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BEC > Formulas > Flashcards

Formulas Flashcards

1
Q

Economic Value Added

A

net operating profit after taxes (NOPAT) – cost of financing

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2
Q

Breakeven Point in terms of dollars

A

fixed costs / contribution margin ratio

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3
Q

Cash conversion cycle

A

inventory conversion period + receivables collection period - payables deferrable period

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4
Q

Current ratio

A

current assets / current liabilities

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5
Q

Contribution Margin

A

revenue – variable costs

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6
Q

Cost of Goods Sold

A

Beg. Inventory + Inv. Purchases – End. Inventory

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7
Q

Dividend Payout Ratio

A

cash dividend per share / Earnings per share

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8
Q

Effective Interest Rate

A

(principle * rate * time) / principle

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9
Q

Gross Margin

A

revenue – cost of goods sold (or gross profit)

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10
Q

Inventory conversion period

A

Average Inventory / Cost of sales per day

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11
Q

Average inventory

A

(Beginning inventory + Ending inventory) / 2

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12
Q

Inventory Turnover

A

cost of goods sold / average inventory

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13
Q

Marginal propensity to consume

A

change in spending / change in disposable income

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14
Q

Marginal propensity to save

A

change in savings / change in income

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15
Q

Number of Days Sales in Inventory

A

of days in year (usually 365 or 360) / Inventory Turnover

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16
Q

Quick Ratio

A

Quick assets (cash, marketable securities, and A/R) / current liabilities

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17
Q

Residual Income (RI)

A

operating profit – interest on investment (or required rate of return)

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18
Q

Times interest Earned Ratio

A

earnings before interest and taxes / interest expense

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19
Q

Total Cost Regression Formula

A 
TC = FC + (VC/unit * Units Produced)
Y = a + bx
TC: Dependent Var. (Y)
Units Produced: Independent Var. (x)
VC/Unit: Slope (b)
FC: Y-axis intercept (a)
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20
Q

Labor Efficiency (Variance Analysis)

A

SR * (SH – AH).

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21
Q

Labor Rate (Variance Analysis)

A

AH * (SR – AR).

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22
Q

Material Price (Variance Analysis)

A

AQ * (SP – AP).

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23
Q

Material Efficiency (Variance Analysis)

A

SP * (SQ – AQ).

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24
Q

Fixed overhead spending (Variance Analysis)

A

(budgeted-standard fixed overhead to incur – actual fixed overhead incurred)

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25
Q

Fixed overhead volume (Variance Analysis)

A

(Actual # Produced - Budgeted Produced) * Per Unit STD fixed OH rate

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26
Q

Weighted Average Cost of Capital

A

(Cost of Equity * % Equity of Capital Structure) + (Weighted average cost of debt * % Debt of Cap. Struct.)

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27
Q

Work in process

A

Direct Material used + Direct Labor + Manufacturing Overhead

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28
Q

Average accounts receivable

A

(Beg. A/R + End. A/R) / 2

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29
Q

Average accounts receivable collection period

A

sales on credit / average accounts receivable

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30
Q

Average total assets

A

(Beginning total assets + Ending total assets) / 2

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31
Q

Book value per share

A

common stock equity / common stock shares outstanding

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32
Q

Common stockholders’ equity

A

stockholders’ equity – preferred stock liquidation value

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33
Q

Contribution Margin Ratio

A

(sales – variable costs) / sales

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34
Q

Cost of financing

A

(Total assets – current liabilities) * Weighted average cost of capital

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35
Q

Cross-Elasticity

A

% change in demand for certain product A / % change in price of certain product B.

36
Q

Debt to equity

A

Total debt / total equity

37
Q

Debt to total assets

A

total liabilities / total assets

38
Q

Discounted Payback Period

A

multiply by Present Value factor until initial invested amount reached. Disregard salvage value

39
Q

Fixed asset turnover

A

sales / average net fixed assets

40
Q

Gross Profit

A

revenue – cost of goods sold

41
Q

Income Elasticity

A

% change in quantity demanded / % change in income

42
Q

Internal Rate of Return

A

Initial Investment + Cash Flow in Period n/ (1 + Discount Rate) to the nth power (# of periods).

