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IB Quick Reference_V2

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					Ratios Cash Cycle
Current assets Current Ratio  Current liabilites

DCF Formulas Free Cash Flow FCF  EBIT * (1  TC )
 Depreciation and Amortization  W /C  Capex
FCF  NOPLAT*(1  IR)
Where IR = the investment rate, or the percentage of NOPLAT reinvested in the business each year

Days A / R 

A / R1 x 365 Sales

COGS 2 Inventory turnover  Inventory1
Inventory 1 Days inventory  x 365 COGS 2 Days A / P 3  A / P1 x 365 COGS 2

IR 

g ROIC I

Operating cycle = Days inv. + Days A/R Cash cycle = Days inv. + Days A/R – Days A/P

 g FCF  NOPLAT * 1   ROIC I 

   

Coverage Ratios
EBIT EBIT Coverage  Interest Expense EBITDA Coverage  EBITDA Interest Expense

Terminal Value or Continuing Value
Simple:

ContinuingValue 
More Robust:

FCFT 1 WACC  g

____________________________ (1) An average from the current year and the prior year gives a more accurate calculation. (2) COGS should exclude depreciation and amortization. The three primary components of COGS are material, labor, and overhead. (3) Days A/P based on COGS > Days A/P based on Sales.

 g NOPLAT 1 1  T   ROICI ContinuingValue  WACC  g

   

WACC Growth & Perpetuity Formulas
WACC  RD * D E * (1  TC )  RE * DE DE

 Ending Period  N CAGR    Beg. Period   1   
(Where N = the number of periods)

1

RE  RF   L * ( RM  RF )

 L  U * 1 

Constant Perpetuity CFO PO  r Gordon Growth Formula D (1  g ) P O rg

 

D  * 1  TC  E 

U 

L
1 D * 1  TC  E

Return Formulas
ROA  NOPAT Average assets

Operating cycle = Days inv. + Days A/R Cash cycle = Operating cycle – Days A/P

FactSet
Stock Price =FDS(ticker,“P_Price”, Date) 1 Month High =FDS(ticker,“IB_PH_1M”, Date) 1 Month Low =FDS(ticker,“IB_PL_1M”, Date)

Excel Text in Formulas
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DOCUMENT INFO
Description: MBA Investment Banking Preparation