It is important to note that r variable in the doubling time formula is the rate per period. If one needs to calculate the amount of time to double their money in a money market account that is compounded monthly, then the r variable needs to express the monthly rate and not the annual rate. The monthly rate can be found by dividing the annual rate by 12. With this situation, the doubling time formula will give the number of months that it takes to double money and not years.

In addition to expressing r as the monthly rate if the account is compounded monthly, one could also use the effective annual rate, or annual percentage yield, as r in the doubling time formula. This particular calculator is used to calculate the monthly rate and not the annual rate.

The investment turnover measure should be tracked on a trend line to see if there are changes in the level of sales efficiency over time.

To find the investment turnover, divide total sales by the combination of stockholders’ equity and long-term liabilities. In cases where debt is coming due in the short term, and therefore is categorized as a short-term liability, it is also acceptable to include it in the denominator.

This figure is useful for a number of operating decisions, such as determining how much extra productive capacity is available after break-even sales have been manufactured, which tells the management team how much profit can theoretically be generated at maximum capacity levels.

To find the break-even point, divide the average gross margin percentage into total operating costs. Be sure to include all operating costs outside of the cost of goods sold in this calculation; only extraordinary items that are in no way related to ongoing operations should be excluded.

The margin of safety indicates the probability that a company may find itself in difficult financial circumstances caused by sales fluctuations.

Subtract the break-even point from the current sales level, and then divide the result by the current sales level. To calculate the break-even point, divide the gross margin percentage into the total fixed costs. This formula can be broken down into individual product lines for a better view of risk levels within business units.

Divide total annual dividend payments by annual cash flow. If there is a long-standing tradition by the board of directors of continually increasing the amount of the dividend, then annualize the last (and presumably largest) dividend only and use the resulting figure in the numerator of the calculation.

Multiply the accounts receivable balance by the average number of days required to liquidate it. Then multiply the inventory balance by the average number of days required to liquidate it (which includes both the number of days to sell the inventory and the number of days to collect the resulting accounts receivable). Then add these two items together and divide them by the sum of all accounts receivable and inventory.

If the accounts receivable or inventory balances tend to fluctuate significantly, an average figure can be used for both.

A negative net worth is a reasonable indicator of serious fiscal problems. This measure is sometimes used by lenders, who may require that a minimum net worth be maintained for a loan to be left outstanding.

In its simplest form, the net worth calculation is found by subtracting total liabilities from total assets.

The formula shown has assumptions, in that it must be an ordinary annuity. These assumptions are that:

1. The periodic payment does not change
2. The rate does not change
3. The first payment is one period away

If the payment and/or rate changes, the calculation of the present value would need to be adjusted depending on the specifics. If the payment increases at a specific rate, the present value of a growing annuity formula would be used.

First find the current monthly budget. To do this, multiply the daily budget by 30.4 and then double the sum to account for markup.

Then find current results and produce a ratio of how many clicks it takes to produce 1 lead. Produce a ratio by simply dividing the users by the leads for that month.

Now find feasible suggestions by trying different increases. Remember that the Google suggestions provide the number of projected clicks by week, so you must multiply that number by 4 to remain in the monthly calculation.

Lastly, do simple division on the current and projected sets of numbers to see increases. Divide suggested budget by current budget. Then divide projected users by current users. And divide projected leads by current leads.

If you cannot produce a ratio of 2:3 (2x budget for 3x results), then reconsider increasing the budget and instead look to optimise the campaign.

The Gross Pay can be calculated by multiplying the employee's hourly wage by the number hours they worked during the week. This is often based on a standard 40 hour work week.

The Overtime Gross Pay can be calculated by carefully following the order of operations. First, multiply the product of the normal rate and the overtime compensation by the difference of the total hours worked and 40 standard hours. Then find the sum of the first product and the product of the normal rate and 40 standard hours.

Compensation is always given if an employee exceeds the standard 40 hours in a work week, and in many places, compensated pay is given if an employee works on a Sunday as well as holidays. Compensation is often time and a half (1.5), double overtime (2), or triple overtime (3).

