Chương 1

Net working capital: Current assets - Minus current liabilities.

Net operating working capital: Operating current assets – Operating current liabilities.
Operating cycle = Inventory conversion period + Receivable collection period
CCC =Inventory conversion period + Receivables collection period - Payables deferral period

Inventory conversion period = Average inventory / ( Annual costs of good sold / 365)
Receivable collection period = Average account receivable / ( Annual sales / 365)
(Day sales outstanding) = Receivable / Daily sales
Payables deferral period = Average account payable / (Annual costs of good sold /365)
Turnover of cash & securities = Sales / Cash & securities
Inventory turnover = Sales / Inventory
Receivable turnover = Sales / Receivable
Inventory = COGS / Inv turnover
Total assets = Inv + Rec + Fixed Assets
Total assets turnover = Sales/Total assets
ROA = Profit margin x TA turnover
ROA = Net income/ Total assets
ROIC = EBIT (1-T)/ Invested Capital

Cash collections = Beginning Receivables + Sale - End Receivables

End Receivables = Daily sales x Average collection period)
Beginning Receivables = cuối kì trước
Payment = ½ purchase of this Q + ½ purchase of pre Q
= Beg + purchase - Ending
Ending= daily purchase x defer period

Basket Wonders is considering changing its credit period from “net 30”(which has resulted in
12A/R “Turns” per year) to “net 60” (which is expected to result in 6A/R “Turns” per year).
- The firm is currently producing a single product with variable costs of $20 and a selling
price of $25.
- Additional annual credit sales of $250,000 from new customers are forecasted, in addition
to the current $2 million in annual credit sales.
The before-tax opportunity cost for each dollar of funds “tied-up” in additional receivables is
20%.
=> Profitability of additional sales = ($5 contribution)x(10,000 units) = $50,000
Additional receivables= ($250,000 sales) / (6 Turns) = $41,667
Investment in add.receivables (new sales) = ($20/$25) x ($41,667) = $33,334
Previous receivable level = ($2,000,000 sales) / (12 Turns) = $166,667

New receivable level = ($2,000,000 sales) / (6 Turns) = $333,333

Investment in add. receivables (original sales)= $333,333 - $166,667 = $166,666
Total investment in add. receivables = $33,334 + $166,666 = $200,000
Req. pre-tax return on add. investment = (20% opp. cost) x $200,000 = $40,000
Yes! Profits > Required pre-tax return
What is the approximate annual cost to forgo the cash discount of “2/10), net 30” after the
first ten days?
=> Approximate annual interest cost =(( % discount 365 days)/ (100% - % discount)) x (( 365
days) / (payment date - discount period))
= ((2% /(100% - 2%)) x (( 365 days) / (30 days - 10 days) = (2/98) x (365/20) = 37.2%
Periodic rate = 0.02 / 0.98 = 2.04%
Periods/year = 365 / (30-10) = 18.25
Effective cost of trade credit
EAR =((1 + periodic rate)^N) – 1 = (1.0204)^18.25 – 1 = 44.56%

$1,000,000 loan at 10% stated interest rate for 1 year with a required $150,000 compensating
balance. => ($100,000 in interest) / ($850,000 in usable funds) = 11.76%
We have a $500,000 line of credit with a 15% compensating balance requirement. The quoted
interest rate is 9%. We need to borrow $150,000 for inventory for one year.
- How much do we need to borrow?
150,000 / (1 -15) = 176,471
- What interest rate are we effectively paying ?
Interest paid = 176,471 x 0.09 = 15.882
Effective rate = 15.882 / 150,000= 0.1059 or 10.59%
Example: $1 million revolving credit at 10% stated interest rate for 1 year; borrowing for the
year was $600,000; a required 5% compensating balance on borrowed funds; and a .5%
commitment fee on $400,000 of unused credit.
What is the cost of borrowing?
=> Interest: ($600,000) x (10%) = $ 60,000
Commitment Fee: ($400,000) x (0.5%) = $ 2,000
Compensating Balance: ($600,000) x (5%) = $ 30,000
Usable Funds: $600,000 – $30,000 = $570,000
($60,000 in interest + $2,000 in commitment fees)/$570,000 in usable funds = 10.88%

