FINANCIAL MANAGEMENT

Transcription

1 Frmulae in Cst Accunting & Financial Management CA IPCC Part I FINANCIAL MANAGMNT

2 Chapter 1 : TIM ALU OF MONY F P(1+r) n Meaning f Terms F P r n Future alue, Present alue, % rate f interest, The time gap. Chapter 2 : CAPITAL BUGTING ARR Average PAT p.a/ Net investment. Prfitability inex (PI)/ esirability factr Ttal f iscunte Cash Inflws/ Ttal iscunte Cash Outflws. AC Cash Outflws per annum+ AI AI Initial Investment / Relevant Annuity Factr. Meaning f Terms AC quivalent Annual Csts PI Prfitability Inex AI quivalent Annual Investment

3 Chapter 6 : CAPITAL STRUCTUR k Annual Interest Charge Market alue f ebt quity arnings k e Market alue v quity k k + k e k k + k e k k + ( k k ) e xpecte Operating Incme + iscunt rate applicable t the risk class t which the firm belngs k k + ( k k ) e Meaning f Terms K Cst f ebt K e Cst f equity k Market alue f the firm () Market value f ebt () Market value f quity Overall capitalizatin rate fr the firm

4 Chapter 7 : Rati Analysis Current Rati Current Assets Current Liabilities Quick Assets Quick Rati Quick Liabilties Cash + Marketable Securities Cash Rati Current Liabilities Owner' s quity quity Owner s quity t Ttal quity Rati r Ttal quity Ttal Assets ebt ebt quity Rati quity ebt Service Cverage Rati arnings available fr ebt service Interest + Instalments ( principal cmpnent) arnings Befre Interest an Tax [ BIT ] Interest Cverage Rati Interest Pr fit After Tax[ PAT ] Preference ivien Cverage Rati Pr eference iviens Pr fit After Tax[ PAT ] Pr eference ivien quity ivien Cverage Rati quity ivien Capital Gearing Rati Pr eference Share Capital + ebentures + Lng term lans quity Share Capital + Re serves an Surplus Lsses Fixe incme bearing securities Nn Fixe incme bearing securities Fixe Assets t Lng term fun Rati Or Fixe Assets Lng Term Funs Pr prietary Funs r Capital mplye r Owners' quity Prprietary Rati Ttal Assets Prprietary funs Share Capital + Reserves an Surplus Fictitius Assets Ttal Assets Ttal Assets as per Balance Sheet except fictitius assets an lsses. Capital Turnver Rati Capital mplye Fixe Assets Turnver Rati Fixe Assets

5 Wrking Capital Turnver Rati Wrking Capital Inventry Turnver Rati Average Stck ½ X [Opening Stck + Clsing Stck] Raw Material Turnver Rati Raw Materials Cnsume Average Raw Materials Stck ebtrs Turnver Rati Creit Average Accunts Re ceivable Average Cllectin Peri Average Accunts Re ceivable 365 r Average aily creit sales ebtrs Turnver Rati Creitrs Turnver Rati Creit Purchases Average Accunts Payable Average Payment Peri Average Accunts Payable 365 r Average aily Creit Purchase Creitrs Turnver Rati Return n quity PAT Pr eference ivien quity Share Capital + Re serves an Surplus Fictitius Assets arnings per share Pr fit After Taxes Pr eference ivien Number f equity shares ivien per share Ttal iviens istribute t the equity Number f equity shares sharehlers Price arnings Rati Market Pr ice per Share arning per share Re turn Return n Capital mplye 100% Capital mplye Pr fit Befre Interest an Tax Return n Investment 100% Capital mplye

6 Grss Pr fit Grss Prfit Rati 100% Operating Pr fit Operating Prfit Rati 100% Net Pr fit Net Prfit Rati 100% ivien per share ivien Yiel 100% Market price per share RO Net Prfit quity Net Prfit Assets Assets quity Meaning f Terms Current Assets Inventries + Sunry ebtrs + Cash an Bank Balances + Lans an Avances + Marketable nn-trae securities at market value. Current Liabilities Trae creitrs + Bills payable + Outstaning expenses + Prvisin fr taxatin + Prpse ivien + Other Prvisin + Cash Creit + Bank Overraft + Unclaime ivien Quick Assets Current Assets Inventries Prepai xpenses Quick Liabilities Current Liabilities Bank Overraft Cash Creit Owner s quity Share Capital (bth equity an preference) + Reserves an Surplus ( ) Fictitius Assets Ttal quity Owner s quity + xternal quity [i.e., utsie liabilities inclusive f current liabilities an prvisins] Or Balance Sheet Ttal Miscellaneus xpeniture quity Owner s quity ebt Lng term lan fun. Prprietary funs Share Capital + Reserves an Surplus Fictitius Assets Ttal Assets Ttal Assets as per Balance Sheet except fictitius assets an lsses. Average Stck ½ X [Opening Stck + Clsing Stck]

7 Chapter 9 : COST OF CAPITAL P 0 1. (1-t). PIFA (k, n) + F.PIF (k,n) I1 ( t) k F P + F P n Cst f term lans Interest rate (1- tax rate) P 0.PIFA (kp,n) + F.PIF (kp,n) k p F P + F P n k e g P k e R f + B (R m R f ) W t t P t P t 1 K e 1 P WACC Wrk n r 1 r PS BIT(1 t) N 1 PS ( BIT Int.)(1 t) N 2

8 Meaning f Terms P 0 (Cst f ebentures) Present value f the ebenture (net f flatatin cst) I Annual interest payable n the ebenture t Tax rate F Principal amunt repayable at the maturity time k Cst f ebenture n Maturity peri P 0 (Cst f preference capital) Net amunt realize per share (net f flatatin cst) Preference ivien per share F Reemptin price k p Cst f preference capital 1 xpecte ivien per share next year 0 (1 + g) 0 Last pai ivien per share P 0 Current market price per share g Grwth rate b Retentin Rati r Return n quity Rf Risk free rate B Beta Rm Return n market Wt Wealth Rati 1 xpecte PS fr the next year Wr Weight f rth surce f capital Kr Cst f rth Surce f capital Int Ttal interest charge n ebt financing. N 1 Ttal N. f quity Shares uner financial Plan 1 N 2 Ttal N. f equity Shares uner Financial plan 2 t Tax Rate Chapter 10 : Leverage Analysis quity arnings ariable Csts Fixe csts Interest Tax Preference ivien quity arnings [Q (P-)-F-I] (1-t)- P arnings Per Share quity arnings Number f quity Shares [Q (P - ) - F - I] (1- n t) - P

9 OL Percentage Change in BIT Percentage Change in BIT BIT Q Q Q( P ) Q( P ) F Cntributin BIT FL Percentage Change in PS Percentage Change in BIT PS PS BIT BIT BIT P BIT I 1 t CL Percentage Change in BIT Percentage Change in PS PS Q Q Q( P ) P Q( P ) F I 1 t Meaning f Terms Q Number f units sl P Price per unit ariable Cst per unit F Ttal fixe cst I Ttal Interest t Tax rate P Preference ivien n Number f equity shares