Formulas Flashcards
(3 cards)
1
Q
Economic Value Added
formula
A
Capital * wacc = normal return - net income after tax = EVA
This number is absolute value
2
Q
Average collection period
formula
A
365/AR turnover ratio
3
Q
Residual income
Formula
A
Net income above the minimum desired rate of return on invested capital
Min. Desired rate of return =
desired rate of return x invested capital