Example
The firm can borrow $100,000 for 1 year at an 8% nominal rate.
Interest may be set under one of the following scenarios:
- Simple annual interest
- Installment loan, add-on, 12 months
=> “Simple interest” means no discount or add-on.
Interest = 0.08($100,000) = $8,000
r NOM = EAR = $8,000 / $100,000 = 8.0%
For a 1-year simple interest loan, rNOM = EAR
=> add-on interest
Interest = 0.08 ($100,000) = $8,000
Face amount = $100,000 + $8,000 = $108,000
Monthly payment = $108,000/12 = $9,000
Avg loan outstanding = $100,000/2 = $50,000
Approximate cost = $8,000/$50,000 = 16.0%
To find the appropriate effective rate, recognize that the firm receives $100,000 and must
make monthly payments of $9,000 (like an annuity)
From the calculator output below, we have:
r NOM = 12 (0.012043) = 0.1445 = 14.45%
EAR = (1.012043)^12 – 1 = 15.45%

Example: Factoring
Last year your company had average accounts receivable of $2 million. Credit sales were $24
million. You factor receivables by discounting them 2%. What is the effective rate of interest?
- Receivables turnover = 24/2 = 12 times
- APR = 12(.02/.98) = .2449 or 24.49%
- EAR = (1+.02/.98)^12 – 1 = .2743 or 27.43%

Chương 2
Forecasted = pct ( tỷ lệ % năm trước) x forecasted sales
= Actual x ( 1 + growth rate) “tỷ lệ tăng trưởng doanh thu”
Sale = Sale ( năm trước) x (1+g)

Nếu AFN >0, thì bạn phải đảm bảo tài chính bổ sung.
Nếu AFN <0, thì bạn có nhiều tài chính hơn mức cần thiết.
-> Trả hết nợ, Mua lại cổ phiếu, Mua các khoản đầu tư ngắn hạn.

AFN ( Additional Fund Need) = Additional Asset Required - Additional Spontaneous Financing -
Addition to Retained Earning

AFN = (A*/S0 ).🛆S - (L*/S0 ).🛆S - PM. S1. RR

🛆S = S1 - S0; S1: next year
RR ( retention ratio) 1 - payout rate
A : assets; S: sales; L*: operating liability ( nợ hđ); PM( profit margin) = Net income/ Sales

Sales at full Capacity = Actual sales/ % capacity

Target ratio of Fixed assets/Sales = Actual Fixed Assets/ Sales at full Capacity
Fixed Assets Required = (Target ratio of Fixed assets/Sales) x Projected Sales
Capacity Sales = Actual sales / % of Capacity ( hoạt động chỉ 75%)
Chương 3
FCFF = FCFE + FCFD
Intrinsic value (giá trị nội tại) > Market value (giá trị thị trường) => Mua
Intrinsic value (giá trị nội tại) < Market value (giá trị thị trường) => Bán

Expected return (lợi nhuận dự kiến, kỳ vọng)

Intrinsic value at t=0 for 2 periods

Với cổ tức ban đầu không đổi => tỷ lệ tăng cổ tức càng cao thì giá cổ phiếu càng cao
Required Return càng cao thì giá cổ phiếu càng giảm
Constant growth : tăng trưởng đều
P4 = P0 x (1 + growth rate)^4 “ Tỉ lệ tăng giá = tỷ lệ tăng cổ tức”
g : capital gain yield
g =0 => Dòng tiền đều mãi mãi
Cổ tức vừa mới chia ( just paid) thì dùng D0; sau 1 năm kể từ bây giờ (in one year):
D1; Có cổ tức dự kiến cho năm tới ( Next period ) : D1
g = return on equity ( LN trên VCSH) x Plowback ratio

ROE > rs : thì giá cp tăng

RS = Dividend Yield + Capital Gains Yield
NOPAT : Net operating profit after tax
FCF: Free cash flow ; WACC: Weighted Average Cost of Capital (cphi sử dụng vốn bq)