C Formulas Flashcards
(32 cards)
Current ratio?
Current assets / Current liabilities
Quick ratio?
(Current assets - Inventory) / Current liabilities
Inventory turnover?
Cost of sales / Average inventory
Inventory holding period?
(Average inventory / Cost of sales) * 365
Receivables collection period?
(Average accounts receivable / Annual credit sales) * 365
Payables payment period?
(Average accounts payables / Annual credit purchases) * 365
Sales/working capital?
Annual sales / Average working capital
Finished goods holding period
(Finished goods inventory / Annual COGS) * 265
WIP production period
(Work in progress / Annual COGS) * 365
Raw materials holding period
(Raw materials inventory / Annual raw materials purchases) * 365
Total annual cost? (inventory)
Annual holding cost + Annual order cost + Annual purchase cost
Re-order level when demand is known and constant? (days)
lead time (days) × demand per day
Return point Miller Orr model?
Lower limit + (⅓ × spread)
Operating cycle?
inventory + Receivables - Payables
Asset turnover?
Sales / Capital Employed
Consumption during lead time?
Consumption per week * lead time
Buffer (safety level) of inventory?
Reorder level - consumption during lead time
What does overtrading do to current ratio?
Decreases it
What does overtrading do to gearing ratio?
Increases it
What does overcapitalisation do to current ratio?
Increases it
What does overtrading to the working capital cycle?
Increases receivables, inventory and payables
Calculate upper limit in Miller-Orr model?
Spread + lower limit
Calculate annual finance cost?
Calculate original AR
Multiply %
Cost vs rate (payables)
Cost formula uses multiplication
Rate formula also uses power
