What are the five components of COSO framework?

(CRIME) (1) Control activities; (2) Risk assessment; (3) Information and
communication; (4) Monitoring; (5) control Environment
How is the control Environment component of COSO framework often
PHRASED?
"tone at the top" (PHRASED) (1) Philosophy and operating style of
management; (2) Human resources; (3) Reporting (financial)
competencies; (4) Authority and responsibility; (5) Structure
(organizational); (6) Ethical values (and integrity); (7) Directors
What are the four categories of enterprise objectives under ERM?
(SORC) (1) Strategic; (2) Operations; (3) Reporting; (4) Compliance
What are the components of ERM?
(IS EAR AIM) (1) Internal environment; (2) Setting objectives; (3) Event
identification; (4) Assessment of risk; (5) Risk response; (6) Activities;
(7) Information and communication; (8) Monitoring
What is prime cost?
Direct labor + direct material
What is conversion cost?
Direct labor + manufacturing overhead
How do you calculate real GDP with multiplier effect?
Multiplier = 1/(1-MPC); change in real GDP= Multiplier x change in
spending;
How do you calculate GDP with the expenditure approach?

(GICE) (1) Government purchases of goods and services; (2) gross

private domestic Investment (nonresidential fixed investment,
residential fixed investment, and change in business inventories); (3)
personal Consumption (durable and non-durable goods, and services);
(4) net Exports (exports minus imports)
How do you calculate GDP under the Income approach?
(IPIRATED) Income of proprietors; Profits of corporations; Interest (net);
Rental income; Adjustments for net foreign income and miscellaneous
items; Taxes (indirect business taxes); Employee compensation
(wages); Depreciation (aka capital consumption allowance)
What are the 8 steps in strategic management in their proper order?
(1) Define the firm's vision and mission statements; (2) Set the goals of
the firm; (3) Define the objectives of the firm; (4) Decide what to
measure and take a baseline measurement; (5) Strategic Analysis
(Strengths, Weaknesses, Opportunities, Threats); (6) Create the
Strategic Plan; (7)Implement the strategic plan; (8) evaluate and revise
the strategic plan (flexibility is key)
What are some of the factors that shift demand curves (other than
price)?
(WRITEN) changes in Wealth; changes in prices of Related goods;
changes in consumer Income; changes in consumer Tastes; changes in
consumer Expectations; changes in Number of buyers served by
market
What are some factors that shift supply curves?
(ECOST) changes in price Expectations of supplying firm; changes in
production Costs (prices of inputs); changes in the price or demand of
Other goods; changes in Subsidies (up) or taxes (down); changes in
production Technology (up)
What is the mnemonic for a firm's input of productive resources?
(CELL) Capital; Entrepreneurial talent; Land; Labor

What are the three major production concepts?

(1) total product TP= total amount of output (Q) produced; (2) marginal
product MP = change in total product resulting from a one-unit
increase in quantity of an input employed; (3) average product AP =
total product divided by the quantity of an input
What is the process for discounting cash flows?
(1) calculate after-tax cash flows; (2) add depreciation benefit
(depreciation x tax rate); (3) multiply result by appropriate present
value of annuity; (4) subtract initial cash outflow; Result= Net present
value
How do you calculate a firm's degree of operating leverage?
percentage change in EBIT (earnings before interest and
taxes)/percentage change in sales
What is financial leverage?
financial leverage= percentage change in EPS/percentage change in
EBIT
How do you calculate combined (Total Leverage)?
percentage change in EPS/percentage change in sales
What is the formula for the cost of debt (kdt)?
(1+(Par Value-Net proceeds)/years to maturity)/ (Net proceeds+Par
Value)/2)
What is the cost or retained earnings (kre) formula?
krf + (bi x (km-kf))
What is net working capital?

difference between current assets and current liabilities

How do you calculate the APR of quick payment discount?
(360/ (pay period-discount period) x (discount/(100-discount %)
What is the cash conversion cycle formula?
lower the better; inventory conversion period + receivables collection
period - payables deferral period
How do you calculate inventory conversion period?
average inventory/average cost of sales per day (COGS /360)
How do you calculate receivables collection period?
average receivables/average sales per day (sales/360)
How do you calculate payables deferral period?
average payables / averages purchases per day (COGS/360)
How do you calculate # of days of inventory in stock?
360/inventory turnover ratio = ending inventory/COGS x 360
How do you calculate and annuity present value (discounted cash
flow)?
Cash flow x (1-(1/(1+r)^t)/r
How do you calculate per share valuation?
Price= Dividend/required return

How do you calculate per share valuation with assumed growth?

Current price=Dividend in one year/ (Required return-growth rate)
What is sales volume variance?
(actual sold units minus budgeted sales units) x (sales price minus
variable costs)
How do you calculate sales mix variance?
(actual product sales mix ratio minus budgeted product sales mix ratio)
x actual sold units x budgeted contribution margin per unit of that
product
How do you calculate sales quantity variance?
(actual sold units of product minus budgeted sales units of product) x
budgeted product sales mix ratio x budgeted contribution margin per
unit of that product
How do you calculate market size variance?
(actual market size in units minus expected size in units) x budgeted
market share x budgeted contribution margin per unit (weighted
average)
How do you calculate market share variance?
(actual market share minus budgeted market share) x actual industry
units x budgeted contribution margin per unit (weighted average)
How do you calculate selling price variance (or sales revenue flexible
budget variance)?
(actual selling price per unit minus budgeted sales price per unit) x
actual sold units
How do you calculate contribution margin ratio?

contribution margin / revenue

Under the equation format, how do you calculate DM price variance?
actual quantity purchased x (actual price minus standard price)
Under the equation format, how do you calculate DM quantity usage
variance?
standard price x (actual quantity used minus standard quantity
allowed)
Under the equation format, how do you calculate DL rate variance?
actual hours worked x (actual rate minus standard rate)
Under the equation format, how do you calculate DL efficiency
variance?
standard rate x (actual hours worked minus standard hours allowed)