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BEC > Formulas > Flashcards

Formulas Flashcards

1
Q

What is the formula for the price elasticity of demand?

A

Percent change in quantity demanded/ percentage change in price

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2
Q

The point method measure the price elasticity of demand for specific change in the product’s price. What is the formula?

A 
%Q= Quantity demanded after the change - quantity demanded before the change/ quantity demanded before the change.
%P = Price after the change - price before the change/price before the change.
%E = %Q/QP
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3
Q

What s the midpoint method (arc Method) formula for elasticity of demand?

A

%E= ((Q1-Q2)/(Qz+Q2))/((P1-p2)/(P1+P2))

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4
Q

How do you evaluate the elasticity of demand?

A

Greater than = relatively elastic
Equal to one - unitary elastic
Less than one = Relatively inelastic
Infinite = perfectly elastic

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5
Q

What is the formula for elasticity of supply?

A

%E= Percentage change in quantity supplies/percentage change in price

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6
Q

What is the formulat for Net Exports

A

Exports - imports

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7
Q

What is the formula for real GDP

A

nominal GDP/price index

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8
Q

What is the formula for GDP expenditures approach

A

consumer spending+investment spending+government spending+Net exports

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9
Q

What is the formula for GDP Income approach

A

salaries+rents+interest+proprietor/partnership income+corporate profits= national income
National income+indirect business taxes+net foreign factor income(+-) capital consumption allowance.

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10
Q

What is the formula for inflation

A

current year price index- prior year price index/prior year price index

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11
Q

What is the formulat for consumer price index

A

cost of market basket in current year/ cost of market basket in base year.

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12
Q

What is the formula for the multiplier

A

1/(1-mPC)

MPC=Marginal propensity to consume

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13
Q

What is the formula for the monetary multiplier

A

1/required reserve ratio

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14
Q

What is the formula for rate of return?

A

return on investment/amount invested

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15
Q

What is the formula for expected rate of return?

A

sum (possible rate of return x probability)

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16
Q

What is the standard deviation of return

A

square root( sum(R1 - expected rate of return)squared x probability)

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17
Q

What is the coefficient of variation

A

Standard deviation/expected rate of return

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18
Q

How do you analyze the coefficient of variation

A

The lower the ratio the better the risk return tradeoff

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19
Q

How do you analyst the coefficient of correlation?

A

1 means the two variables always move together.

-1 means the two variables move in opposite direction.

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20
Q

What is the Capital Asset pricing model (CAPM)?

A

required rate of return= risk free rate+beta(market risk-risk free rate)

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21
Q

What is the degree of operating leverage formula?

A

DOL= % change in earnings before interest and taxes/ % change in sales

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22
Q

How do you analyze DOL>?

A

High percentage of fixed costs is more risky than a firm in the same industry that relies on variable costs.

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23
Q

What is the formula for degree of financial leverage (DFL)?

A

%change in EPS/ % change in earnings before interest and taxes.

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24
Q

What is the formula for degree of total leverage?

A

DTL= % change in EPS/% change in sales

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25
Q

What is the common stock valuation

A

dividend per share+ required rate of return

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26
Q

What is the constant growth model

A

dividends per share expected next year/( required rate of return- growth rate)

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27
Q

What is the formula for Weighted average cost of capital (WACC)?

A

((market value equity/equity+debt)xcost of equity))+((debt//equity+debt) x cost of debt) x (1- tax rate)

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28
Q

What is the current ratio

A

current assets/current liabilities

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29
Q

What is the quick ratio (acid test)

A

Current assets-inventory-prepaid/current liaibilites

30
Q

How do you analyze the current and quick ratio

A

The higher the percentage means the firm is more liquid. However, an overally high ratio could mean the firm is not effiectively using its resources.

31
Q

What is the formula for AR Turnover

A

net credit sales/Avg Balance in receivables

32
Q

What is the formula for days sales in receivables

A

365/AR turnover ratio

33
Q

What is the formula for inventory turnover

A

COGS/avg balance in inventory

34
Q

What is the formula for days sales in inventory

A

365/inventory turnover ratio

35
Q

What is the formula for total cost of inventory?

