BEC Formulas

Question 1

Asset Turnover

Answer 1

Total Sale/Avg. Assets

Question 2

Predetermined Overhead Rate

Answer 2

Est. Manufacturing OH Cost/ Est. # of Machine Hours

Question 3

Times int earned

Answer 3

Ebit/int exp

Question 4

Defensive interval ratio

Answer 4

(Cash + mar security + net ar)/avg daily cash exp

Question 5

Ar turnover

Answer 5

Net credit sales/avg net receivables

Question 6

Return on total assets

Answer 6

(Net income + int exp) / avg total assets

Question 7

Return on total assets

Answer 7

(Net income + int exp) / avg total assets

Question 8

of days supply in avg inventory

Answer 8

Avg inventory/avg daily cogs or 360/inventory turnover

Question 9

Length of operating cycle

Answer 9

of days sales in Ar + # of days supply in avg inventory

Question 10

Book value per cs

Answer 10

Common shareholders equity/ # cs o/s

Question 11

Return on cs equity

Answer 11

(Net income - preferred dividend)/ avg common stockholders equity

Question 12

Return on stockholders equity

Answer 12

Net income/ avg stockholders equity

Question 13

Eps

Answer 13

(Net income - preferred dividend ) / avg # of cs outstanding

Question 14

Yield on cs

Answer 14

Dividend per cs / market price per cs

Question 15

Price earnings ratio

Answer 15

Mp per cs/ earnings per cs

Question 16

Dividend payout ratio

Answer 16

Cash dividend per cs / earnings per cs

Question 17

Avg investment

Answer 17

(Initial investment + nwc + residual value) / 2

Question 18

Discount rate aka

Answer 18

Hurdle rate or min rate

Question 19

Benefits per check in lockbox

Answer 19

Days saved in collection period × avg check size × daily interest or opportunity cost

Question 20

Total benefit in dollars

Answer 20

Per check amt×Days of float reduced×annual rate of interest

Question 21

Break even in dollars for check received

Answer 21

Fee amt per check/ per day int × per day added

Question 22

Reorder pt

Answer 22

Avg lead time×daily demand+ safety stock

Question 23

Safety stock

Answer 23

(Max lead time - avg lead time)×daily usage

Question 24

Social security from eyes of employee

Answer 24

Regressive

Question 25

Roi

Answer 25

Operating income / avg invested capital

Question 26

Residual income

Answer 26

Operating income - (imputed int charge on avg invested capital)

Question 27

Coefficient of determination is strongest

Answer 27

As it approaches -1 Or 1 and weakest as it approaches 0

Question 28

Accrual Accounting Rate of Return

Answer 28

Average Annual Income the project generates / initial or average increase in required investment

Question 29

Nat’l Income

Answer 29

GDP - Dep=Net domestic product - indirect business taxes + income earned abroad=nat’l income

Question 30

Dividend Growth Rate Model

Answer 30

Cost of equity = dividend 1 year from now/ market price + growth rate

Question 31

Operating Profit Margin

Answer 31

EBIT/Sales

Question 32

Operating Leverage

Answer 32

% Change in Operating Income/% change in sales volume

Question 33

Degree of Operating Leverage

Answer 33

Contribution Margin/EBIT

Question 34

Degree of financial leverage

Answer 34

Ebit/(ebit-interest)

Question 36

Ordering costs include

Answer 36

quantity discounts lost, shipping costs, purchasing costs, and, in a manu­facturing facility, set-up costs for production runs.

Question 37

Carrying costs include

Answer 37

handling, interest on invested capital, storage costs, and obsolescence.