• Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

Card Range To Study

through

image

Play button

image

Play button

image

Progress

1/24

Click to flip

Use LEFT and RIGHT arrow keys to navigate between flashcards;

Use UP and DOWN arrow keys to flip the card;

H to show hint;

A reads text to speech;

24 Cards in this Set

  • Front
  • Back
Residual income RI =
= Reported net income -
( Desired rate of rerturn x Invested Capital)
return on sale OR NET Profit margin=
GROSS (profit) margin =
=Net income / Sales revenue.
GROSS (profit) margin = (Sales - COGS) / Sales
capital turnover
= Sales / Capital
1.Cost of common stock - Ks?
2. Cost of preferred stock ?
3.Cost of retained earnings =
Dividend / Net Proceeds + G,
G - is a growth rate
Net Proceeds = Price x (1-flotation %) - other charges
2. Dividend 1 / Market price (1-flotation%) - underpricing
3.Dividend 1/ Market Price of the stock +G
Current Ratio
is indicatior of ____________
Selling Inventory on Account will _________ this ratio b/se ______________
The higher - ________
CA/CL
The ability to generate cash to meet short-term obligations
Selling Inventory on Account will INCREASE this ratio b/se A/R > Inv => CA ↑
The higher - the better
Calculate payment discount 2/10 net 30
360
--------------------------------------- x
pay period -discount period

Discount / 100 - Discount%
Safety stock =
(max lead time - avg lead time) x usage,
Usage = annual demand / business days
Reoder Purchase point =
= avg lead time x usage + safety stock
Degree of total leverage =
= % change in NI / % change in Sales
= DOL x DFL
=Degree of Operating Leverage x Degree of Financial Leverage
Annual Percentage Rate - APR
By law, credit card companies and loan issuers must show customers the APR
For example, a credit card company might charge 1% a month,
but the APR is 1% x 12 months = 12%.
APR= Effective periodic rate * # of periods
compound interest
FV = Principal * (1+i)^n,
where n = number of periods
i - PERIODIC RATE - annual rate/ n
DOL = ?
% Δ in EBIT
-------------------
% Δ in SALES
High degree of operating
leverage - firm's profits more sensitive to Δ in SALES
Operating leverage involves using a large proportion of fixed costs to variable costs in the operations of the firm. The higher the degree of operating leverage, the more volatile the EBIT figure will be relative to a given change in sales, all other things remaining the same.
DFL=?
% Δ in EPS (or % Δ in NI)
-----------------------
% Δ in EBIT
Effective Interest Rate =
=Interest / net proceeds,
net proceeds = principal - INTEREST- COMPENSATING BALANCE
To calculate factoring the receivables -
1. annual cost = interest + fees to factor - savings
2. annual cost / usabe funds
Cost of factoring =
(interest charged + monthly fees *12 - $$ saved)/ $$$ received
Discount CF from Depreciation of an asset
CF= cost of an asset x MACRS depr rate x tax rate x PV factor of 1
the cost of the bond =
interest / $$ received
After tax cost = interest / $$ received * ( 1-tax rate)
Or
[interest payment - tax savings ( interest X tax rate)] / $$ received
The effective annualized % cost of financing =
{[(Face value + transaction costs)/ borrowed amount]- 1}x periods
(interest + transaction costs)/ usable funds * periods
What is the calculation for the interest payment on a bond?
Stated rate of interest X Par value
ROI is affected by
Profit margin= NI/ Sales
and
Capital Turnover rate = Sales/ Invested capital

ROI = NI / AVG invested Capital
Reorder Purchase point =

SStock =
=avg lead time x usage + safety stock (SS)
= (Max - Avg lead time) x usage
The Effective Annualized % cost of financing =
((Face value + transaction cost) / amount borrowed) - 1) x periods
A bank charges a rate of 1.5% per month on their credit card. What Effective Annual Rate (EAR) are they charging their customers.
EAR is equal to (1+ APR/12) to the 12th power minus 1. (1+.18/12) to 12th power minus 1. 19.6% APR is the periodic rate (1.5) times the number of periods per year (12) or 18%