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Hi,
Is there a recommended list of formulae to remember before going to the P2 exam?
My list includes:
1. learning curve
2. throughput accounting ratio
3. IRR
4. Pricing Decision P=ax + b
5. Sensitivity Analysis
6. EVA
. . .Any recommendations?
ThanksHi there, as im sure you are aware -there are hardly any formulae provided in the CIMA exam itself – but in terms of your revision list – the ones you have are good.
Also I would add:
Financial Ratios
Divisional performance measures – ROI / RI
MIRR
PI Index
Price Elasticity Demand
Risk formulae? Expected Value, Bayes TheoremHope that’s helpful
Kind Regards
CathThanks Cath. That’s helpful.
In relation to RI, i recognised it should be operating profit (exclude depreciation and interest and Tax) – Long term liability and equity x cost of capital.
I am often confused when to exclude depreciation/interest/tax.
Is that only calculation RI, Payback period, EVA, which need to exclude depreciation to get the right numerator on the formulae?
Thanks,
KennethHi residual income and ROI need to use operating profit after depreciation.
Payback requires cashflows not profits (which are sometimes assumed to be equal to profits with depreciation added back on.)
EVA deducts accounting depreciation from profit and adds back economic depreciation.
Its a common adjustment in question so they do try to confuse you by stating the situation with depreciation in different ways.
Hope that helps.
Cath
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