MGT 45 Pecore Final

working capital

current assets - current liabilities

current ratio

current assets / current liabilities

debt to equity ratio

total liabilities / stockholder equity

net margin

net income / net sales

return on investment

net income / average total assets

return on equity

net income / average total stockholder equity

dividend yield

dividends per share / market price per share

managerial accounting

inside company, controlling cost; past, present, future

financial accounting

external use, informing shareholders; past

product cost

COGS

manufacturing costs

materials, labour, overhead

selling and administrative costs

not COGS

indirect costs

depreciation, supervisor salary, utilities

inventory categories

raw, wip, finished goods

inventory formula

beginning inventory + transfers in = transfers out + ending inventory

cost of goods manufactured

finished goods cost

upstream cost

costs before beginning manufacturing

operating leverage

contribution margin / net income

low operating leverage

low risk

contribution margin

sales revenue - variable costs

break-even: contribution margin per unit

n = fixed costs / contribution margin per unit

break-even: target profit

n = (fixed costs + target profit) / contribution margin per unit

break-even: verbose

sales x n - variable costs per unit x n - fixed cost = 0

cost object

product or service company sells

cost driver

floor space occupied, sales volume, etc

direct costs

traceable to departments

allocate

rate * weight

rate

total cost / cost driver activity

cost of capital

expected rate of return for shareholders

rule of 72

money doubles (72 / rate of return)

deprecation

added back after tax expensed

npv

based on cashflow not income

sales budget

cornerstone of budget

marketing department

prepares the sales budget, schedule of sales and collections of the money

PV =

c/(1+r)^t

IRR

NPV = 0, solve for R