,
, Selected Abbreviations and Notation
β= beta (a measure of systematic risk)
∆= change (e.g., ΔP = change in price level, ΔS = change in sales level)
ρ= correlation
σ2 (σ) = variance (standard deviation)
x= fractional weight of investment or component of capital
Add WC = addition to working capital
APR = annual percentage rate
ARR = accounting rate of return
b= dividend payout ratio
C= coupon payment (bond), call option value
Cap Exp = capital expenditures
CF = cash flow
CF Opns = cash flow from operations
CFI = cash flow to investors
CFLTA = cash flow invested in long-term assets
CFNWC = cash flow invested in net working capital
CFOA = cash flow from operating activity
CIP = call interest premium
CO = crossover level of unit sales
Kcs = cost of common stock
COGS = cost of goods sold
CV = coefficient of variation
D= dividend (stock)
D&A = depreciation and amortization
DOL = degree of operating leverage
DPO = days’ payables outstanding
DRP = default risk premium
DSI = days’ sales in inventory
DSO = days’ sales outstanding
E(•) = expected value (E(R) = expected return, etc.)
EAC = equivalent annual cost
EAR = EAY = effective annual rate (yield)
EBIT = earnings before interest and taxes
EBITDA = earnings before interest, taxes, depreciation, and amortization
EBT = earnings before taxes
EFN = external funding needed
EOQ = economic order quantity
EROA = EBIT return on assets
ESG = Environmental, Social, and Governance
F= face value (bond)
FC = fixed costs
FCF = free cash flows
FCFE = free cash flow to equity
, FCFF = free cash flow from the firm
FV = future value
FVAn = future value of an annuity
FXR = foreign exchange or currency risk premium
g= growth rate
i= nominal rate of interest
IGR = internal growth rate
IRR = internal rate of return
k= cost of capital (debt or equity)
m= number of payments per year
MAT = maturity adjustment to cost of a loan
MRP = marketability risk premium
MV = market value
n= number of periods
NCF = net cash flow
NCFOA = net cash flow from operating activities
NOPAT = net operating profits after tax
NPV = net present value
NWC = net working capital
OC = operating cycle
Op Ex = cash operating expenses
p= probability
P= price (P0 = price at time zero, etc.), put option value
P/E ratio = price/earnings ratio
PB = payback period
PI = profitability index
PR = prime rate
PV = present value
PV annuity factor = present value of annuity factor
PVAn = present value of an annuity
PVP = present value of a perpetuity
r= real rate of interest
R= return (Rrf = risk free, Ri, RPortfolio, etc.)
RArithmetic average = arithmetic average growth rate
RGeometric average = geometric average growth rate
ROA = return on assets
ROE = return on equity
S= Sharpe Ratio
SGR = sustainable growth rate
SOFR = Secured Overnight Financing Rate
t= tax rate
TV = terminal value
V= value (e.g.,VFirm = VAssets = VDebt + VEquity)
VC = variable costs
WACC = weighted average cost of capital
, Selected Abbreviations and Notation
β= beta (a measure of systematic risk)
∆= change (e.g., ΔP = change in price level, ΔS = change in sales level)
ρ= correlation
σ2 (σ) = variance (standard deviation)
x= fractional weight of investment or component of capital
Add WC = addition to working capital
APR = annual percentage rate
ARR = accounting rate of return
b= dividend payout ratio
C= coupon payment (bond), call option value
Cap Exp = capital expenditures
CF = cash flow
CF Opns = cash flow from operations
CFI = cash flow to investors
CFLTA = cash flow invested in long-term assets
CFNWC = cash flow invested in net working capital
CFOA = cash flow from operating activity
CIP = call interest premium
CO = crossover level of unit sales
Kcs = cost of common stock
COGS = cost of goods sold
CV = coefficient of variation
D= dividend (stock)
D&A = depreciation and amortization
DOL = degree of operating leverage
DPO = days’ payables outstanding
DRP = default risk premium
DSI = days’ sales in inventory
DSO = days’ sales outstanding
E(•) = expected value (E(R) = expected return, etc.)
EAC = equivalent annual cost
EAR = EAY = effective annual rate (yield)
EBIT = earnings before interest and taxes
EBITDA = earnings before interest, taxes, depreciation, and amortization
EBT = earnings before taxes
EFN = external funding needed
EOQ = economic order quantity
EROA = EBIT return on assets
ESG = Environmental, Social, and Governance
F= face value (bond)
FC = fixed costs
FCF = free cash flows
FCFE = free cash flow to equity
, FCFF = free cash flow from the firm
FV = future value
FVAn = future value of an annuity
FXR = foreign exchange or currency risk premium
g= growth rate
i= nominal rate of interest
IGR = internal growth rate
IRR = internal rate of return
k= cost of capital (debt or equity)
m= number of payments per year
MAT = maturity adjustment to cost of a loan
MRP = marketability risk premium
MV = market value
n= number of periods
NCF = net cash flow
NCFOA = net cash flow from operating activities
NOPAT = net operating profits after tax
NPV = net present value
NWC = net working capital
OC = operating cycle
Op Ex = cash operating expenses
p= probability
P= price (P0 = price at time zero, etc.), put option value
P/E ratio = price/earnings ratio
PB = payback period
PI = profitability index
PR = prime rate
PV = present value
PV annuity factor = present value of annuity factor
PVAn = present value of an annuity
PVP = present value of a perpetuity
r= real rate of interest
R= return (Rrf = risk free, Ri, RPortfolio, etc.)
RArithmetic average = arithmetic average growth rate
RGeometric average = geometric average growth rate
ROA = return on assets
ROE = return on equity
S= Sharpe Ratio
SGR = sustainable growth rate
SOFR = Secured Overnight Financing Rate
t= tax rate
TV = terminal value
V= value (e.g.,VFirm = VAssets = VDebt + VEquity)
VC = variable costs
WACC = weighted average cost of capital
