8

Question 1

how do you convert cash to accrual basis for revenue?

Answer 1

cash basis rev + increase EB A/R - increase EB unearned rev = accrual basis rev

*SPEAR-BAR

Question 2

what is A/R TO ratio?

Answer 2

net credit sales / avg. A/R

Question 3

what is total asset TO?

Answer 3

net credit sales / avg. A

Question 4

average collection period?

Answer 4

365 / A/R TO

Question 5

how do you get COGS?

Answer 5

BI + net purch’s = COGAFS - EI = COGS

Question 6

what is inv TO?

Answer 6

COGS / avg. inv (BI+EI/2)

Question 7

what is QR?

Answer 7

(cash + net A/R + mkt sec’s) / CL

• no PPD exp or inv involved

Question 8

what is cash ratio (CaR)?

Answer 8

(cash + CE + mkt sec’s) / CL

Question 9

what is inv. conversion period (inv. TO in days)?

Answer 9

365 / inv TO

Question 10

how do you calculate operating cycle?

Answer 10

A/R TO days + inv TO days

Question 11

what is WC TO?

Answer 11

NS / avg WC

Question 12

how is NPM calc’d?

Answer 12

NI / NS (both IS items)

Question 13

what is ROA?

Answer 13

NI / avg. total A

Question 14

what is DuPont ROA?

Answer 14

same as ROA

• formula is NPM (NI/NS) * asset TO (NS/avg A)

Question 15

what is ROCE?

Answer 15

(NI - PD) / avg. common SE

Question 16

how do you calculate times interest earned (ratio)?

Answer 16

(EBIT + int exp) / int exp

*EBIT = earnings before int+tax

Question 17

what is op. CF to total debt?

Answer 17

op CF / total D

self-explanatory

Question 18

how do you calculate bonus for existing partners or reduction ? (bonus method)

Answer 18

• OG partners + new partner cap. accounts = total

* (new partner % int. * total) - new partner investment = (bonus to OG partners) or bonus to new partner

Question 19

how are assets contributed by a P’ valued?

Answer 19

they are valued at FMV - any related L’s assumed (mortgage note, etc)

• stock issued is credit at par value and any diff. is credited to APIC

Question 20

what is the GW method for P’?

Answer 20

use the new partner’s cap acc. and multiply to 100%, then subtract the current cap. acc totals to get GW. GW is allocated b/w the OLD partners, not new.

Question 21

what is the exact method?

Answer 21

use finger math; 1/4 interest = 4-1 = divide by 3 to get new cap account for new partner (add existing cap’s divide by 3)