Cheat Sheet
All key formulas and concepts on one page. Bookmark this for quick reference.
Core Formulas
Time Value of Money
Future Value = Present Value × (1 + rate)^years
Present Value = Future Value ÷ (1 + rate)^yearsDCF Valuation
Value = Σ (Cash Flow_year ÷ (1 + discount rate)^year) + Terminal Value
Terminal Value = Final Cash Flow × (1 + growth) ÷ (discount rate - growth)Key Multiples
P/E Ratio = Price ÷ Earnings
EV/Revenue = Enterprise Value ÷ Revenue
EV/EBITDA = Enterprise Value ÷ EBITDA
Enterprise Value = Market Cap + Debt - CashKey Concepts
| Concept | One-Sentence Definition |
|---|---|
| Intrinsic Value | What something is worth based on cash it will generate |
| Market Value | What people are actually paying right now |
| Discount Rate | The return you'd expect from alternative investments |
| Free Cash Flow | Money the business generates after all expenses and investments |
| Terminal Value | The value of all cash flows beyond your forecast period |
| Comparable | A similar company you can use for comparison |
| Growth Rate | How fast revenue/profit is increasing year over year |
News Impact Filter
Before reacting to any news, ask:
- Is this actually NEW information?
- Does it change expected CASH FLOWS?
- Is it TEMPORARY or permanent?
If you answer "no" to any question, the news probably doesn't matter much.
Valuation Quality Checklist
Before trusting any valuation (yours or others'):
- Are the assumptions explicit?
- Are growth rates realistic? (>25% for >5 years is rare)
- Is the discount rate appropriate for the risk?
- Does the terminal value make sense?
- What happens if key assumptions are wrong by 20%?
What Moves Stock Prices
| Moves Prices A LOT | Barely Moves Prices |
|---|---|
| Earnings surprises | Minor analyst upgrades |
| Guidance changes | Generic industry news |
| Major acquisitions | Rumors without substance |
| Management changes | Old news re-reported |
| Regulatory news | CEO speeches at conferences |
The Investor Mindset
- Price ≠ Value. Your job is to find the gap.
- Future money is worth less. Always discount back to today.
- Assumptions matter more than math. A DCF is only as good as its inputs.
- Compare apples to apples. Multiples only work with similar companies.
- When in doubt, do nothing. Most money is lost reacting to noise.
- Be patient. The best investors think in years, not days.