Formulas & Vocabulary

Question 1

Effective Interest rate

Answer 1

interest 1 + additional interest/ (net proceeds)

Question 2

Simple Interest

Answer 2

(P(ii)(n))

Question 3

Effective APR

Answer 3

1+ (ii/n)^n) - 1

Question 4

Compound interest

Answer 4

Po (1+ii)^n

Question 5

Required RoR

Answer 5

Maturity Risk
Purchase power or inflations
liquidity risk premium
default risk premium

Question 6

B/E Point Call option - Buy

Answer 6

x + cost

Question 7

B/E Point Put option - Sell

Answer 7

x - cost

Question 8

cost of debt after tax

Answer 8

interest rate * (1-t)

Question 9

W-avg cost of debt

Answer 9

(Cost of debt after tax * % of debt)

Question 10

Cost of preferred stock

Answer 10

P.S / (Net proceeds)

Question 11

Weighted avg cost of capital

Answer 11

Cost debt * % debt + cost of ps * % ps + cost of RE * re

Question 12

1/3 Cost of RE - CAPM

Answer 12

RFR+ B*(Market risk - rfr)

Question 13

2/3 Discounted CF

Answer 13

Dividend per shared @ end of year / ( Current MV or price)

Question 14

3/3 Bond Yield + Risk Premium

Answer 14

Pretax cost of LT debt + Market risk premium

Question 15

Growth Rate

Answer 15

ROA* retention/ (1- roa-retnetion)

Question 16

Return on sales

Answer 16

EBIT/ avg sales

Question 17

Return on investment

Answer 17

NI/ avg investment

Question 18

Return on asset

Answer 18

Ni/ avg assets

Question 19

Return on Equity

Answer 19

NI/ Avg equity or

(NI/sales) * ( sales/ assets) * (asset/equity) *

Question 20

Operating leverage

Answer 20

Fixed cost/ Variable cost

Question 21

Financial leverage

Answer 21

Asset/equity

Question 22

Total debt ratio

Answer 22

Total liabl/total assets

Question 23

Debt to equity

Answer 23

Total liab/total equity

Question 24

Equity Multiplier

Answer 24

Total Asset/total equity

Question 25

Times interest Earned Ratio

Answer 25

EBIT/I.E

Question 26

Working capital

Answer 26

CA-CL

Question 27

Current Ratio

Answer 27

CA/CL

Question 28

Quick ratio

Answer 28

CA-Inv-prepaid/(CL)

Question 29

Cash conversion cycle

Answer 29

days in inventory + days in AR - days in AP

Question 30

Inventory TO

Answer 30

cogs/avg inventory

Question 31

days in inventory

Answer 31

inventory/(cogs/365)

Question 32

AR turnover

Answer 32

Sales/Avg AR

Question 33

Day in sales of AR

Answer 33

AR/ Sales/365

Question 34

AP turnover

Answer 34

COGS/AP

Question 35

Days of payable o/s

Answer 35

Ending AP/COGS/(365)

Question 36

Working Capital

Answer 36

Sales/ avg capital

Question 37

Reorder point

Answer 37

[Safety stock+leadtime *sales lead)

Question 38

Economic order quantity

Answer 38

2*annual sales in unit/ annual carrying cost

Question 39

PV of annuity

Answer 39

Amount Annuity * 1-pv/r

Question 40

Price Earning Ratio

Answer 40

Stock price or value today / EPS in 1 year

Question 41

Price to sale ratio

Answer 41

Stock price or value today/ expected sales in 1 year

Question 42

Price to sales ratio to book

Answer 42

stock price or value today/ book value of common equity

Question 43

Price to CF ratio

Answer 43

stock price or value today/ CF in 1 year

Question 44

Cost of Maufacturing

Answer 44

DM+DL+OH

Question 45

Discounted payback period

Answer 45

initial investment - (net cf * pv factor)

Question 46

pre tax cf

Answer 46

Cash inflow - depreciation - tax

Question 47

After tax cf

Answer 47

annual net CF (1-T)

Question 48

NPV Method

Answer 48

Annual net cf (1-t) + depreciation benefit * NPV - Investment

Question 49

Payback period

Answer 49

Cost/ annual cf

Question 50

Prime Cost

Answer 50

DM+DL

Question 51

Conversion Cost

Answer 51

DL +MOH

Question 52

OH Application using cost driver

Answer 52

Actual cost driver * OH

Question 53

Equivalent Units Under FIFO

Answer 53

Beg WIP% of units to be completed - Beg WIP + Units transferred + Unit WIP Ending % = Total Units current cost/ total units

Question 54

Equivalent units Weighted avg

Answer 54

units completed + FG (% completed) total cost/ units

Question 55

COGM

Answer 55

Wip Beg +DM +DL +OH - end wip =COGS

Question 56

CM

Answer 56

Net sales - variable cost

Question 57

Controllable margin

Answer 57

Contribution Margin - fixed cost

Question 58

ROE Dupont

Answer 58

NP Margin * Assets TO * Financial leverage

Question 59

Residual income

Answer 59

Ni - ( NBV*Hurdle rate)

Question 60

Linner regression

Answer 60

Y=a+bx

Question 61

Absorption Approach

Answer 61

Sale-cogs =gm - variable -sga=ni

Question 62

Contribution approach

Answer 62

Sales- variable cost = CM- fixed=ni

Question 63

Fixed contribution margin

Answer 63

FC/CM Ratio

Question 64

BE IN units

Answer 64

Fixed cost/cmu

Question 65

BE in dollars

Answer 65

Fixed cost/cmr

Question 66

Required sales volume target profit

Answer 66

Fixed cost+ pretax profit/ cmu

Question 67

Sales dollar need to obtain desired profit

Answer 67

Fixed cost + pretax profit/ (cm unit)

Question 68

setting selling prices based on volume

Answer 68

FC+VC+Pretax profit/ (num unit sld)

Question 69

Margin of safety

Answer 69

total sale- be sales

Question 70

Margin of safety in unit

Answer 70

Margin saleft/ Total sales

Question 71

Budged production

Answer 71

Budget Purchase + desired ending inventory- BI

Question 72

DM budget

Answer 72

Budgeted production in units + DM EI - DM BI = UNITS * PRICE = DM COST

Question 73

DL Budget

Answer 73

Budgeted production * hrs required = ttl hrs * hrly wage = ttl wage

Question 74

DM Useage

Answer 74

Beg inventory + DM Cost = DM usegae

Question 75

DM PRICE Variance

Answer 75

Actual qty purchased * (Actual price - std price)

Question 76

DM Quantity

Answer 76

Std price * ( Actual qty used - Std qty allowed)

Question 77

DL rate variance

Answer 77

Actual hours * (Actual rate - std rate)

Question 78

DL efficiency

Answer 78

Standard rate * (actual hrs worked - std hours)

Question 79

VOH Variance

Answer 79

Actual hours * ( actual hrs worked - sd hours allowed)

Question 80

VOH Efficiency rate

Answer 80

Std rate * ( different in actual and std hours worked)

Question 81

Flexible budger

Answer 81

Fixed OH + VOH - Actual OH

Question 82

FOH Budget

Answer 82

actual fixed oh - budget fixd oh

Question 83

FOH volume variance

Answer 83

budgeted fixed oh - std fixed oh

Question 84

price elasticity deman

Answer 84

change in qty/ change in price