Profit and Loss Analysis
•Net income = (1 - tax)(net sales price - manufacturing expense - operating expense)
•Net sales price = list price(1 - discount rate)
•where operating expense represents a percentage of net sales price.
Securities
Discounted Notes
Price (given discount rate)
•B = number of days in year (annual basis).
•DR = discount rate (as a decimal).
•DSM = number of days from settlement date to maturity date.
•P = dollar price per $100 per value.
•RV = redemption value per $100 par value.
•
P = [RV] –
⋅ ⋅ DSM DR RV
B
Yield (given price)
•B = number of days in year (annual basis).
•DSM = number of days from settlement date to maturity date.
•P = dollar price per $100 par value.
•RV = redemption value per $100 par value.
•Y = annual yield of investment with security held to maturity (as a decimal).
Y = |
| RV – P |
| ||
|
| P |
⋅
B
DSM
Forecasting
154
