Appendix A: Master Formula Reference¶

All formulas from the IESE MBA Year 1 Encyclopedia, organized by course. Each entry includes the formula, variables defined compactly, a one-line "when to use," and a reference to the full explanation.

Financial Accounting¶

Lesson 1: The Balance Sheet Accounting Equation: A = L + OE - A = Assets, L = Liabilities, OE = Owners' Equity - When to use: Foundation of all financial statements; every transaction must maintain this balance - → See: Financial Accounting, Lesson 1

Working Capital: Working Capital = Current Assets − Current Liabilities - When to use: Measure short-term liquidity cushion - → See: Financial Accounting, Lesson 1

Lesson 2: The Income Statement Net Income: Net Income = Revenue − COGS − Operating Expenses − Interest Expense − Tax Expense - Revenue = top line, COGS = direct cost of products sold, Operating Expenses = SG&A/R&D - When to use: Measure a firm's profitability over a period - → See: Financial Accounting, Lesson 2

Gross Profit: Gross Profit = Revenue − COGS - When to use: Assess core product profitability before overheads - → See: Financial Accounting, Lesson 2

Operating Profit (EBIT): Operating Profit = Gross Profit − Operating Expenses - When to use: Measure operational profitability before financing and tax - → See: Financial Accounting, Lesson 2

Earnings Per Share: EPS = Net Income / Weighted Average Shares Outstanding - When to use: The single most watched metric by financial analysts - → See: Financial Accounting, Lesson 2

Comprehensive Income: Comprehensive Income = Net Income + Other Comprehensive Income (OCI) - When to use: Capture total change in owners' wealth including unrealized gains/losses - → See: Financial Accounting, Lesson 2

Lesson 3: The Cash Flow Statement Change in Cash: Change in Cash = CFO + CFI + CFF - CFO = Cash Flow from Operations, CFI = from Investing, CFF = from Financing - When to use: Reconcile how cash is generated and consumed each period - → See: Financial Accounting, Lesson 3

CFO (Indirect Method): CFO = Net Income + Depreciation + Non-operating Losses − Non-operating Gains − ΔOperating Assets + ΔOperating Liabilities - When to use: Convert accrual net income back to cash basis - → See: Financial Accounting, Lesson 3

Free Cash Flow: FCF = CFO − Capital Expenditures - When to use: Measure cash available to repay debt and reward shareholders - → See: Financial Accounting, Lesson 3

Cash Burn Rate: Cash Burn Rate = (Cash at Start − Cash at End) / Number of Months - When to use: Assess how fast a company is consuming cash - → See: Financial Accounting, Lesson 3

Runway: Runway = Current Cash / Monthly Cash Burn Rate - When to use: Estimate how long a company can survive without new funding - → See: Financial Accounting, Lesson 3

Cash Conversion Cycle: CCC = DSO + DIO − DPO - DSO = (Receivables / Revenue) × 365, DIO = (Inventory / COGS) × 365, DPO = (Payables / COGS) × 365 - When to use: Diagnose how long cash is tied up in operations - → See: Financial Accounting, Lesson 3

Lesson 4: Inventories in Manufacturing Firms Cost of Goods Sold: COGS = Beginning Inventory + Purchases (or COGM) − Ending Inventory - When to use: Calculate the cost of inventory that was sold during the period - → See: Financial Accounting, Lesson 4

Lesson 5: Financial Statements as a Diagnostic Tool Current Ratio: Current Ratio = Current Assets / Current Liabilities - When to use: Assess short-term liquidity - → See: Financial Accounting, Lesson 5

Quick Ratio: Quick Ratio = (Cash + Receivables) / Current Liabilities - When to use: Stricter liquidity test excluding inventory - → See: Financial Accounting, Lesson 5

Gross Margin: Gross Margin = Gross Profit / Revenue - When to use: Measure core product profitability as a percentage - → See: Financial Accounting, Lesson 5

Operating Margin: Operating Margin = Operating Profit / Revenue - When to use: Measure overall operational efficiency - → See: Financial Accounting, Lesson 5

Net Margin: Net Margin = Net Income / Revenue - When to use: Measure bottom-line profitability as a percentage - → See: Financial Accounting, Lesson 5

Return on Equity: ROE = Net Income / Owners' Equity - When to use: Assess how effectively owners' capital generates profit - → See: Financial Accounting, Lesson 5

Return on Assets: ROA = Net Income / Total Assets - When to use: Assess overall asset efficiency - → See: Financial Accounting, Lesson 5

Asset Turnover: Asset Turnover = Revenue / Total Assets - When to use: Measure how efficiently assets generate revenue - → See: Financial Accounting, Lesson 5

Debt-to-Equity: Debt-to-Equity = Total Liabilities / Owners' Equity - When to use: Assess financial leverage / gearing - → See: Financial Accounting, Lesson 5

Interest Coverage: Interest Coverage = EBIT / Interest Expense - When to use: Assess ability to service debt from operations - → See: Financial Accounting, Lesson 5

Inventory Turnover: Inventory Turnover = COGS / Average Inventory - When to use: Measure how fast inventory sells - → See: Financial Accounting, Lesson 5

Lesson 6: Receivables Valuation Net Receivables: A/R, Net = A/R, Gross − Allowance for Bad Debts - When to use: Report receivables at expected collectible value - → See: Financial Accounting, Lesson 6

Bad Debt Expense: Bad Debt Expense = Write-offs − Recoveries + ΔAllowance for Bad Debts - When to use: Calculate the period's expense for estimated uncollectible accounts - → See: Financial Accounting, Lesson 6

Lesson 9: Noncurrent Assets -- Valuation Straight-Line Depreciation: Depreciation = (Cost − Salvage Value) / Useful Life - Cost = acquisition cost, Salvage Value = expected residual value, Useful Life = years of benefit - When to use: Systematically allocate a tangible asset's cost over its useful life - → See: Financial Accounting, Lesson 9

