Formulas

Question 1

NWC 1

Answer 1

NWC + FA = LTD + E

Question 2

NWC 2

Answer 2

C + OCA - CL

Question 3

NWC 3

Answer 3

LTD + E - NWC (excluding cash) - FA

Question 4

Operating Cycle formula

Answer 4

Inventory period + Accounts receivable period

Question 5

cash cycle formula

Answer 5

operating cycle - accounts payable cycle

Question 6

operating cycle definition

Answer 6

the time we acquire some inventory to the time we collect the cash

Question 7

cash cycle definition

Answer 7

number of days that pass before we collect the cash from a sale, measured from when we actually pay for the inventory.

Question 8

inventory period

Answer 8

time from stock arrives to finished goods sold

Question 9

accounts payable period

Answer 9

firm receives invoice to cash paid for materials

Question 10

accounts receivable period

Answer 10

finished goods sold to cash received

Question 11

inventory turnover

Answer 11

COGS / Avg. Inventory

Question 12

inventory period

Answer 12

365 / IT

Question 13

receivables turnover

Answer 13

CS / AI

Question 14

receivables period

Answer 14

365 / RT

Question 15

payables turnover

Answer 15

COGS / Avg. Payables

Question 16

payables period

Answer 16

365 / PT

Question 17

synergy FROM the acquisition

Answer 17

VAB - (VA+VB)

Question 18

synergy OF an acquisition

Answer 18

SIGMA (you repeat for each year)

(D Revenue - D Costs - D Taxes - D Capital Requirements)/ (1+R)^year

Question 19

NPV of a cash acquisition

Answer 19

(VA + DV)- cash cost = VA* - cash cost

Question 20

value of the combined firm

Answer 20

VAB = VA + (VB*-cash cost)

Question 21

value of a combined firm

Answer 21

VAB = VA + VB+ DV

Question 22

1.0964 (Euro:USD)

Answer 22

It takes 1.0964 USD to buy 1 Euro

Question 23

147.55 (USD:Yen)

Answer 23

147.55 Yen it takes t o buy $1 D

Question 24

cross rate formula

Answer 24

($/foreign)/(foreign/$)

dollars = cancel out

Question 25

expected exchange rate

Answer 25

current spot rate*[1+(inflation fc -inflation us]^t

Question 26

future value

Answer 26

investment amount * (Spot / Forward)

Question 27

interest rate parity

Answer 27

(S/F) = (1 + INT.US)/(1 + INT. FC)

Question 28

Interest rate parity

Answer 28

i fc - i us = (F-S)/(S)

Question 29

international fisher effect

Answer 29

interest us - inflation us = interest fc - inflation fc

Question 30

PPP

Answer 30

spot [1+ (inflation fc - inflation us]^t

Question 31

IRP

Answer 31

Spot [1+(rate fc - rate us]^t

Question 32

UIP

Answer 32

spot [1+(rate fc - rate us]^t