,FREQUENTLY USED SYMBOLS
ACP Average collection period
ADR American Depository Receipt
APR Annual percentage rate
AR Accounts receivable
b Beta coefficient, a measure of an asset’s market risk
bL Levered beta
bU Unlevered beta
BEP Basic earning power
BVPS Book value per share
CAPM Capital Asset Pricing Model
CCC Cash conversion cycle
CF Cash flow; CFt is the cash flow in Period t
CFPS Cash flow per share
CR Conversion ratio
CV Coefficient of variation
Δ Difference, or change (uppercase delta)
Dps Dividend of preferred stock
Dt Dividend in Period t
DCF Discounted cash flow
D/E Debt-to-equity ratio
DPS Dividends per share
DRIP Dividend reinvestment plan
DRP Default risk premium
DSO Days sales outstanding
EAR Effective annual rate, EFF%
EBIT Earnings before interest and taxes; net operating income
EBITDA Earnings before interest, taxes, depreciation, and amortization
EPS Earnings per share
EVA Economic Value Added
F (1) Fixed operating costs
(2) Flotation cost
FCF Free cash flow
FVN Future value for Year N
FVAN Future value of an annuity for N years
g Growth rate in earnings, dividends, and stock prices
I Interest rate; also denoted by r
I/YR Interest rate key on some calculators
INT Interest payment in dollars
IP Inflation premium
IPO Initial public offering
IRR Internal rate of return
LP Liquidity premium
M (1) Maturity value of a bond
(2) Margin (profit margin)
M/B Market-to-book ratio
MIRR Modified Internal Rate of Return
MRP Maturity risk premium
MVA Market Value Added
n Number of shares outstanding
N Calculator key denoting number of periods
N(di) Represents area under a standard normal distribution function
NOPAT Net operating profit after taxes
NOWC Net operating working capital
NPV Net present value
P (1) Price of a share of stock in Period t; P0 = price of the stock today
(2) Sales price per unit of product sold
Pc Conversion price
, Pf Price of good in foreign country
Ph Price of good in home country
PN A stock’s horizon, or terminal, value
P/E Price/earnings ratio
PMT Payment of an annuity
PPP Purchasing power parity
PV Present value
PVAN Present value of an annuity for N years
Q Quantity produced or sold
QBE Breakeven quantity
r (1) A percentage discount rate, or cost of capital; also denoted by i
(2) Nominal risk-adjusted required rate of return
r̄ “r bar,” historic, or realized, rate of return
^r “r hat,” an expected rate of return
r* Real risk-free rate of return
rd Before-tax cost of debt
re Cost of new common stock (outside equity)
rf Interest rate in foreign country
rh Interest rate in home country
ri Required return for an individual firm or security
rM Return for “the market” or for an “average” stock
rNOM Nominal rate of interest; also denoted by iNOM
rps (1) Cost of preferred stock
(2) Portfolio’s return
rPER Periodic rate of return
rRF Rate of return on a risk-free security
rs (1) Required return on common stock
(2) Cost of old common stock (inside equity)
ρ Correlation coefficient (lowercase rho); also denoted by R when using historical data
ROA Return on assets
ROE Return on equity
RP Risk premium
RPM Market risk premium
RR Retention rate
S (1) Sales
(2) Estimated standard deviation for sample data
(3) Intrinsic value of stock (i.e., all common equity)
SML Security Market Line
∑ Summation sign (uppercase sigma)
σ Standard deviation (lowercase sigma)
σ2 Variance
t Time period
T Marginal income tax rate
TVN A stock’s horizon, or terminal, value
TIE Times interest earned
V Variable cost per unit
VB Bond value
VL Total market value of a levered firm
Vop Value of operations
Vps Value of preferred stock
VU Total market value of an unlevered firm
VC Total variable costs
w Proportion or weight
wd Weight of debt
wps Weight of preferred stock
ws Weight of common equity raised internally by retaining earnings
wce Weight of common equity raised externally by issuing stock
WACC Weighted averaged cost of capital
X Exercise price of option
YTC Yield to call
YTM Yield to maturity
, Financial Management:
Theory and Practice
THIRTEENTH EDITION
MICHAEL C. EHRHARDT
University of Tennessee
EUGENE F. BRIGHAM
University of Florida
Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States
