business finance exam 3

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15 Terms

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AFN equation

AFN = A*0(ΔS/S0) - L*0(ΔS/S0) - (S1)(PM1)(1-DivPMT)

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GFA needed - AFN spreadsheet

Old GFA * % usage * (1+g)

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AFN second pass

allocate to CS & LTD, add to year 0 RE

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degree of operating leverage

CM/EBIT, (P-V)(Q)/(P-V)Q-F

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degree of financial leverage

EBIT/EBT = (P-V)Q-F/(P-V)Q-F-I

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degree of total leverage

CM/EBT (P-V)(Q)/(P-V)(Q)-F-I

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financial risk

ROE = [BEP + (D/E)(BEP - rD)][1-T]

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BEP

EBIT/Assets

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% change in EBIT

% change sales x DOL

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% change net income

% change EBIT x DFL or % change sales x DTL

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ROE from ROA

ROAu + (ROA - rD)*(D/E) + (rD-Atrd)*(D/E)

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% change EPS

% change sales x DTL

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ROA from BEP

BEP*(1-T)

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EBIT breakeven

F/(P-V)

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net income breakeven

(F+I)/(P-V)