Summary Formulas/definitions Financial management, Financial and project management (440026-B-6)
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Course
Financial and project management (440026B6)
Institution
Tilburg University (UVT)
Book
The Basics of financial management
Brief summary of the necessary formulas and definitions for the Project Financial section of the FPM course. I also have a document with the details for project management. These can be purchased in a bundle on my account.
Werkcollege aantekeningen Financial and project management (440026-B-6) The Basics of financial management-exercises, ISBN: 9789001889234
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Tilburg University (UVT)
Organisatie- en managementwetenschappen
Financial and project management (440026B6)
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FINANCIAL MANAGEMENT PART
FORMULAS
HC1
● Equity = Assets – liabilities
● Free cash flow = cash inflow (sales) - cash outflow (purchasing/using resources)
● Profit = income - costs (finance, machinery and labour, overheads, inputs)
● Relation free cash flow and profit;
Free cash flow = period profit after tax + depreciation - investments + disinvestments
—> first; profit before tax (sales - costs), than the tax
● ARR (average rate of return): average profit / average invested capital
● profit: free cash flow - annual deprecation
for average profit; divide through period (years)
● Average invested capital: investments + residual value / 2
● Payback period = free cash flow year1 + free cash flow year2 + …
● Compound interest rate = … x (1,0..)^…
● Discount rate = … / (1,0..)^…
● Net Present Value (NPV) = investment x free cash flow /
(WACC discount rate)^year
● Internal rate of return (IRR) = 0 = investment + free cash flow / (1+i)^year
HC2
● Working capital= current assets - current liabilities
● Economic order quantity= Q’ = √(2xDXF)/c
—> D; total demand per period, F; fixed ordering costs per order, c; carrying costs per unit per
period
● Reorder point = Sales per day x Order lead time
● Break even quantity point: q = F / (p - v)
—> p = selling price, F = fixed cost, v = variable cost per unit
● Contribution= fixed costs / amount above break even point
● Indifference point: Increase in total fixed costs / Reduction in variable costs
—> Annual turnover: units x unit selling price
HC3
● COST ACCOUNTING: the art and science of recording, classifying, summarising and
analysing costs to help management make prudent <voorzichtig> business decision
● Unit costs = fixed costs per unit + variable costs per unit
= (total fixed costs / normal output) + (total variable cost at (exp) actual output / (exp) actual
output)
● AC= profit/loss: transaction result (1) + output level variance (2)
(1) sales revenue (sales volume x selling price) - costs of goods sold (sales volume x full unit
costs)
(2) ((expected) actual output - normal output) x fixed costs per unit
● DC= profit/loss: transaction result (1) - fixed costs (2)
(1) sales revenue (sales volume x selling price) - VARIABLE costs of goods sold
Variance
● Budget = (standard Q x standard P) - (actual Q x actual P)
● Efficiency = (standard Q - actual Q) x standard P
● Price = (standard P - actual P) x actual Q
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