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Multi-step Income Statement



Gross Profit

(SG + A)


(D + A)





Net Income

ROE DuPont Method (5 part)

ROE = (NI/EBT) X (EBT/EBIT) X (EBIT/Revenue) X (Revenue/Average Assets) X (Average Assets/Average Equity)

ROE = Tax Burden X Interest Burden X EBIT (Operating Margin) X Total Asset Turnover X Financial Leverage

Futures Priced as Predictors of Futures Assets Key Terms

Backwardation Future price is less than spot price

Contango Future price is greater than spot price

Normal Backwardation Future price is less than spot price

Normal Contango Future price is greater than expected spot price


Sample Covariance of x,y formula

Sample Covariance


Z-Spread, OAS, and Option Cost Graph

Graph of Yield Spreads

Monetary VS Fiscal Policy

Fiscal Policy relates to government spending and revenue collection (taxes).

Monetary Policy relates to the supply of money, which is controlled via factors such as interest rates and reserve requirements for banks.

Free Cash Flow to Firm from Net Income

  • FCFF = Net Income + NCC + (Interest Expense * (1 – tax rate)) – Fixed Capital Expenditures – Working Capital Expenditures
  • NCC = Non-cash Charges such as depreciation and amortization

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