MGT 388
Terms
Done
 Period cost  All costs not directly associated to the manufacture of a product aka admin, finance and selling costs (Includes delivery)
 Asset  entities owned by the company predicted to produce profit

 Current Assets  Assets to be spent within the next year

 Noncurrent Assets  Assets that last longer than a year (land and machinery)
 Absorbtion costing  Calculating product cost including fixed manufacturing costs (Rent…) on top of direct costs (Material costs…)

 Product costs  Direct costs from products plus indirect manufacting costs
 Variable costing

 Product costs  All variable product costs (Direct costs + variable manufacturing overhead)
 Direct costs  a cost that can be directly associated to a produced object
 Prime cost  summation of all direct costs
 Indirect costs  costs that cannot be associated directly to a production object (Utilites, rent, office supplies)
 Accruals  revenue and expenses are recorded on purchase rather than based on cash flow
 Liquidity  (based on current ratio) a companys ability to pay for short term liabilities
 Solvency  (Gearing Ratio) a companies ability to pay for interest on loans and long term payments
 Profitability  (ROCE) a companies ability to make profit on item sales
 Fixed costs  costs that do not change based on revenue or products produced (rent…)
 Variable costs  costs that change based on production quantity (Sparky bill…)
 Audit  an official inspection of a companies accounts
 Contribution  The money leftover after variable costs are applied to revenue
 Liability  A cost owed by the company

 CurrentLiability  Liabilities owed currently aka subblier bills

 NonCurrent Liability  Liabilities owed long term aka loan payback
 Payback period  Time an investment takes to pay back its cost
 Net present value  Summation of profit made on an investment including compound interest
Todo
 Limited company
 Public limited company
 Statement of financial position
 Income statement
 Breakeven point
 Margin of safety
Equations
Done
Return on Captial Investment
𝑅𝑂𝐶𝐸=Operating ProfitEquity+NonCurrent Liabilities$ROCE=\frac{\text{Operating Profit}}{\text{Equity}+\text{NonCurrent Liabilities}}$
Net asset turnover
𝑁𝐴𝑇=RevenueEquity+NonCurrent Liabilities$NAT=\frac{\text{Revenue}}{\text{Equity}+\text{NonCurrent Liabilities}}$
Gross Profit Margin
𝐺𝑃𝑀=Gross ProfitRevenue$GPM=\frac{\text{Gross Profit}}{\text{Revenue}}$
Operating profit margin
𝑂𝑃𝑀=Operating ProfitRevenue$OPM=\frac{\text{Operating Profit}}{\text{Revenue}}$
Current Ratio
𝐶𝑅=Current AssetsCurrent Liabilities$CR=\frac{\text{Current Assets}}{\text{Current Liabilities}}$
Interest Cover
𝐼𝐶=Operating ProfitInterest Payable$IC=\frac{\text{Operating Profit}}{\text{Interest Payable}}$
Gearing
𝐺=NonCurrent LiabilitiesEquity$G=\frac{\text{NonCurrent Liabilities}}{\text{Equity}}$
Quick Ratio
𝑄𝑅=Current Assets−InventoriesCurrent Liabilities$QR=\frac{\text{Current Assets}\text{Inventories}}{\text{Current Liabilities}}$
Inventory Days
𝐼𝐷=InventoriesGross Profit⋅365$ID=\frac{\text{Inventories}}{\text{Gross Profit}}\cdot 365$
Trade Recievable days
𝑇𝑅𝐷=Trade RevievablesRevenue⋅365$TRD=\frac{\text{Trade Revievables}}{\text{Revenue}}\cdot 365$
Trade Payable days
𝑇𝑃𝐷=Trade PayablesCost of Sales⋅365$TPD=\frac{\text{Trade Payables}}{\text{Cost of Sales}}\cdot 365$
Net present value
𝑁𝑃𝑉=∑𝑇𝑒𝑛𝑑𝑡=1(Cash Flow(1+𝑖)𝑡)−Initial Investment$NPV=\sum _{t=1}^{{T}_{end}}(\frac{\text{Cash Flow}}{(1+i{)}^{t}})\text{Initial Investment}$
Period cost
𝑃𝐶=$PC=$Marketing+$+$Selling+$+$Admin+$+$Interest
Asset turnover
𝐴𝑇𝑂=RevenueAssets$ATO=\frac{\text{Revenue}}{\text{Assets}}$
Payback Period
Expenses=Revenue$\text{Expenses}=\text{Revenue}$
Contribution
Sale price−Variable costs$\text{Sale price}\text{Variable costs}$
ToDo
Accounting rate of return
Breakeven point
Margin of safety
MGT 388
Terms
Done
Todo
Equations
Done
Return on Captial Investment
Net asset turnover
Gross Profit Margin
Operating profit margin
Current Ratio
Interest Cover
Gearing
Quick Ratio
Inventory Days
Trade Recievable days
Trade Payable days
Net present value
Period cost
Asset turnover
Payback Period
Contribution
ToDo
Accounting rate of return
Breakeven point
Margin of safety