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Financing Calculations


Calculations and Ratios presents the essential mathematical tools the finance professional needs for finding solutions to daily numerical problems. This section includes how to calculate return on investment, return on shareholders' equity, working capital productivity, EVA, risk-adjusted rate of return, CAPM, and many more.

  • Borrowing Costs and Capitalization
    The costs of borrowing are primarily made up of interest and issuance expenses. The interest rate assigned to a particular debt instrument is based on the level of default risk assumed by the investor. Several rating agencies assess the default risk of public debt issuances and provide a rating that is indicative of credit quality. The credit quality is greater for secured/collateralized senior debt than for unsecured subordinated debt issued by...
  • Forward Interest Rates
    Forward interest rates are interest rates which are specified now for a loan or transaction that will occur at a specified future date. As with current interest rates, forward interest rates include a term structure which shows the different forward rates offered on transactions of different maturities. Forward rates are also known as implied forward rates.

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