Abbreviations and Notations

Seite 1

β Beta (a measure of systematic risk)

∆ change (eg ∆P = change in price level, ∆S = change in sales level)

Ρ correlation

σ2 (σ) variance (standard deviation)

χ fractional weight of investment or component of capital

Add WC addition to working capital

APR annual percentage rate

ARR accounting rate of return

b dividend payout ratio

C coupon payment

Cap Exp capital expenditures

CF cash flow

CF Opns cash flow from operations

CFI cash flow to investors

CFLTA cash flow invested in long-term assets

CFNWS cash flow invested in net working capital

CFOA cash flow from operating activity

CIP call interest premium

CO crossover level of unit sales

COGS cost of goods sold

CV coefficient of variation

D dividend (stock)

D&A depreciation and amortization

DOL degree of operating leverage

DPO days’ payables outstanding

DRP default risk premium

DSI days’ sales in inventory

DSO days’ sales outstanding

E(•) expected value (E(R) = expected return, etc)

EAC equivalent annual cost

EAR=EAY effective annual rate (yield)

EBIT earnings before interest and taxes

EBITDA earnings before interest and taxes, depreciation and amortization

EBT earnings before taxes

EFN external funding needed

EOQ economic order quantity

EROA EBIT return on assets

F face value (bond)

FC fixed costs

FCF free cash flows

FV future value

FVA future value of an n period annuity

FXR foreign exchange or currency risk premium

g growth rate

i nominal rate of interest

IGR internal growth rate

IRR internal rate of return

k cost of capital (debt or equity)

m number of payments per year

MAT maturity adjustment to cost of a loan

MRP marketability risk premium

MV market value

n number of periods

NCF net cash flow

NCFOA net cash flow from operating activities

NOPAT net operating profits after tax

NPV net present value

NWC net working capital

OC operating cycle

Op Ex cash operating expenses

p probability

P price (P0 = price at time zero, etc), put option value

P/E ratio price/earnings ratio

PB payback period

PI profitability index

PR prime rate

PV present value

PVAn present value of an n period annuity

PVP present value of a perpetuity

r real rate of interest

R return (Rrf = risk free, Ri, RPortfolio, etc)

ROA return on assets

ROE return on equity

S Sharpe Ratio

SGR sustainable growth rate

t tax rate

TV terminal value

V value (eg VFirm = VDebt + VEquity)

VC variable costs

WACC weighted average cost of capital