ACP Average collection period
ADR American Depository Receipt
APR Annual percentage rate
AR Accounts receivable
b Beta coefficient, a measure of an asset’s market risk
bL Levered beta
bU Unlevered beta
BEP Basic earning power
BVPS Book value per share
CAPM Capital Asset Pricing Model
CCC Cash conversion cycle
CF Cash flow; CFt is the cash flow in Period t
CFPS Cash flow per share
CR Conversion ratio
CV Coefficient of variation
Δ Difference, or change (uppercase delta)
Dps Dividend of preferred stock
Dt Dividend in Period t
DCF Discounted cash flow
D/E Debt-to-equity ratio
DPS Dividends per share
DRIP Dividend reinvestment plan
DRP Default risk premium
DSO Days sales outstanding
EAR Effective annual rate, EFF%
EBIT Earnings before interest and taxes; net operating income
EBITDA Earnings before interest, taxes, depreciation, and amortization
EPS Earnings per share
EVA Economic Value Added
F (1) Fixed operating costs
(2) Flotation cost
FCF Free cash flow
FVN Future value for Year N
FVAN Future value of an annuity for N years
g Growth rate in earnings, dividends, and stock prices
I Interest rate; also denoted by r
I/YR Interest rate key on some calculators
INT Interest payment in dollars
IP Inflation premium
IPO Initial public offering
IRR Internal rate of return
LP Liquidity premium
M (1) Maturity value of a bond
(2) Margin (profit margin)
M/B Market-to-book ratio
MIRR Modified Internal Rate of Return
MRP Maturity risk premium
MVA Market Value Added
n Number of shares outstanding
N Calculator key denoting number of periods
N(di) Represents area under a standard normal distribution function
NOPAT Net operating profit after taxes
NOWC Net operating working capital
NPV Net present value
P (1) Price of a share of stock in Period t; P0 = price of the stock today
(2) Sales price per unit of product sold
Pc Conversion price
, Pf Price of good in foreign country
Ph Price of good in home country
PN A stock’s horizon, or terminal, value
P/E Price/earnings ratio
PMT Payment of an annuity
PPP Purchasing power parity
PV Present value
PVAN Present value of an annuity for N years
Q Quantity produced or sold
QBE Breakeven quantity
r (1) A percentage discount rate, or cost of capital; also denoted by i
(2) Nominal risk-adjusted required rate of return
r̄ “r bar,” historic, or realized, rate of return
^r “r hat,” an expected rate of return
r* Real risk-free rate of return
rd Before-tax cost of debt
re Cost of new common stock (outside equity)
rf Interest rate in foreign country
rh Interest rate in home country
ri Required return for an individual firm or security
rM Return for “the market” or for an “average” stock
rNOM Nominal rate of interest; also denoted by iNOM
rps (1) Cost of preferred stock
(2) Portfolio’s return
rPER Periodic rate of return
rRF Rate of return on a risk-free security
rs (1) Required return on common stock
(2) Cost of old common stock (inside equity)
ρ Correlation coefficient (lowercase rho); also denoted by R when using historical data
ROA Return on assets
ROE Return on equity
RP Risk premium
RPM Market risk premium
RR Retention rate
S (1) Sales
(2) Estimated standard deviation for sample data
(3) Intrinsic value of stock (i.e., all common equity)
SML Security Market Line
∑ Summation sign (uppercase sigma)
σ Standard deviation (lowercase sigma)
σ2 Variance
t Time period
T Marginal income tax rate
TVN A stock’s horizon, or terminal, value
TIE Times interest earned
V Variable cost per unit
VB Bond value
VL Total market value of a levered firm
Vop Value of operations
Vps Value of preferred stock
VU Total market value of an unlevered firm
VC Total variable costs
w Proportion or weight
wd Weight of debt
wps Weight of preferred stock
ws Weight of common equity raised internally by retaining earnings
wce Weight of common equity raised externally by issuing stock
WACC Weighted averaged cost of capital
X Exercise price of option
YTC Yield to call
YTM Yield to maturity
, Financial Management:
Theory and Practice
THIRTEENTH EDITION
MICHAEL C. EHRHARDT
University of Tennessee
EUGENE F. BRIGHAM
University of Florida
Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States
