CTP Formulas Questions and
Answers Updated 2026
EarningsBCreditB-BAnswerAvgBCollectedBBalancesB×B(1-
ReserveBrequirement)B×BEarningsBCreditBRate(D÷365)
AvgBcollectedBbalancesBrequiredBtoBpayBserviceBchargesB-
BAnswerServiceBChargeB/B(ECRB×B(D÷365)*(1-ReserveBRequirement))
AvgBbalanceBrequiredB-BAnswerServiceBChargeB/B(ECRB×B(D/365))
FloatBNeutralBCalculationB-BAnswerDiscountB=B1B-
B(1/(1+TotalBdaysBdifferenceBinBpaymentBtimingB×B(AnnualizedBOpportunityBCost/365))
CostBofBCashBDiscountB-BAnswerDiscountBCostB=B(DiscountBpercentage/(100-
DiscountBpercentage))B×B(365/(NetBperiodB-BDiscountBperiod))
CashBConversionBCycleB-BAnswerInventoryBDaysB+BReceivablesBDaysB-BPayablesBDays
InventoryBDaysB-BAnswer(InventoryB/BCOGS)B×B365
ReceivablesBDaysB-BAnswer(ARB/BSales)B×B365
PayablesBDaysB-BAnswer(APB/BCOGS)B×B365
CashBTurnoverB-BAnswer365B/BCashBConversionBCycle
DaysBSalesBOutstandingB(DSO)B-BAnswerOutstandingBARB÷BAvg.BDailyBCreditBSales
Avg.BDailyBCreditBSalesB-BAnswerSalesBDuringBPeriodB÷B#BofBDaysBinBPeriod
, Avg.BPastBDueB-BAnswerDSOB-BAvg.BDaysBofBCreditBTerms
FutureBValueB-BAnswerPresentBvalueB×B(1B+BperiodicBinterestBrate)ⁿ
PresentBValueB-BAnswerFutureBValueB÷B(1B+BperiodicBinterestBrate)ⁿ
BreakevenBPointB-BAnswerFixedBCostsB÷B(SellingBPriceBperBUnitB-
BVariableBCostBperBUnit)
NetBPresentBValueB(NPV)B-BAnswerPVBofBCashBInflowsB-BPVBofBCashBOutflows
ProfitabilityBIndex:BValueBgainedBperB$BofBinvestmentB-
BAnswerPresentBValueBofBCashBInflowsB÷BPresentBValueBofBCashBOutflows
InternalBRateBofBReturnB(IRR)B-BAnswerPVBofBCashBInflowB-BCostB=B0
CurrentBRatio:BDegreeBtoBwhichBcurrentBobligationsBareBcoveredBbyBcurrentBassetsB-
BAnswerTotalBCurrentBAssetsB÷BTotalBCurrentBLiabilities
QuickBRatio:BDegreeBtoBwhichBaBcompany'sBcurrentBliabilitiesBareBcoveredBbyBitsBmost
BliquidBcurrentBassetsB-BAnswer(CashB+BShort-
termBInvB+BAR)B÷BTotalBCurrentBLiabilities
WorkingBCapitalB-BAnswerCurrentBAssetsB-BCurrentBLiabilities
TotalBAssetBTurnover:B#BofBtimesBtheBassetBbaseBisBturnedBoverB-
BAnswerRevenuesB÷BTotalBAssets
Answers Updated 2026
EarningsBCreditB-BAnswerAvgBCollectedBBalancesB×B(1-
ReserveBrequirement)B×BEarningsBCreditBRate(D÷365)
AvgBcollectedBbalancesBrequiredBtoBpayBserviceBchargesB-
BAnswerServiceBChargeB/B(ECRB×B(D÷365)*(1-ReserveBRequirement))
AvgBbalanceBrequiredB-BAnswerServiceBChargeB/B(ECRB×B(D/365))
FloatBNeutralBCalculationB-BAnswerDiscountB=B1B-
B(1/(1+TotalBdaysBdifferenceBinBpaymentBtimingB×B(AnnualizedBOpportunityBCost/365))
CostBofBCashBDiscountB-BAnswerDiscountBCostB=B(DiscountBpercentage/(100-
DiscountBpercentage))B×B(365/(NetBperiodB-BDiscountBperiod))
CashBConversionBCycleB-BAnswerInventoryBDaysB+BReceivablesBDaysB-BPayablesBDays
InventoryBDaysB-BAnswer(InventoryB/BCOGS)B×B365
ReceivablesBDaysB-BAnswer(ARB/BSales)B×B365
PayablesBDaysB-BAnswer(APB/BCOGS)B×B365
CashBTurnoverB-BAnswer365B/BCashBConversionBCycle
DaysBSalesBOutstandingB(DSO)B-BAnswerOutstandingBARB÷BAvg.BDailyBCreditBSales
Avg.BDailyBCreditBSalesB-BAnswerSalesBDuringBPeriodB÷B#BofBDaysBinBPeriod
, Avg.BPastBDueB-BAnswerDSOB-BAvg.BDaysBofBCreditBTerms
FutureBValueB-BAnswerPresentBvalueB×B(1B+BperiodicBinterestBrate)ⁿ
PresentBValueB-BAnswerFutureBValueB÷B(1B+BperiodicBinterestBrate)ⁿ
BreakevenBPointB-BAnswerFixedBCostsB÷B(SellingBPriceBperBUnitB-
BVariableBCostBperBUnit)
NetBPresentBValueB(NPV)B-BAnswerPVBofBCashBInflowsB-BPVBofBCashBOutflows
ProfitabilityBIndex:BValueBgainedBperB$BofBinvestmentB-
BAnswerPresentBValueBofBCashBInflowsB÷BPresentBValueBofBCashBOutflows
InternalBRateBofBReturnB(IRR)B-BAnswerPVBofBCashBInflowB-BCostB=B0
CurrentBRatio:BDegreeBtoBwhichBcurrentBobligationsBareBcoveredBbyBcurrentBassetsB-
BAnswerTotalBCurrentBAssetsB÷BTotalBCurrentBLiabilities
QuickBRatio:BDegreeBtoBwhichBaBcompany'sBcurrentBliabilitiesBareBcoveredBbyBitsBmost
BliquidBcurrentBassetsB-BAnswer(CashB+BShort-
termBInvB+BAR)B÷BTotalBCurrentBLiabilities
WorkingBCapitalB-BAnswerCurrentBAssetsB-BCurrentBLiabilities
TotalBAssetBTurnover:B#BofBtimesBtheBassetBbaseBisBturnedBoverB-
BAnswerRevenuesB÷BTotalBAssets
