Port communicationThe most explosive financial secret in history—110 core formulas for cost management Financial statement analysis 1、Current ratio = current assets ÷ current liabilities 2、Quick ratio = Quick assets ÷ Current liabilities Conservative quick ratio = (Cash + Short-term securities + Notes receivable + Net accounts receivable) ÷ Current liabilities 3、Business period = inventory transfer days + accounts receivable transfer days 4、Inventory conversion rate (number of times) = cost of sales ÷ average inventory where：Average inventory = (Inventory at the beginning of the year + Inventory at the end of the year) ÷ 2 Number of days of inventory transfer = 360 / Inventory transfer rate = (Average inventory × 360) ÷ Cost of sales 5、Accounts receivable conversion rate (times) = sales revenue ÷ average accounts receivable, among which：Sales revenue is the net amount after deducting discounts and allowances；Accounts receivable is the amount before bad debt provisions are deducted. Number of days to transfer accounts receivable = 360 ÷ Accounts receivable transfer rate = (average accounts receivable × 360) ÷ Net sales revenue 6、Current assets conversion rate (number of times) = sales revenue ÷ average current assets 7、Total asset conversion rate = sales revenue ÷ average total assets 8、Asset-liability ratio = (total liabilities ÷ total assets) × 100% (also called debt operating ratio) 9、Equity ratio = (total liabilities ÷ shareholders’ equity) × 100% (also called debt-to-equity ratio) 10、Tangible net worth debt ratio =[Total liabilities ÷ (shareholders’ equity – net intangible assets)]×100、Multiple of interest earned = profit before interest and tax ÷ interest
cost
Long-term debt to working capital ratio = long-term liabilities ÷ (current assets – current liabilities) 12、Net sales profit margin = (net profit ÷ sales revenue) × 100、Gross profit margin =[(Sales revenue - Cost of sales) ÷ Sales revenue]×100、Net asset interest rate = (net profit ÷ average total assets) × 100、Return on equity = net profit ÷ average net assets (or net assets at the end of the year) × 100% or = net sales interest rate × asset conversion rate × equity multiplier 16、Equity multiplier = Total assets ÷ Total owners’ equity = 1 ÷ (1 – Asset-liability ratio) = 1 + Equity ratio 17、Average number of common shares outstanding = ∑ (number of common shares outstanding × number of months outstanding) ÷1218、Earnings per share = Net profit ÷ Total number of common shares at the end of the year = (Net profit – Preferred dividends) ÷ (Total number of shares at the end of the year – Number of preferred shares at the end of the year) 19、Price-to-earnings ratio (multiple) = market price per common stock ÷ earnings per share 20、Dividends per share = total dividends ÷ total number of common shares at the end of the year 21、Stock profit rate = dividends per share of common stock ÷ market price per share of common stock 22、Price-to-book ratio = Price per share ÷ Net assets per share 23、Dividend payout ratio = (dividends per share ÷ net income per share) × 100% dividend coverage ratio = the reciprocal of the dividend payout ratio 24、Retained earnings ratio = (net profit – total dividends) ÷ net profit × 100%、Net assets per share = shareholders’ equity at the end of the year (excluding preferred shares) ÷ number of common shares at the end of the year (also called book value per share or equity per share) 26、Cash to maturity ratio = Net operating cash inflow ÷ Debt due in the current period (referring to long-term debt due in the current period and bills payable in the current period) Cash flow to liability ratio = Net operating cash inflow ÷ Current liabilities Total cash to debt ratio = Net operating cash inflow ÷ Total debt (calculates the company’s maximum debt capacity) 27、Sales cash ratio = Net operating cash inflow ÷ Sales net operating cash flow per share = Net operating cash inflow ÷ Number of common shares All assets Cash recovery rate = Net operating cash inflow ÷ All assets × 100(、Cash to investment ratio = net cash inflow from operating activities in the past 5 years ÷ capital expenditures in the past 5 years、Inventory increase、Sum of cash dividends Cash dividend coverage ratio = Net operating cash inflow per share ÷ Cash dividend per share 29、Net income operating index = net operating income ÷ net income = (net income - non-operating income) ÷ net income cash operating index = net operating cash flow ÷ cash generated from operations (cash generated from operations = net income from operating activities + non-cash
cost
) Financial Forecasting and Planning 30、Amount of external financing = (Asset sales percentage – Liability sales percentage) × New sales – Net sales interest rate × Planned sales × (1 – Dividend payout rate) 31、Sales growth rate = new amount ÷ base period amount or = (planned amount ÷ base period amount) – 132、New sales = sales growth rate × base period sales 33、External financing sales growth ratio = asset sales percentage – liability sales percentage – net sales interest rate ×[(1 + growth rate) ÷ growth rate]× (1-dividend payout ratio) 34、Sustainable growth rate = growth rate of shareholders’ equity = increase in shareholders’ equity during the period ÷ shareholders’ equity at the beginning of the period = net sales interest rate × total asset conversion rate × earnings retention rate × beginning equity and ending total asset multiplier or = net interest rate on equity × earnings retention rate ÷ (1 – net interest rate on equity × earnings retention rate) Financial evaluation (P – present value i – interest rate I – interest S – terminal value n – time r – nominal interest rate m – number of compound interest per year) 35、Future value of compound interest Present value of compound interest 36、ordinary annuity future value：or 37、annual sinking fund：or A=S (A/S，i，n) (36 and 37 coefficients are reciprocals of each other) 38、Ordinary annuity present value：or P=A (P/A，i，n）39、ROI：or A=P(A/P，i，n) (38 and 39 coefficients are reciprocals of each other) 40、Future value of an immediate annuity：or S=A[（S/A，i，n＋1）－1]41、Present value of an immediate annuity：or P=A[（P/A，i，n－1）＋1]42、present value of deferred annuity：first method：Second method：43、Perpetual annuity present value：44、Conversion of nominal interest rate to real interest rate：45、bond value：Interest installment，Repay principal upon maturity：PV = present value of interest annuity + present value of principal compound interest Pure discount bond value PV = face value ÷ (1 + required rate of return) n (if the face value matures and the principal and interest are repaid in one lump sum, the payment is based on the sum of principal and interest) flat bond PV = I/M × (P/A，i/M，M×N) + principal (P/S，i/M，M×N) (M is the number of annual interest payments，N is the number of years) Perpetual bonds 46、Bond yield to maturity = or (V - stock value P - market price g - growth rate D - dividend R - expected rate of return Rs - required rate of return t - dividend in the first year) 47、stock general pattern：zero growth stocks：fixed growth：48、Total return = dividend yield + capital gains yield or 49、expected value：50、variance：standard deviation：Coefficient of variation = standard deviation ÷ expected value 51、The expected rate of return of a security portfolio = Σ (the expected rate of return of a certain security × the proportion of that security in the total amount), that is：m - security type Aj - the proportion of a certain security in the total investment；- The covariance of the returns of j and k securities - The expected correlation coefficient Q between the returns of j and k securities - The standard deviation of a certain security The standard deviation of the security portfolio：52、Total expected rate of return = Q × expected rate of return of risk portfolio + (1-Q) × total standard deviation of risk-free interest rate = Q × standard deviation of risk portfolio 53、capital asset pricing model：①COV is covariance，Others are the same as above ② Linear regression method ③ Direct calculation method 54、securities market line：individual stocks
Require
Yield Investment Management 55、discount index：Net present value = present value of cash inflows - present value of cash flows Present value index = present value of cash inflows ÷ present value of cash flow internal rate of return：Use the "annuity method" when the annual flows are equal，Use the "step-by-step test method" when not waiting 56、non-discounted indicator：The payback period varies or the investment is divided into several years = n + n years of unrecovered amount / n + 1 year cash outflow Accounting rate of return = (average annual net income ÷ original investment amount) × 100W、investor
Require
The rate of return (capital cost) = debt proportion × interest rate × (1-income tax) + owner’s equity proportion × equity cost 58、Fixed average annual cost = (original value + operating cost – residual value) / service life (without considering time value) or = (original value + sum of present value of operating cost – present value of residual value) / annuity present value coefficient (taking into account time value) 59、Operating cash flow = operating income - cash paid costs - income tax (according to the definition) = net profit after tax + depreciation (based on year-end operating results) = (income - cash paid costs) × (1 - income tax rate) + depreciation × tax rate (based on the impact of income tax on income and depreciation) 60、adjusted cash flow method：(α-positive equivalent) 61、risk-adjusted discount rate method：investor
Require
The rate of return = risk-free rate of return + β × (market average rate of return – risk-free rate of return) (β – beta coefficient) project
Require
The rate of return = risk-free rate of return + project β × (market average rate of return – risk-free rate of return) 62、Net present value = entity cash flow/entity weighted average cost - original investment net present value = shareholder cash flow/shareholder
Require
rate of return – shareholder investment 63、β equity = β assets × (1 + liabilities/equity) β assets = β equity ÷ (1 + liabilities/equity) Liquidity management 64、Cash return line H = 3R - 2L (upper limit = 3 × cash return line - 2 × lower limit) 65、Increase in revenue = increase in sales × contribution margin per unit 66、Accrued interest on accounts receivable = daily sales × average cash collection period × variable cost rate × average capital cost balance = daily sales × average cash collection period funds occupied = average balance × variable cost rate 67、Increase in discount cost = (new sales level × new discount rate – old sales level × old discount rate) × proportion of customers enjoying discounts 68、Ordering cost = Ordering fixed cost + Annual demand / each purchase quantity × ordering variable cost Acquisition cost = ordering cost + acquisition cost Storage cost = fixed cost + unit variable cost × each purchase quantity / 2 Total inventory cost = take Acquisition cost + storage cost + out-of-stock cost TC = TCa + TCc + TCs (K - cost per order D - total demand Kc - unit storage cost N - number of orders U - unit price p - daily delivery volume d - daily consumption) 69、Total cost of economic order quantity Optimum number of orders Economic order quantity occupied funds = Total cost of economic order quantity for continuous purchases during the optimal order period 70、Reorder point (R) = delivery time (L) × average daily demand (d) + insurance reserve (B) R = L × d + B (Ku - unit shortage cost；S - out-of-stock quantity for one order；N - Number of orders per year；Kc - unit inventory cost) 71、Total cost of insurance reserves = out-of-stock cost + insurance reserve cost = unit shortage cost × out-of-stock quantity × number of orders per year + insurance reserve × unit inventory cost, that is：TC（S、B)=Ku×S×N＋B×Kc Financing Management 72、Actual interest rate (short-term borrowing) = nominal interest rate / (1 - compensatory balance ratio) or = interest / actual available borrowing amount 73、Conversion ratio of convertible bonds = face value of the bond ÷ conversion price Dividend distribution 74、Earnings per share (market price) after the issuance of stock dividends = Earnings per share (market price) before the issuance ÷ (1 + stock dividend distribution rate) General model of capital cost and capital structure：Capital cost = capital occupation fee/amount of funds raised × (1-raising rate) 75、bank borrowing costs：(K1-bank borrowing cost；I - annual interest；L - total amount of financing；T - income tax rate；R1 - Borrowing interest rate；F1 - Financing rate) Pre-tax cost considering time value (K)：(P-Principal) After-tax cost (K1)：（K1）＝K×（1－T）76、bond cost：(Kb-bond cost；I - annual interest；T - income tax rate；Rb – bond interest rate；B - Amount of financing (based on issue price)；Fb - financing rate) pre-tax cost considering time value (K)：(P-face value) after-tax cost (Kb) (Kb) = K × (1-T) 77、cost of retained earnings：first method：dividend growth model：Second method：capital asset pricing model：Third method：risk premium approach：(Kb-Debt cost；RPc - risk premium) 78、cost of common stock：(in the formula：D1—Dividend in the first year；P0—market price；g—annual growth rate) preferred stock cost = annual dividend rate/(1—financing rate) 79、Financing breakthrough point = the amount of funds that can be raised at a specific cost ÷ the proportion of this type of funds in the capital structure 80、weighted average cost of funds：(Kw is the weighted average cost of capital；Wj is the proportion of the jth type of funds in the total funds；Kj is the cost of the jth type of funds) 81、Financing breakthrough point = the amount of funds that can be raised at a specific cost/the proportion of that type of funds 82、(p - Unit price V - Unit variable cost F - Total fixed cost S - Sales volume VC - Total variable cost Q - Sales volume N - Number of common shares) Operating leverage：Formula 1：Formula 2：financial leverage：or (D—preferred dividend；T—income tax rate) total leverage：DTL＝DOL×DFL or 83、(EPS - Earnings per share；SF - sinking fund；D - preferred dividend；VEPS (free earnings per share) earnings per share indifference point：or：Free earnings per share indifference point：When EBIT is greater than the indifference point，Debt financing is beneficial；When EBIT is less than the indifference point，Common stock financing is beneficial。
84、Total market value (V) = Stock value (S) + Bond value (B) Assume B = Bond face value，but：S=(EBIT-I)(1-T)/KsKs-equity capital cost (calculated according to the capital asset model) Kb-pre-tax debt cost weighted average capital cost or = Σ (individual capital cost × the proportion of individual capital in all capital) Mergers, Acquisitions and Control 85、Target enterprise value = valuation income indicator × standard price-to-earnings ratio (price-to-earnings ratio model method) capital return rate = profit before interest and tax / (long-term liabilities + shareholders' equity) intrinsic value per share = present value of dividends per share + present value of expected stock sale price (dividend income discount model) 86、Operating cash flow = operating income – operating costs
cost
(cash payment nature) - income tax = profit before interest and tax + depreciation - income tax Enterprise free cash flow = profit before interest and tax + depreciation - income tax - capital expenditure - net increase in working capital free cash flow (CFt) = after-tax profit - new sales × (fixed capital growth rate + working capital growth rate) 87、(V-Terminal value of target enterprise；WACC - weighted average cost of capital (target company discount rate)；FCFt - target enterprise free cash flow) zero growth model：stable growth model：It refers to the free cash flow in year (K+1)88、q ratio method：q=stock market value/corresponding asset replacement cost stock value=q×asset replacement cost (q-price-to-book ratio) 89、M&A value = book value of target company’s net assets × (1 + adjustment coefficient) × proportion of shares to be acquired or = target net assets per share × (1 + adjustment coefficient) × number of shares to be acquired 90、Earnings per share (market price) of the merged company = Earnings per share (market price) after the merger × stock：) rate post-merger earnings per share = post-merger net income/total post-merger share capital = post-merger net income/(number of shares of the acquired company + number of shares of the target company × shares：) rate) 91、Income from mergers and acquisitions = company value after mergers and acquisitions - sum of the values of each company before mergers and acquisitions S = Vab - (Va + Vb) merger and acquisition completion cost = merger and acquisition price + merger and acquisition
cost
=Pb+F M&A premium = M&A price – Target company value P = Pb – Vb M&A net income = M&A income – M&A premium – M&A
cost
NS=S-P-F or NS=company value after merger and acquisition-value of merger and acquisition company-merger and acquisition price-merger and acquisition
cost
NS=Vab-Va-P-F The value of the target enterprise = valuation income index × standard price-earnings ratio (price-earnings ratio model of the income method) Reorganization and liquidation 92、Fund safety rate = asset realization rate - asset liability ratio = (asset realization value - liability amount)/total book assets operating safety rate = safety margin rate = (existing or expected sales - capital guarantee amount)/existing or expected sales discriminant function value X1 - (working capital/total assets) × 100；X2－(retained earnings/total assets)×100；X3－(profit before interest and tax。
Total assets)×100；X4-(total market value of common stocks and preferred stocks/total book value of liabilities)×100；X5－Sales revenue/total assets cost calculation 93、general formula：indirect
cost
Allocation rate = Indirect to be allocated
cost
÷Allocation standard total indirect amount that a product should be allocated
cost
= indirect
cost
Allocation ratio
cost
Distribution rate = manufacturing
cost
Total amount ÷ Practical use of each product (Quota、Machine) sum of labor hours, auxiliary production unit cost = auxiliary
cost
Total amount ÷Total amount of products or services provided externally. Each beneficiary workshop、product、Department should assign
cost
=Unit cost of auxiliary production×Consumption94、(Equivalent production method) Equivalent production of work in progress = quantity of work in progress × degree of completion Cost of finished goods = unit cost
cost
) ÷ (output of finished goods + equivalent output of work in progress at the end of the month) cost of work in progress at the end of the month = unit cost × equivalent output of work in progress 95、(Calculated based on fixed cost) Cost of work in progress at the end of the month = Quantity of work in progress × Fixed unit cost of work in progress Total cost of finished goods = (Cost of work in progress at the beginning of the month + This month
cost
) - Cost of work in progress at the end of the month Unit cost of finished goods = Total cost of finished goods ÷ Output of finished goods 96、(Quota proportion method) The material (wage) cost that should be allocated for the product in progress = the fixed material (wage) cost of the product in progress × the material (wage) distribution rate The material (wage) cost that should be allocated for the completed product = the fixed material (wage) cost of the completed product × material (wage) allocation rate 97、Cost-Quantity-Profit Analysis 98、basic equations：Profit = unit price × sales volume - unit variable cost × sales volume - fixed cost or = contribution margin - fixed cost = sales revenue × contribution margin rate - fixed cost = safety margin × contribution margin rate 99、contribution margin equation：Profit = sales volume、Weighted average contribution margin rate = sum of contribution margin of each product/sum of sales revenue of each product × 100% or = Σ (margin contribution rate of each product × proportion of each product in total sales) 101、Profit and loss critical point operation rate = Profit and loss critical point sales volume ÷ normal sales volume (or sales volume) 102、Safety margin = normal sales - profit and loss critical point sales safety margin rate = safety margin ÷ normal sales (or actual order amount) × 100% sales profit margin = safety margin rate × contribution margin rate (profit = safety margin × contribution margin rate) 103、Sensitivity coefficient = change percentage of target value (profit) ÷ change percentage of parameter value, such as：Sales volume sensitivity coefficient = Profit change percentage ÷ Sales volume change percentage Sales volume sensitivity coefficient，That is, operating leverage coefficient) cost control 104、General model of variable cost difference analysis Difference = Price difference + Volume difference Price difference = Actual usage × (Actual price - Standard price) Volume difference = (Actual usage - Standard usage) × Standard price 105、Direct material cost difference = material price difference + material quantity difference material price difference = actual quantity × (actual price – standard price) material quantity difference = (actual quantity – standard quantity) × standard price 105、Direct labor cost difference = wage rate difference + labor efficiency difference wage rate difference = actual working hours × (actual wage rate – standard wage rate) labor efficiency difference = (actual working hours – standard working hours) × standard wage rate 106、variable manufacturing
cost
Variance = Variation Manufacturing
cost
Consumption difference + variable manufacturing
cost
Efficiency Variation Manufacturing
cost
Consumption difference = actual working hours × (actual allocation rate – standard allocation rate) variable manufacturing
cost
Efficiency difference = (actual working hours – standard working hours) × standard allocation rate manufacturing
cost
Standard allocation rate = manufacturing
cost
Total budget/total direct labor standard hours
cost
Standard cost = direct labor standard hours × standard allocation rate 107、fixed manufacturing
cost
fixed cost manufacturing
cost
Standard allocation rate = budget number ÷ production capacity standard working hours two-factor analysis method：fixed manufacturing
cost
Cost difference = fixed manufacturing
cost
Actual Numbers - Fixed Manufacturing
cost
Fixed budget manufacturing
cost
Energy difference = budget number - standard cost = (production energy - actual output standard working hours) × standard allocation rate three-factor analysis method：fixed manufacturing
cost
Cost difference = fixed manufacturing
cost
Actual Numbers - Fixed Manufacturing
cost
Budget number = fixed manufacturing
cost
Actual Numbers - Fixed Manufacturing
cost
Standard allocation rate × production energy fixed manufacturing
cost
Idle Energy Difference = Fixed Manufacturing
cost
Budget - actual hours × fixed manufacturing
cost
Standard allocation rate = (capacity standard working hours - actual working hours) × standard allocation rate fixed manufacturing
cost
Efficiency difference = (actual working hours – actual output standard working hours) × standard allocation rate Performance evaluation 108、Contribution margin = sales revenue – total variable costs. Controllable contribution margin = contribution margin – controllable fixed costs department contribution margin = revenue – variable costs – controllable fixed costs – uncontrollable fixed costs department pre-tax profit = department contribution margin – management
cost
109、Return on Investment = Marginal Contribution of the Department ÷ Amount of Assets Owned by the Department Residual Income = Marginal Contribution of the Department - Departmental Assets × Capital Cost Rate = Departmental Assets × (Return on Investment - Capital Cost Rate) 110、Operating cash flow = annual cash income - cash recovery rate of expenditures = operating cash flow ÷ average total assets remaining cash flow = operating cash inflow - department assets × capital cost rate
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