Formulas

Question 1

Current Ratio

Answer 1

Current Assets / Current Liabilities

Question 2

Quick Ratio

Answer 2

(Cash+ Market + AR) / Current Liabilities

Question 3

Cash Ratio

Answer 3

(Cash + Market) / Current Liabilities

Question 4

Cash Flow Ratio

Answer 4

Operating CF / Current Liabilities

Question 5

Net Working Capital Ratio

Answer 5

(Current Assets - Current Liabilities) / Total Assets

Question 6

DOL

Answer 6

CM / OI
or
% chg in EBIT / % chg in Sales

Question 7

DFL

Answer 7

OI / EBT
or
% chg in NI / % chg OI

Question 8

Financial Leverage Ratio (FLR)

Answer 8

Total Assets / Equity

Question 9

DER (Debt to Equity Ratio)

Answer 9

Total Debt / Equity

Question 10

DTAR (Debt to Total Assets Ratio)

Answer 10

Total Debt / Total Assets

Question 11

FCCR (Fixed Charge Coverage Ratio)

Answer 11

Earnings before FC and taxes / FC

Question 12

ICR (Interest Coverage Ratio)

Answer 12

Earnings before Int and taxes / Int Exp

Question 13

CFFCR (Operating CF to Fixed Charge Ratio)

Answer 13

(OCF + FC + Tax) / FC

Question 14

ARTO

Answer 14

Credit Sales / Avg AR

Question 15

ITO

Answer 15

COGS / Inv

Question 16

APTO

Answer 16

Credit Purchases / Avg AP

Question 17

DSO

Answer 17

365 x ARTO
or
365 x (Avg gross AR / Credit Sales)

Question 18

DSI

Answer 18

365 x ITO
or
365 x (Inv / COGS)

Question 19

DPAP

Answer 19

365 x APTO
or
365 x (Avg AP / Credit Purchases)

Question 20

TAT

Answer 20

Sales / Total Assets

Question 21

FAT

Answer 21

Sales / Fixed Assets

Question 22

G.O.N.E

Answer 22

GP/ Sales, OP/ Sales, NP/Sales, EBITDA/Sales

Question 23

ROA

Answer 23

NI / Average Total assets

ROE x (1-debt ratio)

Net Profit margin x Asset turnover

Question 24

ROE

Answer 24

NI / Average Equity

Profit Margin x Asset Turnover x Leverage

Question 25

BV per Share

Answer 25

(Total SHE - Pref Equity) / # of CS outstanding

Question 26

MV to BV

Answer 26

Market Price per share / BV per share

Question 27

BEPS (Basic Earnings per share)

Answer 27

(NI - Pref Div) / WACSO (or avg C/S for EPS)

Question 28

DEPS

Answer 28

(NI - Pref Div) / Diluted WACSO

Question 29

Earnings Yield

Answer 29

EPS / MP per CS

Question 30

Dividends Yield

Answer 30

Annual Div per share / MP per share

Question 31

Dividend Payout Ratio

Answer 31

Common Div / Earnings avail to CS

Question 32

P/E Ratio

Answer 32

MP per Share / EPS

Question 33

Price to EBIDTA

Answer 33

MP per Share / EBITDA per share

Question 34

Shareholder Return

Answer 34

(End Stock $ - Beg Stock $ + Ann div per share) / Beg Stock $

Question 35

Rate of Return % (ROI)

Answer 35

Income (from asset/investment) / Avg invested amount

Question 36

CAPM

Answer 36

Rf + B(Rm - Rf)

Question 37

PV of Bond

Answer 37

PV (Principal) x (PV (Interest) OR (PVFp x P) + (PRFAi x I)

Question 38

Nominal Risk Premium

Answer 38

Avg Market Return - Risk free rate (Rf)

Question 39

Coefficient of Variation (CV)

Answer 39

Std dev / expected returns

Question 40

Common Stock Valuation

Answer 40

sum of [(Dn/ (1+i)n)]

Question 41

Future Selling $ Stock Value

Answer 41

Sum (Dn/ (1+i)n) + Pn/ (1+i)n

Question 42

Value of a call option

Answer 42

Max (0, Market Price - Strike Price)

Question 43

WACC

Answer 43

(CWd x Cd(1-t)) + (CWp x Cp) + (CWc x Cc)

Question 44

WMCC

Answer 44

(TWd x Cd(1-t)) + (TWp x Cp) + (TWc x Cc)

Question 45

Cost of Capital Breakeven

Answer 45

Unappropriated R.E / Target Weight CS in capital structure

Question 46

Zero Growth div discount

Answer 46

Po= D/r

Question 47

Constant Growth Div Discount

Answer 47

Po = D1 / r-g

Question 48

Gordan growth (Future div or cost of new stock)

