Formulas Section 3B - VERY EASY

Question 1

Inventory Turnover

Answer 1

COGS / Avg Inventory

Question 2

Days Sales in Inventory

Answer 2

360 / Inventory Turnover

Question 3

Net Working Capital

Answer 3

Current Asset - Current Liabilities

Question 4

Unit Gross Margin

Answer 4

Unit Price - Unit Cost

Question 5

Gross Margin

Answer 5

(Net Sales - COGS) / Net Sales

Question 6

Quick Acid

Answer 6

( Current Asset - Inventory ) / Current Liabilities

Question 7

AR Turnover

Answer 7

Net Credit Sales / Avg AR

Question 8

Interest

Answer 8

Principal x Rate x Time

Question 9

Cost Per Check Saved

Answer 9

Days Saved x Avg Check Size x Daily Interest

Question 10

Price - Earnings Ratio

Answer 10

MKT Price per Share / EPS

Question 11

Effective Interest Rate

Answer 11

Interest Expense / (Loan - Compensating Balance)

Question 12

Safety Stock

Answer 12

( Max Lead Time - Avg Lead Time ) x Daily Usage

Question 13

Return on Investment

Also Called what?

Answer 13

Net Income / Invested Capital

Also called return on Assets

Question 14

of days in Operating Cycle

Answer 14

Days Sales in Inventory + Days Sales in AR

Question 15

Return on Equity

Answer 15

Net Income / Equity

Question 16

Reorder Point

Answer 16

Usage Per Day x Lead Time

OR

( Avg use per day x Lead Time ) + Safety Stock

Question 17

Daily Usage

Answer 17

Total Amount / Available Days

Question 18

Transfer Amount

Answer 18

Interest Earned / Interest Rae