Formulas

Question 1

APR (annual Percentage return)

Answer 1

Effective Interest Rate * # of periods in year

Question 2

Asset Turnover

Answer 2

Sales/Total Assets

Question 3

Breakeven Point in terms of units

Answer 3

FC/CM

Question 4

Breakeven Point in terms of dollars

Answer 4

FC/CM ratio

Question 5

Cash conversion cycle

Answer 5

Inventory conversion period+Receivables Collection Period-Payables Deferrable Period

Question 6

Payables Deferrable Period

Answer 6

Purchases/ Average payables

365/Payables TO

Question 7

Current Ratio

Answer 7

CA/CL

Question 8

Contribution margin

Answer 8

Revenue-VC

or

Sales - VC

Question 9

Raw Materials

Answer 9

Beg RM

+Purchases

Available

-Ending RM

Materials Used

Question 10

WIP: COGM

Answer 10

Beginning WIP

+DM used

+DL used

+Applied MOH

WIP Available

-Ending WIP

COGM

Question 11

Finished goods: COGS

Answer 11

Beginnning Finished Goods

+COGM

Finished Goods available

-end Finished Goods

COGS

Question 12

Regular COGS

Answer 12

Beginning Inventory

+ Inventory Purchases

• Ending Inventory

Question 13

Dividend payout ratio

Answer 13

Cash Dividend per share/Earnings per share

or

Total cash dividends/Total Earnings

Question 14

Economic Value Added

Answer 14

Net operaitng profit after taxes NOPAT - Cost of financing

Question 15

Effective Interest Rate

Answer 15

(principle x rate x time)/ Principle

Question 16

Gross margin

Answer 16

Revenue

• Cost of goods sold (or gross profit)

Question 17

Inventory Conversion Period

Answer 17

Average Inventory/(Cost of sales per day/365)

Question 18

Inventory Turnover

Answer 18

COGS/Average Inventory

Question 19

Marginal Propensity to Consume

Answer 19

Change in Spending/Change in Disposable Income

Question 20

Marginal Propensity to save

Answer 20

Change in savings/Change in Disposable Income

Question 21

Number of days sales in inventory

Answer 21

365 or 360/Inventory Turnover

Question 22

Quick Ratio

Answer 22

Cash+Marketable Securities+AR / Current Liabilities

Question 23

Residual Income

Answer 23

Operating Profit-Interest on Investment (or required rate of return)

Question 24

Times Interest Earned Ratio

Answer 24

Earnings before interest and taxes/ Interest expense

Question 25

Total Costs

Answer 25

FC + VC or Y=mx+b m=slope x=variable value b=Y intercept

Question 26

DM Price Variance

Answer 26

AQ(SP-AP)

Question 27

DM Usage Variance

Answer 27

SP(SQ-AQ)

Question 28

DL Rate Variance

Answer 28

AH(SR-AR)

Question 29

DL Efficiency Variance

Answer 29

SR(SH-AH)

Question 30

Variable OH Spending Variance

Answer 30

Actual Costs - Amount Budgeted which is AQ x SP

Question 31

Variable OH Efficiency Variance

Answer 31

Amount Budgeted which is AQ x SP - Amount Applied which is EQ x SP

Question 32

Fixed Overhead Spending Variance

Answer 32

Actual Costs - Amount Budgeted which is AQ x SP

Question 33

Fixed Overhead Volume Variance

Answer 33

Amount Budgeted which is AQ x SP - EQ x SP

Question 34

WACC

Answer 34

[(Cost of capital A/ Total Amount)(rate of cost)(1-tax rate)] + [(Cost of capital B/Total Cost amount)(rate of cost)] For debt consider tax, for equity, do not consider tax

Question 35

Accounts receivable TO

Answer 35

Net credit sales/Average Accounts Receivable

Question 36

Book Value per share

Answer 36

Common stock equity/Commont stock shares outstanding

Question 37

Commong Stockholder's Equity

Answer 37

Stockholder's equity - preferred stock liquidation value

Question 38

Contribution Margin Ratio

Answer 38

(sales - VC) / Sales

Question 39

Cost of financing

Answer 39

(Total assets- current liabilities) x WACC

Question 40

Cross Elasticity

Answer 40

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

Question 41

Debt to equity ratio

Answer 41

Total debt/Total equity

Question 42

Debt to total assets

Answer 42

Total Liabilities/ Total Assets

Question 43

Discounted Paybakck period

Answer 43

Multiply by PV factor until initial invested amount reached. Disregard salvage value

Question 44

Fixed asset TO

Answer 44

Total net sales/ Average net fixed assets

Question 45

Gross Profit

Answer 45

Revenue - COGS

Question 46

Income Elasticity

Answer 46

% change in quantity demanded/% change in income

Question 47

IRR

Answer 47

Initial net investment/annual net cash flows Look up in annuity table

Question 48

Operating leverage

Answer 48

% change in operating income/ % change in unit volume

Question 49

Operating Profit Margin

Answer 49

Operating Profit/ Net sales

Question 50

Preferred stock valuation

Answer 50

Dividend per share/ required rate of return

Question 51

Price/earning PE ratio

Answer 51

Common stock price per share/earning per share

Question 52

Profitability Index

Answer 52

PV of cash inflows/ PV of cash outflows

Question 53

Receivable TO

Answer 53

Net credit sales/Average AR

Question 54

Return on assets

Answer 54

Net income/ Average total assets

Question 55

Return on Equity

Answer 55

Net income/Average common stockholder's equity

Question 56

Return on investment

Answer 56

Net income/ Total assets

Question 57

Return on sales

Answer 57

Net income/Sales

Question 58

Safety Stock

Answer 58

(max daily demand x max lead time) - reorder point

Question 59

Total Asset TO

Answer 59

Sales/Average Total Assets

Question 60

Net operating income to sales

Answer 60

EBIT/Net sales

Question 61

Dividend Yield

Answer 61

Cash dividend per CS/ Market price per share of CS