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BEC > Reinforce Terms & Topics > Flashcards

Reinforce Terms & Topics Flashcards

1
Q

What pair of stocks will create the portfolio with the LEAST risk ?

A

Those stocks that are NEGATIVELY correlated.

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2
Q

Return of Investment ROI Formula

A

Net Income / investment capital (average)

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3
Q

Pareto Diagram

A

Cumulative frequency of quality issues, problems & defects

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4
Q

What can cause a demand curve to move to the LEFT?

A

A price increase in a complementary commodity

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5
Q

JIT (Just in Time system)

A

Lower inventory levels. If Carrying cost are increasing, JIT is beneficial

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6
Q

Cloud Computing

A

Virtual Servers access from anywhere using the internet

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7
Q

Lean Manufacturing

A

focus on Waster Reduction not Quality

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8
Q

DSS System (Decision Supporting System)

A

type of MIS system, is a “what if” system it helps to make decisions. Forecasting

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9
Q

System Steering Committee

A

Review and Approve long range projects. Oversight of system development and acquisition.

The Steering Committee does not communicate with end users

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10
Q

Hot site

A

Backup Facility that contains most of the original equipment from the computer center

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11
Q

MIS (Management Information System) has 3 subsystem

A
  1. AIS (accounting information system)
  2. DSS (decision supportive system)
  3. EIS (Executive Information System)
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12
Q

Contribution Margin Formula

A

Sales - Variable Cost

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13
Q

Balance Scorecards

A

Provides performances on various aspect of an organization

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14
Q

Cost of Debt Formula

A

Pretax Rate (Interest Rate) x (1-Tax Rate)

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15
Q

Organizational sustainability

A

Ability of an entity to withstand impact of large-scale risk events

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16
Q

Opportunity Cost

A

Is the the maximum benefit foregone. Benefit provided by the next best thing.

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17
Q

Risk Averse

A

Behavior that demand more return on a investment. Managers expect to be compensated for increased risk.

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18
Q

Expected Growth Formula

A

Multiply each estimated by the probability to get the % growth.

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19
Q

Activity-Based Costing

A

It can be used in Process and Job Costing.
Eliminating nonvalue-adding activities would reduce cost (objetives of ABC)

20
Q

Inventory Turnover Formula

A

COGS / Average Inventory (Change of inventory divided by 2)

21
Q

Residual Income Formula

A

Net Income - Required Return*

*Required Return = Net Book Value (Equity) x Hurdle Rate

Economic-Added Value is Residual Income Technique used for Capital Budgeting and Performance Evaluation

22
Q

Prime Cost Formula

A

Direct Material (BASE) & Direct Labor

23
Q

BASE acronym

A

B = Beginning Balance
A = Add (Purchases, Transportation In)
S = Subtract (Return and Allowances)
E = Less Ending Balance

24
Q

Net Present Value NPV Formula

A

Es la diferencia entre inflows and outflows

  1. Annual Net Cash Flow Amount (el Yield amount que tendra al futuro) X Present Value of Annuity (los decimales dados)
  2. Cash Flow al ultimo año X Present Value de ese ultimo año (decimales)
  3. Outflow (Investment outflow $) X Discount Factor (Today = 1.0)

If NPV is positive it would indicate that the IRR > than the Hurdle Rate

focused on dollar amount instead of percentages like IRR

25
Q

Dividend Growth Model Formula

A

((Dividend X Growth Rate) / Current Price) + Growth Rate

26
Q

Average Collection Period

A

Is used to evaluated the liquidity of the firm by calculating the Cash Conversion Cycle.

27
Q

Internal Controls

A
  1. Must be evaluated within 90 days prior to the issuer’s report
  2. Is the responsibility of the signing officers
28
Q

CAPM Formula

A

Risk Free Rate+(Beta* x [Market Rate-Risk Free Rate])

*Beta = Stock Value / Current Market Value

29
Q

Profit Margin Formula

A

EBIT (add back Interest & Taxes) / Sales

30
Q

Budgeted Production Formula

A

Budget Sales + Desired Ending Inventory - Beginning Inventory

31
Q

Term that assumes that all variable costs and revenues are constant over relevant range

A

Breakeven Analysis

Sales = Fixed Cost / Contribution Margin %

32
Q

Price Variance Formula

A

(Actual Price - Standard Price) X Actual Quantity

33
Q

Risk Assessment (3)

A
  1. Target Residual Risk
  2. Inherent Risk
  3. Actual Residual Risk
34
Q

Conversion Cost

A

Includes Direct Labor and Manufacturing Overhead

35
Q

Cost of Good Manufacture (Jobs Completed) Formula

A

Total Manufacturing Cost* + Beg. WIP - Ending WIP

*DM used + DL + overhead applied

36
Q

Weighted Average Formula

A

(Beginning Cost + Current Cost) / Equivalent Units of Production

37
Q

Net Realizable Value

A

% Of Total Cost
Allocates joint costs based upon the ratio of each product

38
Q

Difference between Job-Order Costing & Process Costing

A

Process Costing average product costs and applied those cost to a large number of homogenous products | Job order allocates the same cost to each individual job

39
Q

Effect of having many similar substitutes of an Item.

A

Its price elasticity of demand will be high. Customers can switch to substitute, so the price may affect demand.

40
Q

Vertical Combination

A

Two companies has to be in a different stages of production.

41
Q

Diagonal Combination

A

When another company that provides ancillary support for that primary activity. (Transportation, Supply Chain)

42
Q

Increasing Money Supply (bring money to the economy)

A

Lower discount rates, lower banks reserve, buy bonds from goverment

43
Q

Internal Rate of Return (IRR) Formula

A

Investment / Cash Flow = Present Value Factor

44
Q

Projected Stock Price Formula

A

= PEG x EPS (EPS x 1.growth rate) x Growth %

45
Q

-time-adjusted-rate of return
-is focused on percentages
-does not adjust with risk

A

Internal Rate of Return IRR

46
Q

PEG Ratio Formula

A

(P/E1)/G
P = Stock Price
E1= Expected EPS
G = Growth Rate (100 x Expected Growth Rate)

47
Q

In order to calculate target units or price per unit.

A

After tax amount / 1-tax rate
Add up Fixed Cost and Others

BEC (7 decks)

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