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Audit > BEC Formulas > Flashcards

BEC Formulas Flashcards

1
Q

APR

A

Effective interest rate x # of periods in a year
OR
Annual interest paid / net proceeds

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2
Q

Asset Turnover

A

Sales / Total Assets

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3
Q

Breakeven point in units

A

Fixed Costs / CM

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4
Q

Breakeven point in dollars

A

Fixed costs / CM ratio

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5
Q

Cash conversion cycle

A

Inventory conversion period + receivables conversion period - payables conversion period

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6
Q

Inventory conversion period

A

Avg inventory / cost of sales per day
OR
365 / Inventory turnover

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7
Q

Receivables conversion (collection) period

A

Avg AR / credit sales per day
OR
365 / AR turnover

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8
Q

Payables conversion period

A

Avg AP / COGS per day

365 / AP turnover

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9
Q

Current ratio

A

Current assets / Current liabilities

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10
Q

Working capital

A

Current assets - Current liabilities

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11
Q

Contribution margin

A

Sales - VC

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12
Q

Contribution margin ratio

A

Contribution margin / sales

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13
Q

Dividend payout ratio

A

Cash dividend per share / EPS

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14
Q

Economic value added

A

Net operating profit after taxes - cost of financing

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15
Q

Zero growth stock / Per share valuation / Perpetuities

A

Price = Dividend / Required return

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16
Q

Effective interest rate

A

Interest paid / Net proceeds of loan

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17
Q

Effective annual percentage rate

A

(1 + Effective periodic rate)^ # compounding periods - 1

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18
Q

Simple interest

A

Principal x annual rate x # years

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19
Q

Compound interest

A

Principal x (1 + rate)^#years

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20
Q

Nominal rate of return

A

Real interest rate + inflation premium

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21
Q

Constant growth model

A

Current price at period “t” = Dividend one year after period “t” / (Required return - Growth rate)

To calc “D” = Current dividend x (1 + Growth rate)

22
Q

Price earnings ratio

A

Price or value today / Expected earnings in one year

E can be calculated by E x (1 + G)

23
Q

PEG ratio

A

(Price or value today / Expected earnings in one year) / Growth rate

Also: P = PEG x E x G

24
Q

Price to sales ratio

A

Price today / Expected Sales in one year

25
Q

Inventory turnover

A

COGS / Avg inventory

26
Q

Multiplier effect

A

1 / (1 - MPC)

27
Q

Real GDP

A

(Nominal GDP / GDP deflator) x 100

28
Q

Days sales in inventory

A

365 / Inventory turnover

29
Q

Quick ratio

A

Cash + mktble securities + AR / Current Liabilities

30
Q

Residual income

A

Operating profit - interest on investment (or req rate of return)

31
Q

Times interest earned ratio

A

EBIT / interest expense

32
Q

Labor efficiency

A

Std rate*(std hrs - actual hrs)

33
Q

Labor rate

A

Actual hours*(std rate - actual rate)

34
Q

Material price

A

Actual qty*(std price - actual price)

35
Q

Material efficiency

A

Std price*(Std qty - actual qty)

36
Q

WACC

A

(cost of equity x % equity in capital structure) + (weight avg cost of debt x % debt in capital structure)

37
Q

Cost of financing

A

(Total assets - Current liab) * WACC

38
Q

Cross-elasticity

A

% change in demand for product A / % change in price for product B

39
Q

Income elasticity

A

% change in qty demanded / % change in income

40
Q

Internal rate of return

A

Initial investment + CF in period n / (1 + Discount rate)^nth power (# of periods)

41
Q

Operating leverage

A

% change in EBIT / % change in sales

42
Q

Financial leverage

A

% change in EPS / % change in EBIT

43
Q

Combined total leverage

A

DOL x DFL
OR
% change in EPS / % change in sales

44
Q

Operating profit margin

A

Operating profit / net sales

45
Q

Profitability index

A

NPV / Cost of project

46
Q

Reorder point

A

Delivery time of stock + safety stock

47
Q

ROI

A

Net income / total assets

48
Q

Safety stock

A

(Max. daily demand * max. lead time) - reorder point

49
Q

Economic order quantity

A

Square root of: (2 x annual sales x order cost) / carrying cost per unit

50
Q

Margin of safety

A

Sales - Breakeven sales

Audit (4 decks)

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