MINDPLUG ACADEMIC SOLUTIONS | VERIFIED EXAM GUIDES 2025
MBA MFT Study Guide Cards (2025 Edition)
– Core Business Concepts, Formulas &
Practice Questions | Verified and Updated
steps in capital budgeting
(1) estimate cash flows, (2) assess risk of cash flows, (3) determine r [WACC], (4) evaluate cash flows
THE DUPONT EQUATION
(1) ROA = [NY/SALES] [SALES/TA] = NY/TA
(2) ROE = [NY/TA] [TA/EQUITY] = NY/EQUITY
components of risk
(1) default risk, (2) maturity risk premium, (3) liquidity premium
why would a company have a target capital structure?
recognize debt is cheaper, but too much debt increases cost of debt, which increases default risk and
looks bad
efficient frontier
the set of optimal portfolios that offers the highest expected return for a defined level of risk or the
lowest risk for a expected level of return
MINDPLUG ACADEMIC SOLUTIONS – TURNING STUDY INTO STRATEGY
,MINDPLUG ACADEMIC SOLUTIONS | VERIFIED EXAM GUIDES 2025
WACC (definition)
the weighted average of the after-tax components cost of capital -- debt, preferred stock, and common
equity
byproduct
a product of relatively small total value produced simultaneously with a product of greater total value
methods of byproduct costing
(1) byproducts could be valued at the split-off point at their net realizable value
(2) none of the common costs is assigned to the byproducts
job costing vs. process costing
- job costing is used for unique products, process costing is for standardized
- job costing is for small production runs, process costing for large production runs
- job costing is more likely to be used for billing to customers
activity based costing (ABC)
firm assigns costs to the activities that are the real cause of the overhead, then assigns the costs of
those activities only to the products that are actually demanding the activities
absorption vs. variable costing
absorption includes all costs, including fixed costs, in figuring the cost of production, while variable
costing only includes the variable costs related to production
MINDPLUG ACADEMIC SOLUTIONS – TURNING STUDY INTO STRATEGY
,MINDPLUG ACADEMIC SOLUTIONS | VERIFIED EXAM GUIDES 2025
UNITS FOR TARGET PROFIT =
X = (TFC/[UP-UVC]) + TP
cost behavior
the change in total costs in response to the change in some activity
- costs that vary proportionately with the changes in the level of activity are variable costs, unaffected
are fixed costs
options for transfer pricing (4)
(1) market based, (2) variable-cost, (3) full-cost, (4) negotiated
TOTAL COST
TC = UVC(UNITS) + TFC
BREAK EVEN POINT =
BEP = TFC/(UP - UVC) or... TFC/UCM
variance analysis
the quantitative investigation of the difference between actual and planned behavior
cash budget
MINDPLUG ACADEMIC SOLUTIONS – TURNING STUDY INTO STRATEGY
, MINDPLUG ACADEMIC SOLUTIONS | VERIFIED EXAM GUIDES 2025
financial budget prepared to calculate the budgeted cash inflows and outflows during a period and the
budgeted cash balance at the end of the period
3 ways to analyze sell-or-process further
(1) incremental (or differential), (2) opportunity cost, (3) total project approach
major segmentation variables (4)
(1) geographic, (2) demographic, (3) psychographic, (4) behavioral
penetrated market
set of customers who are buying the company's product
target market
qualified available market the company decides to pursue
available market
set of consumers who have interest, income, and access to a particular offer
potential market
set of consumer with a sufficient level of interest in a market offer
corporate culture
shared experiences, stories, beliefs, & norms that characterize an organization
MINDPLUG ACADEMIC SOLUTIONS – TURNING STUDY INTO STRATEGY
MBA MFT Study Guide Cards (2025 Edition)
– Core Business Concepts, Formulas &
Practice Questions | Verified and Updated
steps in capital budgeting
(1) estimate cash flows, (2) assess risk of cash flows, (3) determine r [WACC], (4) evaluate cash flows
THE DUPONT EQUATION
(1) ROA = [NY/SALES] [SALES/TA] = NY/TA
(2) ROE = [NY/TA] [TA/EQUITY] = NY/EQUITY
components of risk
(1) default risk, (2) maturity risk premium, (3) liquidity premium
why would a company have a target capital structure?
recognize debt is cheaper, but too much debt increases cost of debt, which increases default risk and
looks bad
efficient frontier
the set of optimal portfolios that offers the highest expected return for a defined level of risk or the
lowest risk for a expected level of return
MINDPLUG ACADEMIC SOLUTIONS – TURNING STUDY INTO STRATEGY
,MINDPLUG ACADEMIC SOLUTIONS | VERIFIED EXAM GUIDES 2025
WACC (definition)
the weighted average of the after-tax components cost of capital -- debt, preferred stock, and common
equity
byproduct
a product of relatively small total value produced simultaneously with a product of greater total value
methods of byproduct costing
(1) byproducts could be valued at the split-off point at their net realizable value
(2) none of the common costs is assigned to the byproducts
job costing vs. process costing
- job costing is used for unique products, process costing is for standardized
- job costing is for small production runs, process costing for large production runs
- job costing is more likely to be used for billing to customers
activity based costing (ABC)
firm assigns costs to the activities that are the real cause of the overhead, then assigns the costs of
those activities only to the products that are actually demanding the activities
absorption vs. variable costing
absorption includes all costs, including fixed costs, in figuring the cost of production, while variable
costing only includes the variable costs related to production
MINDPLUG ACADEMIC SOLUTIONS – TURNING STUDY INTO STRATEGY
,MINDPLUG ACADEMIC SOLUTIONS | VERIFIED EXAM GUIDES 2025
UNITS FOR TARGET PROFIT =
X = (TFC/[UP-UVC]) + TP
cost behavior
the change in total costs in response to the change in some activity
- costs that vary proportionately with the changes in the level of activity are variable costs, unaffected
are fixed costs
options for transfer pricing (4)
(1) market based, (2) variable-cost, (3) full-cost, (4) negotiated
TOTAL COST
TC = UVC(UNITS) + TFC
BREAK EVEN POINT =
BEP = TFC/(UP - UVC) or... TFC/UCM
variance analysis
the quantitative investigation of the difference between actual and planned behavior
cash budget
MINDPLUG ACADEMIC SOLUTIONS – TURNING STUDY INTO STRATEGY
, MINDPLUG ACADEMIC SOLUTIONS | VERIFIED EXAM GUIDES 2025
financial budget prepared to calculate the budgeted cash inflows and outflows during a period and the
budgeted cash balance at the end of the period
3 ways to analyze sell-or-process further
(1) incremental (or differential), (2) opportunity cost, (3) total project approach
major segmentation variables (4)
(1) geographic, (2) demographic, (3) psychographic, (4) behavioral
penetrated market
set of customers who are buying the company's product
target market
qualified available market the company decides to pursue
available market
set of consumers who have interest, income, and access to a particular offer
potential market
set of consumer with a sufficient level of interest in a market offer
corporate culture
shared experiences, stories, beliefs, & norms that characterize an organization
MINDPLUG ACADEMIC SOLUTIONS – TURNING STUDY INTO STRATEGY