Answer 48

Cre = (D1/Po) + g

Question 49

Price to sale ratio

Answer 49

Total Market Cap / Total sales OR MPS/Sales per share

Question 50

Stock Value rate

Answer 50

r= D1+ (P1-Po) / Po

Question 51

Stock Value price

Answer 51

Po = (D1 + P1) / 1-r

Question 52

Cost of debt

Answer 52

Int Exp / Cash received from sale of bond

Question 53

Cost of newly issued Pref Stock

Answer 53

Yearly Div / Net proceeds of issue

Question 54

Lockbox benefit

Answer 54

Float reduction in days x Avg daily receipts x Int rate

Question 55

Tax Equivalent yield

Answer 55

Tax - Free yield / 1 - Marginal Tax rate

Question 56

Annual Carrying Cost (Inv)

Answer 56

Carrying cost per unit x (# of units ordered / 2)

Question 57

Annual Ordering cost

Answer 57

Cost per order x # of orders

Question 58

Total annual cost of inventory

Answer 58

Annual Carrying - Annual ordering

Question 59

Effective annual forgoing cash discount

Answer 59

D / (1-D) x (365/n)

Question 60

Effective annual forgoing int rate

Answer 60

(1+ periodic rate)n - 1

Question 61

CVP Formula

Answer 61

OP = S - VC- FC

Question 62

Breakeven Units

Answer 62

Total FC / CM per unit

Question 63

Breakeven dollars

Answer 63

Total FC / CM ratio

Question 64

Breakeven Units (pretax)

Answer 64

Total FC + Profit target / CM per unit

Question 65

Breakeven dollars (pretax)

Answer 65

Total FC + profit target / CM ratio

Question 66

Target income in units

Answer 66

(FC + Targeted OI) / CM per unit

Question 67

Pre Tax Profit Target

Answer 67

After Tax Profit Target / (1- Tax rate)

Question 68

WACM per unit

Answer 68

(CMP1 x SMP1) + (CMP2 x SMP2) +…

Question 69

Multiple product Breakeven

Answer 69

Total FC / WACM

Question 70

Safety Margin (units/dollars)

Answer 70

Excess Sales Level - Breakeven Sales Level

Question 71

Margin of Safety Ratio

Answer 71

Safety Margin / Total Sales

Question 72

Total/Avg Fixed/Ave VC

Answer 72

(AFC/AVC/ATC) / # of units produced

Question 73

CM per scarce resource

Answer 73

UCM/ scarce resource to produce per unit

Question 74

"Accept/Reject Special order or to further process | Sale as Is"

Answer 74

Incremental Revenue - Incremental Costs

Question 75

Continue or drop line

Answer 75

CM - Avoidable FC and Exp (included opportunity costs)

Question 76

Basic Cost based method

Answer 76

Price = Cost basis + Markup (MU)

Question 77

Price

Answer 77

Cost x (1 + MU%) or (FC + VC + Profit) / # of units produced

Question 78

Target Costing per Unit

Answer 78

(1 - Target Rate) x Total Sales $ / # units of sold

Question 79

Cost & rate of Return

Answer 79

VC + FC + ( Target Rate x Return Measure) / # units sold

Question 80

Price Elasticity of Demand Formula

Answer 80

% Change in Demand / % Change in Price

Question 81

Capital Adequacy Ratio

Answer 81

(Tier 1 Capital + Tier 2 Capital) / Risk Weighted Assets

Question 82

Expected Loss

Answer 82

sum of (LOSS AMOUNTn) x (LOSS Probabilityn)

Question 83

Net Real Value

Answer 83

Nominal value/ Price Index or Monetary Rate / (1+Inflation)

Question 84

Percentage of Base

Answer 84

Amount of line item / base amt

Question 85

Growth rate of Total Assets

Answer 85

(EB - BB) / BB

Question 86

Growth Rate of Sales

Answer 86

Chang in sales / base year sales

Question 87

Return on Common Equity

Answer 87

NI - Preferred Dividends / Avg Common Equity

Question 88

Dilution Effect of Convertible Bonds

Answer 88

(Total Debt x Debt Rate) x (1- tax rate) / CS to be issued if convertible.

Question 89

Dilution Effect of Preferred Stock

Answer 89

(Pref Div or Declared Div) / CS to be issued

Question 90

Return on Shareholder Investment

Answer 90

Div Paid + MV R.E / # CS x Share price

Question 91

Working Capital Turnover Ratio

Answer 91

Net sale / Quick Assets - Current Liabilities