FMVA cheat sheet

WACC = (E/V) x Re + (D/V) x Rd x (1 - t), where V = E + D measured at market values.

CAPM: Re = Rf + beta x (Rm - Rf). Unlever and relever beta with Hamada: beta_L = beta_U x [1 + (1 - t) x D/E].

NPV = sum of CFt / (1 + r)^t minus initial outlay; accept when NPV > 0. IRR is the discount rate at which NPV = 0.

DuPont: ROE = net profit margin x asset turnover x equity multiplier (leverage).

Liquidity: current ratio = current assets / current liabilities; quick ratio removes inventory; cash ratio = cash / current liabilities.

Cash conversion cycle = days inventory outstanding + days sales outstanding - days payable outstanding; a shorter cycle releases working capital.

After-tax cost of debt = pre-tax yield x (1 - tax rate); interest expense is tax-deductible, dividends are not.

Growing perpetuity value = CF / (r - g); annuity factor = [1 - (1 + r)^-n] / r.

Build order: assumptions tab, then income statement, balance sheet, cash flow, debt and interest schedules, then outputs.

Balance check: total assets minus (total liabilities + equity) must equal zero in every period; surface that check cell on the summary tab.

Interest circularity: interest depends on debt, debt depends on cash flow, and cash flow depends on interest; resolve with iterative calculation or a copy-paste-values macro.

Corkscrew roll-forward: ending balance = beginning balance + additions - reductions; apply to PP&E, debt, and retained earnings.

Keep every hard-coded input on a single assumptions tab and format consistently (blue font for inputs, black for formulas).

Use driver-based formulas such as volume x price or base x (1 + growth); never embed standalone constants inside a calculation.

A single scenario switch cell read by CHOOSE or SWITCH avoids maintaining duplicate model copies.

Build error checks: COUNTIF/ISERROR flags for broken links, sign errors, and debits not equal to credits.

=INDEX(range, MATCH(key, lookup_range, 0)) performs leftward or upward lookups that VLOOKUP cannot handle.

XLOOKUP(lookup_value, lookup_array, return_array, if_not_found) defaults to exact match and searches vertically or horizontally.

SUMIFS(sum_range, criteria_range1, criteria1, ...) requires every range to be the same size; criteria accept operators and wildcards.

F4 cycles $A$1, A$1, $A1, A1; lock references before copying a formula across rows or columns.

Avoid OFFSET and other volatile functions in large models because they recalculate on every worksheet change.

Ctrl+Shift+Arrow selects to the last contiguous cell; Ctrl+[ jumps to the cells a formula depends on.

What-If Data Table evaluates one or two input variables over a grid without rewriting the underlying formula.

Alt+= inserts an AutoSum; Ctrl+` toggles display of all formulas so a reviewer can audit the sheet.

IFERROR(formula, fallback) replaces #N/A, #DIV/0! and similar errors with a controlled value.

Enterprise value = equity value + debt + preferred stock + minority interest - cash and equivalents.

FCFF = EBIT x (1 - t) + D&A - capital expenditures - increase in net working capital; discount at WACC.

FCFE = net income + D&A - capex - increase in NWC + net borrowing; discount at the cost of equity.

Gordon terminal value = FCF_n x (1 + g) / (WACC - g); g should not exceed long-run nominal GDP growth.

Exit-multiple terminal value = EBITDA_n x multiple; cross-check it against the multiple implied by the Gordon method.

Mid-year convention discounts period t using the exponent t - 0.5 because cash arrives throughout the year.

Trading comparables: use EV/EBITDA for capital-structure neutrality; P/E is only comparable across similar leverage and accounting.

Precedent transaction multiples embed a control premium, so they normally exceed trading comparables.

Treasury stock method: net new shares = options outstanding - (options x strike price / share price), counting only in-the-money options.

Match chart to question: comparison uses bar, trend uses line, composition uses stacked bar or waterfall, relationship uses scatter.

Bar charts must start the value axis at zero; line charts may truncate the axis to make change visible.

Waterfall charts bridge a start and end value through additive and subtractive steps built with an invisible base series.

Raise the data-ink ratio by deleting gridlines, borders, shadows, and 3-D effects that encode no information.

Titles should state the takeaway (for example, 'Margins fell 300 bps on input costs'), not just name the topic.

One message per slide; detailed schedules and backup belong in the appendix.

Label data points directly on the chart rather than forcing readers to match colors to a legend.

Hold axis scales, color meaning, and number formats constant across every slide in the deck.

State units and rounding once per chart and footnote the source and date of the data.

Flexible budget = actual volume x standard rate; the resulting volume variance reflects activity, the price variance reflects rate.

Variance = actual - budget; for revenue a positive variance is favorable, for expense a negative variance is favorable.

Driver-based forecasting links revenue to units x price and costs to headcount, utilization, or per-unit rates.

A rolling forecast replaces the expired period each cycle, holding a constant 12- to 18-month horizon.

Zero-based budgeting rebuilds every cost from zero each cycle instead of inflating the prior year.

Model seasonality with a 12-month moving average plus a seasonal index, or a ratio-to-trend method.

Top-down targets come from market share and growth; bottom-up builds from pipeline and capacity; reconcile the gap explicitly.

Run sensitivity on the two or three assumptions with the largest impact on EBITDA rather than every line item.

Forecast cash as well as profit: collection terms, payment terms, and capex timing drive liquidity.

Double entry: total debits equal total credits. Assets and expenses increase with debits; liabilities, equity, and revenue increase with credits.

Revenue recognition (ASC 606 / IFRS 15): identify the contract, identify performance obligations, determine price, allocate price, recognize when satisfied.

Accrual basis matches expenses to the revenue they help generate; prepaids and accruals correct timing differences with cash.

Straight-line depreciation = (cost - salvage value) / useful life; double-declining balance applies twice the straight-line rate to book value.

Goodwill is not amortized; it is tested for impairment at least annually, and the charge is non-cash.

Under ASC 842 / IFRS 16 an operating lease creates a right-of-use asset and a matching lease liability.

Indirect-method CFO = net income + non-cash charges - increase in non-cash net working capital.

A deferred tax liability typically arises when tax depreciation exceeds book depreciation, a temporary difference.

Retained earnings roll-forward: beginning balance + net income - dividends declared = ending balance.

Porter's five forces: supplier power, buyer power, threat of new entrants, threat of substitutes, and rivalry jointly set industry profitability.

Economic profit = (ROIC - WACC) x invested capital; a persistently positive spread indicates a competitive advantage.

Durable moats come from intangibles and brand, switching costs, network effects, cost advantage, and efficient scale.

BCG matrix plots units by market growth and relative share: stars, cash cows, question marks, and dogs guide capital allocation.

Value chain analysis separates primary activities (inbound logistics, operations, outbound logistics, sales, service) from support activities.

PESTEL scans political, economic, social, technological, environmental, and legal forces affecting the industry.

Make-versus-buy compares fully loaded internal cost plus strategic risk against supplier price and flexibility.

Strategy test: the choice must raise willingness-to-pay or lower cost, and must be difficult for rivals to imitate.

Relative market share = firm revenue / largest competitor revenue; absolute share = firm revenue / total market revenue.