Net Book Value: NBV = Cost − Accumulated Depreciation - When to use: Determine the carrying amount of an asset - → See: Financial Accounting, Lesson 9

Gain/Loss on Disposal: Gain or Loss = Sale Price − Net Book Value - When to use: Record profit or loss when selling a fixed asset - → See: Financial Accounting, Lesson 9

Lesson 12: Noncurrent Assets -- Goodwill and Impairments Impairment Test: An asset is impaired when NBV > Recoverable Amount - Recoverable Amount = max(Net Selling Price, Value in Use) - When to use: Test whether a noncurrent asset has lost value unexpectedly - → See: Financial Accounting, Lesson 12

Goodwill: Goodwill = Purchase Price − Fair Value of Identifiable Net Assets Acquired - When to use: Calculate the intangible asset arising from an acquisition - → See: Financial Accounting, Lesson 12

Lesson 14: Liabilities -- Warranties and Restructuring Warranty Expense: Warranty Expense = Units Sold × Defect Rate × Average Repair Cost - When to use: Estimate warranty provisions at time of sale - → See: Financial Accounting, Lesson 14

Lesson 15: Liabilities -- Bonds Interest Expense (Effective Interest Method): Interest Expense = Beginning Balance of Debt × Market Interest Rate - When to use: Calculate periodic interest expense on bonds and long-term debt - → See: Financial Accounting, Lesson 15

Lifetime Cost of Debt: Lifetime Cost = Total Cash Paid − Cash Received - When to use: Determine total interest expense over the life of a debt instrument - → See: Financial Accounting, Lesson 15

Lesson 16: Liabilities -- Leasing Lease Liability at Inception: Lease Liability = PV of Lease Payments - Discounted at the implicit interest rate or the lessee's incremental borrowing rate - When to use: Capitalize leases under IFRS 16 - → See: Financial Accounting, Lesson 16

Right-of-Use Asset at Inception: ROU Asset = Lease Liability + Upfront Payments + Direct Costs - When to use: Record the asset side of a capitalized lease - → See: Financial Accounting, Lesson 16

Lease Interest Expense: Interest Expense = Beginning Lease Liability × Implicit Rate - When to use: Split each lease payment between interest and principal reduction - → See: Financial Accounting, Lesson 16

Lesson 17: Corporate Income Taxes -- Deferred Taxation Total Tax Expense: Total Tax Expense = Current Tax Expense + Deferred Tax Expense - When to use: Calculate the full tax charge for the income statement - → See: Financial Accounting, Lesson 17

Tax Payable: Tax Payable = Taxable Income × Statutory Tax Rate - When to use: Calculate taxes owed to authorities - → See: Financial Accounting, Lesson 17

Deferred Tax Liability: DTL = (Book Value of Asset − Tax Value of Asset) × Tax Rate - When to use: Recognize future taxes owed from timing differences - → See: Financial Accounting, Lesson 17

Effective Tax Rate: Effective Tax Rate = Total Tax Expense / Profit Before Tax - When to use: Compare actual tax burden to statutory rate - → See: Financial Accounting, Lesson 17

Lesson 18: Financial Investments Interest Income (Amortized Cost): Interest Income = Beginning Book Value × Market Yield - When to use: Calculate income on debt investments held to maturity - → See: Financial Accounting, Lesson 18

Equity Method: Investment EB = BB + Share of Investee's Profit − Dividends Received - Share of Profit = Investee's Net Income × Ownership % - When to use: Account for significant-influence investments (typically 20-50% ownership) - → See: Financial Accounting, Lesson 18

Lesson 19: Financial Investments -- Consolidation Goodwill (Consolidation): Goodwill = Purchase Price − % Acquired × Fair Value of Identifiable Net Assets - When to use: Calculate goodwill in a business combination - → See: Financial Accounting, Lesson 19

Noncontrolling Interests: NCI = % Not Acquired × Fair Value of Identifiable Net Assets - When to use: Record minority shareholders' claim in consolidated statements - → See: Financial Accounting, Lesson 19

Profit for NCI: Profit for NCI = Subsidiary's Profit × NCI Ownership % - When to use: Allocate consolidated profit between parent and minority shareholders - → See: Financial Accounting, Lesson 19

Operational Finance¶

Session 1: Financial Analysis Return on Sales: ROS = Net Profit / Sales - When to use: Measure how many cents of each revenue euro reach the bottom line - → See: Operational Finance, Session 1

Return on Equity: ROE = Net Profit / Equity - When to use: Measure the return shareholders earn on invested capital - → See: Operational Finance, Session 1

Return on Assets: ROA = EBIT / Net Assets - When to use: Measure operating return on all invested capital regardless of financing - → See: Operational Finance, Session 1

DuPont Decomposition: ROE = ROS × Turnover × Leverage = (Net Profit / Sales) × (Sales / Net Assets) × (Net Assets / Equity) - When to use: Decompose ROE into profitability, efficiency, and leverage drivers - → See: Operational Finance, Session 1

DSO (Collection Days): DSO = (A/R / Sales) × 365 - When to use: Measure average days to collect from customers - → See: Operational Finance, Session 1

DIO (Stock Days): DIO = (Inventory / COGS) × 365 - When to use: Measure average days inventory sits before sale - → See: Operational Finance, Session 1

DPO (Payment Days): DPO = (A/P / COGS) × 365 - When to use: Measure average days to pay suppliers - → See: Operational Finance, Session 1

Session 2: P&L and Balance Sheet Forecast A/R Forecast: A/R = (DSO / 365) × Projected Sales - When to use: Project receivables from sales and collection policy - → See: Operational Finance, Session 2

