1.

Maximum Dividends (or per share) / Investments

Orig Current Assets+ x

Rqrd Current Ratio =
Orig Current Liabilities+ x

2. Operating Cycle = Average Age of Inventory + Average Collection Period

Cash Conversion Cycle = Operating Cycle - Average Age of Accounts Payable

• To get Inventory Period

- Inventory Turnover = COGS/Average Inv.
- Inventory Period = 365/Inventory Turnover

• To get the Receivables Period

- Receivable turnover = Net Sales / Average Receivables
- Receivables Period = 365/Receivable Turnover

• To get the AP Period

- AP turnover = Purchases or COGS / Average AP
- AP Period = 365/AP turnover

3. Net Float = Check Issuance Clearing Float - Deposit Clearing Float

Float in Pesos = Net float x Amount of checks received

4. Monthly Average Permanent Fund Requirements = Monthly lowest total assets

Monthly Average Seasonal Fund Requirements = (Total Assets - Permanent Fund
Requirements) / 12

• Annual financing cost (Aggressive)

Permanent funds x Long Term debt rate xxx
Add: Seasonal Funds x Short term debt rate xxx
Total xxx

• Annual financing cost (Conservative)

Highest total assets x Long term debt rate xxx

• Annual Profits on total assets

Fixed Assets = Average fixed assets x Percentage of Fixed assets xxx
Current Assets = Average current assets x Percentage of Current Assets xxx
Total xxx

• Net working Capital = Current assets of that month - Current liabilities given xxx

5. (PEIR) Periodic Effective Interest Rate = (Amount of credit x interest rate) / (Amount of
credit – interest)
(APR) Arbitrage Pricing Rate = PEIR x (days/360)
 Compounded APR = ((1+APR)^(360/days)) -1)
6. Baumol Model (Q*) = square root of (2 x Annual Demand x Cost per transaction) /
Carrying cost per unit or percentage

Transaction Cost = (Annual Demand / Q*) x Cost per transaction xxx

Carrying Cost = (Q* / 2) x Carrying cost per unit or percentage xxx
Total Cost xxx

Miler-Orr model / Return Point = square root of (2 x Conversion Cost x Variances of

Daily Net Cash Flows) / (4 x Daily Opportunity Cost)

Upper limit = Return Point x 3

‘
7. Decrease in Sales -xxx
Multiply: Contribution Margin Rate %
CM - xxx
Less: Decrease in Bad debts
Old Sales x Bad debts % xxx
Less: New Sales x Bad debts % xxx - xxx
Before tax net (benefit)/ cost - xxx
Less: Tax xxx
After tax net (benefit)/ cost - xxx

8. Old Ave. AR = Old Sales units x Sales price per unit x (average collection period / 360)
Less: New Ave. AR = New Sales units x Sales Per unit x (average collection period / 360)

Decrease in Sales xxx

Multiply: VC Per unit / Selling price per unit xxx
Total xxx
Rate of Return %
Total xxx
Less: Cost of Cash Discount (New sales units x sales price per unit x % who will take
discount x % of discount) xxx
Net (benefit)/cost xxx

9. EOQ (units)    
2 x Total Annual Demand x Cost per Order
√   Carrying Cost per unit
EOQ (pesos)              
2 x Total Annual Demand (pesos) x Cost per Order  
√     Carrying Cost ratio (based on sales)    
                 
EOQ (w/ back orders)      
 2 x Total Annual Demand x Cost per Order  
√ CCPU x  Cost of Back Orders (CBU)        
CBO -
      CCPU  

Reorder Point (ROP) = Lead time qty + Safety stock qty

Lead time Qty = Normal usage x Normal lead time
Safety Stock = Safety stock in usage [(max - normal usage) x normal lead time]
Safety stock in time [(max - normal lead time) x normal usage]
Maximum Inventory Level = Safety stock quantity + order size

    Expected Value of Stockout cost        

Prob
abilit
    y of       Expected Val.   Carrying    
Stockout
costs
(Stock
Stoc out cost
Safety kout per unit x of St.Out Costs Costs (Safety
stock (Give Stock out (Stock out costs x stock x Carrying Total
(Given)   n)   units)   probability)   cost per unit)   Cost

105,
100   0.50 x 210,000 = 105,000 + - = 000

10. Revolving credit agreements

Interest xxx
Add: Commitment Fee xxx
Total Cost xxx
Divide: Credit received xxx
Effective cost rate xxx

11. Factoring of Receivables

Receivables xxx
Less: Commission xxx
Less: Reserve xxx
Total Receivables
Less: Interest Charges (Remaining receivables x % x days/360) xxx
Proceeds xxx

12. T-bills
T-bills xxx
Less: Interest xxx
Current Price of T-bills xxx

13. Cost of Giving up cash discount / annual interest rate

 net day−discount day
Discount rate−(interest rate x )
360 360
x
1−discount rate net day−discount day
14. Issuing a commercial paper

Cost of commercial paper −selling price of commercial paper 360

x
selling price of commercial paper days of maturity