The key Corporate Issuers formulas and decision rules for 2026, module by module. Corporate Issuers is 6-9% of the Level I exam.
Free to read, no sign-up. A revision companion to use alongside your curriculum or prep provider. The full sheet (39 concepts, 14 formulas, 7 decision rules) is in the study dashboard.
The ones to know cold before exam day.
Where: DOH = Days of Inventory on Hand, DSO = Days Sales Outstanding, DPO = Days Payable Outstanding
Open the lessonWhere: r = required return (WACC for firm projects)
Open the lessonWhere: w = weight, rd = cost of debt, re = cost of equity, t = tax rate
Open the lessonKey concepts and formulas from each of the 7 Corporate Issuers modules. Open a module for its lesson page, or the dashboard for the full sheet.
Single owner, unlimited liability, simple structure. Owner and business are legally identical. Limited life.
General partnership: all partners share unlimited liability. Limited partnership: GPs manage, LPs have limited liability.
Full sheet: 6 concepts · 1 decision rules
Debt: fixed claims, priority in liquidation, limited upside. Equity: residual claims, last in liquidation, unlimited upside.
Shareholders benefit from higher risk (upside). Creditors prefer lower risk (protect fixed claims). Asset substitution problem.
Full sheet: 5 concepts · 1 decision rules
Managers (agents) may not always act in shareholders' (principals') best interest. Monitoring and incentive alignment needed.
Controlling shareholders may extract private benefits at minority shareholders' expense. Tunneling, related-party transactions.
Full sheet: 5 concepts · 1 decision rules
Current assets - Current liabilities. Measures short-term financial health and operational efficiency.
DOH + DSO - DPO. Days to convert raw materials to cash. Lower CCC = more efficient working capital management.
Where: DOH = Days of Inventory on Hand, DSO = Days Sales Outstanding, DPO = Days Payable Outstanding
Where: Days to sell inventory
Full sheet: 5 concepts · 6 formulas · 1 decision rules
Sum of PV of all cash flows (including initial investment). Accept if NPV > 0. The theoretically best capital budgeting method.
Discount rate that makes NPV = 0. Accept if IRR > required return. May conflict with NPV for mutually exclusive projects.
Where: r = required return (WACC for firm projects)
Where: IRR = rate where NPV equals zero
Full sheet: 6 concepts · 4 formulas · 1 decision rules
Weighted average cost of capital = w<sub>d</sub>r<sub>d</sub>(1-t) + w<sub>e</sub>r<sub>e</sub>. Blended cost of debt and equity financing.
Capital structure is irrelevant to firm value in perfect markets. V<sub>L</sub> = V<sub>U</sub>.
Where: w = weight, rd = cost of debt, re = cost of equity, t = tax rate
Where: Tax shield increases levered firm value
Full sheet: 6 concepts · 4 formulas · 1 decision rules
How a company creates, delivers, and captures value. Defines: who are customers, what is offered, how to deliver, how to earn revenue.
The unique combination of products/services that creates value for a specific customer segment.
Full sheet: 6 concepts · 1 decision rules
Start with the free module, then add your own notes to every Corporate Issuers cheat sheet in the dashboard.