BEC Formulas

Question 1

Inventory conversion period

Answer 1

Average inventory / (COGS/365)

Question 2

Receivables collection period

Answer 2

Avg Rec / (COGS/365)

Question 3

Payables deferral period

Answer 3

Avg payables / (COGS/365)

Question 4

Lifespan of commercial paper

Answer 4

< 9 months

Question 5

Economic order quantity

Answer 5

EOQ = √(2*(Order cost * Annual Unit demand))/Inventory carrying cost

Question 6

Inventory re-order point

Answer 6

Average daily demand(sales) * Average lead time(wait for inv shipment)

Question 7

Cost of forgoing discount

Answer 7

(disc % * 365)/((100%-disc%)*(pay pd. - disc pd))

Question 8

Current yield

Answer 8

Interest payment / Bond price

Question 9

Effective rate formula

Answer 9

PV of principal + Interest = Bond Price

Question 10

Weighted Average Cost of Capital

Answer 10

(E/V * Re) + (D/V * Rd) * (1-T)

Question 11

Cost of Debt

Answer 11

(Interest Expense - Tax Benefit) / Carrying Value of Debt

Question 12

Market capitalization

Answer 12

Number of outstanding shares × Market value per share

Question 13

Payback period

Answer 13

Cash outlay(initial investment) / Net cash flow per year

Question 14

Annual preferred Dividend

Answer 14

of shares * cumulative % *Par value per share

Question 15

Degree of operating leverage

Answer 15

Contribution margin/EBIT

Question 16

Contribution margin

Answer 16

Sales minus variable cost

Question 17

Gross margin

Answer 17

profit/total sales

Question 18

Earnings per share

Answer 18

EAIT/# ofshares

Question 19

Market price per share

Answer 19

EPS * Price-earnings ratio

Question 20

Debt to equity

Answer 20

TL / TSE

Question 21

Debt Ratio

Answer 21

TL/TA

Question 22

Put =

Answer 22

Sell