Managerial & Financial Accounting Formula Sheet

Flashcards covering key accounting ratios, cost formulas, depreciation methods, profitability measures, and cost-volume relationships from the provided lecture notes.

What is the formula for Return on Assets (ROA)?

Net income ÷ average total assets

How do you calculate average total assets?

(Beginning assets + ending assets) ÷ 2

What is the debt ratio?

Total liabilities ÷ total assets

How is the current ratio computed?

Total current assets ÷ total current liabilities

What is the acid-test (quick) ratio?

(Cash + short-term investments + receivables) ÷ current liabilities

How do you find working capital?

Current assets – current liabilities

Give the formula for inventory turnover.

Cost of goods sold ÷ average inventory

How is average inventory determined?

(Beginning inventory + ending inventory) ÷ 2

What is the formula for Day’s Sales in Inventory?

365 ÷ inventory turnover

State the accounts receivable turnover formula.

Net credit sales ÷ average net accounts receivable

How do you calculate Day’s Sales in Receivables?

365 ÷ accounts receivable turnover

What is the Gross Profit Percentage?

Gross profit ÷ net sales revenue

How is asset turnover computed?

Net sales ÷ average total assets

Give the cash ratio formula.

(Cash + cash equivalents) ÷ total current liabilities

What is Times-Interest-Earned?

(Net income + interest expense + income taxes) ÷ interest expense

Provide the Debt-to-Equity ratio.

Total liabilities ÷ total equity

How is free cash flow calculated?

Operating cash flow – capital expenditures – dividends

State the merchandising Cost of Goods Sold (COGS) formula.

Beginning inventory + purchases – ending inventory

What is the Cost of Goods Manufactured (COGM) formula?

Direct materials + direct labor + manufacturing overhead + beginning WIP – ending WIP

Give the finished-goods COGS formula in manufacturing.

Beginning finished goods + COGM – ending finished goods

How do you determine direct materials used?

Beginning raw materials + purchases – ending raw materials

What is the formula for net purchases?

Purchases – purchase returns – purchase discounts + freight-in

How is Gross Profit calculated?

Net sales revenue – Cost of Goods Sold

Provide the Unit Product Cost formula.

COGM ÷ total units produced

How do you determine COGS using unit cost?

Units sold × unit product cost

State the straight-line depreciation formula.

(Cost – residual value) ÷ useful life

In units-of-production depreciation, what is STEP 1?

(Cost – residual value) ÷ total estimated units = depreciation per unit

In units-of-production depreciation, what is STEP 2?

Depreciation per unit × units used in the period

What is the double-declining-balance depreciation formula?

Book value × 2 × (1 ÷ useful life)

How do you compute book value of an asset?

Cost – accumulated depreciation

State the depletion expense formula.

[(Cost – residual value) ÷ estimated total units] × units extracted

Give the straight-line amortization formula for intangibles.

(Cost – residual value) ÷ useful life

How is Earnings per Share (EPS) calculated?

(Net income – preferred dividends) ÷ weighted-average shares outstanding

Provide the price-earnings (P/E) ratio formula.

Market price per share ÷ EPS

What is the dividend yield formula?

Dividend per share ÷ market price per share

State the Return on Equity (ROE) formula.

Net income ÷ average shareholders’ equity

How is residual income (RI) found?

Operating income – (target rate × average assets)

Provide the basic Return on Investment (ROI) formula.

Operating income ÷ average total assets

What is the profit margin ratio (operating income margin)?

Operating income ÷ net sales

State the expanded ROI relationship.

ROI = Profit margin × Asset turnover

Give the total mixed cost equation (high-low method).

Total mixed cost = (Variable cost per unit × units) + fixed cost

How is variable cost per unit found using high-low?

(High cost – low cost) ÷ (High units – low units)

How do you compute fixed cost under high-low?

Total cost – (Variable cost per unit × units)

Provide the contribution margin (CM) formula.

Net sales – variable costs

What is contribution margin per unit?

Sales price per unit – variable cost per unit

State the contribution margin ratio.

Contribution margin ÷ net sales

How do you calculate breakeven in units (CM approach)?

Fixed costs ÷ contribution margin per unit

What is the formula for breakeven in sales dollars?

Fixed costs ÷ contribution margin ratio

How is the margin of safety computed?

Actual or budgeted sales – breakeven sales

Give the degree of operating leverage formula.

Contribution margin ÷ operating income