Dave Formulas

Question 1

GDP-Expenditure Approach

Answer 1

G.I.C.E. Government Spending+Private Investment+Personal Consumption+Net Exports

Question 2

GDP-Income Approach

Answer 2

I.P.I.R.A.T.E.D. Income of proprietors+Profits of corporations+Interest (net)+Rental Income+Adjustment for foreign income+Taxes Indirect business taxes+Employee Compensation+Depreciation

Question 3

Net Domestic Product

Answer 3

GDP less depreciation

Question 4

Gross National Product (GNP)

Answer 4

GDP plus US overseas production less Foreign production in US

Question 5

Net National Product

Answer 5

GNP less economic depreciation

Question 6

National Income

Answer 6

NNP less indirect business taxes

Question 7

Personal Income

Answer 7

Income by households and noncorporate businesses

Question 8

Disposable Income

Answer 8

personal income less personal taxes

Question 9

Frictional Unemployment

Answer 9

unemployment from workers changing jobs

Question 10

Structural Unemployment

Answer 10

unemployment from changing skills and no jobs where workers live

Question 11

Cyclical Unemployment

Answer 11

unemployment from declines in real GDP during periods of contraction or recession

Question 12

Natural Rate of Unemployment

Answer 12

Frictional + Structural+ Seasonal Unemployment

Question 13

Inflation Rate

Answer 13

(((CPI (this period)-CPI (last period))/CPI (last period)))*100

Question 14

APR (annual percentage return)

Answer 14

Effective Interest Rate * # of periods in year

Question 15

Asset turnover

Answer 15

Sales / Total Assets

Question 16

Breakeven Point in terms of units

Answer 16

fixed costs / Contribution Margin

Question 17

Breakeven Point in terms of dollars

Answer 17

fixed costs / contribution margin ratio

Question 18

Cash conversion cycle

Answer 18

inventory conversion period + receivables collection period - payables deferrable period

Question 19

Inventory conversion period

Answer 19

Average Inventory / Cost of sales per day

Question 20

Contribution Margin

Answer 20

revenue or sales – variable costs

Question 21

Cost of Goods Sold

Answer 21

Beg. Inventory + Inv. Purchases – End. Inventory

Question 22

Dividend Payout Ratio

Answer 22

cash dividend per share / Earnings per share

Question 23

Economic Value Added

Answer 23

net operating profit after taxes (NOPAT) – cost of financing

Question 24

Effective Interest Rate

Answer 24

(principle * rate * time) / principle

Question 25

Gross Margin

Answer 25

revenue – cost of goods sold (or gross profit)

Question 26

Inventory Turnover

Answer 26

cost of goods sold / average inventory

Question 27

Marginal propensity to consume

Answer 27

change in spending / change in disposable income

Question 28

Marginal propensity to save

Answer 28

change in savings / change in income

Question 29

Number of Days Sales in Inventory

Answer 29

of days in year (usually 365 or 360) / Inventory Turnover

Question 30

Quick Ratio

Answer 30

Quick assets (cash, marketable securities, and A/R) / current liabilities

Question 31

Residual Income (RI)

Answer 31

operating profit – interest on investment (or required rate of return)

Question 32

Times interest Earned Ratio

Answer 32

earnings before interest and taxes / interest expense

Question 33

Total costs

Answer 33

fixed costs + variable costs or y mx + b, where m slope, x variable value, and b variable value, and b y intercept

Question 34

Labor Efficiency

Answer 34

SR * (SH – AH). Standard Rate *(standard hour – actual hour)

Question 35

Labor Rate

Answer 35

AH * (SR – AR). Standard price per unit * (standard quantity used – actual quantity used)

Question 36

Material Price

Answer 36

AQ * (SP – AP). Actual Quantity Purchased/Consumed *(standard price per unit – actual price per unit)

Question 37

Material Efficiency

Answer 37

SP * (SQ – AQ). Standard price per unit * (standard quantity used – actual quantity used)

Question 38

Fixed overhead spending

Answer 38

(budgeted-standard fixed overhead to incur – actual fixed overhead incurred)

Question 39

Fixed overhead volume

Answer 39

(budgeted-standard fixed overhead to incur – ((actual production * standard labor hours)*(budgeted-standard fixed overhead to incur/budgeted labor hours))

Question 40

Weighted Average Cost of Capital

Answer 40

[(cost of capital A / Total Amount)(rate of cost)(1-Tax Rate)] + [(cost of capital B / Total cost amount)(rate of cost)]

Question 41

Work in process

Answer 41

Direct Material used + Direct Labor + Manufacturing Overhead

Question 42

Book value per share

Answer 42

common stock equity / common stock shares outstanding

Question 43

Common stockholders’ equity

Answer 43

stockholders’ equity – preferred stock liquidation value

Question 44

Contribution Margin Ratio

Answer 44

(sales – variable costs) / sales

Question 45

Cost of financing

Answer 45

(Total assets – current liabilities) * Weighted average cost of capital

Question 46

Cross-Elasticity of Demand

Answer 46

% change in demand for certain product A / % change in price of certain product B.

Question 47

Debt to equity

Answer 47

Total debt / total equity

Question 48

Fixed asset turnover

Answer 48

sales / average net fixed assets

Question 49

Income Elasticity

Answer 49

% change in quantity demanded / % change in income

Question 50

Total asset turnover

Answer 50

sales / average total assets

Question 51

Safety Stock

Answer 51

(Max. Daily demand * Max. Lead time) – reorder point

Question 52

Receivable Turnover

Answer 52

Net credit sales / average accounts receivable

Question 53

Return on sales (ROS)

Answer 53

net income / Sales

Question 54

Return on Investment (ROI)

Answer 54

Net Income / Total Assets

Question 55

Return on Investment (ROI)

Answer 55

Net Income / Total Assets

Question 56

Return on Equity (ROE)

Answer 56

net income / Average common stockholders’ equity

Question 57

Return on Assets (ROA)

Answer 57

net income / average total assets

Question 58

Reorder Point

Answer 58

delivery time of stock + safety stock or could be stated as

Question 59

Receivables Collection Period

Answer 59

Average Accounts Receivable / Credit Sales per day

Question 60

Profitability Index

Answer 60

project net present value / cost of project

Question 61

Price/Earning (PE) Ratio

Answer 61

common stock price per share / Earning per share

Question 62

Preferred Stock Valuation

Answer 62

dividend per share / required rate of return

Question 63

Operating Profit Margin

Answer 63

Operating profit / net sales

Question 64

Operating leverage

Answer 64

% change in operating income / % change in unit volume

Question 65

Market Capitalization

Answer 65

Common stock price per share * common stock shares outstanding

Question 66

Marginal utility

Answer 66

change in total utility / change in quantity

Question 67

Internal Rate of Return

Answer 67

Initial Investment + Cash Flow in Period n/ (1 + Discount Rate) to the nth power (# of periods).

Question 68

Variable overhead efficiency variance (VOHEV)

Answer 68

(Actual quantity × Standard price) - (Standard quantity × Standard price)