formulas

Question 1

Alpha

Answer 1

measures the reaction of news, events, related to a particular company.

Question 2

Beta

Answer 2

measure the volatility of a particular stock compared to the market price.

Question 3

Balance Sheet

Answer 3

Total liabilities + Net Worth= Total Assets

Question 4

Current Assets

Answer 4

items that are cash or will be converted to cash in the upcoming 12 month period

Question 5

Fixed Assets

Answer 5

items the company has or needs to produce it products or services
Other Assets- Intangible items such copyrights, patents, and good will.

Question 6

Liabilities

Answer 6

must be paid in the upcoming 12 month period
Should be $2 in current assets for every $1 in current liabilities.

Question 7

sum of liabilities

Answer 7

Total Liabilities + Total shareholders Equity

Question 8

Debt to equity ratio

Answer 8

Total Liabilities / Total shareholders Equity

Question 9

The Income Statement- (Profit and Loss Statement )

Answer 9

Shows amount the corporation revenues
Expenses that were paid
Amount of earning remaining after expenses over a period of time( 1 year)

Question 10

the most important number on the Income Statement

Answer 10

Net Earning

Question 11

Earning Per share

Answer 11

Net Earning / Common Shares Outstanding

Question 12

Retained Earning

Answer 12

Net Earning – Dividends on common stock

Question 13

Conservative Capital Structure

Answer 13

Large % common outstanding
Small % Bonds outstanding

Question 14

Speculative Capital Structure

Answer 14

Large % Bonds Outstanding
Small % Common Outstanding

Question 15

Net Working Capital

Answer 15

Current Assets- Current Liabilities

Question 16

Current Ratio

Answer 16

Current Assets / Current Liabilities Must be 2:1

Question 17

Acid Test Ratio

Answer 17

Current Assets Less Inventory / Current liabilities

Question 18

Interest Coverage or Fixed Charge Coverage -

Answer 18

Operating profit / Interest Expense

Question 19

Debt to Equity

Answer 19

Total Debt / Net Worth

Question 20

Margin of Profit

Answer 20

Operating profit / Net Worth

Question 21

Cash Flow

Answer 21

Net income+ Depreciation

Question 22

Price Earning Ratio

Answer 22

Market price / Earning Per share(EPS)

Question 23

Capitalization or Total Capital

Answer 23

Shareholders Equity + Bonds

Question 24

Bond Ratio

Answer 24

Stated Value of Preferred / Capitalization

Question 25

Preferred Stock Ratio

Answer 25

Stated value of Preferred / Capitalization

Question 26

Common Stock Ratio

Answer 26

Value of Common + Paid in surplus + Retained Earning Capitalization

Question 27

Return on Assets

Answer 27

Net Income( net profits after tax) / Total Tangible Assets

Question 28

Return On Equity

Answer 28

Net Income / Shareholders Equity

Question 29

Outstanding share

Answer 29

Issued stock – treasury stock

Question 30

Rights Calculation

Answer 30

OUTSTANDING SHARES / NEW SHARES = # of rights needs to purchase each new share of stock

Question 31

Current Yield on Bonds

Answer 31

Annual Interest / Market price

Question 32

Current Yield on Common Stock

Answer 32

Annual Dividend / Market Price = Current yield %

Question 33

Conversion formula for a convertible bond

Answer 33

Par value /Conversion Price # of common shares

Question 34

Corporate Equivalent Yield

Answer 34

Municipal Yield / (100% - Investors Tax rate) = Corporate Equivalent Yield MC hammer

Question 35

Municipal Equivalent Yield

Answer 35

Corporate Yield x (100% - investors tax rate)

Question 36

Breakeven on a CALL

Answer 36

Strike price + Premium = Breakeven on a Call

Question 37

Breakeven on a PUT

Answer 37

Strike price - Premium = Breakeven on a Put

Question 38

NAV per share

Answer 38

(Total Assets of the fund – Total liabilities) /Total number of shares outstanding

Question 39

Calculating parity price

Answer 39

Par Value / Conversion Price = common shares produced Market price of bond or preferred stock / Common shares produced = parity price of common stock -or- Common Shares produced x Market price of stock= Parity of bond or preferred Stock

Question 40

Dividends per share

Answer 40

Dividends paid to common shareholders / Outstanding common shares

Question 41

Dividend Payout Ratio %

Answer 41

Dividends per share / Earnings Per Share

Question 42

Price to Earning Ratio (P/E)

Answer 42

Market price / Earning Per share

Question 43

Expense ratio

Answer 43

Operating Expenses / Average Net Assets

Question 44

EPS

Answer 44

Net Earning / Outstanding common shares