Formulas 1

Question 1

Annual Percentage Return (APR)

Answer 1

Effective Interest Rate * # of periods in year

Question 2

Asset Turnover

Answer 2

Sales / Total Assets

Question 3

Breakeven Point - Units

Answer 3

Fixed Costs / Contribution Margin

Question 4

Breakeven Point - Dollars

Answer 4

Fixed Costs / Contribution Margin Ratio

Question 5

Current Ratio

Answer 5

Current Assets / Current Liabilities

Question 6

Contribution Margin

Answer 6

Revenue - Variable Costs
or
Sales - Variable Costs

Question 7

Cost of Goods Sold

Answer 7

Beg. Inv + Inv Purchases - End Inv

Question 8

Dividend Payout Ratio

Answer 8

cash dividend per share / earnings per share

Question 9

Effective Interest Rate

Answer 9

(principleratetime) / principle

Question 10

Gross Margin

Answer 10

Revenue - CGS (or gross profit)

Question 11

Inventory Conversion Period

Answer 11

Average Inventory / Cost of sales per day

Avg Inv = (Beg Inv + End Inv) / 2

*Make sure to use 365 days per year unless stated otherwise.

Question 12

Inventory Turnover

Answer 12

CGS / Average Inv

Question 13

Marginal Propensity to Consume

Answer 13

Change in Spending / Change in disposable Income

Question 14

Marginal Propensity to Save

Answer 14

Change in Savings / Change in Income

Question 15

Number of Days Sales in Inventory

Answer 15

Days in year (360 or 365) / Inventory Turnover

Question 16

Quick Ratio

Answer 16

Quick Assets / Current Liabilities

*Quick Assets = cash, mkt securities, A/R

Question 17

Residual Income (RI)

Answer 17

Operating Profit - Interest on Investment (or required rate of return)

Question 18

Required Return

Answer 18

NBV (equity) * hurdle rate

Question 19

Times Interest Earned Ratio

Answer 19

EBIT / interest expense

Question 20

Total Costs

Answer 20

FC + VC
or
y = mx + b, where x = variable, m = slope, b = y intercept

Question 21

Work in Process (WIP)

Answer 21

DM used + DL + Manufacturing OH

Question 22

Average Accounts Receivable

Answer 22

(Beg AR + End AR) / 2