A

purchase costs+ carrying costs+ordering costs+stockout costs

36
Q

What is the formula for the reorder point?

A

(average daily demand x lead time in days) + safety stock

37
Q

What is the formula for the economic order quantity model

A

EOQ= square root ( 2 x ordering cost x demand in units/carrying costs)

38
Q

What is the formula for operating cycle?

A

days sales in receivables + days sales in inventory

39
Q

What is the formula for for the cash conversion cycle?

A

avg collection period+ days sales in inventory- avg payables period

40
Q

What is the formula for accounts payable turnover?

A

cogs/ avg balance in AP

41
Q

What is the formula for avg payable period?

A

365/ AP turnover

42
Q

What is the Calculation of no taking the discount in spontaneous financing?

A

(discount %/100-discount%)x(days in the year/total payment period -discounter period. Typically around 36.73%?

43
Q

What is the formula for simple interest expense on loans?

A

Interest expense = principla of loan x stated rate

44
Q

What is the formula for effective interest rate of a loan?

A

interest expense/usable funds

45
Q

What is the formula for total borrowings of discounted loands

A

amount needed/ (1 - stated rate)

46
Q

What is the formula for to figure out effect rate on a discounted loan?

A

stated rate /(1-stated rate)

47
Q

What is the formula for to figure out the effective rate with compensating balances

A

stated rate / (1- compensating balance %)

48
Q

What is the formula for accounting rate of return?

A

annual cash inflow - depreciation/initial investment

49
Q

What is the formula for the payback period?

A

initial investment/annual after tax savings

50
Q

What is the formula for profitability index?

A

PV of future net cash flows or NPV of proj/ initial investment

51
Q

What is the formula for return on investment (ROI)?

A

Operating income/average invested capital or Operating income/ total assets.

52
Q

What is the formula for return on investment component view?

A

(operating income/sales) x (sales/average invested capital)

53
Q

What is the formula for residual income?

A

operating income-target return on invested capital

54
Q

What is the formula for return on assets (ROA)?

A

net income/average total assets

55
Q

What is the formula for return on common equity (ROCE)?

A

NI-Preferred dividends/average common equity

56
Q

What is the formula for Price-earnings ration (P-E ratio)?

A

Market price of share/eps *higher the ratio the more the confidence the market has in the firm’s ability to provide higher returns to investors

57
Q

What is the formula for economic rate of return on Common Stock?

A

dividends+change in share price/beg share price

58
Q

What is the formula for Economic value added (EVA)?

A

after-tax operating income - (initial investment x cost of capital)

59
Q

What is the formula for times interest earned ratio?

A

earnings before interest and taxes (EBIT)/ interest expense

60
Q

What is the formula for Total debt to total capital ratio

A

total debt/total capital *Low is viewed favorable by creditors because the equity cushion

61
Q

What is the formula for Debt to equity?

A

total debt/shareholders equity *Low ratio is low risk

62
Q

What is the formula for Long term debt to total equity ratio?

A

long term debt/shareholders equity *low ratio better chance for financing

63
Q

What is the formula for Weighted Average method EUP

A

beginning WIP costs+current period costs/EUP

EUP=Total units completed+ending WIPx%complete

64
Q

What is the formula for FIFO EUP

A

current period costs/EUP

EUP= beg WIP x % left to complete+started &completed units+ending WIP x% complete

65
Q

What is the formula for direct materials price variancd

A

acctual aty purchasedx(standard material price- actual materials price)

66
Q

What is the formula for direct materials quantity variance

A

(standard quantity of input allowed-actual quantity consued)x standard materials price

67
Q

What is the formula for direct labor rate variance

A

actual hours worked x (standard hourly rate-actual hourly rate)

68
Q

What is the formula for direct labor efficiency variance

A

(standard number of hours allowed-actual number of hours worked)x standard hourly rate

69
Q

What is the formula for VOH spending variance

A

Actual VOH-(AQ X SP)

70
Q

What is the formula for VOH efficiency variance

A

(EQ - AQ) X SP

71
Q

What is the formula for FOH applies

A

(actual FOH incrurred - FOH applied

72
Q

What is the formula for FOH Spending Variance

A

actual FOH incurred-amount budgeted

BEC (3 decks)

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