To calculate the wage to salary ratio, start by calculating the smaller ratios and then use the product to find the larger ratios. To find the daily rate of pay, multiply the hours worked by the hourly rate. To find the weekly, multiply the wage by the total hours worked in a week. To find the monthly, multiply the previous product by the number of weeks in a month. To find the yearly, multiply the previous product by the number of months in a year.

Conversely, this formula can be used to determine an hourly wage if a salary is already known. Instead of multiplication, use division to divide the salary by the number of months, weeks, and hours worked respectively.

This measurement is based solely on information in the balance sheet. Its intent is to focus management attention on assets that are not generating a return on investment so that they can be eliminated.

Divide the dollar value of all assets used in the revenue creation process by the total amount of assets. Both of these numbers should be recorded at their gross values, prior to any depreciation deduction. The calculation can also include accounts receivable and inventory

It is particularly noteworthy in cases where a company continually muddies the waters by adding a variety of items, such as asset sales and loss contingency reserves, that make it difficult to see how the underlying business is performing. The ratio is best used on a trend line, so that long-term changes in profitability can be readily seen and acted upon.

Divide operating income by net sales (reduced by investment income). Investment income, if listed as revenue, should be eliminated from the net sales figure, because it relates to a company’s financial activities rather than its operations.

It is particularly useful when calculated for individual product lines, since the cost of sales and distribution can vary significantly by product line, and thus shows the actual margins generated in these areas. It should be tracked on a trend line to see if distribution and sales costs are proportionally changing in relation to sales volume.

Subtract sales expenses from the gross margin, and divide the result by gross sales. Sales costs should include the sales department’s payroll, commissions, benefits, travel expenses, customer service, field maintenance, warranty, sales promotion, advertising, and distribution costs.

There are two ways to measure the gross margin. The most common approach is to add together the costs of overhead, direct materials, and direct labor; subtract the total from revenue; and then divide the result by revenue. This approach takes into account all costs that can be reasonably associated with the production process.

The trouble with this approach is that many of the production costs are not truly variable. Under a much more strictly defined view of variable costs, only direct materials should be included in the formula, since this is the only cost that truly changes in proportion with changes in revenue. All other production costs are then shifted into other operational and administrative costs, which typically yields a high gross margin percentage.

If the ratio is substantially higher than one, then there is a high risk that fraudulent reporting was used to achieve an improvement in the gross profit percentage from period to period.

Divide the gross profit in period two by sales for the same period, and then divide this by the same calculation for period one.

This percentage reveals the extent to which a company is earning a profit from standard operations, as opposed to resorting to asset sales or unique transactions to post a profit.

Subtract the cost of goods sold, as well as all sales, general, and administrative expenses, from sales. To obtain a percentage that is related strictly to operational results, be sure to exclude interest income and expense from the calculation, since these items are related to a company’s financing decisions rather than its operational characteristics. Expense totals used in the ratio should exclude all extraordinary transactions, as well as asset dispositions, since they do not relate to continuing operations.

It is particularly useful when a company is considering the acquisition of more fixed assets to replace variable costs, such as manual labor in the production process, and wants to find out the extent to which this will add to its fixed cost structure. This ratio works well when combined with break-even analysis, which is heavily influenced by changes in fixed costs.

Subtract all variable expenses from sales and then divide this amount by operating income. Under the most strict definition of variable expenses, this will likely include only direct materials costs and commissions; all other expenses are fixed in the short run and can be included in the ratio as fixed costs.

This figure is the one most commonly used as a benchmark for determining a company’s performance, even though it can be significantly misrepresented by the accounting department.

Divide net income by revenue. If this percentage is being tracked on a trend line, it may be useful to eliminate from the calculation any extraordinary income items, such as losses from disasters, since they do not yield comparable period-to-period information.

It is least useful in highly automated entities where the proportion of labor costs to total costs is quite small. This is a more comprehensive measure than sales per person since it accounts for not only the ability of the staff to bring in sales but also their ability to wring a profit from those sales.

