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25 Cards in this Set
- Front
- Back
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Accrued L + A/P + Current portion of long-term note payable =
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=Current liabilities
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Cash+ A/R + inventory =
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Current Assets
Prepaid assets - not CA |
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Avg. Gross Receivable balance =
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AVG daily sales x Avg collection period
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Gross Margin =
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= ( unit price - unit cost ) x number of units
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The debt-to-equity ratio measures the
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% of total financing provided by creditors (debt) compared to financing by owners.
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The interest coverage ratio measures the
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firm's ability to make required interest payments. The higher - the greater ability to repay the debt.
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The return on Equity reflects the
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net income that accrued to owners
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If there is no provision for allocating losses ->
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the method used to allocate profits will be used
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Inventory T/Over ratio
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= COGS/ AVG Inventory
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List major risks associated with the A/R component of the system?
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Credit may be applied to improper accounts
Updates of credit ratings may be untimely Financial or management reporting may be inaccurate |
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EVA % =
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RCOE % - WACC %,
where RCOE = Oper. income / capital, WACC = Cost of debt + cost of equity |
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What costs are relevant in decision making?
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only INCREMENTAL (fixed or variable)
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Seasonality in data may be removed by calculating a
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WEIGHTED AVERAGE of the data for the four seasonal time periods
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Treating dividends as a residual part of a financial decision assumes that
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earnings should be retained and reinvested as long as profitable projects are available
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Interest on long-term debt costs ______ than interrest on short-term debt because
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more
of risk associated with longer maturity dates |
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The intercept value is where the line crosses the _____ axis.
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Y axis
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The implicit cost of debt financing is the
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increase in the cost of debt and equity as the debt-to-equity ration increases
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ADRs are receipts issued by a US bank which represents ownership rights in
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a foreign corporation
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Cost of asset + increase in WC - tax saved - cash received from sale of old asset =
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NET OF INVESTMENT
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EBIT=
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Total revenue - total Var. costs- total Fixed Costs
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At what rate company would be INDIFFERENT to the investment?
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at the IRR
CF * IRR ( or annuity factor)= PV of initial investment |
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How do you solve the problem if CL is known and Current Ratio will change from 1.75 to 1.5 to 1?
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CA + inc in Inv / CL + inc in Inv. = 1.5
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How to calculate conversion costs transfered to second department using WA method and normal spoilage is given?
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1) calc. Equivalent units= completed + spoiled + % completed of end units
2) Cost per Eq. unit = Total conversion costs / Eq. units 3) Conversion costs transferred = Cost per unit x ( Good units + Normal spoilage) |
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Leverage refers to the amount of _________ in the firm's structure
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Debt
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FIXED OVERHEAD is a Product cost for ABSORPTION COSTING at the time of _________ and
a PERIOD COST under Variable costing at time of ________ |
SALE
PRODUCTION |
