Formulas for Equity Application and Process

Page No. 11316thNov 2022WednesdayDate / /1VE - P = (VE - IV) + (VE -P) -MispricingValuation errorActual misspricing2GordonGrowthModel=D,r-g3Single stage DDM=D.P1= Diti,+(1+r)(1+r)(1+r)+4Two Stage DDM D1+Dz+P,(1+r)'(1+r)25Multiple - Period DDM =NDtPn(1+r)t(1+r)n6Implied Growth Rate7(g)=r- CDY&2)Por= D tgPo7Po = E1 + PVGOrPVGO = Po - E1r8PVGOusind Leading P/E,Po. =+PVGQE,rE1 Page No 114Date/Leading9Justified PIE = Div Payout(1-b)(PolE)r-gr-g10Justified trailing PLE = (1-b) (Ht)(PolEo)5-gus&(I)H. - Model = Do X ( 1 +gl)+Do X H X (gs-gl)r-gcr-gi12[HX (gs-gc)+gePo3g= RR x ROE14Perpetual pref share : Vp = Dprp15Equity value = Firm value - MV of debt16g = NI -DivNL)SaleTotal assetsNISalesTotal assetsSH equity17Firm value = FCFF disc at theWALLEquity value = FCFE disc at Req Return on equity (Ke)18OCA = CA - Cash & MSOCL 11 a - Debt Page No 115Date/ /19 WCAV = A [ OCA - OCL]End COCA - OCL] - Beg [ OCA - ou )20FCFF=NL+NCC+Int(1-t)-WC-FCFCFF=EBITX(1-taxrate)+Dep-FC-WCFCFF = [EBITDA (1-t) + (Depxt) - FC -WCFCFF=CFO+[IntX(1-t)]-FC21FCFE=NI+NCC-we-FC+NetborrowingFCFE = FCFF - [ Int (1-t) ]+ NBFCFE = CFO - FC + NBFCFE = EBIT (1-t) + Dep - WC -FCFCFE = EBITDA (1-+) - Int (1-t) + Dep (t) - WC - FL + NB22NBtNet Borrowing =DRxFC -Dep)+WC]FCFE= NI -[[[ - DR) - X (FC -Dep) ] - [ ( 1 - DR) x WC Page No.116Date/23WACC = ( (Wext) + [wd xid x (1-t) ]Firm Value29FSingle Stage=FCFF,=FCFFo X (1-g)FCFF modelWALL -gWALL - gus(25)FCFE Model=&ECFEL=FCFE.X( 1tg)leEquity Value5-gF-g26FCF=NI + NCC-Cashdiv-FCFCapita=CFO+expCapex27Trailing PIE =MPS= (1-b) (1+y)EPS over last 12mr-g28Leading PIE =MPS=1-bEPS over next 12mr-g29PEG =PLEg30BV=(Asset-Liability)-PrefStock31P/B=MVPBVPSJustifiedPIBratio=ROE-gr -y Page No. 117Date / /32P/S =MUPSale per ShareJustifiedPo=(E.IS.)(1-b)x( t+y)Sorog= Net margintrailing PE33P / CF = MVPCFJustifiedVo=FCFE.X(1+g)r-gJustified P/CF = VoCF34Trailing DIP=4mostrecent quartely DivMP per ShareLeading D/P =Next4quaterforecasteDivMP pricepershare35Justified Div YieldDe=5-2P.1+g36UE t = EPSt - E E E PS + )37SUE. t =EPSt - E (EPSt)Earning SupriseCEPS - E (EPSE)SD Page No.118Date/38Weighted harmonic mean=1E Wi1=1 Xi34 RI post leverage = NI - ( Equity Capital xKe )us&IRl pre leverage = EBIT (1-t) - (Total Capital XWALL %)EVANo PAT - $ WABALpMVA =Market value of firm - Invested Capital41Vo by = B 0 + ( ROE -r) X BoRIr-gg = r-Bo X (ROE-T)Vo -B.4Future RI = EPSE - (r X Bo)= (RUE -r) x Bo48WALL $:WALLXTotalCapitalTotal Capital i WC t PPE= long term debt + SH Equity44Equity Q =EquityAsset - Liability Page No. 119Date / /50Tobins Q = MV of debt + MV of EquityReplacement Cost of total assets51PVofContinuingRln-1=Rlnl+r-wSi Value of firm = Fixed asset + WC t Intangible asset53Control prem = Pro rata value of -Pro rata valueControlling Intof NCI54Adj Control =Control Prem(1 - DR)Premof equityssDLOC = 1-+ Control prem(56Total Disc = 1- [C1. DLOC)(1- DLOM) ]Financial Levelage = ROEROATotal Asset turnover = ROANPMREF