Divide net profit by the total number of full-time equivalents. This measure is more reliable when net profit from operations is used instead of total net profit, since this concentrates attention on actual operating results, rather than other actions that may impact profits. A full-time equivalent (FTE) is the combination of staffing that equals a 40-hour week. For example, two half-time employees would be counted as one FTE.

The future value of an annuity formula assumes that:

1. The rate does not change
2. The first payment is one period away
3. The periodic payment does not change

If the rate or periodic payment does change, then the sum of the future value of each individual cash flow would need to be calculated to determine the future value of the annuity. If the first cash flow, or payment, is made immediately, the future value of annuity due formula would be used.

Understanding the future value of annuity with continuous compounding formula requires the understanding of two specific financial and mathematical concepts, which are future value of an annuity and continuous compounding.

The future value of an annuity is the sum of a series of periodic payments and typically involves compounding of interest as the balance increases. The formula for future value of annuity alone generally solves the question "How much will I have saved at X dollars per month after Y months."

Continuous compounding is compounding that is constant. One way some try to visualize the concept of continuous compounding is that is fluid, constantly compounding moment by moment, as opposed to daily, monthly, quarterly, or annually. The question a few sentences above regarding 'How much will I have saved' must also take into consideration how often interest is compounded in the interest bearing account.

The Capitalization Rate of an investment may be calculated by dividing the investment’s net operating income (NOI) by the current market value of the property, where NOI is the annual return on the property minus all operating costs.

For instance, if someone borrows $130,000 to purchase a house worth $150,000, the LTV ratio is $130,000 to $150,000 or $130,000/$150,000, or 87%. The remaining 13% represent the lender's haircut, adding up to 100% and being covered from the borrower's equity. The higher the LTV ratio, the riskier the loan is for a lender.

The valuation of a property is typically determined by an appraiser, but a better measure is an arms-length transaction between a willing buyer and a willing seller. Typically, banks will utilize the lesser of the appraised value and purchase price if the purchase is "recent" with in 1–2 years.

The higher this ratio is, the easier it is to obtain a loan. The phrase is also used in commercial banking and may be expressed as a minimum ratio that is acceptable to a lender; it may be a loan condition. Breaching a DSCR covenant can, in some circumstances, be an act of default.

In corporate finance, DSCR refers to the amount of cash flow available to meet annual interest and principal payments on debt, including sinking fund payments.

n personal finance, DSCR refers to a ratio used by bank loan officers in determining debt servicing ability.

In commercial real estate finance, DSCR is the primary measure to determine if a property will be able to sustain its debt based on cash flow.

The Gross Rent Multiplier (GRM) is the number of months the property would take to pay for itself in gross received rent. For the investor, a higher GRM (perhaps over 120) is a poorer opportunity, whereas a lower one (perhaps under 80) is better.

The GRM is useful for comparing and selecting investment properties where depreciation effects, periodic costs (such as property taxes and insurance) and costs to the investor incurred by a potential renter (such as utilities and repairs) can be expected to be uniform across the properties (either as uniform values or uniform fractions of the gross rental income) or insignificant in comparison to gross rental income. As these costs are also often more difficult to predict than market rental return, the GRM serves as an alternative to a measure of net investment return where such a measure would be difficult to determine.

The Operating Expense Ratio formula measures how much of a property’s potential rental income is consumed by expenses needed to operate the property. When building a multi-year proforma, it can often be helpful to calculate an operating expense ratio for each year in the holding period in order to spot trends in total operating expenses, relative to potential rental income.

The numerator of the average collection period formula shown at the top of the page is 365 days. For many situations, an annual review of the average collection period is considered. However, if the receivables turnover is evaluated for a different time period, then the numerator should reflect this same time period.

For example, if the receivables turnover for one year is 8, then the average collection period would be 45.63 days. If the period considered is instead for 180 days with a receivables turnover of 4.29, then the average collection period would be 41.96 days. By the nature of the formula, a company will have a lower receivables turnover when a shorter time period is considered due to having a larger portion of its revenues awaiting receipt in the short run.

