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Business Finance – Formulas, 2026 – Study Material and Reference Guide-3.docx
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Total Debt Ratio - ANS✔✔ Total Debt / Total Assets Total Debt - ANS✔✔ Current Liabilities + LongTerm Liabilities Current Ratio - ANS✔✔ Current Assets / Current Liabilities Current Assets - ANS✔✔ Total Assets - Net Fixed Assets Current Liabilities - ANS✔✔ Total Debt - Total LongTerm Debt Profit Margin - ANS✔✔ Net Income / Sales EBT - ANS✔✔ EBIT - Interest Net Income - ANS✔✔ EBT - T Total Asset Turnover - ANS✔✔ Sales Revenue / Total Assets Financial Leverage - ANS✔✔ Total Debt / Shareholder's Equity Net Working Capital - ANS✔✔ Current Assets - Current Liabilities Debt-Equity Ratio - ANS✔✔ Total Liabilities / Shareholders Equity
EAR - ANS✔✔ (1 + (APR / Compounding) ^ # of Compounds) - 1 What is the goal of a financial manager? - ANS✔✔ To maximize shareholder wealth, by maximizing share price What is the Agency Problem? - ANS✔✔ A financial manager not maximizing shareholder wealth Primary Markets - ANS✔✔ IPO, SEO, Bonds Secondary Markets - ANS✔✔ Individual Sales Liquidity - ANS✔✔ How quickly an asset can be converted to cash Capital Structure - ANS✔✔ Mix of debt and equity financing for a firm Depreciation - ANS✔✔ The expensing of the cost of an asset involved in producing revenues throughout its useful life Free Cash Flow - ANS✔✔ Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Double Taxation - ANS✔✔ How corporations are taxed How are investments picked for companies? - ANS✔✔ Those which add the most value