CMA1 Formulas

Question 1

Formula: Accounts Receivables Turnover

Answer 1

= Net Credit Sales / Net Accounts Receivable

Question 2

Formula: Balance Sheet

Answer 2

Assets = Liabilities + Owners Equity

Question 3

Formula: Basic Earnings Per Share (EPS)

Answer 3

= (net income - preferred dividends) / weighted average common shares outstanding

Question 4

Formula: Book Value Per Share

Answer 4

= Shareholders Equity / Shares Outstanding

Question 5

Formula: Contribution margin

Answer 5

= Total sales - Total variable costs

Question 6

Formula: Contribution margin ratio

Answer 6

= (Unit Price - Variable cost per unit) ÷ Unit Price

Question 7

Formula: Contribution margin per unit

Answer 7

= Unit Price - Variable cost per unit

Question 8

Formula: Current Ratio

Answer 8

= Current Assets / Current Liabilities

Question 9

Formula: Dividend Payout Ratio

Answer 9

= Dividend per share / Earnings Per Share

Question 10

Formula: Inventory Turnover Ratio

Answer 10

= Cost of Sales / Average Inventory for the Period

Question 11

Formula: Net Accounts Receivable

Answer 11

= (Beginning Accounts Receivable + Ending Accounts Receivable) / 2

Question 12

Formula: Operating Margin

Answer 12

= Income from Operations / Net Revenues

Question 13

Formula: P/E Ratio

Answer 13

= Price per share / Earnings per share

Question 14

Formula: Residual Income

Answer 14

= Operating Income - Target Income
= Net Income – (Average Total Assets x Opportunity Cost of Capital)

Question 15

Formula: Return on Investment (ROI)

Answer 15

= Net Income / Average Total Assets
= Income / Invested Capital
= (Net Income / Sales) x (Sales / Invested Capital)
= Profit Margin x Asset Turnover

Question 16

Formula: Working Capital

Answer 16

= Current Assets - Current Liabilities

Question 17

Where are losses from discontinued operations reported?

Answer 17

on the income statement separately, after income from continuing operations, but before net income

Question 18

What does the accumulated other comprehensive income balance reflect?

Answer 18

Unrealized gains or losses at the end of the accounting period.

Question 19

Formula: Throughput Contribution

Answer 19

= Sales dollars - Direct Material costs

Question 20

Formula: Price Variance

Answer 20

= Actual quantity purchased x (Actual price - Standard Price)

Question 21

Formula: Rate Variance

Answer 21

= (Actual Hours x Actual Rate) - (Actual Hours x Standard Rate)

Question 22

Formula: Efficiency Variance

Answer 22

= (Actual Hours x Standard Rate) - (Standard Hours x Standard Rate)

Question 23

Formula: Sales Volume Variance

Answer 23

= (Actual Volume - Budget Volume) x Budget Sales Price

Question 24

Formula: Flexible Budget Variance

Answer 24

Actual Income - Flexible Budget Income

Question 25

Formula: Sales Price Variance

Answer 25

(Actual Price - Budget Price) x Units Sold

Question 26

Formula: Operating Income

Answer 26

Revenue - Operating Costs

Question 27

Formula: Operating Costs

Answer 27

Variable Costs + Fixed Costs

Question 28

Formula: Target Income

Answer 28

Assets x Required Rate of Return

Question 29

Formula: Investment Base

Answer 29

Total Assets, such as Property, Plant, & Equipment + Working Capital

Question 30

Formula: Asset Turnover

Answer 30

Sales / Average Operating Assets