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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
Fixed overhead volume (Variance Analysis)
(Actual # Produced - Budgeted Produced) * Per Unit STD fixed OH rate
26
Weighted Average Cost of Capital
(Cost of Equity * % Equity of Capital Structure) + (Weighted average cost of debt * % Debt of Cap. Struct.)
27
Work in process
Direct Material used + Direct Labor + Manufacturing Overhead
28
Average accounts receivable
(Beg. A/R + End. A/R) / 2
29
Average accounts receivable collection period
sales on credit / average accounts receivable
30
Average total assets
(Beginning total assets + Ending total assets) / 2
31
Book value per share
common stock equity / common stock shares outstanding
32
Common stockholders’ equity
stockholders’ equity – preferred stock liquidation value
33
Contribution Margin Ratio
(sales – variable costs) / sales
34
Cost of financing
(Total assets – current liabilities) * Weighted average cost of capital
35
Cross-Elasticity
% change in demand for certain product A / % change in price of certain product B.
36
Debt to equity
Total debt / total equity
37
Debt to total assets
total liabilities / total assets
38
Discounted Payback Period
multiply by Present Value factor until initial invested amount reached. Disregard salvage value
39
Fixed asset turnover
sales / average net fixed assets
40
Gross Profit
revenue – cost of goods sold
41
Income Elasticity
% change in quantity demanded / % change in income
42
Internal Rate of Return
Initial Investment + Cash Flow in Period n/ (1 + Discount Rate) to the nth power (# of periods).
43
Marginal utility
change in total utility / change in quantity
44
Market/Book Ratio
common stock price per share (or market value)/ book value per share
45
Market Capitalization
Common stock price per share * common stock shares outstanding
46
Operating leverage
% change in operating income / % change in unit volume
47
Operating Profit Margin
Operating profit / net sales
48
Preferred Stock Valuation
dividend per share / required rate of return
49
Price/Earning (PE) Ratio
common stock price per share / Earning per share
50
Profitability Index
project net present value / cost of project
51
Receivables Collection Period
Average Accounts Receivable / Credit Sales per day
52
Receivable Turnover
Net credit sales / average accounts receivable
53
Reorder Point
delivery time of stock + safety stock or could be stated as = average daily demand * average lead time
54
Return on Assets (ROA)
net income / average total assets
55
Return on Equity (ROE)
net income / Average common stockholders’ equity
56
Return on Investment (ROI)
Net Income / Total Assets
57
Return on sales (ROS)
net income / Sales
58
Safety Stock
(Max. Daily demand * Max. Lead time) – reorder point
59
Total asset turnover
sales / average total assets
60
ONE LEVEL OH VARIANCE: Total OH
Actual OH - Applied OH
61
TWO LEVEL OH VARIANCE: Total OH
Budget (Controllable) Variance + Product (Denominator or Capacity) Volume Variance
62
THREE LEVEL OH VARIANCE: Total OH
Price (Spending) Variance + Efficiency Variance + Production (Denom/Cap) Volume Variance
63
FOUR LEVEL OH VARIANCE: Total OH
Variable Price (Spending) Variance + Fixed Price (Spending) Variance + Efficiency Variance + Production (Denominator or Capacity) Volume Variance
64
Net present value
(expected after tax inflows x PV factor) - Investment cost
65
PV for 1 year
cash flow / (1 + discount rate)^n
66
PV factor
investment cost / annual cash inflows
67
payback period
net initial investment / annual after tax cash flow
68
Initial investment
annuity x PV factor
69
Financial Leverage
% change in EPS / % change in EBIT
70
weighted average interest rate
cost of debt x (1-tax rate)
71
earnings before tax
after tax income / 1 - tax rate
72
CAPM
risk free rate + beta * (market return - risk free rate)
73
degree of financial leverage
% change in net income / % change in operating income
74
operating leverage
(Quantity x (selling price - variable cost) / (quanity x (selling price - variable cost) - fixed cost
75
total leverage
(Quantity x (selling price - variable cost) / (quanity x (selling price - variable cost) - fixed cost - Interest expense - (preferred dividends / (1 - tax rate)
76
dividend capitalization model common stock
dividend / (selling price per share - underpricing - flotation) + expected annual growth
77
gordon growth model
dividend / (price x (1 - flotation)) + expected annual growth
78
cost of forgoing discount
(discount % x 365) / ((1 - discount%) x (pay period - discount period))
79
cost of debt
(interest expense - tax benefit) / carrying value of debt
80
accounting rate of return
net income / average investment
81
economic order quantity
Square root ((2 x demand per year x production setup) / (cost per unit x carrying cost))
82
reward to risk ratio
return / standard deviation
83
Sharpe portfolio measure
(portfolio return - risk free rate) / standard deviation
84
Treynor index
(portfolio return - risk free rate) / beta
85
cost of preferred stock
(dividend% x par) / (issue price - issuing cost)
86
cost of common equity
(dividend / price) + growth percentage
87
CPI
(current / base ) x 100

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