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LESSON THREE: The V Formula - A Shortcut To Computing Return on Equity

In this lesson you’ll discover the details on the V Formula, a simple way to compute the pre-tax rate of return, created by Chris Volk, CEO of STORE Capital. Just tuning into STORE University for the first time? Head back to Lesson 1 and 2 to become proficient in valuing your business and calculating your return on equity to get really rich!

LESSON THREE, PART ONE

What is the V Formula?

Is there a simpler way of computing pre-tax rate of return? The answer is yes! Chris Volk, CEO of STORE Capital, created the V Formula. Learn more from Chris about the creation of the V Formula in STORE University’s Lesson 3 Part 1.

LESSON THREE, PART TWO

V Formula Variables

There are six variables in the V Formula. The initial three variables are sales, investment and annual capital investments. Chris Volk, CEO of STORE Capital, will walk you through the details on the first three variables of the V Formula.

LESSON THREE, PART THREE

Putting the Variables to Work

Now that you’ve discovered the details on the initial three variables of the V Formula, it’s time to dive into the remaining three variables: profit margin, debt and equity mix and the cost of Other People’s Money (OPM). Combine the six variables in the V Formula and discover the shortcut of how to compute your return on equity. Chris Volk, CEO of STORE Capital, will show you how it’s done.

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