Inventory Forecast: Inventory = (DIO / 365) × Projected COGS - When to use: Project inventory from cost of goods and stock policy - → See: Operational Finance, Session 2

A/P Forecast: A/P = (DPO / 365) × Projected COGS - When to use: Project payables from purchases and payment policy - → See: Operational Finance, Session 2

Fixed Assets Forecast: FA = Previous FA − Depreciation + Capex - When to use: Project net fixed assets forward - → See: Operational Finance, Session 2

Equity Forecast: Equity = Previous Equity + Net Profit − Dividends - When to use: Project book equity forward - → See: Operational Finance, Session 2

Funding Gap (Plug): Funding Gap = (NFO + FA) − (Equity + LT Debt) - Gap > 0 = need short-term credit; Gap < 0 = surplus cash - When to use: Calculate exactly how much short-term credit the company needs - → See: Operational Finance, Session 2

Session 3: Growth and Financial Needs Growth-Driven NFO Increase: ΔNFO = NFO(current) × g - g = sales growth rate (assuming constant NFO% of sales) - When to use: Calculate how much additional working capital growth consumes - → See: Operational Finance, Session 3

Working Capital: WC = Equity + LT Debt − FA - When to use: Measure permanent financing available to fund operations - → See: Operational Finance, Session 3

Short-Term Credit Needed: Short-Term Credit = NFO − WC - When to use: Identify structural financing gap - → See: Operational Finance, Session 3

Session 5: Management of Cash Cycle Cash Conversion Cycle: CCC = DIO + DSO − DPO - When to use: Measure days between paying suppliers and collecting from customers - → See: Operational Finance, Session 5

Session 6: Credit Management Cost of Trade Credit: Cost = (Discount% / (1 − Discount%)) × (365 / (Full Payment Days − Discount Days)) - When to use: Calculate the annualized cost of forgoing an early payment discount - → See: Operational Finance, Session 6

Corporate Finance¶

Lesson 1: Project Evaluation -- NPV and the Investment Decision Present Value: PV = CF₁/(1+r)¹ + CF₂/(1+r)² + ... + CFₙ/(1+r)ⁿ - CFₜ = expected cash flow at time t, r = discount rate, n = number of periods - When to use: Translate future cash flows into today's equivalent - → See: Corporate Finance, Lesson 1

Net Present Value: NPV = −CF₀ + Σ CFₜ/(1+r)ᵗ - CF₀ = initial investment; invest if NPV > 0 - When to use: The gold standard for evaluating any investment decision - → See: Corporate Finance, Lesson 1

Internal Rate of Return: 0 = −CF₀ + CF₁/(1+IRR)¹ + CF₂/(1+IRR)² + ... + CFₙ/(1+IRR)ⁿ - Invest if IRR > required rate of return (r) - When to use: Find the break-even discount rate of a project - → See: Corporate Finance, Lesson 1

Payback Period: Payback = Initial Investment / Annual Cash Flow (for even cash flows) - When to use: Quick liquidity risk assessment (complement to NPV, never standalone) - → See: Corporate Finance, Lesson 1

Gordon Growth Model (Growing Perpetuity): PV = CF₁ / (r − g) - CF₁ = next period's cash flow, r = discount rate, g = constant growth rate (g < r) - When to use: Value an infinite stream of growing cash flows - → See: Corporate Finance, Lesson 1

Lesson 2: Project Evaluation -- Methodology Free Cash Flow: FCF = EBIT × (1 − T) − Change in Net Assets - EBIT = Earnings Before Interest and Taxes, T = tax rate, Net Assets = FA + NFO - When to use: Measure cash generated by assets as if 100% equity-financed - → See: Corporate Finance, Lesson 2

Equity Cash Flow: ECF = Net Income − Change in Net Assets + Change in Net Debt - When to use: Measure cash available exclusively to equity holders - → See: Corporate Finance, Lesson 2

Lesson 3: Business Valuation with DCF Enterprise Value: EV = Market Value of Equity + Net Debt - Equity Value = EV − Net Debt; Net Debt = Total Debt − Cash - When to use: Determine the total value of a business to all capital providers - → See: Corporate Finance, Lesson 3

Terminal Value: Terminal Value = FCFₜ₊₁ / (WACC − g) - When to use: Capture the value of all cash flows beyond the explicit forecast period - → See: Corporate Finance, Lesson 3

DCF Enterprise Value: EV = Σ FCFₜ/(1+WACC)ᵗ + Terminal Value/(1+WACC)ᵀ - When to use: Full DCF valuation of an entire company - → See: Corporate Finance, Lesson 3

Lesson 4: Valuation with Multiples P/E Ratio: P/E = Stock Price / Earnings Per Share - When to use: Quick equity-based relative valuation - → See: Corporate Finance, Lesson 4

EV/EBITDA: EV/EBITDA = Enterprise Value / EBITDA - When to use: The workhorse enterprise-value multiple; strips out capital structure and depreciation - → See: Corporate Finance, Lesson 4

EV/Sales: EV/Sales = Enterprise Value / Revenue - When to use: Relative valuation for high-growth or pre-profit companies - → See: Corporate Finance, Lesson 4

Lesson 5: M&A -- Deal Valuation Maximum Acquisition Price: Max Price = Standalone Value + PV of Synergies - When to use: Determine the ceiling price in an acquisition to avoid destroying value - → See: Corporate Finance, Lesson 5

Lesson 7: Private Equity MOIC: MOIC = Total Cash Returned / Total Cash Invested - When to use: Measure absolute return multiple on a PE investment - → See: Corporate Finance, Lesson 7

Lesson 8: Cost of Equity and Cost of Debt CAPM: rₑ = rƒ + β × (rₘ − rƒ) - rₑ = cost of equity, rƒ = risk-free rate, β = systematic risk, (rₘ − rƒ) = market risk premium - When to use: Estimate the required return to shareholders - → See: Corporate Finance, Lesson 8

