Financial Ratios/Stock Valuation:

Market Capital
Earnings Per Share
Earning Growth Rate
Price to Cash Flow
Operating Cash Flow Per Share = (Net Income + Depreciation + Amortization)/ Common
Shares Outstanding
Price/Trailing Earnings (5 Years)
P/E to EPS Growth
Price/Book
Price/Sales

Debt to Equity Ratio

Debt to total Capital Ratio

Dividend Payout Ratio

Dividend cover ratio - EPS/DPS
Dividend Yield

Betai=Cov(Ri,Rm)/σ2m

Jensen’s Alpha

PAT – Operating Profit After Tax

Return on Assets:

Return on Equity

[1]

ROE is equal to a fiscal year's net income (after preferred stock dividends but before common
stock dividends) divided by total equity (excluding preferred shares),

Capitalization Rate:

Net operating income produced by an asset and its capital cost (the original price paid to buy the
asset) or alternatively its current market value.[1] The rate is calculated in a simple fashion as
follows:
T Model:

The T-Model is a formula that states the returns earned by holders of a company's stock in terms
of accounting variables obtainable from its financial statements[1]. Specifically, it says that:

where T = total return from the stock over a period (appreciation + "distribution yield" — see
below);

g = the growth rate of the company's book value during the period;

PB = the ratio of price / book value at the beginning of the period.

ROE = the company's return on equity, i.e. earnings during the period / book value;

The T-Model connects fundamentals with investment return, allowing an analyst to make
projections of financial performance and turn those projections into an expected return that can
be used in investment selection

Business Valuation:
EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization)
Enterprise value = common equity at market value + debt at market value + minority interest at
market value, if any – associate company at market value, if any + preferred equity at market
value – cash and cash-equivalents.

Economic Value Add

The basic formula is:

where

, called the Return on Invested Capital (ROIC).

r is the firm's return on capital, NOPAT is the Net Operating Profit After Tax, c is the Weighted
Average Cost of Capital (WACC) and K is capital employed. To put it simply, EVA is the profit
earned by the firm less the cost of financing the firm's capital.

Shareholders receive a positive EVA when the return from the capital employed is greater than
the cost of that capital; see Working capital management. Any value obtained by employees of
the company or by product users is not included in the calculations.

The firm's market value added, or MVA, is the discounted sum of all future expected economic
value added:

Note that MVA = NPV of EVA.

Weighted Average Cost of Capital:

In general, the WACC can be calculated with the formula[2]:

, where N is the number sources of capital (securities,

types of liabilities); ri is the required rate of return for security i; MVi is the market value of all
outstanding securities i.

In a simple case where the company is financed by homogeneous equity and debt, the weighted
average cost of capital can be found through:

, where ,
where:
Symbol Meaning Units
required or expected rate of return on equity, or cost of equity %
required or expected rate of return on borrowings before taxes %
risk free rate %
risk premium rate %
Beta coefficient -
corporate tax rate %
total debt and leases (including current portion of long-term debt and notes
currency
payable)
total market value of equity and equity equivalents or market cap (number of
currency
shares outstanding X share price)

Performance

E ( Rp ) − Rf
Treynor =
σp
E ( Rp ) − Rf
Sharpe =
βp
Jensen = αp = E ( Rp ) −[ Rf + [ E ( Rm ) − Rf ]βp ]

Benchmarking:
Ep = Rportfolio- Rbenchmark
Tracking Error= σep
E ( Rp ) − E ( Rb )
Information Error = [ σep
]

Bond Pricing:
z z Nj
c N − j ×j − ×N
B = ( × ∑e 2 ) + ( FV × e 2 )
2 j =1
C= annual Coupon
N= No. of semiannual payment periods
Zj=bond equivalent spot rate corresponding to j periods on a continuously compounded basis
FV= Face value of bond

BV −∆y − BV +∆y
duration =
2 × BV 0 × ∆y

BV −∆y + BV +∆y − 2 × BV 0
convexity =
BV 0 × ∆y 2

Loan Portfolio and Expected Loss

Expected Loss = exposure x loss given default x probability of default

Unexpected Loss = Adjusted Exposure x
probabilit y _ of _ default ×σ LossGivenD
2
efault + LossGivenD efault 2
×σ Pr2 obabilityO fDefault
Adjusted Exposure =Outstanding Credit extended +(Committed Additional Credit - Outstanding
Credot Extended)x Usage given Default