Summary Formula sheet (only important ones) accounting 1 VU
27 views 6 purchases
Course
Accounting I (E_EBE1_ACC1)
Institution
Vrije Universiteit Amsterdam (VU)
This is a summary of the important formulas from the course accounting 1, which is given in the first year of the study economics and business economics at the Vrije Universiteit Amsterdam.
With remembering all the formulas on this sheet, I was able to pass the course.
Traditional decomposition approach (DuPont decomposition):
ROE = return on sales (ROS) x asset turnover x equity multiplier
operating efficiency effective use of assets leverage
Definitions for alternative decomposition
- NOPAT = net operating profit after tax (Operating):
net profit – NIPAT + net interest expense
- NIPAT = net investing profit after tax (Investment):
(investment income + interest income) x (1 – tax rate)
- Business assets:
shareholder’s equity + interest bearing debt
- ROBA = return on business assets:
(NIPAT + NOPAT) / business assets
- Financial leverage:
debt / equity
- Effective interest rate after tax (financing):
interest expenses after tax / debt
Alternative decomposition approach separates financial statements in operating, investing and financing
activities.
𝑁𝑂𝑃𝐴𝑇 + 𝑁𝐼𝑃𝐴𝑇 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥
𝑅𝑂𝐸 = −
𝐸𝑞𝑢𝑖𝑡𝑦 𝐸𝑞𝑢𝑖𝑡𝑦
NOPAT + NIPAT 𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠 𝑎𝑠𝑠𝑒𝑡𝑠 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥 𝐷𝑒𝑏𝑡
= x − 𝑥
Business assets 𝐸𝑞𝑢𝑖𝑡𝑦 𝐷𝑒𝑏𝑡 𝐸𝑞𝑢𝑖𝑡𝑦
Operating management
Gross profit margin = (sales – cost of sales) / sales
NOPAT margin = net operating profit after tax / sales
EBITDA margin = earnings before interest tax depreciations / sales
Financial management - liquidity
Cash ratio = cash / current liabilities
Quick ratio = (cash + trade receivables) / current liabilities
Financial management – solvency
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller nadinevalkenburg. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $0.00. You're not tied to anything after your purchase.
