rd(1 - T), the relevant cost to the firm of new debt
After-Tax Cost of Debt
financing.
The simple average of a series of returns over
Arithmetic Average
multiple periods, calculated by summing periodic
Return
returns and dividing by the number of periods.
Measure how efficiently a firm uses its assets to
Asset Utilization Ratios
generate sales.
b Retention ratio
A financial statement that lists a company's assets
Balance Sheet liabilities, and shareholders' equity at a specific
point in time.
, The equation that states Assets = Liabilities +
Balance Sheet Identity
Shareholders' equity.
Beta < 1.0 Indicates an asset is less risky than the market.
Indicates an asset is riskier (more volatile) than the
Beta > 1.0
market.
Measures how much systematic risk an asset has
Beta Coefficient
relative to an asset of average risk.
Beta of the Market 1
Bond Public debt of a corporation or government entit
The present value of its expected future cash
Bond valuation
flows.
Bond value formula Bond value = PV of coupons + PV of face value
, The profit from selling an asset, calculated as the
Capital gains selling price per share minus the purchase price
per share (P1 - P0).
The percentage change in the stock price,
Capital gains yield
represented as g.
Measures the amount of capital needed to
Capital Intensity
generate sales.
The cash flow that the firm receives from its asset
Cash Flow from Assets
calculated as CFFA = Operating cash flow - Net
(CFFA)
capital spending - Δ in net working capital.
Cash flows to Consist of dividends plus a future sale price.
stockholders
After-Tax Cost of Debt
financing.
The simple average of a series of returns over
Arithmetic Average
multiple periods, calculated by summing periodic
Return
returns and dividing by the number of periods.
Measure how efficiently a firm uses its assets to
Asset Utilization Ratios
generate sales.
b Retention ratio
A financial statement that lists a company's assets
Balance Sheet liabilities, and shareholders' equity at a specific
point in time.
, The equation that states Assets = Liabilities +
Balance Sheet Identity
Shareholders' equity.
Beta < 1.0 Indicates an asset is less risky than the market.
Indicates an asset is riskier (more volatile) than the
Beta > 1.0
market.
Measures how much systematic risk an asset has
Beta Coefficient
relative to an asset of average risk.
Beta of the Market 1
Bond Public debt of a corporation or government entit
The present value of its expected future cash
Bond valuation
flows.
Bond value formula Bond value = PV of coupons + PV of face value
, The profit from selling an asset, calculated as the
Capital gains selling price per share minus the purchase price
per share (P1 - P0).
The percentage change in the stock price,
Capital gains yield
represented as g.
Measures the amount of capital needed to
Capital Intensity
generate sales.
The cash flow that the firm receives from its asset
Cash Flow from Assets
calculated as CFFA = Operating cash flow - Net
(CFFA)
capital spending - Δ in net working capital.
Cash flows to Consist of dividends plus a future sale price.
stockholders
