BEC Formulas Flashcards
APR (annual percentage return)
APR (annual percentage return) = Effective Interest Rate * # of periods in year
Asset turnover
Asset turnover = Sales / Total Assets
Average accounts receivable
Average accounts receivable = (Beg. A/R + End. A/R) / 2
Average accounts receivable collection period
Average accounts receivable collection period = sales on credit / average accounts receivable
Average inventory
Average inventory = (Beginning inventory + Ending inventory) / 2 Make sure to use 365 days per year unless stated otherwise
Average total assets
Average total assets = (Beginning total assets + Ending total assets) / 2
Book value per share
Book value per share = common stock equity / common stock shares outstanding
Breakeven Point in terms of dollars
Breakeven Point in terms of dollars = fixed costs / contribution margin ratio
Breakeven Point in terms of units
Breakeven Point in terms of units = fixed costs / Contribution Margin
Cash conversion cycle
Cash conversion cycle = inventory conversion period + receivables collection period - payables deferrable period
Common stockholders_ equity
Common stockholders_ equity = stockholders_ equity _ preferred stock liquidation value
Contribution Margin
Contribution Margin = revenue _ variable costs
Contribution Margin Ratio
Contribution Margin Ratio = (sales _ variable costs) / sales
Cost of financing
Cost of financing= (Total assets _ current liabilities) * Weighted average cost of capital
Cost of Goods Sold
Cost of Goods Sold = Beg. Inventory + Inv. Purchases _ End. Inventory
Cross-Elasticity
Cross-Elasticity = % change in demand for certain product A / % change in price of certain product B.
Current ratio
Current ratio = current assets / current liabilities
Debt to equity
Debt to equity = Total debt / total equity
Debt to total assets
Debt to total assets = total liabilities / total assets
Discounted Payback Period
Discounted Payback Period = multiply by Present Value factor until initial invested amount reached. Disregard salvage value
Dividend Payout Ratio
Dividend Payout Ratio = cash dividend per share / Earnings per share
Economic Value Added
Economic Value Added = net operating profit after taxes (NOPAT) _ cost of financing
Effective Interest Rate
Effective Interest Rate = (principle * rate * time) / principle
Fixed asset turnover
Fixed asset turnover = sales / average net fixed assets
Gross Margin
Gross Margin = revenue _ cost of goods sold (or gross profit)
Gross Profit
Gross Profit = revenue _ cost of goods sold
Income Elasticity
Income Elasticity = % change in quantity demanded / % change in income
Internal Rate of Return
Internal Rate of Return = Initial Investment + Cash Flow in Period n/ (1 + Discount Rate) to the nth power (# of periods).
Inventory conversion period
Inventory conversion period = Average Inventory / Cost of sales per day
Inventory Turnover
Inventory Turnover = cost of goods sold / average inventory
Marginal propensity to consume
Marginal propensity to consume = change in spending / change in disposable income
Marginal propensity to save
Marginal propensity to save = change in savings / change in income
Marginal utility
Marginal utility = change in total utility / change in quantity
Market Capitalization
Market Capitalization = Common stock price per share * common stock shares outstanding
Market/Book Ratio
Market/Book Ratio = common stock price per share (or market value)/ book value per share
Number of Days Sales in Inventory
Number of Days Sales in Inventory = # of days in year (usually 365 or 360) / Inventory Turnover
Operating leverage
Operating leverage= % change in operating income / % change in unit volume
Operating Profit Margin
Operating Profit Margin = Operating profit / net sales
Price/Earning (PE) Ratio
Price/Earning (PE) Ratio = common stock price per share / Earning per share
Profitability Index
Profitability Index = project net present value / cost of project
Quick Ratio
Quick Ratio = Quick assets (cash, marketable securities, and A/R) / current liabilities
Receivable Turnover
Receivable Turnover = Net credit sales / average accounts receivable
Receivables Collection Period
Receivables Collection Period = Average Accounts Receivable / Credit Sales per day
Reorder Point
Reorder Point= delivery time of stock + safety stock or could be stated as = average daily demand * average lead time
Residual Income (RI)
Residual Income (RI) = operating profit _ interest on investment (or required rate of return)
Return on Assets (ROA)
Return on Assets (ROA) = net income / average total assets
Return on Equity (ROE)
Return on Equity (ROE) = net income / Average common stockholders_ equity
Return on Investment (ROI)
Return on Investment (ROI) = Net Income / Total Assets
Return on sales (ROS)
Return on sales (ROS) = net income / Sales
Safety Stock
Safety Stock= (Max. Daily demand * Max. Lead time) _ reorder point
Times interest Earned Ratio
Times interest Earned Ratio = earnings before interest and taxes / interest expense
Total asset turnover
Total asset turnover = sales / average total assets
Total costs
Total costs = fixed costs + variable costs or y = mx + b, where m = slope, x = variable value, and b = y intercept
Weighted Average Cost of Capital
Weighted Average Cost of Capital = [(cost of capital A / Total Amount)(rate of cost)(1-Tax Rate)] + [(cost of capital B / Total cost amount)(rate of cost)]
Work in process
Work in process = Direct Material used + Direct Labor + Manufacturing Overhead
