Finance Final Cheat Sheet
2
Quiz 1 & 2 Quiz 2 – Valuation CFs Quiz 3 Quiz 4 Options F C F -P C T P T Writer = Seller Peer group • Industry, size, geo, age of rm Equity Holders Both Debt & Equity Va lua ti on Pri e, !"t Cap, !"t Value of #$uity #nterprise Val S ale #arnings %&I', (oo" #$uity, #PS #(IT, #(IT)*, +e enue Equity Holders Both Debt & Equity Va lua ti on Pri e, !"t Cap, !"t Value of #$uity #nterprise Val S ale #arnings %&I', (oo" #$uity, #PS #(IT, #(IT)*, +e enue *nnuity %nite' Payo s * tion S T ./ S T 0/ Call %(uy' 1 ST-/ Call %Sell' 1 -%ST-/' Put %(uy' /-S T 1 Put %Sell' -%/-S T ' 1 Sto " %(uy' S T S T Sto " %Sell' -S T -S T 2end3(uy PV%/' / / (orro43Sell PV%/' - / -/ (uy / /%56r' t /%56r' t Sell / -/%5 6r' t -/%56r' t Put3Call Parity C If not all alues %assume opposite'7 58 C (uy C9eap %St' Sell Pri y %Ct' C-/ :8 C-/ (uy Call %Ct' Sell Sto " %St' (uy (ond -/ C-PV%/' ;8 (uy Call %Ct' Sell Sto " %St' (uy (ond < PV%/' C-PV%/' -0 /%56r' t *nnuity 43t gro4t9 %nite' Perpetuity %innite' Perpetuity 43t gro4t9 %innite' Interest +ates -5 -0 m ompound3yr -5 -0 > inter al CFs fra tion3yr -0 nom 4it9out in? 58 )is ounted CFs 1 5 : ; & FCF 1 FCF 5 FCF : FCF ; FCF & 58 Find ea 9 FCF :8 (ring @a " to PV 1 :8 PV%)i ' *ssumes onstant gro4t97 Ap Prof #(IT #arn3&I Portfolio 4it9 n-sto "s To Find t9e eB ient om@inations of 5 D : )i ersied Portfolios Se urities s mar"et portfolio W*CC C al l Put Continuous ompounding = % E > ' 3 m +is" Free )e@t = T < t +emem@er to dis ount t9e @ond t9is 4ay W*CC = + * = )3V E + ) 6 #3V E + # + # = + * 6 )3# E %+ * -+ ) ' Same goes for + + − − − = T r g g r g r C PV 1 1 * 1 1 * ( ) + − = T r r CF PV 1 1 1 * / 1 r CF PV 1 = g r CF PV − = 1 ms SpecialIte INV WC Dep Tax Dep Cost v FCF c t + − ∆ − + − − − = ) 1 ( * ) (Re ( ) t t g r DIV DIV PV P ) ( 0 − = = − = = 1 1 1 * * EPS DIV EPS ROE PB ROE g Shares Costs v Shares Erngs EPS # Re # 0 0 0 0 − = = EPS P E P = ~ ) 1 ( * 0 1 g EPS EPS + = ( ) PB EPS DIV − = 1 * 0 0 t t r FCF FCF PV ) 1 ( ) ( + = j i j i j i R R Corr R R Cov σ σ ) ( ) ( = 2 ) , ( m i m i Cov σ β = i m i R R E R R E C!P" S"# β * ) ( ) ( ) ( ) − + = = p m m p R R E R R E C"# σ σ * ) ( ( ) ( ) − + = = ( ) ( ) ( ) In r r nom real + + = + 1 1 1 ( ) T T T r DF + = 1 / 1 1 ) / 1 ( − = T T T DF r t #ieO!sse Salvage t InitialCos Dep − = Tax Boo$Val%e ice Sale ice Sale Cap&ain * ) Pr ( Pr − − = τ + 2 σ + ' + R + T S +
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Transcript of Finance Final Cheat Sheet
PowerPoint Presentation
Quiz 1 & 2Quiz 2 Valuation CFsQuiz 3Quiz 4OptionsWriter = SellerPeer groupIndustry, size, geo, age of firm
Annuity (finite) PayoffsActionSTKCall (Buy)0ST-KCall (Sell) 0-(ST-K)Put (Buy) K-ST0Put (Sell)-(K-ST)0Stock (Buy)STSTStock (Sell)-ST-STLend/Buy PV(K)KKBorrow/Sell PV(K)-K-KBuy KK(1+r)tK(1+r)tSell K-K(1+r)t-K(1+r)t
Put/Call ParityIf not all values (assume opposite):1.Buy Cheap (St) Sell Pricy (Ct)2.Buy Call (Ct) Sell Stock (St)Buy Bond -K3.Buy Call (Ct) Sell Stock (St)Buy Bond PV(K)-> K(1+r)tAnnuity w/t growth (finite)
Perpetuity (infinite) Perpetuity w/t growth (infinite)
Interest Rates-> nom without infl1. Discounted CFs0123N
FCF0FCF1FCF2FCF3FCFN1. Find each FCF2. Bring back to PV02. PV(Div)Assumes constant growth:
Op ProfEBITEarn/NIPortfolio with n-stocksTo Find the efficient combinations of X1&X2
Diversified PortfoliosSecurities vs market portfolioWACC
CallPut
Continuous compounding
Risk Free Debt
Remember to discount the bond this wayWACC = RA = D/V * RD + E/V * RERE = RA + D/E * (RA-RD)