This is a particularly effective measure when compared to the same ratio for other companies in the same industry; that is, if another company has found a way to generate profitable sales with a smaller asset investment, then it will be rewarded with a higher valuation. This measure is also useful when tracked on a trend line, so that one can see if there are any sudden jumps in asset investments that the company has made to incrementally bring in more sales.

Divide net sales for a full year by the total amount of fixed assets. There are several variations on this formula. One is to calculate annualized net sales on a rolling basis, so that the last 12 months of revenue are always used. This can be a better approach than attempting to extrapolate revenues forward for several months, especially if future revenues are uncertain. The denominator in the calculation, which is the amount of total fixed assets, may be used net of depreciation or before depreciation; the most common usage is after depreciation, since this is more indicative of the actual value of the assets.

Divide annualized net sales by the total of all general and administrative expenses. It is better to use the last twelve months of net sales for the annualized net sales figure, rather than an estimate of sales for future months, since the look-forward estimate may be substantially incorrect. Also, the expense figure in the denominator should include the cost of the sales department, especially if its cost is largely fixed (as is the case when the sales staff has a high proportion of salaries to commissions).

The ratio can also be used to determine if too much equity has accumulated in a business, so that some may be extracted through extra dividends, a stock buyback, or some other form of distribution.

Divide annual net sales by total equity. It is important to include retained earnings in the denominator; many companies that have high margins or have been generating profits for many years have accumulated a great deal of retained earnings, which may make up the largest component of equity.

If the ratio is dropping rapidly over several consecutive months, then it is likely that the company will soon experience a reduction in sales volume as well as over-capacity in its production and related overhead areas, resulting in imminent losses. Conversely, a rapid jump in the ratio indicates that a company cannot keep up with demand, and it may soon have customer relations problems from delayed orders and need additional capital expenditures and staff hirings to increase its productive capacity.

Divide the most current total backlog of sales orders by sales. It is generally best not to use annualized sales in the denominator, since sales may vary considerably over that period, due to the influence of seasonality. A better denominator is sales over just the preceding quarter.

Divide total sales returns by gross sales. This ratio can be unusually high or low from month to month, because sales returns are usually related to shipments made in previous months; consequently, a high sales month may have very low associated sales returns, which instead will appear in the ratio for the following month. To avoid this problem, the ratio should be aggregated on a rolling quarterly basis, so that returns will be more likely to be matched against related sales.

If the proportion of accumulated depreciation to fixed assets is quite high, it is evidence that not too many assets have been added by a company in recent years, which may in turn lead one to suspect that there is little cash available for such investments.

Divide the total accumulated depreciation by the total amount of fixed assets. A variation on this approach is to run the same calculation for different classes of assets, in order to see if there are certain types of assets in which a company does not appear to be making a sufficient level of investment in new assets.

This is also a useful measure when comparing the overall fringe benefit costs of two companies that are considering merging, so that the surviving entity can calculate the potential savings to be made by shifting the other company’s benefit plan to that of the acquirer.

This can also be a tool for comparing the benefit costs of union shops to non-union shops, since there can be significant differences in the benefits granted to union members.

Add together the cost of all discretionary benefit costs, minus the cost of any related deductions from employee pay, and divide this amount by the total of all wages, salaries, and payroll taxes.

A high ratio of discretionary costs to sales means that there are considerable opportunities for expense reductions.

Divide all discretionary costs by sales. Discretionary costs can include marketing, research and development, training, and repairs and maintenance costs, as well as any other costs that do not directly contribute to ongoing sales or production activities.

Divide the interest expense by the sum of all short- and long-term debt. The total amount of debt can also include all leases, if an interest expense can be calculated from them and is included in the interest expense account.

Divide total overhead expenses by an activity measure. The following expenses should be included in overhead:

1. Maintenance
2. Quality control and inspection
3. Repair expenses
4. Rent
5. Utilities

One alternative is to use the quick ratio, which excludes inventory from the current assets portion of the current ratio. By doing so, one can gain a better understanding of a company’s very short-term ability to generate cash from more liquid assets, such as accounts receivable and marketable securities.

