Midterm Exam Formula – Summer 2015

Chapter Two:Assets=1 .Current Assets=cash+marketable securities+short−term invest+account receivable+ inventories+prepaid expenses .2 .Fixed Assets=land+building+machines+cars−depreciation .3 .Others Assets=goodwill+copyright+franchises .Liabilities=1 .Current Liabilities=account payable+notes payable+accrued expenses+ income taxes payable2 .Others Liabilities=long−term+bonds+mortgages+long−term notesStockholders equity=1 .Preferred stock=2 .Common stock=3 . treasury stock=4 .Capital surplus=5 .Retained earnings=(net income-cash dividend )

Working Capital=Current Assets−Current Liabilities=change in Current Assets−change in Current Liabilities

Market price of stock per= par value+Capital surplus# of common stock

Earnings per Share ( EPS)= net income¿of share(common stock outstnding )

T axable income=N et Sales - Cost and operation expense-interest paymentN et income=T axable income-Income Taxes

Debt Management Analysis:

Debt Ratio = total debettotal assets

=current liabilities+ long-term debttotal assets

Time-Interest-Earned Ratio =EBITInterest expense

=

=Earnings Before Interest and income TaxesInterest expense

Liquidity Analysis:

Current Ratio =current assetscurrent liabilitie

Quick Ratio (Acid-Test )=current assets-inventoriescurrent liabilitie

Asset Management Analysis:

Inventory turnover ratio =SalesAverage inventory balance

=Total RevenueAverage inventory

Day's Sales Outstanding (DSO )=ReceivablesAverage sales per day

=Receivablesannual sales/365

Total Assets Turnover =SalesTotal Assets

Profitability Analysis:

Profit Margin on Sales =net income available to common stockholderssales

Return on Total Assets (ROA )=net income+interest expense (1-tax rate )average total assets (debt+equity )

Return on Common Equity (ROE )=net incomeaverage common equity

=Net incomeSales

×SalesAssets

×AssetsStockholder's equity

=(Profit Margin )×( Asset turnover)×(Financial leverage )

Market Value Analysis:

Price-to-Earning Ratio (P/E)=Price per shareEarnings per share

Book Value per share =total stockholder equity-preferred stockAverage shares outstanding

Chapter Four:General Formula=if PP>CP , find ieffective for PP

ia=(1+rM )

M

−1

if PP<CP

ia=(1+r1 /M )

1M −1

comp continuous Formula=

i=erk −1

to find r lin¿er

Amortized Loans: API+A to find balanceTotal interest payment=( A× N )-LoanI n=Loan×APIPn=A−In

The Remaining Balance=B i=A( P / A , API , N−i)Add-On Inerest Loans: API+P+NTotal add-on interest = P×i× NPrincipal + add-on interest = P+( P×i× N )

Monthly installment =Principal + add-on interestN (months )

=P+( P×i× N )N ( months)

to find Rate=RATE (N,A,-P,F(0 ))Inestment in Bonds:interest earned=(Pv ) face value × coupon rateYield to maturity= Pv=(all interest earned )+face value ¿equivalance to Markert Price

The current Yield =annual interest earnedmarket price of bond

= APv

Midterm Exam Formula – Summer 2015

Chapter Five:

Payback period =Initial costUnifform annual benefit

=PvA