Formulas/Mental Math

Question 1

Gross Margin Formula

Answer 1

(Revenue - Cost or COGS) / Revenue

Question 2

Net Margin Formula

Answer 2

Net income / Sales Revenue

Question 3

Gross Margin (Definition)

Answer 3

The gross profit margin reflects how successful a company’s executive management team is in generating revenue, considering the costs involved in producing their products and services.

Question 4

Return on Assets Formula

Answer 4

Net income/Total Assets

Question 5

Value to Perpetuity Foruma

Answer 5

Value of Asset / Discount Rate

Question 6

Inventory Turns Formula

Answer 6

COGs/Average Inventory

Means that if its high, product is turning over quickly

Question 7

Inventory Turns

Answer 7

Inventory turnover is the rate at which a company replaces inventory in a given period due to sales

Question 8

For market sizing - US household number

Answer 8

120 M

Question 9

For market sizing - Asia population

Answer 9

4.4 B

Question 10

For market sizing - median household income US

Answer 10

60,000

Question 11

For market sizing - Africa population

Answer 11

1.2 B

Question 12

1/18

Answer 12

.0555

Question 13

1/16

Answer 13

.0625

Question 14

1/15

Answer 14

.0667

Question 15

1/12

Answer 15

.0833

Question 16

1/11

Answer 16

.0909

Question 17

1/9

Answer 17

.1111

Question 18

1/7

Answer 18

.1428

Question 19

1/6

Answer 19

.1667

Question 20

Rule of 72

Answer 20

Investments double in 72/
% Annual Interest Rate
years

Question 21

14 squared

Answer 21

196

Question 22

16 squared

Answer 22

256

Question 23

17 squared

Answer 23

289

Question 24

18 squared

Answer 24

324

Question 25

19 squared

Answer 25

361

Question 26

NPV formula

Answer 26

-Upfront costs + (Annual benefits - annual costs)/discount rate

Question 27

MWP Formula for an investor

Answer 27

Total (projected) profit / 1+ROI percent

ie: 39.7/ (1.25) [for a 25% ROI]

Question 28

Expected Value

Answer 28

E(X) = P1X1 + P2X2

X1 & 2 = payoff of first and second outcomes
P1 & 2 = probability of first and second outcomes

Question 29

Take rate (meaning and definition)

Answer 29

The take rate refers to the number of users or site visitors that take action on an offer. It is also known as the visitor to lead conversion rate or the form completion rate.

To calculate take rate, find the number of successes for the action being measured and divide it by the number of people exposed to the action.

Question 30

Current market size by product

Answer 30

Product revenue/market share

Question 31

ROI Calculation

Answer 31

Future revenue - Cost of Investment / Cost of investment

Question 32

Payback period

Answer 32

Upfront cost/cash flows per period