Ratios Flashcards
1
Q
Return on Investment
A
Controllable Margin / Average Operating Assets
2
Q
Residual Income
A
Controllable Margin - (Average Operating Assets x Minimum rate of return)
3
Q
Cash Payback
A
Cost of Capital Investment / Net annual cashflow
4
Q
annual/accounting rate of return
A
annual net income / ((Original Investment-Value at end of useful life)/2)
5
Q
NPV
A
Add all cashflows discounted to PV
6
Q
Profitability Index
A
PV of all cashflows / Initial Investment
7
Q
IRR
A
Discount factor that makes NPV = 0
8
Q
Contribution Ratio
A
CM/Unit / Selling price
9
Q
Margin of Safety
A
Actual Sales - Breakeven sales
10
Q
Margin of Safety Ratio
A
Margin of Safety / Actual Sales
11
Q
Degree of operating leverage
A
Contribution Margin / Net Operating Income
