Internal Rate of Return (IRR)

The discount rate that makes NPV equal zero. CF_t = cash flow at time t.

0 = \sum_{t=0}^{n} \frac{CF_t}{(1 + IRR)^t}

Capital Asset Pricing Model (CAPM)

Expected return E(R_i) = risk-free rate R_f plus risk premium β_i·(R_m − R_f).

E(R_i) = R_f + \beta_i \cdot (E(R_m) - R_f)

Sharpe Ratio

Excess return per unit of risk. R_p = portfolio return, R_f = risk-free rate, σ_p = portfolio standard deviation.

S = \frac{R_p - R_f}{\sigma_p}

DuPont Analysis (ROE)

ROE = Profit Margin × Asset Turnover × Equity Multiplier.

ROE = \frac{Net\ Income}{Sales} \cdot \frac{Sales}{Assets} \cdot \frac{Assets}{Equity}

Break-Even Point

FC = fixed costs, P = price per unit, VC = variable cost per unit. Quantity where total revenue equals total cost.

BEP = \frac{FC}{P - VC}

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Investment Metrics