Formulas

Question 1

MOH Formula

Answer 1

FC+VC/ Driver

Question 2

%Change

Answer 2

current-prior/prior

Question 3

market interest rate

Answer 3

risk free rate + inflation premium

Question 4

inflation factor

Answer 4

current CPI/ Previous CPI

Question 5

Worth after inflation

Answer 5

Real value/ 1 + inflation

Question 6

Price Elasticity

Answer 6

Change in quantity demand/ change in price demanded

Question 7

GDP multiplier

Answer 7

1/MPS or reserve ratio

Question 8

Forward premium or discount

Answer 8

(forward rate-spot rate/ spot rate) * total/amount in forward

Question 9

Expected Return

Variance

Answer 9

good probability * % + bad probability * %

good probability * (%- expected return)2 + bad probability * (% - expected return)2

Question 10

ARR

Answer 10

annual NI/ average (initial investment)

Question 11

NPV

Answer 11

PVFCF - investment

Question 12

NPV =, greater than, less than 0 IRR effect

Answer 12

direct relationship

Question 13

Inventory Conversion Period

Answer 13

AVG inventory/ (COGS/365)

Question 14

Average Receivables

Answer 14

AVG receivables/ (credit sales/365)

Question 15

Payables deferral period

Answer 15

AVG payables/ (COGS/365)

Question 16

Conversion cycle

Answer 16

inventory + receivables - payable

Question 17

EOQ

Answer 17

(2* cost of placing an order(SETUP COSTS)(ONLY VARIABLE COST) * demand/cost of carrying) square rooted

Question 18

days sales outstanding

Answer 18

receivables/sales per day

Question 19

nominal annual cost

Answer 19

(discount/100 - discount)x 365/ total days - discount days

Question 20

effective interest rate

Answer 20

interest paid/ principle available (principle - DISCOUNTED interest ONLY - compensating balance)

Question 21

DOL

Answer 21

% change in operating income/ % change in unit volume(SALES)

contribution margin/ CM- fixed costs

Question 22

DFL

Answer 22

% change in EPS/ % change in EBIT

change in NI/change in operating income

DEBT/EQUITY

Question 23

CAPM

Answer 23

risk free + (mkt - risk free) *beta coefficient

Question 24

Cost of CS/ Alternate CAPM

Answer 24

(expected dividend/ current price(1- float cost) + growth rate in earnings

Question 25

cost of bond issue

Answer 25

interest rate * (1 - effective rate)

Question 26

cost of preferred stock

Answer 26

Total dividend amt/ issue price

Question 27

ROI (3)

Answer 27

NI/ TA NI/Sales *Sales/AVG investment Return on Sales * Capital/Asset Turnover ROS(profit margin) * Asset Turnover ratio

Question 28

RI

Answer 28

NI - Interest on Investment

Question 29

EVA

Answer 29

NOPAT - (total asset- current liabilities) WACC | NOPAT - cost of capital

Question 30

Free flow cash

Answer 30

NOPAT + Dep - cap expenditure - change in WC requirements

Question 31

Profit Margin

Answer 31

NI after interest and taxes/ net sales

Question 32

Operating Profit Margin

Answer 32

Operating Profit/ Net sales

Question 33

Return on Equity

Answer 33

NI after interest and taxes/ avg CS equity

Question 34

Dividend Payout Ratio

Answer 34

Cash Dividend per CS/ Earnings per CS

Question 35

Receivables turnover

Answer 35

Net credit sales/ AVG A/R

Question 36

Average Collection Period

Answer 36

AVG AR/ Avg sales per day

Question 37

Inventory turnover

Answer 37

COGS/ AVG inventory

Question 38

Fixed Asset Turnover

Answer 38

Sales/ AVG FA

Question 39

total asset turnover

Answer 39

sales/ avg total asset

Question 40

Quick Ratio excludes

Answer 40

INVENTORY

Question 41

Times interest earned

Answer 41

earning BEFORE interest and taxes/ interest expense

Question 42

Price/earnings ratio

Answer 42

stock price per share/ earnings per share

Question 43

BV per share

Answer 43

CS equity/ # of shares outstanding

Question 44

Breakeven with a profit

Answer 44

sales- vc-fc

Question 45

Units to breakeven

Answer 45

FC/CM

Question 46

Dollars to breakeven

Answer 46

FC/CM RATIO

Question 47

Target NI

Answer 47

SPX = VCX + FC + (target % *SPX)

Question 48

Real GDP

Answer 48

nominal rate/price index

Question 49

Net Domestic Production

Answer 49

GDP - depreciation

Question 50

National Income

Answer 50

NDP - indirect business taxes - net foreign factor income

Question 51

PI

Answer 51

NI - corp taxes - undistributed profits - SS contributions + transfer payments

Question 52

DI

Answer 52

PI - personal taxes

Question 53

Marginal Propensity to Consume

Answer 53

change in level of consumption/ change in disposable incme

Question 54

Reserve Ratio

Answer 54

Reserves/ Total demand deposits

Question 55

Income Approach

Answer 55

Wages + Rental Income + Dividends

Question 56

Expenditure Approach

Answer 56

Personal Consumption + investments (net imports - exports) + gov acquisitions

Question 57

Lowest Cost Formula

Answer 57

of units * carrying costs/ stock outs costs * probability of running out * PO

Question 58

OH Rate

Answer 58

Estimated OH/ Estimated DL

Question 59

APPLIED OH

Answer 59

OH * Actual DL

Question 60

Gross Margin

Answer 60

Sales - COGS

Question 61

Weighted Avg

Answer 61

Completed + Spoiled Goods + Completed EWIP

Question 62

Excess of PV index

Answer 62

PV of FCF - tax - depreciation / Initial * 100 excess id greater than 100 then return exceeds required

Question 63

ARR

Answer 63

NI/ investment (no time value)

Question 64

payback

Answer 64

initial investment/ annual CF

Question 65

Inflation Rate

Answer 65

Risk free - nominal rate

Question 66

Return on CS

Answer 66

dividends % * sale price/ beg. price - flotation costs

Question 67

NPV for items with additional investment

Answer 67

PV of FCF * Annuity PV of additional investment - initial investment - additional investment

Question 68

operating profit margin

Answer 68

sales - COGS - NI / Total sales

Question 69

Predetermined OH

Answer 69

estimated VOH/ Estimated Activity Level

Question 70

Profit Center Income

Answer 70

Controllable Rev | Controllable Costs

Question 71

Company's Preferred Cost

Answer 71

(PAR * % issued/FMV - issuance costs

Question 72

Planned Debt Financing

Answer 72

Actual Interest/Actual Cost incurred

Question 73

Usage

Answer 73

Purchases + BI - EI

Question 74

Production/Purchases

Answer 74

COGS + EI - BI

Question 75

Contribution Margin

Answer 75

Change in Rev/ Change in Volume

Question 76

Special Orders

Answer 76

Opportunity Costs + DM + DL + VOH

Question 77

Real GDP

Answer 77

nominal GDP/price index

Question 78

Economic Rate Return

Answer 78

(Dividends + Change in price) ÷ Beginning price

Question 79

Reserve Ratio

Answer 79

Reserve/Total demand deposits

Question 80

Average inventory with EOQ model

Answer 80

EOQ/2 + safety stock

Question 81

Safety Maximum Average Daily stock / Reorder point Reorder Purchase point

Answer 81

= (lead time - lead time) x usage = lead time units + safety stock

Question 82

Collection Ratio

Answer 82

= A/R/Average Daily Sales

Question 83

debt ratio

Answer 83

total debt/total assets

Question 84

Return on Equity

Answer 84

Sales/Equity