CFA Level II

Formula Sheet 5 - Equity Analysis

http://www.cpa-cfa.org
Equity Analysis

Ex ante alpha (______________) =

•
•
Ex post alpha (______________) =

Int'l capital gains =

Int'l tax credit =

Stock option expense =

Concentration ratio =

Herfindahl index =
•
•
•
•

Equivalent # of firms =

Payout Ratio =

Internal growth rate = g =

or

Internal growth rate = g =

Intrinsic P/E =

or

Intrinsic P/E =

Intrinsic Franchise P/E =

1
 CFA Level II
Formula Sheet 5 - Equity Analysis
http://www.cpa-cfa.org

Growth Duration Model:

P/E =

T of gs =

Inflation flowthrough Intrinsic P/E =

Value of perpetual preferred shares =

Single period DDM = V0 =

Gordon Growth (constant growth) model = V0 =

GGM when Div starts in yr n = Vn =

H Model = V0 =

H Model E(R) =

PVGO =
___

FCFF from NI =

FCFF from CF =
___

FCFE from FCFF =

FCFE from NI =

2
 CFA Level II
Formula Sheet 5 - Equity Analysis
http://www.cpa-cfa.org

FCFE from CF =

Firm Value FCFF =

or

Firm Value FCFF =

Equity Value FCFF =

Per Share Value =

___

Equity Value FCFE =

Equity Value FCFE =

___

Normalizing EPS:
• Historical Avg EPS =
• Avg ROE =

Terminal Value based on Comparables =

Justified leading P/E = Justified trailing P/E =

Justified P/B =

Justified P/S =

P/EBITDA =

EV/EBITDA =

PEG Ratio =
3
 CFA Level II
Formula Sheet 5 - Equity Analysis
http://www.cpa-cfa.org

Intrinsic value per share =

RI =
or
RI =
or
RI =

V0 =

Residual income cheat sheet:

RI TV=

•
-
-

Claims Valuation =

MVA =

EVA =

EVA spread =

ROC =

CFROI =

4
 CFA Level II
Formula Sheet 5 - Equity Analysis
http://www.cpa-cfa.org
Market extraction method:
• NOI =

• Taxes payable =

• After tax cash flow =

• Cap Rate =

• MVRE =

Band-of-investment method:
• Debt interest rate (mortgage constant rate) =

• Cap rate =

Built up method:
• Cap Rate =

Gross income multiplier:

• GIM =

• MVRE =

Equity Reversion =

Sinking fund factor =

Total mortgage cost to borrower =