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Aggressive financing Plan
High Risk/Profit
Low Liquidity/Short term financing
Conservitive Financing Plan
Low Profit/Risk
Long Term financing/High Liquidity
Moderate financing plan
Moderate Profit/Risk
Short term financing with High Liquidity
or
Long term financing with Low Liquidity
% of Working Capital
(current assets - Current Liabilities)
divided by
Sales
Cost of failing to take cash discount
Discount %/(100% - discount %)
times
360/ (final due date - discount period)
Effective Rate Reg Loan
interest/principal
times
days in the year (360)/ days outstanding on loan
Effective Rate Discount Loan
interest/(principal - interest)
times
days in the year(360)/days outstanding
Effective rate w/ compensating balance (given rate)
stated rate/(1-% compensating balance)
Effective rate with compensating balance (given $$ amounts)
interest/(principal - compensating balance in $)
times
year (360)/days loan outstanding
effecitve rate on installment loans
(2 X annual # of payments X interest)
divided by
(total # of payments +1) times principle
Ratio of bad debt to credit sales
$ of bad debt loss/$ of credit sales
sales to ar turnover
sales/turnover
ROI for credit decision
I is AR so
net income/ AR
Economic Order Quantity (EOQ)
sqrt ((2*S*O)/C)
S is sales in units
O is ordering cost
C is carrying cost per units
Average Inventory
EOQ/2
Average inventory with safety stock
(EOQ)/2 + Safety stock
Total cost for inventory
Order costs = units sold/order size
Carrying cost - Avg inv in units X carrying cost per unit
order cost + carrying cost
future value - single amount
FV = PV X FVif
FV = PV X (1+i)^n
table future value of $1
present value - single amount
PV=FV X PVif
PV = FV X (1/(1+i)^n)
table present value of $1
future value - annuity
FVa=A(FVifa)
FVa = A[((1+i)^n-1)/i]
future value of annuity
Present value - annuity
PVa=A(PVifa)
PVa = A[(1-(1/(1+i)^n)/i]
table present value of annuity
annuity equaling a future amount
A = FVa/((1+i)^n-1)i)
A = FVa/FVifa
table future value of annutiy
annuity equaling a present value
A=PVa/(1-(1/(1+i)^n))/i
A=PVa/PVifa
table present value of annuity
how to figure annuity when more than one payment/investment in a year
n = number of years X # of compunding periods per year
i = annual interest rate/# of compounding periods in a year
Author
wsrdpc
ID
82315
Card Set
financial formulas
Description
exam 2 formulas
Updated
2011-04-28T01:45:28Z
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