43
Q

Marginal utility

A

change in total utility / change in quantity

44
Q

Market/Book Ratio

A

common stock price per share (or market value)/ book value per share

45
Q

Market Capitalization

A

Common stock price per share * common stock shares outstanding

46
Q

Operating leverage

A

% change in operating income / % change in unit volume

47
Q

Operating Profit Margin

A

Operating profit / net sales

48
Q

Preferred Stock Valuation

A

dividend per share / required rate of return

49
Q

Price/Earning (PE) Ratio

A

common stock price per share / Earning per share

50
Q

Profitability Index

A

project net present value / cost of project

51
Q

Receivables Collection Period

A

Average Accounts Receivable / Credit Sales per day

52
Q

Receivable Turnover

A

Net credit sales / average accounts receivable

53
Q

Reorder Point

A

delivery time of stock + safety stock or could be stated as = average daily demand * average lead time

54
Q

Return on Assets (ROA)

A

net income / average total assets

55
Q

Return on Equity (ROE)

A

net income / Average common stockholders’ equity

56
Q

Return on Investment (ROI)

A

Net Income / Total Assets

57
Q

Return on sales (ROS)

A

net income / Sales

58
Q

Safety Stock

A

(Max. Daily demand * Max. Lead time) – reorder point

59
Q

Total asset turnover

A

sales / average total assets

60
Q

ONE LEVEL OH VARIANCE: Total OH

A

Actual OH - Applied OH

61
Q

TWO LEVEL OH VARIANCE: Total OH

A

Budget (Controllable) Variance + Product (Denominator or Capacity) Volume Variance

62
Q

THREE LEVEL OH VARIANCE: Total OH

A

Price (Spending) Variance + Efficiency Variance + Production (Denom/Cap) Volume Variance

63
Q

FOUR LEVEL OH VARIANCE: Total OH

A

Variable Price (Spending) Variance + Fixed Price (Spending) Variance + Efficiency Variance + Production (Denominator or Capacity) Volume Variance

64
Q

Net present value

A

(expected after tax inflows x PV factor) - Investment cost

65
Q

PV for 1 year

A

cash flow / (1 + discount rate)^n

66
Q

PV factor

A

investment cost / annual cash inflows

67
Q

payback period

A

net initial investment / annual after tax cash flow

68
Q

Initial investment

A

annuity x PV factor

69
Q

Financial Leverage

A

% change in EPS / % change in EBIT

70
Q

weighted average interest rate

A

cost of debt x (1-tax rate)

71
Q

earnings before tax

A

after tax income / 1 - tax rate

72
Q

CAPM

A

risk free rate + beta * (market return - risk free rate)

73
Q

degree of financial leverage

A

% change in net income / % change in operating income

74
Q

operating leverage

A

(Quantity x (selling price - variable cost) / (quanity x (selling price - variable cost) - fixed cost

75
Q

total leverage

A

(Quantity x (selling price - variable cost) / (quanity x (selling price - variable cost) - fixed cost - Interest expense - (preferred dividends / (1 - tax rate)

76
Q

dividend capitalization model common stock

A

dividend / (selling price per share - underpricing - flotation) + expected annual growth

77
Q

gordon growth model

A

dividend / (price x (1 - flotation)) + expected annual growth

78
Q

cost of forgoing discount

A

(discount % x 365) / ((1 - discount%) x (pay period - discount period))

79
Q

cost of debt

A

(interest expense - tax benefit) / carrying value of debt

80
Q

accounting rate of return

A

net income / average investment

81
Q

economic order quantity

A

Square root ((2 x demand per year x production setup) / (cost per unit x carrying cost))

82
Q

reward to risk ratio

A

return / standard deviation

83
Q

Sharpe portfolio measure

A

(portfolio return - risk free rate) / standard deviation

84
Q

Treynor index

A

(portfolio return - risk free rate) / beta

85
Q

cost of preferred stock

A

(dividend% x par) / (issue price - issuing cost)

86
Q

cost of common equity

A

(dividend / price) + growth percentage

87
Q

CPI

A

(current / base ) x 100

BEC (3 decks)

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