Add together cash, marketable securities, and accounts receivable, and then divide the result by current liabilities. Be sure to include only those marketable securities that can be liquidated in the short term and those receivables that are not significantly overdue.

This means that a company has a limited amount of time in order to raise the funds to pay for these liabilities. Current assets like cash, cash equivalents, and marketable securities can easily be converted into cash in the short term. This means that companies with larger amounts of current assets will more easily be able to pay off current liabilities when they become due without having to sell off long-term, revenue generating assets.

The current ratio is calculated by dividing current assets by current liabilities. This ratio is stated in numeric format rather than in decimal format.

Current liabilities are best paid with current assets like cash, cash equivalents, and marketable securities because these assets can be converted into cash much quicker than fixed assets. The faster the assets can be converted into cash, the more likely the company will have the cash in time to pay its debts.

The reason this ratio is called the working capital ratio comes from the working capital calculation. When current assets exceed current liabilities, the firm has enough capital to run its day-to-day operations. In other words, it has enough capital to work. The working capital ratio transforms the working capital calculation into a comparison between current assets and current liabilities.

The working capital ratio is calculated by dividing current assets by current liabilities.

In some respects the times interest ratio is considered a solvency ratio because it measures a firm's ability to make interest and debt service payments. Since these interest payments are usually made on a long-term basis, they are often treated as an ongoing, fixed expense. As with most fixed expenses, if the company can't make the payments, it could go bankrupt and cease to exist. Thus, this ratio could be considered a solvency ratio.

The times interest earned ratio is calculated by dividing income before interest and income taxes by the interest expense.

A turn refers to each time a company collects its average receivables. If a company had $20,000 of average receivables during the year and collected $40,000 of receivables during the year, the company would have turned its accounts receivable twice because it collected twice the amount of average receivables.

This ratio shows how efficient a company is at collecting its credit sales from customers. Some companies collect their receivables from customers in 90 days while other take up to 6 months to collect from customers.

Accounts receivable turnover is calculated by dividing net credit sales by the average accounts receivable for that period.

The total asset turnover ratio calculates net sales as a percentage of assets to show how many sales are generated from each dollar of company assets. For instance, a ratio of .5 means that each dollar of assets generates 50 cents of sales.

The asset turnover ratio is calculated by dividing net sales by average total assets.

The cash cycle has three distinct parts. The first part of the cycle represents the current inventory level and how long it will take the company to sell this inventory. This stage is calculated by using the days inventory outstanding calculation.

The second stage of the cash cycle represents the current sales and the amount of time it takes to collect the cash from these sales. This is calculated by using the days sales outstanding calculation.

The third stage represents the current outstanding payables. In other words, this represents how much a company owes its current vendors for inventory and goods purchases and when the company will have to pay off its vendors. This is calculated by using the days payables outstanding calculation.

The cash conversion cycle is calculated by adding the days inventory outstanding to the days sales outstanding and subtracting the days payable outstanding.

This is why many creditors look at the cash ratio. They want to see if a company maintains adequate cash balances to pay off all of their current debts as they come due. Creditors also like the fact that inventory and accounts receivable are left out of the equation because both of these accounts are not guaranteed to be available for debt servicing. Inventory could take months or years to sell and receivables could take weeks to collect. Cash is guaranteed to be available for creditors.

The cash coverage ratio is calculated by adding cash and cash equivalents and dividing by the total current liabilities of a company.

Since most investments’ annual returns vary from year to year, the CAGR calculation averages the good years’ and bad years’ returns into one return percentage that investors and management can use to make future financial decisions.

CAGR formula is calculated by first dividing the ending value of the investment by the beginning value to find the total growth rate. This is then taken to the Nth root where the N is the number of years money has been invested. Finally, one is subtracted from product to arrive at the compound annual growth rate percentage.

The concept of this equation relies on the difference between fixed and variable costs. Fixed costs are production costs that remain the same as production efforts increase. Variable costs, on the other hand, increase with production levels.

