BEC Study Sheet

Impact of Foreign Currency GDP GICE Govt Purchase IPIRATED Income

US$ A/R A/P Investment Profits, Corp
↑ Loss Gain Consumption, Personal Interest, net
↓ Gain Loss Exports, Net Rental
Adj Net
Eff int rate= Interest / proceeds GNP All domestic product regardless of owner Taxes
Annual Interest 1+ (i/p)p-1 Employment
nt
compound interest = P (1+r/n) Depreciation
residual income = NI - (Investment x Interest)
Leverage
DOL = %∆EBIT DFL= %∆EPS Total Lev= %∆EPS or DOL*DFL
%∆Sales %∆EBT %∆Sales

CAPM = R + β(M-R) ROI = Profit Margin x Investment Turnover

Income/Investment
ROA= NI/Total Assets
Discounts
360 Discount %
(Pay Period-Discount Period) X (100 - Discount %)

Inventory Conversion Period Avg inventory

COGS/365

Receivables Conversion period Avg Rec

Rev/365

Payable deferral Period = Avg AP

COGS/365

EOQ = √(2SO)/C

FIFO % Remaining x Beg units Current costs =cost per unit

Started & completed EUP
% completed x ending units
Eq. Units of Prod

Weighted Avg Completed this period Beginning + Current costs

% completed x ending EUP
Eq Units of Prod
INV
Absorption = DM + DL + OH (GAPP) Abs NI = Var NI =
Variable = DM + DL + VOH (not GAAP) Abs NI > Var NI ↑
Abs NI < Var NI ↓

P Price DA (AP-SP)XAQ
U Usage DS (AQ-SQ)XSP
R Rate DA (SR-AR)XAH
E Efficiency DS (SH-AH)XSR

OH Variance
one way Actual Applied (FOH+VOH)Actual Hours

two way Actual BFOH+(Bvol-ActVol)xFOH Applied

Budget Volume

Three way Actual BFOH+(AHxSVOH) BFOH+(Bvol-ActVol)xFOH Applied

Spending Efficiency Volume

WIP, B Man Other

+DM FG, B Inv, B
+DL +COGM +Purchases
+OH -FG, E -Inv, E
-WIP, E COGS COGS
COGM

BE units = FC/CM BBE $ = FC/CM%

CM%= (REV-VC)/REV CM = Revenue - Variable cost
Margin of safety = (Sales-BE$)/Sales)x100 margin of Safety %

EVA - NOPAT - Opportunity costs of capital invested

WACC (%E/%E+$D)xCost of Equity )+ ((%D/$E+$D)xcost of debt)x (1-tax)

prime costs = DM + DL conversion costs = DL + OH prod costs=DM+DL+MOH

inventory turnover = sales/inv or cogs/avg inv

carrying cost = Inv Costs/Inv Value + Opp Cost + Ins + Tax reorder pt = safety stock +(lead time * units sold)

cost of debt = Eff int rate *(1-tax) Cost of Prefereed stock = div/net proceeds
EVA Required Return

Sales = Variable expense + fixed expense + Profit

required return = net book value * hurdle rate

How to calculate the IRR = Determine life of Proj - use payback period as PV
profitabilty index - PV of Cinflows/PV of net initial investment
PV of asset = Projected CF/Required Rate of Return

invoice price+ship+install After tax CF

+/- Working cap Tax dep on new PPE +Depr tax shield
-proceeds on sale of old net of tax * marginal tax rate *PV of annuity
net cash outflow for new PPE Depreciation sheild NPV

payback period = net initial inv / increase in annual CF(Includes dep shield)
discounted payback period => cash flows are discounted

DCF
Bond yield plus risk prem

Current Ratio CA/CL

Quick (Cash+Mark Sec+AR)/CL
Cost Savings = Inventory TO*APR

joint product cost allocation (3 ways

Volume (VOL A /TA)*Joint
NRV Sales at split off A/Total sales vale at split)*Joint
Sales Value not available
Final sales Prod A - Sep cost
(Sales value A at split off/Total sales split)*Joint

Two ways to measure price elasticity

Point %∆D/%$
Midpoint [(Q2-Q1)/(Q2+Q1)]/[(P@-P1)/(P2+P1)]

cross elasticity $∆Quantity Demanded X/ %∆in price of Y