COVERS ALL TOPICS IN LEVEL I CFA EXAM REVIEW CFA LEVEL I FORMULA SHEETS

Transcription

1 2016 CFA EXAM REVIEW COVERS ALL TOPICS IN LEVEL I LEVEL I CFA FORMULA SHEETS

2 Copyright 2016 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) , fax (978) , or on the Web at Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) , fax (201) , or online at Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) , outside the United States at (317) or fax (317) Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at For more information about Wiley products, visit

3 Financial Analysis Techniques Inventory Turnover Cost of goods sold Inventoryturnover = Averageinventory Days of Inventory on Hand 365 Days of inventoryonhand(doh) = Inventory turnover Receivables Turnover Receivables turnover = Averagereceivables Days of Sales Outstanding 365 Days of sales outstanding ( DSO) = Receivables turnover Payables Turnover Purchases Payables turnover = Average trade payables Number of Days of Payables 365 Number of days of payables = Payables turnover Working Capital Turnover Working capital turnover = Average working capital Fixed Asset Turnover Fixedasset turnover = Average fixed assets Total Asset Turnover Totalasset turnover = 46 Wiley 2016 All Rights Reserved. Any unauthorized copying or distribution will constitute an infringement of copyright.

4 Current Ratio Current assets Current ratio = Current liabilities Quick Ratio Cash + Short-term marketable investments+ Receivables Quickratio = Current liabilities Cash Ratio Cash + Short-term marketable investments Cash ratio = Current liabilities Defensive Interval Ratio Cash + Short-term marketable investments+ Receivables Defensive interval ratio = Daily cashexpenditures Cash Conversion Cycle Cash conversion cycle = DSO + DOH Number of days of payables Debt to Assets Ratio Total debt Debt-to-assets ratio = Totalassets Debt to Capital Ratio Total debt Debt-to-capitalratio = Total debt+ Shareholders equity Debt to Equity Ratio Total debt Debt-to-equity ratio = Shareholders equity Financial Leverage Ratio Financialleverage ratio = Average total equity Interest Coverage Ratio EBIT Interest coverage ratio = Interest payments Wiley 2016 All Rights Reserved. Any unauthorized copying or distribution will constitute an infringement of copyright. 47

5 Fixed Charge Coverage Ratio EBIT + Leasepayments Fixedchargecoverage ratio = Interest payments + Leasepayments Gross Profit Margin Gross profit margin = Grossprofit Operating Profit Margin Pretax Margin Operating profit margin = Operatingprofit EBT(earnings before tax, but after interest) Pretax margin = Net Profit Margin Return on Assets Net profit Net profit margin = Net income ROA = Net income+ Interest expense(1 Tax rate) Adjusted ROA = OperatingincomeorEBIT Operating ROA = Return on Total Capital EBIT Return on totalcapital = Short-term debt + Long-term debt + Equity Return on Equity Net income Return on equity = Average total equity Return on Common Equity Net income Preferreddividends Return on common equity = Averagecommonequity 48 Wiley 2016 All Rights Reserved. Any unauthorized copying or distribution will constitute an infringement of copyright.

6 DuPont Decomposition of ROE Net income ROE = Averageshareholders equity 2 Way Dupont Decomposition Net income ROE = Averageshareholders equity ROA Leverage 3 Way Dupont Decomposition Net income ROE = Averageshareholders equity Net profit margin Asset turnover Leverage 5 Way Dupont Decomposition Interest burden Asset turnover Net income EBT EBIT ROE = EBT EBIT Avg. shareholders equity Tax burden EBITmargin Leverage Price to Earnings Ratio PE / = Earnings per share Price to Cash Flow PCE / = Cash flow pershare Price to Sales PS= / Salesper share Price to Book Value PBV / = Book valueper share Wiley 2016 All Rights Reserved. Any unauthorized copying or distribution will constitute an infringement of copyright. 49