D Formulas Flashcards

(63 cards)

1
Q

ROCE for an investment?

A

(Average annual operating profit / Initial investment) * 100

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2
Q

Average investment

A

(Initial investment + scrap value) / 2

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3
Q

Calculate 7% compund interest for 4 years?

A

$500 (1 + 0.07)^4

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4
Q

Effective annual interest rates (EAIR)

A

1 + EAIR = (1 + interest rate for a period)^Number of periods in a year

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5
Q

Perpetuity IRR?

A

(Annual cash inflows / Initial investment) * 100

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6
Q

Profitability index?

A

NPV of net cash inflows / Initial investment

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7
Q

Equivalent annual cost

A

NPV / Annuity factor

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8
Q

Sensitivty

A

(NPV / PV of relevant cash flow) * 100

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9
Q

Gross profit margin?

A

Gross profit / Sales *100

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10
Q

Operating profit margin?

A

Operating profit / Sales *100

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11
Q

Return on capital employed?

A

Operating profit / Capital employed * 100

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12
Q

Return on equity?

A

((PFY - Preference dividends) / Ordinary shareholders’ funds) * 100

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13
Q

Capital employed?

A

Shareholders’ funds + long-term liabilities

Total assets - current liabilities

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14
Q

Diluted EPS?

A

(PFY - preference dividends + PDS adjustments) / (Weighted average of ordinary shares in issue + PDS)

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15
Q

Dividend coverage?

A

(profit for the year - preference dividend) / Ordinary dividend

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16
Q

Dividend payout ratio?

A

(Ordinary dividend / (PFY - preference dividends)

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17
Q

Dividend yield?

A

(Dividend per ordinary share / Ordinary share price) * 100

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18
Q

Earnings yield?

A

(EPS / Ordinary share price) * 100

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19
Q

Total shareholder return?

A

((Year-end share price - Share price at start of year + dividends for year) / Share price at start of year) * 100

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20
Q

Average annual operating profit?

A

Net annual inflow - depreciation

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21
Q

Is lost contribution a cash inflow or outflow?

A

Cash outflow

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22
Q

Leasing in advance AF for 10 years?

A

(AF for 9 years + 1)

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23
Q

Leasing in arrears AF for 5 years?

A

(AF for 5 years)

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24
Q

What is an annuity discount factor?

A

Sum of individual discount factors for a certain period (e.g. 5 years)

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25
What is relevant cash flow for sales volume?
Contribution
26
After-tax operating cash flow?
pre-tax rate * (1 - profit tax rate)
27
Fisher formula on nominal rate
(1 + nominal rate) = (1 + real rate) * (1 + general inflation rate)
28
Are accounting profits generated after depreciation?
Yes
29
What is meant by opportunity cost of lost contribution?
Benefit that is forgone when a resource, effort, or investment is not utilized in its next best alternative use
30
When person due to receive 5 year annuity starting in 3 years time, How to calculate annuity factor?
Annuity for seven years - annuity for two years
31
What must be doen first before looking at the perpetuity factor?
Calculation must be done in real termse
32
How to calculate EAB?
NPV/annuity factor . Higher the better
33
How to calculate EAC?
NPV/annuity factor . Lower the better
34
Another term for before- and after-tax discount rate may also be called?
Pre-tax and post-tax`
35
How to calculate pre-tax cash flow?
Post-tax cash flow/(1 − Corporate tax rate)
36
How to calculate pre-tax discount rate?
Post-tax discount rate/(1 − Corporate tax rate)
37
After-tax present value of the perpetuity (when tax is paid in arreas)
PV of perpetuity - PV of tax
38
Calculate PV of perpetuity?
1 / cost of capital
39
Calculate nominal rate?
(1 + inflation rate)(1 + real rate)
40
When to use the real rate rather than nominal inflation rate?
Revenues and costs all increase at the general inflation rate. Cash flows before inflation can be discounted at the real cost of capital
41
When can the perpetuity factor only be used?
When the inflation rate is in real terms
42
Difference between annuity and perpetuity?
Annuity is finite, perpetuity is infinite
43
$2,000 receivable in perpetuity commencing 10 years from now. Assume interest at 7%. How to get annuity using perpetuity?
(1/0.07) - annuity factor for 9 years
44
Calculation for optimum investment programme?
NPV / invested
45
When there is more than one rate of inflation?
Nominal rate should be used as discount factor and general annual rate of inflation should be used for labour
46
Another way to calculate IRR from a perpetuity?
Equal annual inflows in perpetuity / investment
47
Does PV of the cash flows of the cycle include the initial investment?
Yes
48
Are allocated overheads a cash flow?
No
49
How to calculate depreciation in ROCE?
(Initial investment - scrap value) / useful life)
50
What is meant by the result when NPV / contribution?
% change in sales volume which will make the NPV zero
51
Calculate average annual accounting profit?
(Operating cash flow / payback period) essentially the cash flows per year
52
How to calculate money discount rate?
Money discount rate = (1 + real rate)(1 + general inflation rate)
53
Calculate tax effect of the disposal?
TWDV = Initial investment * (1-reducing balance %)*^(number of years -1) (TWDV - scrap value) * profit tax %
54
How to get annuity factor 3-7 (receive a 5 year annuity starting in 3 year's time)
AF1-7 - AF1-2
55
If question says starting immediately (advance or arrears)
Advance
56
Get PV of a perpetuity?
Perpetuity * 1/cost of capital
57
How to work out working capital?
preceding cell - current cell
58
When working capital is released?
The positive figure is included not the negative figure
59
When question asks for estimate of production and sales volume fall for the projected to be regarded as not worthwhile? What should i think of?
Sensitivty analysis (e.g. NPV / contribution)
60
Calculate net annual inflow using payback period?
Investment / payback period
61
What is needed to be done to work with a perpetuity?
Calculate at the real rate
62
How to get NPV of zero using investment and net cash inflow
Investment / net cash inflow
63
When a variance says efficiency?
Look for hours