The contribution margin measures how efficiently a company can produce products and maintain low levels of variable costs. It is considered a managerial ratio because companies rarely report margins to the public. Instead, management uses this calculation to help improve internal procedures in the production process.

The contribution margin is calculated by subtracting total variable costs from total sales revenue.

The COGS formula is particularly important for management because it helps them analyse how well purchasing and payroll costs are being controlled. Creditors and investors also use cost of goods sold to calculate the gross margin of the business and analyse what percentage of revenues is available to cover operating expenses.

Both manufacturers and retailers list cost of good sold on the income statement as an expense directly after the total revenues for the period. COGS is then subtracted from the total revenue to arrive at the gross margin.

The cost of goods sold formula is calculated by adding purchases for the period to the beginning inventory and subtracting the ending inventory for the period.

This ratio measures the financial leverage of a company. Companies with higher levels of liabilities compared with assets are considered highly leveraged and more risky for lenders. This helps investors and creditors analysis the overall debt burden on the company as well as the firm's ability to pay off the debt in future, uncertain economic times.

The debt ratio is calculated by dividing total liabilities by total assets. Both of these numbers can easily be found the balance sheet.

Investors invest their money in stocks to earn a return either by dividends or stock appreciation. Some companies choose to pay dividends on a regular basis to spur investors' interest. These shares are often called income stocks. Other companies choose not to issue dividends and instead reinvest this money in the business. These shares are often called growth stocks.

Investors can use the dividend yield formula to help analyse their return on investment in stocks.

The dividend yield formula is calculated by dividing the cash dividends per share by the market value per share.

The Dupont analysis looks at three main components of the ROE ratio: Profit Margin, Total Asset Turnover, and Financial Leverage.

Based on these three performances measures the model concludes that a company can raise its ROE by maintaining a high profit margin, increasing asset turnover, or leveraging assets more effectively.

The Dupont Model equates ROE to profit margin, asset turnover, and financial leverage.

To avoid this, the logistics staff must ensure that the jobs listed on the production schedule are completed in an orderly manner and in the scheduled sequence and quantities. The production schedule accuracy measurement is a useful tool for tracking this.

Divide the number of scheduled jobs completed during the measurement period by the total number of jobs scheduled for completion. However, if there are large jobs that cross over multiple periods, they will fall outside of this measurement, which only tracks completed jobs. In such cases, it may be more accurate to divide the number of completed production tasks within each scheduled job by the total number of scheduled tasks for all jobs.

Under this calculation, the point at which the carrying cost of inventory equals its ordering cost can be derived. Theoretically, this is the ideal quantity that should be ordered.

Multiply the total usage of a component by two, and then multiply the result by the cost per order. Then divide this result by the carrying cost per unit, and calculate the root of the result. Of particular importance is the variety of costs that can be included in the carrying cost per unit, which includes incremental materials handling costs, the cost of extra warehouse space and storage racks to contain it, damage caused by storage, insurance fees, and property taxes.

Divide the total usage in units for a selected time period by the economic order quantity, as shown in the preceding section.

This measurement assumes that the effort required to place any order is the same. In reality, the cost of order placement varies widely, depending on the number of purchasing steps required for items of different costs (more steps for high-dollar orders), the uniqueness of the items ordered, and the need for documentation for international orders. Consequently, it is better to run this calculation for different types of orders, to gain a more accurate understanding of the total projected amount of time required to place them.

This is a useful tool for the production scheduling staff, which needs to know the most cost-effective size for which production runs should be scheduled.

Multiply the total unit demand of a product by two, and then multiply the result by the run setup cost. Then divide the result by the carrying cost per unit, and calculate the root of the result. Of particular importance is the variety of costs that can be included in the carrying cost per unit, which includes incremental materials handling costs, the cost of extra warehouse space and storage racks to contain it, damage caused by storage, insurance fees, and property taxes.

Divide the dollar volume of raw materials consumed during the measurement period by the total dollar value of inventory on hand at the end of the period, and multiply the result by 12. The inventory value at the end of the period can be arbitrarily high in relation to average inventory levels throughout the measurement period, so an average value can be used instead.

