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        <mxCell id="title" value="IS2218 Accounting + Financial Statement Analysis — Formula Cheatsheet" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=center;verticalAlign=top;fontFamily=Arial;fontSize=17;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="legend" value="CA/CL current assets/liabilities · NI net income · RE retained earnings · Dep depreciation · TI taxable income (EBT) · I interest · AR/AP receivables/payables · Inv inventory · OCA/OCL other operating current assets/liabilities · NFA net fixed assets · CapEx capital expenditure · τ tax rate · k cost of capital · Δ change" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=center;verticalAlign=top;fontFamily=Arial;fontSize=7.4;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h1" value="Balance sheet &amp;amp; roll-forwards" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b1" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Assets = Liabilities + Equity.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Net working capital: NWC = CA − CL.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Change in NWC: ΔNWC = NWC_end − NWC_start.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Retained earnings: RE_end = RE_start + NI − Dividends.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;NI = ΔEquity + Dividends (if no stock issues/buybacks).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Net fixed assets: NFA = Gross PP&amp;amp;E − Accumulated Dep.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;NFA_end = NFA_start + CapEx − Dep.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;CapEx = ΔNFA + Dep (no disposals).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Debt_end = Debt_start + New debt − Debt repaid.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Market assets = Market debt + Market equity.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Common-size balance-sheet item % = Item / Total assets × 100%.&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h2" value="Income statement" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b2" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;EBIT = Revenue + Other income − Costs − Dep.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Taxable income: TI = EBIT − I.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Taxes = τ × TI (flat rate).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Net income: NI = TI − Taxes.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;NI = (EBIT − I)(1 − τ) (flat rate).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Addition to RE = NI − Dividends.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Common-size income-statement item % = Item / Sales × 100%.&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h3" value="All-equity case" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b3" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;All-equity taxable income: TI_AE = TI + I.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;All-equity net income: NI_AE = NI + I(1 − τ).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;All-equity FCF: FCF_AE = NI_AE + Dep − ΔONWC − CapEx.&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h4" value="Operating &amp;amp; total cash flow" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b4" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Operating NWC: ONWC = Non-cash CA − Non-debt CL.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;ONWC = (CA − Cash) − (CL − ST debt).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;ΔONWC = ΔAR + ΔInv + ΔOCA − ΔAP − ΔOCL.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Operating cash flow: CFO = NI + Dep − ΔONWC.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Investing cash flow: CFI = −CapEx + Asset sales − Acquisitions ± Other investing.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Financing cash flow: CFF = ΔDebt + Stock issued − Dividends − Buybacks ± Other financing.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Net change in cash: ΔCash = CFO + CFI + CFF.&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h5" value="Free cash flow (FCF)" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b5" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;FCF = NI + I + Dep − ΔONWC + CFI (signed CFI).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;FCF = NI + I + Dep − ΔONWC − CapEx (if CFI = −CapEx).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;FCF = I + CFO + CFI (signed CFI).&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h6" value="Taxes &amp;amp; losses" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b6" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Interest tax shield = I × τ.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Depreciation tax shield = ΔDep × τ (if tax Dep changes).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Progressive personal tax = Σ(BI_i × rate_i).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Bracket income: BI_i = max(0, min(Y, U_i) − L_i).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Average tax rate = Total tax / Total income.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Marginal tax rate = rate on the next dollar.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Usable loss carryforward = min(Loss CF, 80% × Future TI).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;TI_after loss = Future TI − Usable loss carryforward.&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h7" value="Market value &amp;amp; value creation" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b7" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Market capitalization (market equity) = Shares outstanding × Price per share.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Market value added: MVA = Market capitalization − Book equity.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Market-to-book = Market capitalization / Book equity = Price / Book value per share.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Book value per share = Book equity / Shares outstanding.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Percent value created = MVA / Book equity × 100% = (Market-to-book − 1) × 100%.&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h8" value="ATOI, capitalization &amp;amp; EVA" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b8" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;After-tax operating income: ATOI = NI + I(1 − τ) = EBIT(1 − τ).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Total capitalization (Cap) = Long-term debt + Shareholders’ equity.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Economic value added: EVA = ATOI − k × Cap_start (if start requested).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;EVA = Cap × (ROC − k) (use same capital base).&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b9" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Return on assets: ROA = ATOI / Total assets.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Return on capital: ROC = ATOI / (Long-term debt + Equity) = ATOI / Cap.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Return on equity: ROE = NI / Equity.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Profit margin = NI / Sales.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Operating profit margin = ATOI / Sales.&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="h10" value="DuPont identities" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=10.2;fontStyle=1;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b10" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;DuPont ROA: ROA = (Sales / Assets) × (ATOI / Sales).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Four-factor ROE = (Assets / Equity) × (Sales / Assets) × (ATOI / Sales) × (NI / ATOI).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Leverage ratio = Total assets / Equity (equity multiplier).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Debt burden = NI / ATOI.&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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        <mxCell id="b11" value="&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Asset turnover = Sales / Assets_start (or average if asked).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Receivables turnover = Sales / AR_start.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Inventory turnover = COGS / Inv_start.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Average collection period = AR_start / (Sales / 365) = 365 / Receivables turnover.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Days in inventory = Inv_start / (COGS / 365) = 365 / Inventory turnover.&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Payment delay = AP_start / (COGS / 365).&lt;/div&gt;&lt;div style=&quot;margin-bottom:4px;&quot;&gt;Average balance = (Start + End) / 2 (if requested).&lt;/div&gt;" style="text;html=1;strokeColor=none;fillColor=none;whiteSpace=wrap;overflow=hidden;align=left;verticalAlign=top;fontFamily=Arial;fontSize=12;fontStyle=0;fontColor=#000000;spacing=0;" vertex="1" parent="1">
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