Q&A/Review for Midterm

Matthias Buehlmaier, PhD

The University of Hong Kong

PMBA6076, Oct. to Nov. 2017

Formulae

• How to remember formulae?

• Some formulae such as DIH or DSO are really easy to memorize

(after all, this is not a course on mathematical finance)

• In most cases, however, it’s easier to remember the story behind

the formula rather than the formula itself

• Examples (if you want I can explain each story in class, just let me
know): Cost of equity, WACC, levered beta, TSM method, FCF, . . .

2
 Real-World Cookbook Approach

• In this class, we follow the cookbook approach, written in our

textbook by leading practitioners

• As such, everything is practical and real-world knowledge

• As such, it is important to remember the real-world conventions

and procedures

• In most cases, they make intuitive sense and should therefore be

easier to remember (if not, you can always ask me in class and I’ll be
glad to elaborate)