Beta: β = Cov(Rᵢ, Rₘ) / Var(Rₘ) - When to use: Measure a stock's sensitivity to market movements - → See: Corporate Finance, Lesson 8

Cost of Debt: r_d = rƒ + Credit Spread - After-tax cost of debt = r_d × (1 − T) - When to use: Calculate the cost of borrowing adjusted for the tax shield - → See: Corporate Finance, Lesson 8

Expected Return: R̄ = Σ pᵢ × Rᵢ - When to use: Compute the probability-weighted average of possible returns - → See: Corporate Finance, Lesson 8

Variance: Var(R) = E[(R − R̄)²] - When to use: Measure dispersion of returns (total risk) - → See: Corporate Finance, Lesson 8

Standard Deviation: SD(R) = √Var(R) - When to use: Measure total risk in the same units as returns - → See: Corporate Finance, Lesson 8

Covariance: Cov(Rₐ, R_b) = E[(Rₐ − R̄ₐ)(R_b − R̄_b)] - When to use: Measure how two securities move together - → See: Corporate Finance, Lesson 8

Correlation: ρₐ_b = Cov(Rₐ, R_b) / [SD(Rₐ) × SD(R_b)] - Range: −1 to +1 - When to use: Standardized measure of co-movement for diversification analysis - → See: Corporate Finance, Lesson 8

Lesson 9: Estimating the WACC WACC: WACC = (E/V) × rₑ + (D/V) × r_d × (1 − T) - E = market value of equity, D = market value of debt, V = E + D, T = tax rate - When to use: Calculate the blended discount rate for all capital providers - → See: Corporate Finance, Lesson 9

WACC with Preferred Stock: WACC = (E/V) × rₑ + (D/V) × r_d × (1 − T) + (P/V) × rₚ - P = market value of preferred stock, rₚ = cost of preferred - When to use: When the company also uses preferred stock financing - → See: Corporate Finance, Lesson 9

Lesson 10: Unlevering and Relevering Returns Unlever Beta: βᵤ = βₗ / [1 + (D/E) × (1 − T)] - βᵤ = unlevered (asset) beta, βₗ = levered (equity) beta - When to use: Strip out debt effect to isolate pure operational risk - → See: Corporate Finance, Lesson 10

Relever Beta (Hamada Equation): βₗ = βᵤ × [1 + (D/E) × (1 − T)] - When to use: Calculate equity beta for a target capital structure - → See: Corporate Finance, Lesson 10

Unlevered Return: Rₐ = [E / (E + D(1−T))] × Rₑ + [D(1−T) / (E + D(1−T))] × R_d - When to use: Find the return on assets independent of financing - → See: Corporate Finance, Lesson 10

Relevered Return: Rₑ = Rₐ + (Rₐ − R_d) × (D/E) × (1 − T) - When to use: Estimate cost of equity at a different leverage ratio - → See: Corporate Finance, Lesson 10

Lesson 13: LBO Valuation Entry Valuation: Purchase Price (EV) = Entry Multiple × EBITDA - When to use: Determine LBO acquisition price - → See: Corporate Finance, Lesson 13

Exit Valuation: Exit EV = Exit Multiple × Final Year EBITDA - Equity at Exit = Exit EV − Remaining Debt - When to use: Calculate equity value at the end of the PE holding period - → See: Corporate Finance, Lesson 13

Decision Analysis¶

Lesson 1: Decision Trees Critical Fractile (Newsvendor): F_c = G / (G + L) - G = incremental profit if sold, L = incremental loss if unsold - When to use: Determine optimal production/inventory quantity under demand uncertainty - → See: Decision Analysis, Lesson 1

Incremental EV: EV(q + 1) = G × P(D > q) − L × P(D ≤ q) - Produce the extra unit when EV ≥ 0, i.e., P(D ≤ q) ≤ G / (G + L) - When to use: Decide whether to produce one more unit - → See: Decision Analysis, Lesson 1

Lesson 2: Expected Monetary Value, Certainty Equivalent, and Risk Premium Expected Monetary Value: EMV = Σ P(outcomeᵢ) × payoffᵢ - When to use: Probability-weighted average for repeated, moderate-stakes decisions - → See: Decision Analysis, Lesson 2

Certainty Equivalent: CE = U⁻¹(EU) - EU = Σ P(outcomeᵢ) × U(payoffᵢ) - When to use: Find the guaranteed amount equivalent to a risky gamble given risk preferences - → See: Decision Analysis, Lesson 2

Risk Premium: RP = EMV − CE - RP > 0 = risk averse, RP = 0 = risk neutral, RP < 0 = risk seeking - When to use: Quantify how much expected wealth you sacrifice to eliminate risk - → See: Decision Analysis, Lesson 2

Lesson 3: NPV and IRR Present Value: PV = CF₁/(1+r)¹ + CF₂/(1+r)² + ... + CFₙ/(1+r)ⁿ - When to use: Discount future cash flows to today's value - → See: Decision Analysis, Lesson 3

NPV: NPV = F₀ + Σ Fₜ/(1+r)ᵗ - Accept if NPV > 0 - When to use: Evaluate projects with cash flows spread over time - → See: Decision Analysis, Lesson 3

IRR: 0 = CF₀ + Σ CFₜ/(1+IRR)ᵗ - Accept if IRR > discount rate - When to use: Find the project's annualized rate of return - → See: Decision Analysis, Lesson 3

Continuous Discounting: PV = Q × e^(−r×t) - When to use: Option pricing and portfolio returns with continuous compounding - → See: Decision Analysis, Lesson 3

Annuity PV Factor: PV of annuity = Annual CF × [1 − (1+r)^(−n)] / r - When to use: Value a level stream of cash flows for n periods - → See: Decision Analysis, Lesson 3

