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1 Rec Formula Research
1 Rec Formula Research
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= Potential Gross Rental Income + Other Income - Vacancy & Bad Debt Allowance.
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= RR − OE
where:
OE = operating expenses
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NOI
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Profitability Index
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Building Efficiency
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Development Margin
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Development Profit
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Months supply
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Payback period in Years
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Goodwill = P-(A-L),
where:
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Where:
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NPV > 0
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Conversion
Benefit-Cost Ratio
= (€^N t=0 CFt (Benefits / (1+it)^t) / (€^N t=0 CFt (Costs) / (1+it)^t)
Where,
€ = sum
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3. Capital Gearing Ratio = Equity Share Capital / Fixed Interesr Bearing Funds
4. Debt Service Ratio = Net Profit Before Interest and Taxes / Fixed Interest Charges
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3. Debt Collection Ratio = (Receivable x Months or days in a year ) / Net Credit Sales for the year
5. Average Payment Period = (Average Trade Creditors / Net Credit Purchases) x 100
7. Fixed Assets Turnover Ratio = Cost of Goods Sold / Total Fixed Assets
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Profitability Ratios
5. Return on Investment (ROI) Ratio = (Profit After Interest and Taxes / Shareholders Investment) x 100
6. Return on Capital Employed Ratio = (Net Profit after Taxes / Gross Capital Employed) x 100
7. Earnings per Share Ratio = (Net Profit after Tax and Preferred Dividend / No. of Equity Shares)
8. Dividend Payout Ratio = (Dividend Per Equity Share / Earnings per Equity Share) x 100
9. Earnings Per Equity Share = Net Profit after Tax and Preferred Dividend / No. of Equity Share
10. Dividend Yield Ratio = (Dividend Per Share / Market Value per Share ) x 100
11. Price Earnings Ratio = (Market Price Per Equity Share / Earnings per Share) x 100
12. Net Profit to Net Worth Ratio = (Net Profit after Taxes / Shareholders Net Worth) x 100
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Liquidity Ratios
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Benefit-Cost Analysis
= PV of Benefit / PV of Cost
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RevPOR
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RevPAR
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GOPPAR
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ARPAR
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TREVPAR
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Capitalization Rate
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= (Total Debt Service + Annual Operating Expenses) / Gross Annual Rental Income
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Equity Amount
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Max Loan Amount obtained for this project
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Yield on Cost %
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Build to x% calculation (yield cost)
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Capital Employed
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Quick Ratio
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Current Ratio
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Debt-to-equity ratio
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Present Value
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ROI %
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Residual Income
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Land Value
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Property Value
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Occupancy Rate
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Vacancy Rate
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Absorption rate
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S = R ((1+i)^n - 1) / i ) (1+i)
Where,
i = interest rate
n = number of periods
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Present Value
P = R (1 - (1+i)^-n / i)
Where,
P = Present Value
i = interest rate
n = number of periods
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Ordinary Annuity
S = R ((1+i)^n - 1) / i)
Where,
i = interest rate
n = number of periods
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B9a. Cases Studies
Formulas
2. Conversion
7. Consumer Price Index = (Cost given year / Cost base year) x 100%
10. Mortgage debt ratio = sum of monthly debt payment / Gross monthly income
11. Debt service coverage ratio = net operating income / total debt service
12. Months supply = (Vacant space + space in construction) / new absorption per month
13. Total Development Cost = Land Cost + Development Cost + sum of interest and commissions
17. FV = PV (1+r)^n
18. PV = FV x (1/(1+r)^n
1. Profitability -
f. Return on Common Stock Equity = (Net Income - PS Dividend) / Net worth par value of preferred
stocks
2. Liquidity -
4. Test of Total Debt Coverage = Profit before interest & taxes / (Interest + principal payments) x (1/1-
income tax rate)
BEC = Cash Fixed Cost / (Selling Price - Cash Variable Cost / Unit)
b. Dividends per share = (Net Income -Preferred Stock Dividends - Retained Earnings) / Common Share
b. Payback period in Years = Initial Year Cash Outflow / Succeeding Annual Net Cash Flow
C. Capital Recovery or Cash Pay-Off Period (in years) = Stocks / Annual Cash Dividends
9c
Goodwill = P-(A-L),
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weighted average cost of capital (WACC) and The WACC discount formula :
WACC = E/V x Ce + D/V x Cd x 1-T),
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APV = NPV + PV
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capitalization rate = (risk-free rate + historical real estate risk premium - expected net operating income
growth rate) / 1 - (annual capital expenditures / net operating income).
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NOI = Gross Potential Income – vacancy and collection loss – operating expenses
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where:
OE=operating expenses
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Where:
P0 equals the initial investment (cash outflow)
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NPV > 0
or
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where:
FV=Future Value
r=Rate of return
n=Number of periods
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The debt service coverage ratio (DSCR) is defined as net operating income divided by total debt service.
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Potential gross income (also known as PGI or gross potential rent) is the total revenue a property could
generate if 100% leased at market rent. For example, some rents may be over or under market, or the
property may not be 100% occupied. Nevertheless, PGI reflects the the most annual rent a property
would collect.
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