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    Formula Sheet: Pay Back Period

    Uploaded by

    tejaswi
    The document provides formulas for capital budgeting, capital structure, cost of capital, and working capital. Key formulas include: payback period, average rate of return, profitability index, value of the firm, overall cost of capital (WACC), operating leverage, financial leverage, cost of debt, cost of preference shares, current ratio, acid test ratio, inventory turnover, current asset turnover, and receivable turnover. The document contains over 15 financial formulas across various corporate finance topics.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Formula Sheet: Pay Back Period

    Uploaded by

    tejaswi
    22 views3 pages
    The document provides formulas for capital budgeting, capital structure, cost of capital, and working capital. Key formulas include: payback period, average rate of return, profitability index, value of the firm, overall cost of capital (WACC), operating leverage, financial leverage, cost of debt, cost of preference shares, current ratio, acid test ratio, inventory turnover, current asset turnover, and receivable turnover. The document contains over 15 financial formulas across various corporate finance topics.

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    Original Title

    Revsion_FORMULA-SHEET

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    The document provides formulas for capital budgeting, capital structure, cost of capital, and working capital. Key formulas include: payback period, average rate of return, profitability index, value of the firm, overall cost of capital (WACC), operating leverage, financial leverage, cost of debt, cost of preference shares, current ratio, acid test ratio, inventory turnover, current asset turnover, and receivable turnover. The document contains over 15 financial formulas across various corporate finance topics.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    22 views3 pages

    Formula Sheet: Pay Back Period

    Uploaded by

    tejaswi
    The document provides formulas for capital budgeting, capital structure, cost of capital, and working capital. Key formulas include: payback period, average rate of return, profitability index, value of the firm, overall cost of capital (WACC), operating leverage, financial leverage, cost of debt, cost of preference shares, current ratio, acid test ratio, inventory turnover, current asset turnover, and receivable turnover. The document contains over 15 financial formulas across various corporate finance topics.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    FORMULA SHEET

    CAPITAL BUDGETING
    Pay Back Period
    =
    ℎ

    Average Rate of
    Return =

    Profitability Index ℎ
    =
    ℎ

    CAPITAL STRUCTURE
    Value of Firm EBIT
    Value of Firm =
    Ko

    Value of Equity EBIT−Interest


    Value of Firm =
    Ke

    Total Value of Firm Total Value of Firm = Value of Debt + Market Value of
    Equity

    Overall Cost of D E
    Capital Ko = Kd × + Ke ×
    (D + E) (D + E)

    Modigliani Miller EBIT EBIT


    Approach Vl = Vu = =
    Kol Kou

    Operating Contribution
    Leverage Operating Leverage =
    Operating Profit (EBIT)
    Financial Leverage Operating Profit (EBIT)
    Financial Leverage =
    Profit Before Tax

    Combined Contribution × EBIT = Contribution


    Leverage DCL = DOL × DFL =

    EBIT PBT PBT

    COST OF CAPITAL

    Cost of Debt Kd after taxes = Kd (1 – tax rate)

    Cost of Kp (cost of pref. share)


    Preference Annual dividend of preference shares
    Shares
    =
    Market price of the preference stock

    Weightage WACC = (Equity Weight * Ke) + (Debt Weight *


    Average Cost of Kd)
    Capital
    Value of Equity
    Equity Weight =
    Total Capital Employed

    Value of Debt
    Debt Weight =
    Total Capital Employed

    WORKING CAPITAL
    Working Capital Current Assets – Current Liabilities

    Operating Cycle Operating Cycle = RM period+ WIP period + FG period +


    Debtors period – Creditors period
    FG stands for finished goods
    RM – Raw materials
    WIP – Work In progress
    Period of Raw
    =
    Material Stock
    (RM)
    Period of Credit
    =
    Granted by
    supplier
    ℎ

    Period of
    =
    Production

    Period of turnover ℎ
    ℎ =
    of finished goods
    stock

    Current Ratio
    =

    Acid Test Ratio −


    =

    Inventory Turnover
    =

    Current Asset
    =
    Turnover

    Receivable
    =
    Turnover

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