Lesson 7: Bayes' Theorem Bayes' Theorem: P(B|A) = [P(A|B) × P(B)] / P(A) - P(B) = prior, P(A|B) = likelihood, P(B|A) = posterior - When to use: Update beliefs when imperfect new evidence arrives - → See: Decision Analysis, Lesson 7

Lesson 8: The Value of Information EVPI: EVPI = EV(with perfect info) − EV(without info) - When to use: Determine the maximum you should ever pay for any information source - → See: Decision Analysis, Lesson 8

EVII: EVII = EV(with imperfect info) − EV(without info) - When to use: Decide whether a specific real-world test or study is worth its cost - → See: Decision Analysis, Lesson 8

Lesson 9: Risk Attitudes Exponential Utility Function: U(x) = 1 − e^(−x/R) - R = risk tolerance coefficient (higher R = greater tolerance) - When to use: Model risk attitudes for large, one-shot decisions - → See: Decision Analysis, Lesson 9

Lesson 14: Probability Models Annual Savings for Future Target: Annual Payment = FV / [((1+r)ⁿ − 1) / r] - FV = future value needed, r = investment return, n = years - When to use: Calculate required annual savings to fund a future obligation - → See: Decision Analysis, Lesson 14

Rule of 72: Doubling time ≈ 72 / annual rate (%) - When to use: Quick mental math for how long money takes to double - → See: Decision Analysis, Lesson 14

Managerial Accounting¶

Lesson 1: Foundations -- Relevant Costs and the Decision Framework Contribution Margin (total): CM = Revenue − Variable Costs - When to use: Determine how much revenue contributes to covering fixed costs - → See: Managerial Accounting, Lesson 1

Contribution Margin per Unit: CMU = Price − Variable Cost per Unit - When to use: Measure the per-unit profit contribution - → See: Managerial Accounting, Lesson 1

Break-Even Quantity: BEQ = Fixed Costs / CMU - When to use: Find the volume at which profit is exactly zero - → See: Managerial Accounting, Lesson 1

Margin of Safety: Margin of Safety = Actual Sales − BEQ - When to use: Measure buffer above breakeven - → See: Managerial Accounting, Lesson 1

Profit (Single Product): Profit = Q × CMU − FC - Q = quantity sold, FC = total fixed costs - When to use: Calculate profit for a single-product firm - → See: Managerial Accounting, Lesson 1

Profit (Multi-Product): Profit = SalesVolume × [%A × CMU_A + %B × CMU_B + ...] − FC - When to use: Calculate profit with a product mix - → See: Managerial Accounting, Lesson 1

Target Profit Volume: Units = (FC + Target Profit) / CMU - When to use: Find the volume needed to achieve a specific profit target - → See: Managerial Accounting, Lesson 1

Lesson 2: Product Line Decisions Keep/Drop Rule: Keep if CM > Avoidable Fixed Costs; Drop if CM < Avoidable Fixed Costs - When to use: Decide whether to keep or discontinue a product line - → See: Managerial Accounting, Lesson 2

Lesson 4: Technological Changes Indifference Point: Q* = (FC_new − FC_old) / (VCU_old − VCU_new) - When to use: Find the volume at which old and new technology yield equal profit - → See: Managerial Accounting, Lesson 4

Lesson 5: Outsourcing -- Make vs. Buy Outsource Decision Rule: Outsource if P_buy < VCU_make + Avoidable FC per unit + Opportunity Cost per unit - When to use: Compare the cost of making in-house versus buying externally - → See: Managerial Accounting, Lesson 5

Lesson 6: Special Orders CM per Bottleneck Unit: CM per Bottleneck Unit = CMU / Resource Usage per Unit - When to use: Rank products when capacity is scarce - → See: Managerial Accounting, Lesson 6

Lesson 7: Cost Systems Allocation Rate: Allocation Rate = Total Indirect Cost in Pool / Total Allocation Base - When to use: Distribute indirect costs to cost objects - → See: Managerial Accounting, Lesson 7

Allocated Cost: Allocated Cost_j = Allocation Rate × Allocation Base consumed by j - When to use: Assign overhead to a specific product or division - → See: Managerial Accounting, Lesson 7

Full Cost: Full Cost = Direct Materials + Direct Labor + Allocated Manufacturing Overhead - When to use: Determine total product cost under absorption costing - → See: Managerial Accounting, Lesson 7

Lesson 8: Activity-Based Costing ABC Activity Rate: Activity Rate = Total Activity Cost / Total Cost Driver Volume - When to use: Allocate overhead using activity-specific cost drivers - → See: Managerial Accounting, Lesson 8

Lesson 11: Transfer Pricing -- Cost-Based Transfer Price Range: Variable Cost ≤ TP ≤ Market Price - When to use: Set boundaries for internal transfer prices that achieve goal congruence - → See: Managerial Accounting, Lesson 11

TP at Full Cost + Markup: TP = Variable Cost + Allocated Fixed Cost + Markup - When to use: Cost-based transfer pricing (watch for goal congruence failures) - → See: Managerial Accounting, Lesson 11

Lesson 13: Variance Analysis Sales Volume Variance: (Q_actual − Q_budget) × CMU_budget_weighted - When to use: Isolate the effect of selling more or fewer total units - → See: Managerial Accounting, Lesson 13

Product Mix Variance: Q_actual × Σ[(%_actual − %_budget) × CMU_budget_i] - When to use: Isolate the effect of mix shifting toward higher- or lower-margin products - → See: Managerial Accounting, Lesson 13

Selling Price Variance: Q_actual × Σ[%_actual × (P_actual − P_budget)] - When to use: Isolate the effect of charging more or less per unit - → See: Managerial Accounting, Lesson 13

