Business analysis, technical accounting, and financial statement analysis topics tested on the CPA BAR discipline section.
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- Formula for the current ratio
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Current assets divided by current liabilities- What does the quick ratio exclude that the current ratio includes?
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Inventory and prepaid expenses- Formula for working capital
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Current assets minus current liabilities- Formula for the debt-to-equity ratio
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Total liabilities divided by total stockholders' equity- Formula for return on equity (ROE)
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Net income divided by average stockholders' equity- Formula for the gross margin ratio
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Gross profit divided by net sales- Formula for inventory turnover
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Cost of goods sold divided by average inventory- Formula for days sales outstanding (DSO)
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Average accounts receivable divided by net credit sales, times 365- Formula for times interest earned
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EBIT divided by interest expense- Formula for the asset turnover ratio
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Net sales divided by average total assets- Formula for the break-even point in units
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Fixed costs divided by contribution margin per unit- Definition of contribution margin
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Sales revenue minus total variable costs- What does the degree of operating leverage measure?
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How sensitive operating income is to a change in sales volume- How does variable costing treat fixed manufacturing overhead?
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As a period expense, not included in product cost- How does absorption costing treat fixed manufacturing overhead?
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As a product cost, included in inventory
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