💙💚💔Formulas Flashcards
APR (annual percentage return) = Effective Interest Rate * # of periods in year
Asset turnover = Sales / Total Assets
Breakeven Point in terms of units = fixed costs / Contribution Margin
Breakeven Point in terms of dollars = fixed costs / contribution margin ratio
Cash conversion cycle = inventory conversion period + receivables collection period – payables deferrable period
Current ratio = current assets / current liabilities
Contribution Margin = revenue – variable costs
or = sales – variable costs
Cost of Goods Sold = Beg. Inventory + Inv. Purchases – End. Inventory
Dividend Payout Ratio = cash dividend per share / Earnings per share
Economic Value Added = net operating profit after taxes (NOPAT) – cost of financing
Effective Interest Rate = (principle * rate * time) / principle
Gross Margin = revenue – cost of goods sold (or gross profit)
Inventory conversion period = Average Inventory / Cost of sales per day
Average inventory = (Beginning inventory + Ending inventory) / 2
Make sure to use 365 days per year unless stated otherwise
Inventory Turnover = cost of goods sold / average inventory
Marginal propensity to consume = change in spending / change in disposable income
Marginal propensity to save = change in savings / change in income
Number of Days Sales in Inventory = # of days in year (usually 365 or 360) / Inventory Turnover
Quick Ratio = Quick assets (cash, marketable securities, and A/R) / current liabilities
Residual Income (RI) = operating profit – interest on investment (or required rate of return)
Times interest Earned Ratio = earnings before interest and taxes / interest expense
Total costs = fixed costs + variable costs or y = mx + b, where m = slope, x = variable value, and b = y intercept
Variances – plug in the corresponding units:
Labor Efficiency – SR * (SH – AH). Actual Quantity Purchased/Consumed *(standard price per unit – actual price per unit)
Labor Rate – AH * (SR – AR). Standard price per unit * (standard quantity used – actual quantity used)
Material Price – AQ * (SP – AP). Actual Quantity Purchased/Consumed *(standard price per unit – actual price per unit)
Material Efficiency – SP * (SQ – AQ). Standard price per unit * (standard quantity used – actual quantity used)
Fixed overhead spending – (budgeted-standard fixed overhead to incur – actual fixed overhead incurred)
Fixed overhead volume – (budgeted-standard fixed overhead to incur – ((actual production * standard labor hours)*(budgeted-standard fixed overhead to incur/budgeted labor hours))
Weighted Average Cost of Capital = [(cost of capital A / Total Amount)(rate of cost)(1-Tax Rate)] + [(cost of capital B / Total cost amount)(rate of cost)]
Work in process = Direct Material used + Direct Labor + Manufacturing Overhead
Average accounts receivable = (Beg. A/R + End. A/R) / 2
Average accounts receivable collection period = sales on credit / average accounts receivable
Average total assets = (Beginning total assets + Ending total assets) / 2
Book value per share = common stock equity / common stock shares outstanding
Common stockholders’ equity = stockholders’ equity – preferred stock liquidation value
Contribution Margin Ratio = (sales – variable costs) / sales
Cost of financing= (Total assets – current liabilities) * Weighted average cost of capital
Cross-Elasticity = % change in demand for certain product A / % change in price of certain product B.
Debt to equity = Total debt / total equity
Debt to total assets = total liabilities / total assets
Discounted Payback Period = multiply by Present Value factor until initial invested amount reached. Disregard salvage value
Fixed asset turnover = sales / average net fixed assets
Gross Profit = revenue – cost of goods sold
Income Elasticity = % change in quantity demanded / % change in income
Internal Rate of Return = Initial Investment + Cash Flow in Period n/ (1 + Discount Rate) to the nth power (# of periods).
Marginal utility = change in total utility / change in quantity
Market/Book Ratio = common stock price per share (or market value)/ book value per share
Market Capitalization = Common stock price per share * common stock shares outstanding
Operating leverage= % change in operating income / % change in unit volume
Operating Profit Margin = Operating profit / net sales
Preferred Stock Valuation – dividend per share / required rate of return
Price/Earning (PE) Ratio = common stock price per share / Earning per share
Profitability Index = project net present value / cost of project
Receivables Collection Period = Average Accounts Receivable / Credit Sales per day
Receivable Turnover = Net credit sales / average accounts receivable
Reorder Point= delivery time of stock + safety stock or could be stated as = average daily demand * average lead time
Return on Assets (ROA) = net income / average total assets
Return on Equity (ROE) = net income / Average common stockholders’ equity
Return on Investment (ROI) = Net Income / Total Assets
Return on sales (ROS) = net income / Sales
Safety Stock= (Max. Daily demand * Max. Lead time) – reorder point
Total asset turnover = sales / average total assets
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