Efficiency Variance: −Q_actual × Σ[%_actual × (ER_actual − ER_budget) × IP_budget] - ER = efficiency ratio (input/output), IP = input price - When to use: Isolate the effect of using more or fewer inputs per unit - → See: Managerial Accounting, Lesson 13

Input Price Variance: −Q_actual × Σ[%_actual × ER_actual × (IP_actual − IP_budget)] - When to use: Isolate the effect of input costs differing from budget - → See: Managerial Accounting, Lesson 13

Fixed Cost Variance: −(FC_actual − FC_budget) - When to use: Isolate the effect of fixed cost deviations - → See: Managerial Accounting, Lesson 13

Lesson 14: Variance Analysis with Absorption Costing Standard Full Cost per Unit: Standard Full Cost = Standard Variable Cost + (Budgeted Fixed Cost / Budgeted Volume) - When to use: Calculate per-unit cost under absorption costing - → See: Managerial Accounting, Lesson 14

Production Volume Variance: PVV = (Actual Production − Budgeted Production) × Standard Fixed Cost per Unit - When to use: Measure the cost impact of producing above or below budget under absorption costing - → See: Managerial Accounting, Lesson 14

Absorption vs. Variable Profit Difference: Difference = (Production − Sales) × Standard Fixed Cost per Unit - When to use: Reconcile profit differences between absorption and variable costing - → See: Managerial Accounting, Lesson 14

Lesson 15: Financial Performance Measures Return on Investment: ROI = Operating Income / Invested Capital - When to use: Evaluate investment center performance (caution: penalizes good projects) - → See: Managerial Accounting, Lesson 15

Residual Income: RI = Operating Income − (Cost of Capital × Invested Capital) - When to use: Evaluate whether a division creates value above its capital charge - → See: Managerial Accounting, Lesson 15

Economic Value Added: EVA = NOPAT − (WACC × Invested Capital) - NOPAT = Net Operating Profit After Taxes - When to use: Measure true economic value creation with accounting adjustments - → See: Managerial Accounting, Lesson 15

Lesson 17: Employee Incentives Bonus (with floor/cap): Bonus = min(Cap, max(Floor, Slope × (Performance − Threshold))) - When to use: Design incentive schemes with bounded payouts - → See: Managerial Accounting, Lesson 17

Lesson 18: Equity Compensation Restricted Stock Value: Value = Number of Shares × Current Stock Price - When to use: Value equity grants for compensation design - → See: Managerial Accounting, Lesson 18

Stock Option Value (Black-Scholes): Value = p × e^(−dT) × N(Z) − X × e^(−rT) × N(Z − σ√T) - Z = [ln(p/X) + T(r − d + σ²/2)] / (σ√T) - p = stock price, X = exercise price, T = time, r = risk-free rate, d = dividend yield, σ = volatility - When to use: Value employee stock options for compensation accounting - → See: Managerial Accounting, Lesson 18

Operations Management¶

Lesson 2: Process Analysis -- Introduction Throughput: T = items completed / time period - When to use: Measure actual production rate - → See: Operations Management, Lesson 2

Cycle Time: CT = 1 / T - When to use: Convert between throughput and the interval between completions - → See: Operations Management, Lesson 2

Capacity: Capacity = Processor Availability / Processor Consumption per item - When to use: Calculate maximum throughput of a single processor - → See: Operations Management, Lesson 2

Little's Law: WIP = T × TT - WIP = work-in-process, T = throughput, TT = throughput time - When to use: Universal relationship linking inventory, throughput, and time in any stable system - → See: Operations Management, Lesson 2

Labor Efficiency: Labor Efficiency = Total labor content of items produced / Total labor availability - When to use: Measure what fraction of paid labor time is productive - → See: Operations Management, Lesson 2

Lesson 3: Process Analysis -- Product Mix Capacity (Weighted Average): Capacity = Availability / Weighted Average Consumption per item - When to use: Calculate capacity with a multi-product mix - → See: Operations Management, Lesson 3

Utilization: ρ = Actual Throughput / Processor Capacity = (Consumption × Demand) / Availability - When to use: Measure the fraction of available capacity actually used - → See: Operations Management, Lesson 3

Lesson 4: Process Improvement Capacity with Batch/Setup: Capacity = Available time (M) / [unit processing time (p) + setup time (s) / Q] - Q = batch size - When to use: Calculate capacity when production runs have setup time - → See: Operations Management, Lesson 4

Minimum Batch Size: Q_min = C / [(M − C × p) / s] - C = required capacity - When to use: Find the smallest batch that achieves a target capacity - → See: Operations Management, Lesson 4

Lesson 5: Input/Output Analysis Average Queue Length (I/O): Avg queue = Area between cumulative curves / Total time period - When to use: Analyze predictable demand fluctuations and resulting queues - → See: Operations Management, Lesson 5

Average Waiting Time (I/O): Avg wait = Area between cumulative curves / Total number of items - When to use: Calculate expected wait times from input/output curves - → See: Operations Management, Lesson 5

Lesson 9: Productivity Management Productivity: Productivity = Output / Input - Output = throughput (units or revenue), Input = resources consumed - When to use: Benchmark efficiency across shifts, plants, or time periods - → See: Operations Management, Lesson 9

Lesson 11: Queue Management -- Introduction Utilization (Queueing): ρ = λ / (S × μ) - λ = arrival rate, μ = service rate per server, S = number of servers - When to use: Determine server utilization; ρ < 1 required for stability - → See: Operations Management, Lesson 11

Little's Law (Queueing): L = λ × W; L_q = λ × W_q - L = avg in system, W = avg time in system, L_q = avg in queue, W_q = avg wait - When to use: Link queue-level and system-level KPIs - → See: Operations Management, Lesson 11

System Time Decomposition: W = W_q + t_S; L = L_q + L_S; L_S = S × ρ - When to use: Break total time into waiting and service components - → See: Operations Management, Lesson 11

