BEC as seen on test Flashcards
(23 cards)
Accounting Rate of Return =
(Average Incremental Revenue - Average Incremental Expense) / Initial (or average) investment
Return on Investment =
Net income / Total assets
Economic Value Added =
Net Operating Profit after Tax - Cost of Capital Invested
Times Interest Earned
(Net income + Interest Expense + Income Tax) / Interest Expense
Contribution Margin Income Statement
Sales - Variable Costs = Contribution Margin - Fixed Costs = Operating Income
Breakeven =
dividing fixed costs by the contribution margin percentage
Profit (NI) =
Sales - VC - FC
Net cost of debt =
effective interest rate times (one minus the marginal tax rate)
average receivables balance =
Average daily sales times average collection period
Margin of Safety =
current sales level - the breakeven point
Inventory Turnover =
Cost of Goods Sold / Average Inventory (e.g. Beginning + Ending/2)
Gross Profit %, Gross Profit Margin, Gross Income % =
(Revenue - COGS) / Revenue
Residual Income =
Net Income - Required Dollar Return
Absorption Operating Income Statement =
Sales - COGS =GM -SG&A = Operating Income
Variable Costing Income Statement =
Sales - VC = CM - FC = Operating Income
Cost of Preferred Stock =
Annual Dividend \ Net Proceeds of Stock Issuance
Reorder Point =
Delivery Time Stock + Safety Stock
Debt to Equity Ratio =
Total Liabilities / Total Shareholder’s Equity
Asset Turnover =
Net Sales / Average Total Assets
AR Turnover Ratio =
Credit Sales / Average AR
A statement expressed in the form of “1 euro = $1.20” expresses a/an
Direct Exchange Rate (Not an Indirect)
current cost of capital for newly issued preferred stock =
the annual cost (dividends) of the newly issued shares / the net proceeds per share
Cost of not taking discount =
(discount % / (100% - discount %)) X (365 / (total pay period - discount period))
