Mba 503 Midterm 2

Front 1

Gross Profit Margin (GPM)

Back 1

Gross Profit / Gross Sales

Front 2

Return on Equity (ROE)

Back 2

Net Income / Average Equity

Front 3

Return on Net Operating Assets (RNOA)

Back 3

NOPAT / Average Net Operating Assets

Front 4

Net Operating Profit After Taxes (NOPAT)

Back 4

Net Operating Profit Before Tax x (1-Tax rate on Operating Profit)

Front 5

Net Operating Asset Turnover (NOAT)

Back 5

Sales / Average NOA

Front 6

Current Ratio

Back 6

Current Assets / Current Liabilities

Front 7

Accounting for R&D Expenses

Back 7

Expense all R&D expenses as incurred. While it may yield future benefit, it is difficult to measure future benefits. GAAP rules require R&D to be immediately expensed (except if they yield alternative future uses).

Front 8

Earnings per Share (EPS)

Back 8

Earnings / Average Number of Common Shares

Front 9

Accounts Receivable Turnover (ART)

Back 9

Sales / Average Accounts Receivables

Front 10

Accounting for unearned revenue.

Back 10

If cash is received for a future service, it must be also labeled as unearned revenue and a corresponding liability.

Front 11

First In, First Out

Back 11

Inventory costing method that calculates the COGS as the inventory first stocked by the company. Less advantageous from a tax standpoint.

Front 12

Last In, First Out

Back 12

Calculates COGS by pricing the later items as the COGS value. Better from a tax standpoint as it allows the company to usually declare a lower taxable net income. May understate income when prices are rising

Front 13

INVT

Back 13

Cost of Goods Sold / Average Inventory

Front 14

IFRS

Back 14

International Financial Reporting Standard

Front 15

Calculate # of days outstanding

Back 15

365 / ART