 YTM n n

rn = YTMn

CPN
y

CPN
CPN
CPN FV

2
1 YTM 1 1 YTM 2
1 YTM n n

Div1 P1
1 rE

rE

Div1 P1
Div1 P1 P0 Div1
1

g
P0
P0
P0
P0

FCF UNI D CE NWC

FCF R E D 1 c D CE NWC

CR FV
NCPR

1 y

FV

1 y N

Div1 Div2 P2

1 rE 1 rE 2

Div N
PN
Div1
Div2

2
N
1 rE 1 rE
1 rE 1 rE N

Divn

1 r
n 1

Page 2 of 5

Div1
rE g

P0

Rt 1

CE NI RONI

1+RL = (1+RS1) (1+RS2) (1+RS3).

NI E RR

g RR RONI

1
T

Div1
Div2
Div N
1
P

2
N
1 rE 1 rE
1 rE 1 rE N
PV FTDAR
SO0

t 1

1
T 1

Div N 1

g
E

t 1

SD ( IO)

SE A

NO

MRP = E[Rmkt] - r f

RP

xR
i

E RP

V C0 D0
P0 0
SO0

x E R

E R

FCFN

P0
Div1 EPS1
DPR

EPS1
rE g
rE g

V0
FCF1 EBITDA1

EBITDA1
rwacc g FCF

Var R
SD R

pR R

pR R E R 2

Var R

Cov Ri , R j E Ri E Ri R j E R j

FCFN
VN
FCF1
FCF2

1
2
N
1 rWACC 1 rWACC
1 rWACC 1 rWACCCov
N Ri , R j T 1

P/E

Vi
TVP

xi

V0 = PV(FFCF)

1 g wacc
FCFN 1

rwacc g FCF rwacc g FCF

FCF EBIT 1 C D CD NWC

VN

E R rf E RMkt r f

EV = MVE + D C

V0

Var R

Div N 1
PN
rE g

P0

Divt 1 Pt 1 Pt

Pt
Pt

Corr Ri , R j

Ri R j ,t R j

i ,t

Cov Ri , R j

SD Ri SD R j

Var R p x12Var R1 x22Var R2 2 x1 x2Cov R1 , R2

Var R p x12 SD R1 2 x 22 SD R2 2 2 x1 x 2 Corr R1 , R2 SD R

Var RP

x Cov R , R

Var RP

Var RP

1
AVIS 1 1 ACBS
n
n

xi x j Cov Ri , R j

Page 3 of 5

SD R P

x
i

x
i

SD Ri Corr Ri , R P

SD Ri Corr Ri , RP

x
i

Ri rf i i RMkt rf i

SD Ri

E R xP 1 x r f xE R P r f x E R P r f

rMkt

SD(RxP) = xSD(RP)

iP

E RP r f

E+D=U=A

SD Ri Corr Ri , RP Cov Ri , RP

SD RP
Var RP

ri rf iP E RP rf

SD Ri Corr Ri , R Eff

SD R Eff

ri rf iEff E REff rf

E
D

rE
rD rU rA
D

E
D
E

E Ri ri rf i E RMkt rf

x
i

xi

E
D
E
D
ED
ED

E U

E 1 U
E

ND = D CRFS

CFL = CFU + ITS

Pi

ITS = CTR x IP

VL = VU + PV(ITS)
PV(ITS) = C x D
VL = VU + CD

MVi

D
U D
E

SD Ri Corr Ri , RMkt Cov Ri , RMkt

SD RMkt
Var RMkt

s E Rs rs E Rs rf s E RMkt rf
MVi = Ni

D
rU rD
E

SD R xCML xSD RMkt

rE rU

D
RU RD
E

rWACC

E RxCML r f x E RMkt r f

E
D
RE
RD RU R A
ED
ED
RE RU

E Ri ri rf iEff E REff rf

i iMkt

Div1
g
P0

E = A D

SD RP

iEff

MV j

2
1
i 1. 0
3
3

ABSi

1 x 2Var rf x 2Var RP 21 x xCov r f , RP

SD R xP

SR

E Ri ri r * i E RMkt r *

E
D

rE
rD 1 C
ED
ED

rWACC

Page 4 of 5

rWACC

E
D
D

rE
rD
rD C
ED
ED
ED

1 c 1 e
1
1 i

Cd S d
1 rf

VL = VU + PV(ITS) PV(FDC)
VL = VU + PV(ITS) PV(FDC) PV(ACD) + PV(ABD)

Pcum Pex 1 g Div1 d

Div 1 d*

Pcum Pex

d1

PV K T
2
T

ln

d 2 d1 T

P PV K 1 N d 2 S 1 N d1
Sx = S PV(Div)

d g

Sx = S/(1+q)

1 g

= N(d1)

1 d
1 g

Pcum Pex Div 0

B = -PV(K)N(d2)

= -[1-N(d1)]

1 c 1 g
1

*
Pretain Pcum 1 retain

*
retain

C S N d1 PV K N d 2

e i
1 i

d*

Cu C d
Su S d

C = S + B

VL = VU + D
*
ex

1 i

C = max(S K,0)
P = max(K S,0)

B = PV(K)[1-N(d2)]

C S N d1 K e rT N d 2
2
S
r
2
K
T

ln
d1

S + P = PV(K) + C

d 2 d1 T

P = C S + PV(K)

rf er 1

S + P = PV(K) + PV(Div) + C

Sd + (1+r f)B = Cd

r = ln(1 + rf)

P = C S + PV(K) + PV(Div)
Su + (1+r f)B = Cu

option

S
S
S B

D 1

A
E

U 1 1 U
D
D

Page 5 of 5

E
D

1
E

= N(d1)

Page 6 of 5