BEC RATIOS

Question 1

contribution margin (units)

Answer 1

sales - VC (if for units make it units)

Question 2

contribution margin ratio

Answer 2

sales - VC/ total sales

Question 3

VC ratio

Answer 3

variable cost/sales

Question 4

BE units

Answer 4

fixed expenses/unit sales - unit VC

Question 5

BE $

Answer 5

fixed expenses/ sales - vc

Question 6

$ to achieve desired profit

Answer 6

(fixed cost + desired net income)/ contribution margin ratio (sales-VC/sales)

Question 7

units to achieve desired profit

Answer 7

(fixed cost + desired net income)/ unit contribution margin ratio (unit sales-unit VC/unit sales)

Question 8

return on equity

Answer 8

net income/SH equity

Question 9

return on asset

Answer 9

net income/total assets

Question 10

net working capital

Answer 10

current assets - current liabilities

Question 11

current ratio

Answer 11

current assets/ current liabilities

Question 12

acid test or quick ratio

Answer 12

cash + marketable securities + net receivables/ current liabilities

Question 13

debt to equity

Answer 13

total liabilities/ owner equity

Question 14

time interest earned

Answer 14

income before taxes and interest charges/interest charges

Question 15

AR t/o

Answer 15

net credit sales/avg AR

Question 16

of says in AR

Answer 16

360/ (sales-AR)

Question 17

inventory t/o

Answer 17

COGS/avg inventory

Question 18

return on assets

Answer 18

net income+int exp/avg assets

Question 19

days in avg inventory

Answer 19

360/(COGS/avg inv)

Question 20

length of operating cycle

Answer 20

days sales in avg receivables

Question 21

book value per pref./common share

Answer 21

common SH/# of SH

Question 22

return on equity

Answer 22

net income (-pref if solving for common)/ avg SH equity

Question 23

earning per share

Answer 23

net income - pref div/avg # of shares outstanding

Question 24

price earnings or div earnings per share

Answer 24

price per share/earnings per share

Question 25

Inventory Conversion Period

Answer 25

Average Inventory / (COGS / 365)

Question 26

Receivables Collection Period

Answer 26

Ending A/R / (Net Sales / 365)

Question 27

Payables Deferral Period

Answer 27

Average Payables / (COGS/365)

Question 28

Asset Turnover Ratio

Answer 28

Sales / Average Assets

Question 29

Gross Margin %

Answer 29

Gross Margin = Gross Profit / Net Sales

Question 30

Period vs. Product Costs

Answer 30

Net Sales
- product cost
=gross margin 
-period cost 
=operating income