Also, the measurement can be tracked on a trend line to see if the proportion of raw material to sales is rising, which indicates that raw material costs are increasing without a corresponding increase in sales.

Summarize the total amount of raw material dollars sold, and divide it by sales. The amount of raw materials can be collected from the bills of material associated with each product sold, though this only summarizes the standard amount of raw materials used (which may not reflect actual scrap levels or the most current raw material costs).

This manufacturing strategy is used by companies that level-load their work forces year-round and by companies that are attempting to increase their loan borrowing bases by pumping up the value of their inventories by converting them to higher-value finished goods. Given the latter reason, a lender may be interested in reviewing this measurement on a trend line to see if it increases in concert with the company’s borrowing base.

Divide the amount of finished goods dollars sold during the measurement period by the finished goods dollar amount on hand, and multiply the result by 12. In cases where there are highly seasonal sales, it is better to use an average annualized sales figure than the annualized sales for the month in which the measurement is made.

First, external auditors will require that an obsolescence reserve be set up against these items, which will lower the inventory value and create a charge against current earnings. Second, constantly monitoring the level of obsolescence allows a company to work on eliminating the inventory through such means as returns to suppliers, taxable donations, and reduced-price sales to customers. Finally, obsolete inventory takes up valuable warehouse space that could otherwise be put to other uses; monitoring it with the obsolete inventory percentage allows management to eliminate these items to reduce space requirements.

Summarize the cost of all inventory items having no recent use, and divide by the total inventory valuation. The amount used in the numerator is subject to some interpretation, since there may be an occasional use that will eventually use up the amount left in stock, despite the fact that it has not been used for some time. An alternative summarization method for the numerator that avoids this problem is to include only those inventory items that do not appear on any bill of material for a currently produced item.

By determining the amount of inventory that is older than a certain fixed date, the logistics staff can determine which items should be returned to suppliers (see the next measurement) or which items should be sold off at a reduced price.

Settle on a number of days after which inventory is considered to be old enough to require liquidation action. Then determine the dollar value of all items whose age exceeds this number of days. Divide that total by the total dollar value of inventory. The measurement should be accompanied by a report that lists the detailed amounts and locations of each inventory item in the numerator so that the logistics staff can review them in detail.

Whatever the reason, it is useful to review the inventory occasionally to determine what proportion of it can be returned to suppliers for cash or credit.

Summarize all inventory items for which suppliers have indicated that they will accept a return in exchange for cash or credit. For these items, use in the numerator either the listed book value of returnable items or the net amount of cash that can be realized by returning them (which will usually include a restocking fee charged by suppliers). The first variation is used when a company is more interested in the amount of total inventory that it can eliminate from its accounting records, whereas the second approach is used when a company is more interested in the amount of cash that can be realized through the transaction. The denominator is the book value of the entire inventory.

Consequently, this is one of the most important measures of supplier performance. It should be measured both by supplier and by each component provided by each supplier, in case there are problems with only some portion of a supplier’s total deliveries to a company. Also, it should be measured on a trend line, so that gradual increases can be easily spotted and dealt with.

Summarize all rejected components and divide them by the total number of components received. As just noted, this measurement should at least be summarized by supplier, if not by specific component types delivered by individual suppliers.

To solve this, simply divide the cost of the Box by the number of units in the Box. Compare the Price Per Unit or PPU against the other Boxes to determine which is the most cost effective option.

First we determine the Wholesale Cost by multiplying the Number of Units by the Price Per Unit.

Then we find the Retail Price by mutliplying the Price Per Unit by the Markup percentage.

To find net profit, we subtract Wholesale Costs and Overhead from gross Retail Sales.

First multiply the number of graphical elements by the load time of a single graphical element.

Then multiple the number of text elements by the load time of a single text element.

Add these two products together for the load speed of an old system. Then find the difference in new system load speed by using a percentage against the old system.

lorem....

lorem....

lorem..