Formulas Flashcards
Bond Conversion Formula
Par of Bond / Conversion Price ($ per share)
Parity Price of Bond
Conversion Ratio (%) x Stock’s Market Price
Balance Sheet Formula for Net Worth
Net worth = Assets - Liabilities
Liquidity Ratios (Working Capital)
Working capital = current assets/current liabilities
Quick Ratio or Acid Test Ratio
Current Assets - Inventory/Current Liabilities
Dividend Yield Formula or Current Yield Formula ($)
Annual income ($) / Current Market Price
Earnings per Common Share ($)
Earnings available for Common ($) /Common shares outstanding
Price/Earnings Ratio (P/E Ratio) (“Stock selling for a multiple of ___”)
Market Price of Security ($)/ Earnings Per share ($)
Current Yield (Stock)
Annual income from security (Dividend) / market price of security
Current Yield (Bond)
Annual interest amount / bond’s current market price
Warrant
Attached to a new bond or preferred stock as a “sweetener.” Gives holder right to buy a stated amount of common stock at a specific price. The price is initially higher than stock’s current market price. They trade separately from the security to which they were originally attached
American Depositary Receipts (ADRs)/American Depositary Shares (ADSs)
Negotiable securities representing ownership of common or preferred stock in a foreign company that is held in trust.
Market Capitalization
Shares Outstanding x Stock Price
