Formulas

Question 1

Working Capital

Answer 1

Current Assets - Current Liabilities

Question 2

Quick Asset Ratio

Answer 2

Quick Assets (CA - Inv) / Current Liabilities

Question 3

Current Ratio

Answer 3

Current Assets / Current Liabilities

Question 4

Debt to Equity Ratio

Answer 4

Debt / Total Capitalization (total debt + total equity)

Question 5

Book Value Per Share

Answer 5

(Tangible Assets - Liabilities - Par Value of Preferred Stock) / Shares if common stock outstanding

Question 6

EPS

Answer 6

Earnings available to common (remaining earnings after preferred stock has been paid) / number of shares outstanding

Question 7

Current Yield

Answer 7

Annual Dividends/Income / current market price

Question 8

Dividend Payout Ratio

Answer 8

• annual dividends per common share / earnings per share

Question 9

P/E ratio

Answer 9

Current Market Price of Common Shares / EPS

Question 10

EPS

Answer 10

Current Market Price / PE Ratio

Question 11

Securities Market Line Formula

Answer 11

[(rm - rf) x b] + rf

Question 12

Total Return

Answer 12

(Income + Capital Appreciation) / Investment

Question 13

Mutual Fund Returns

Answer 13

Annual Dividend / Current Price = Current Return

Question 14

Holding Period Return

Answer 14

• (Sold + Income) - Investment/ Investment

Question 15

Annualized Return

Answer 15

• Return x (12 / # of months investment was held)

Question 16

Sharpe Ratio

Answer 16

(rP - rF) / SD

Question 17

Required Rate of Return

Answer 17

Rf + risk premium

Question 18

POP

Answer 18

POP = NAV / (1-SC%)

Question 19

Alpha

Answer 19

((rM-rF)xb) - (rP-rF)

Question 20

CAPM (Expected Rate of Return)

Answer 20

rF + ((rM-rF)xb)

Question 21

Average Cost

Answer 21

= total invested/ total number of shares

Question 22

Average Price Per Trade

Answer 22

= total share price / no. of investment periods

Question 23

Margin

Answer 23

LMV + CR - SMV + DR?

Question 24

Breakpoint

Answer 24

Average cost per share = total cost / total number of shares