Sakasegawa Approximation: L_q ≈ [ρ^√(2(S+1)) / (1 − ρ)] × [(CV_A² + CV_S²) / 2] - CV_A = coefficient of variation of inter-arrival times, CV_S = of service times - When to use: Estimate average queue length with random variability - → See: Operations Management, Lesson 11

Simplified Queue (S=1, CV=1): L_q = ρ² / (1 − ρ) - When to use: Quick estimate for a single-server queue with Poisson arrivals and exponential service - → See: Operations Management, Lesson 11

Lesson 14: Inventory -- Batching (EOQ) EOQ: EOQ = √(2 × D × S / H) - D = annual demand, S = ordering/setup cost, H = holding cost per unit per year - When to use: Find the optimal order quantity that minimizes total ordering + holding cost - → See: Operations Management, Lesson 14

Ordering Cost per Year: Ordering cost = S × D / Q - When to use: Calculate annual cost of placing orders - → See: Operations Management, Lesson 14

Holding Cost per Year: Holding cost = H × Q / 2 - When to use: Calculate annual cost of carrying inventory - → See: Operations Management, Lesson 14

Lesson 15: Inventory -- Safety Stock Safety Stock: SS = z × σ_d × √VP - z = safety factor (from normal distribution), σ_d = std dev of demand per period, VP = vulnerable period - When to use: Calculate buffer inventory to protect against demand uncertainty - → See: Operations Management, Lesson 15

Vulnerable Period: VP = LT + RP - LT = lead time, RP = review period (0 if continuous review) - When to use: Determine the time window safety stock must cover - → See: Operations Management, Lesson 15

Reorder Point: ROP = (Average demand per period × VP) + SS - When to use: Determine when to place a new order - → See: Operations Management, Lesson 15

Lesson 16: Inventory -- Perishable Goods (Critical Fractile) Critical Fractile: F_c = C_u / (C_u + C_o) = G / (G + L) - C_u (G) = cost of underage (profit lost per unit of unmet demand), C_o (L) = cost of overage (loss per unsold unit) - When to use: Determine optimal production quantity for perishable/seasonal goods (newsvendor problem) - → See: Operations Management, Lesson 16

Operations Strategy¶

Capacity Strategy Critical Fractile (Newsvendor, Normal Demand): Q = μ + z × σ, where z* = NORM.S.INV(F_c) - μ = mean demand, σ = std dev of demand, F_c = Cu / (Cu + Co) - When to use: Calculate optimal order quantity when demand is normally distributed - → See: Operations Strategy

Inventory Management Reorder Point (Continuous Review): ROP = d × LT + z × σ × √LT - d = average daily demand, LT = lead time - When to use: Set reorder trigger under continuous review - → See: Operations Strategy

Safety Stock (Periodic Review): SS = z × σ × √(LT + R) - R = review period - When to use: Calculate safety stock when inventory is reviewed at fixed intervals - → See: Operations Strategy

Order-Up-To Level (Periodic Review): S = d × (LT + R) + z × σ × √(LT + R) - When to use: Determine target inventory level under periodic review - → See: Operations Strategy

Supply Chain Demand Pooling (Square Root Law): σ_total = σ_single × √n - n = number of independent, identical demand streams consolidated - When to use: Quantify safety stock reduction from centralizing warehouses - → See: Operations Strategy, Module 3

GMROI (Fast Fashion): GMROI = Gross Margin / Average Inventory - When to use: Measure return on inventory investment in retail/fashion - → See: Operations Strategy, Module 4

Marketing Management¶

Lesson 2: Market Analysis II -- Customer Value Economic Value to the Customer: EVC = Reference Price + Life Cycle Savings - Reference Price = competitor's price, Life Cycle Savings = TCO savings from your product - When to use: Determine the maximum rational price a customer would pay - → See: Marketing Management, Lesson 2

Lesson 5: STP III -- Positioning Customer Funnel Conversion: End Customers = Market × Awareness% × Consideration% × Trial% × Purchase% × Repeat% - When to use: Estimate how many target customers become repeat buyers - → See: Marketing Management, Lesson 5

Lesson 7: Products II -- Branding Brand Premium: Brand Premium = (Your Price − Generic Price) / Generic Price × 100 - When to use: Quantify the economic value of your brand moat - → See: Marketing Management, Lesson 7

Moran's Brand Equity Index: Brand Equity = Effective Market Share × Relative Price × Customer Retention Rate - When to use: Track brand equity over time using three measurable factors - → See: Marketing Management, Lesson 7

Lesson 12: Pricing I -- Cost Structures and Breakeven Breakeven Quantity: BEQ = FC / CM = FC / (P − VC) - FC = fixed costs, P = price, VC = variable cost, CM = contribution margin - When to use: Calculate how many units must sell to cover fixed costs - → See: Marketing Management, Lesson 12

Price Decrease BEQ (Incremental Units): BEQ = Lost Revenue / New CM - Lost Revenue = (Old CM − New CM) × Existing Quantity - When to use: Determine incremental units needed to offset a price cut - → See: Marketing Management, Lesson 12

Impact on Profits: Impact = (CM × Units Sold) − FC - When to use: Calculate net profit impact of a marketing program - → See: Marketing Management, Lesson 17

Units Required for Target Profit: Units = (FC + Profit Objective) / CM - When to use: Find volume needed to achieve a specific profit goal - → See: Marketing Management, Lesson 17

Lesson 14: Pricing III -- Elasticity Price Elasticity of Demand: E = %ΔQ / %ΔP - When to use: Measure demand sensitivity to price changes (average across industries ≈ −2) - → See: Marketing Management, Lesson 14

