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Flashcards in Rando Formulas Deck (24):
1

growth formula

retention ratio x ROE

2

Economic Value Added

EBIT(1 − t) − $WACC

NOPAT - $WACC

3

Multi-Stage Residual Income Model

V0 = B0 + PV of interim high-growth RI + PV of continuing RI

4

Price to Sales Multiple

P0 / S0 = [(E0 / S0)(1 - b)(1 + g)] / (r - g)

5

growth via SBV

g = Retention Rate × Profit Margin × SBV of equity

6

price of a t-period zero-coupon bond

P,t = 1 / (1+S,t)^T

7

forward price (at t = j) of a zero-coupon bond maturing at (j + k)

F,(j,k)= 1 / [1+f(j,k)]^k

8

forward pricing model

P,(j+k) = P,j * F,(j,k)

9

Confidence Interval for slope coeff

Slope coeff + or - (critical t stat * standard error of slope)

10

Degrees of freedom

n - k - 1

11

Standard Error of Forecast

SEE^2 [1 + 1/n + (X

12

SST (components)

RSS + SSE
aka
Total variation (SST) = explained (RSS) + unexplained (SSE)

13

SST

(Yi - avg Y)^2

14

Mean Squared Regression

RSS/k

15

Mean squared error

SSE / (n - k - 1)

16

K

# of independent variables

17

SEE

square root of (SSE/(n-k-1)) or Square root of MSE.

18

R^2

RSS/SST = explained variation / total variation

19

Net Fixed Capital Investment Adjustments

Additions - proceeds

20

FCFE via FCFF

FCFF - Int(1-t) + net borrowing

21

FCFF Formula

NI + NCC + int(1-t) - WC inv - FC inv

22

FCFE Formula

NI + NCC - WC inv - FC Inv + Net borrowing

23

FCFF long form mnemonic

N - net income
+I - int (1-t)
-C (WC)
-E (capex)
-----\/ NCC ----
+T DTL
+I Impairment
-P (Premium)Discount
-G (gain)
+L loss
+A amort
+D depreciation

24

FCFE long form mnemonic

N - net income
-E (capex)
-W (WC)
+B Net Borrowing
-----\/ NCC ----
+T DTL
+I Impairment
-P (Premium)Discount
-G (gain)
+L loss
+A amort
+D depreciation