FIN 300 Study Guide - Midterm Guide: Asset Turnover, Retained Earnings, Capital Asset Pricing Model
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Retention ratio = additions to retained earnings / net income: cash flow from assets cfa = ocf less additions to nwc less capex. Ocf = ebit + d - t. Additions to nwc = end nwc - beg nwc. Capex = end fixed assets - beg fixed assets + d: cash flow from assets = cash flow to creditors less cash flow to shareholders. Cash flow to creditors = interest paid net new borrowing. Cash flow to stockholders = dividends paid net new equity raised. + any decrease in current assets (except cash) Any increase in current assets (except cash) Roe = roa ( profit margin x total asset turnover) x equity multiplier. Time value of money (tvm: future value formula compound interest, present value formula. Rate m = the number of compounding periods per year. where, f = frequency of payments. The bond price formula consists of the pva and pv formulas: