Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

BEC > Formulas & Methods > Flashcards

Formulas & Methods Flashcards

1
Q

WACC

A

WACC = WACC Equity + WACC Debt After Tax

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

WACC Equity

A

WACC Equity = Cost of Equity % * Equity %

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

WACC Debt After Tax

A

WACC Debt = Cost of Debt % * Debt % * (1 - Tax %)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Debt to Equity

A

Debt to Equity = Debt / Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

CAPM
Cost of Equity = Common Stock

A

CAPM = Risk Free Rate + (Beta * (Market Rate - Risk Free Rate)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Discounted Cash Flows (DCF)
Cost of Equity = Common Stock

A

DCF = (Dividend / Price of Stock) + Growth Rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Bond Yield Plus Risk Premium
Cost of Equity = Common Stock

A

BYPRP = Before Tax Cost of Debt + Risk Premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Cost of Preferred Stock
Cost of Equity = Preferred Stock

A

Cost of Preferred Stock = Dividends / Net Proceeds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Cost of Debt

A

Cost of Debt = (Interest Expense / Total Debt) * (1 - Tax %)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Return on Sales

A

Return on Sales = Op Profit / Sales (net)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Return on Equity

A

Return on Equity = Net Income / Avg Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Return on Assets

A

Return on Assets = Net Income / Avg Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Return on Investment

A

Return on Investment = Net Income / Avg Invested Capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Gross Profit Margin

A

Gross Profit Margin = Gross Profit / Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Operating Profit Margin

A

Operating Profit Margin = Operating Profit / Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Net Profit Margin

A

Net Profit Margin = Net Income / Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

EBIDTA Margin

A

EBITDA Margin = EBITDA / Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Residual Income

A

Residual Income = Net Income - (Required Return * Equity)

For Required Return = The question may say WACC, Cost of Equity or Hurdle Rate.
For Equity = The question may say NBV or Investment.

Method =
1. Calculate Actual Return (Equity * Required Return Rate)
2. Residual Income = Net Income - Actual Return

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Operating Leverage

A

Operating Leverage = Fixed Expenses / Total Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Financial Leverage

A

Financial Leverage = Avg Assets / Avg Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Debt Ratio

A

Debt Ratio = Total Debt / Total Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Debt to Total Capital

A

Debt to Total Capital = Total Debt / Total Capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Times interest Earned
AKA Interest Coverage Ratio!

A

Times Interest Earned = EBIT / Interest Expense

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Zero Growth Model or Perpetuitites

A

Zero Growth Model or Perpetuities = Dividends / Required Return
*Absolute model that tells me the price of stock

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Dividend Discount Model
Gordon Growth Model = Dividends * Growth Rate / (Required Return - Growth Rate) *Absolute model that tells me the price of stock
26
Discounted Cash Flows *Absolute model that tells me the price of stock
Discounted Cash Flows = Valuation on DCF / Outstanding shares
27
Price to Earnings (PE) *Tells me how many times I'm paying for the stock
PE = FMV / EPS
28
Price to Earnings Growth (PEG) *Tells me how many times I'm paying for the stock but considers company growth
PEG = PE / Expected Growth Rate
29
Price to Sales (PS)
PS = FMV / Expected Sales per Share *Tells me how sales compare to the mkt price
30
Price to Cash Flows (PCF)
PCF = FMV / CF As an investor, I want it to be high.
31
Price to Book (PB)
PB = FMV / NBV of Equity
32
Net Present Value
NPV = PV of Future CF - Upfront Investment
33
Profitability Index
Profitability Index = PV of Future CF / Upfront Investment
34
Payback Period
Payback Period = Initial Investment / Annual CF *For partial years : Cash needed / Period CF
35
Discounted Payback Period
Discounted Payback Period = Initial Investment / Discounted Annual CF *For partial years : Cash needed / Period CF
36
Economic Value Added
EVA = NOPAT - Required Return* Required Return = WACC * Op Assets
37
Internal Rate of Return
IRR = When NPV is zero. Must be > Required Return
38
Working Capital Turnover
WCTO = Sales, net / Avg Working Cap
39
APR of Quick Payment Discount
APR = (360 / (Pay Period - Disc Period)) * (Disc% / 1 - Disc %)
40
Economic Order Quantity
EOQ = SQRT (2SO / C) *Tells me the optimal order size S = Annual Sales O = Cost per PO C = Carrying costs per unit
41
Reorder Point
Reorder Point = Safety Stock + (Lead Time * Sales during Lead Time) * Safety Stock tells me the amt of inventory I need to have to not sell out, and Reorder Point tells me when I need to reorder to avoid loss of being sold out. * Lead time is the amount required to deliver goods to costumers.
42
Cost of Goods Manufactured
Total Mfg Costs (+) Beg WIP (-) End WIP (=) COGM
43
COGS
COGM (+) Beg FG (-) End FG (=) COGS
44
Absorption Costing
Revenues (-) COGS (=) Gross Profit (-) Variable SG&A (-) Fixed SG&A (=) Net Income * Assigns fixed and variable DM, DL, and a portion of OH to inventory. ** Split between product and period costs. *** GAAP
45
Variable Costing
Revenues (-) Variable COGS (-) Variable SG&A (=) Contribution Margin (-) Fixed OH (-) Fixed SG&A (=) Net Income * Assigns variable DM, DL, OH to inventory. ** Applies only to product costs. *** Fixed OH is period cost. **** NOT GAAP
46
Traditional Costing
OH Cost = OH rate * Cost Driver for Product OH Rate = Total Costs / Cost Driver
47
Activity Based Costing
48
Joint Product Costing
It's just an allocation, based on whatever the MCQ/SIM says.
49
DM Price Variance
DM Price Variance = Actual Units * (Budg Price - Actual Price)
50
DM Usage Variance
DM Usage Variance = Budg Cost * (Budg Units - Actual Units)
51
DL Rate Variance
DL Rate Variance = Actual Hrs * (Budg Rate - Actual Rate)
52
DL Efficiency Variance
DL Efficiency Variance = (Actual Hrs * Std Rate) - (Std Hrs * Std Rate)
53
Variable Spending OH Variance
Variable Spending OH Variance = Actual Hrs * (Budg Rate - Actual Rate)
54
Variable Efficiency OH Variance
Variable Efficiency OH Variance = Budg Rate * (Budg Hrs - Actual Hrs)
55
Fixed Spending OH Variance
Fixed Spending OH Variance = (Actual Hrs * Actual Rate) - (Actual Hrs * Std Rate)
56
Fixed Efficiency OH Variance
Fixed Efficiency OH Variance = (Std Hrs * Std Rate) - (Actual Hrs * Std Rate)
57
Sales Volume Variance
Sales Volume Variance = Contribution Margin * (Actual Units Sold - Budg Units Sold)
58
Sales Price Variance
Sales Price Variance = Actual Units * (Budg Units - Actual Units)
59
Make or Buy?
1. Compare what it would cost you to have it made + Fixed Costs to your n normal costs. 2. If you have income, net it against the additional cost.
60
Special Order?
1. Ck if we have capacity = Total Capacity - Current Production 2. If we have capacity, then add DM + DL + Other costs, except Fixed.
61
Production Budget
Budg Sales or Planned Production (+) Desired End Inventory (-) Beg Inventory (=) Production Budget
62
DM Usage Budget
Beg Inv (+) Purchases (-) End Inventory (=) DM Usage Budget Same as COGS formula
63
DL Budget
Production Budget or Sales Budget (*) Hrs per unit (*) Hrly Rate (=) Total Wages
64
OH Budget
Same as COGM!
65
Cash Budget
Beg Cash (+) Cash Collections (-) Cash Payments (-) Cash Required (=) End Cash
66
Financing Budget
End Cash (+) Loans (-) Loan Repayments (-) Interest Payments (=) Financing Budget
67
Coefficient of determination
r^2
68
Coefficient of Correlation
r -1.0 = Perfect Inverse correlation \ >units >cost 0.0 = No correlation 1.0 = Perfect correlation / >units
69
Regression Model
y = a + Bx y is Total Cost or Dependent Variable a is fixed cost B is variable cost x is total activity or Independent Variable
70
Sensitivity Analysis
Compare Overestimated (<100%), projected, and overestimated (>100%)
71
Scenario Analysis
Sum of likelihoods * regressions or progressions.
72
Breakeven Point in Units
Total Fixed Costs / Contribution Margin per Unit
73
Breakeven Point in Sales
Selling Price per Unit * Breakeven Point in Units
74
Pretax Profit
Desired After Tax Profit / (1-Tax)
75
Sales Units Needed to Achieve Target Profit
(Fixed Costs + Pretax Profit) / Contribution Margin per Unit
76
Margin of Safety
Sales (-) Breakeven Sales
77
Margin of Safety Ratio
Margin of Safety / Total Sales
78
Target Cost
Planned Selling Price - Desired Profit
79
Expected Monetary Value
Risk Cost * Risk Probability %
80
Interest Rate of a T-Bill
RF rate + Inflation Premium
81
Real GDP
(Nominal GDP / GDP Deflator) * 100 *** For YoY Change = (Real GDP PY / Real GDP CY) - 1
82
Multiplier Effect
1 / (Marginal Propensity to Save)
83
Price Elasticity of Demand
% Change in Quantity Demanded / % Change in the Price Point
84
Price Elasticity of Supply
% Change in Quantity Supplied / % Change in the Price Point
85
Cross Elasticity of Demand/Supply
% Change in Qty Demanded/Supplied of Prod A / % Change in Price of Prod B
86
Income Elasticity of Demand
% Change in Qty Demanded / % Change in Income Level
87
Partial Productivity Ratio
Qty of Output / Qty of Input
88
How to get Valuation of Equity?
PE Ratio * Net Income
89
Dividend Discount Model
D1 / R - G
90
Total Factor Productivity
Qty of Output / Cost of Input
91
Average AR
Annual Sales / (360 / Avg Collection Period)

BEC (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions