A-32 Appendix C Selected Equations and Tables
Chapter 14
Dividends! Net income #
Retained earnings required to help
! nance new in^ vestements^
! Net income # [(Target equity ratio)(Total capital budget)]Chapter 15
Inventory(^) conversion
(^) period "
Average
(^) collection
(^) period #
Payables
(^) deferral
(^) period!
C^ conashversion
(^) cycle
Inventory conversion period!
Inventory
____Cost of goods sold per da (^) y
Average collection period (ACP or DSO)! RecSales/365eivables
Payables deferral period!
Payables
Pur____chases per da^ y^!^
Payables
____Cost of goods sold/365
Accounts receivable! Sales per day $ Length of collection period
Receivables! (ADS)(DSO)
Nominal annual cost of trade credit! ____ 100 Disc# Discount % (^) ount % $ __ 365
(^) outstandingDa^ ys cr edit is # Disc^ periodount
Simple interest rate per day! Nominal r____Days in y (^) earate
Interest charge for month! (Rate per day)(Amount of loan)(Days in month)
Approximate annual rateAdd-on!
Interest paid
__(Amount r (^) ec (^) eived)/2
Chapter 16
Projected Spontaneous Increase in
AFN! asset # liabilities # retained
increase increase earnings
! (A 0 /S 0 )&S # (L 0 /S 0 )&S # MS 1 (1 – Payout)
Full capacity sales!
Actual sales
Percentage of capacity
(^)
at which! xed assets
w^ ere oper^ ated^
Target! xed assets/Sales! Actual ____Full capacit! xed (^) y salesassets
Required level of! xed assets! (Target! xed assets/Sales)(Projected sales)
Chapter 17
Direct quotation:
US$ required
1 unit of f__^ oreign curr^ ency^
Indirect quotation:
Units of foreign currency
1 US$
Forward exchange rate
____Spot exchange r (^) ate!
(1 " rh)
___(1 " r
f)
Ph! (Pf)(Spot rate)
Spot rate!
Ph
__P
f