Lesson 17: Unit Economics Customer Lifetime Value: CLV = (ARPU × Gross Margin) / Churn Rate - ARPU = average revenue per user per period, Churn = % leaving per period - When to use: Estimate total profit from one customer over their lifetime - → See: Marketing Management, Lesson 17

Customer Acquisition Cost: CAC = Total Marketing & Sales Spend / New Customers Acquired - When to use: Measure the cost to acquire each new customer - → See: Marketing Management, Lesson 17

CLV/CAC Ratio: CLV / CAC - Target ≥ 3; below 1 = losing money on every customer - When to use: Test whether your business model is economically viable - → See: Marketing Management, Lesson 17

Marketing, Planning and Implementation¶

Session 2: Media Allocation GRP (Gross Rating Points): GRP = Reach × Frequency - Reach = % of target seeing ad at least once, Frequency = avg exposures per person reached - When to use: Measure total weight of a media campaign - → See: Marketing Planning and Implementation, Session 2

CPM (Cost Per Thousand): CPM = (Total Ad Spend / Total Impressions) × 1,000 - When to use: Compare cost efficiency of display/branding campaigns - → See: Marketing Planning and Implementation, Session 2

Session 3: Online/Offline Metrics CTR (Click-Through Rate): CTR = (Clicks / Impressions) × 100 - When to use: Measure ad effectiveness at capturing attention - → See: Marketing Planning and Implementation, Session 3

CPC (Cost Per Click): CPC = Total Spend / Total Clicks - When to use: Calculate cost per user interaction - → See: Marketing Planning and Implementation, Session 3

CPA (Cost Per Acquisition): CPA = Total Spend / Conversions - When to use: Calculate cost to acquire a customer or lead from a campaign - → See: Marketing Planning and Implementation, Session 3

ROAS (Return on Ad Spend): ROAS = Revenue from Campaign / Cost of Campaign - When to use: Measure financial return per dollar of advertising - → See: Marketing Planning and Implementation, Session 3

SEM Ad Rank: Ad Rank = Maximum CPC × Quality Score - When to use: Determine ad position in search engine auctions - → See: Marketing Planning and Implementation, Session 3

Session 7: Channel Margin Math Channel Margin Calculation: Manufacturer Revenue = RRP × (1 − Retailer Margin%) × (1 − Wholesaler Margin%) - When to use: Calculate what the manufacturer actually receives after intermediary margins - → See: Marketing Planning and Implementation, Session 7

Session 17: Brand Equity Moran's Brand Equity: Brand Equity = Effective Market Share × Relative Price × Customer Retention Rate - When to use: Diagnostic measure of brand strength over time - → See: Marketing Planning and Implementation, Session 17

Session 19: Customer Equity Customer Lifetime Value (DCF): CLV = Σ [(Revenueₜ − Costₜ) / (1 + discount rate)ᵗ] - When to use: Full NPV-based estimate of customer relationship value - → See: Marketing Planning and Implementation, Session 19

Business Analytics¶

Session 1: The Regression Line Simple Linear Regression: Y = a + bX - a = intercept, b = slope (avg change in Y per unit X) - When to use: Model the relationship between one predictor and one outcome - → See: Business Analytics, Session 1

R-Squared: R² = Var(Predicted) / Var(Actual) = 1 − Var(Residuals) / Var(Actual) - When to use: Measure proportion of variance in Y explained by the model - → See: Business Analytics, Session 1

Session 2: Multiple Linear Regression Multiple Regression: Y = a + b₁X₁ + b₂X₂ + ... + bₖXₖ - bᵢ = partial effect of Xᵢ holding all other X's constant - When to use: Model the relationship between multiple predictors and one outcome - → See: Business Analytics, Session 2

Adjusted R-Squared: Adjusted R² = 1 − [(1 − R²)(n − 1)] / (n − k − 1) - n = observations, k = independent variables - When to use: Compare models with different numbers of variables (penalizes overfitting) - → See: Business Analytics, Session 2

Session 3: Testing Regression Coefficients 95% Confidence Interval: CI = Coefficient ± 2 × SE - SE = standard error of the coefficient - When to use: Test whether a coefficient is statistically different from zero - → See: Business Analytics, Session 3

F-Test: F = [R² / k] / [(1 − R²) / (n − k − 1)] - When to use: Test whether the entire model is significant (all coefficients jointly zero?) - → See: Business Analytics, Session 3

Session 5: Time Series Exponential Smoothing: sm(t) = α × x(t) + (1 − α) × sm(t−1) - α = smoothing parameter (0 < α < 1), x(t) = actual observation - When to use: Forecast the next period using a weighted blend of current data and prior trend - → See: Business Analytics, Session 5

Additive Seasonality: Predicted = Trend + Seasonal - When to use: When seasonal fluctuation amplitude is constant over time - → See: Business Analytics, Session 5

Multiplicative Seasonality: Predicted = Trend × Seasonal - Seasonal factor of 1.2 = 20% above trend - When to use: When seasonal fluctuations scale with the trend level - → See: Business Analytics, Session 5

Sessions 6-7: Classification Logistic Regression (Logit): ln[P / (1 − P)] = a + b₁X₁ + b₂X₂ + ... + bₖXₖ - P = probability Y = 1, P/(1−P) = odds - When to use: Predict binary outcomes (default/no default, churn/stay) - → See: Business Analytics, Session 6

Accuracy: Accuracy = (TP + TN) / Total - When to use: Overall classification correctness (watch for class imbalance) - → See: Business Analytics, Session 6

Sensitivity (Recall): Sensitivity = TP / (TP + FN) - When to use: Measure the catch rate for actual positives - → See: Business Analytics, Session 6

Specificity: Specificity = TN / (TN + FP) - When to use: Measure the correct clearance rate for actual negatives - → See: Business Analytics, Session 6

Precision: Precision = TP / (TP + FP) - When to use: Measure the reliability of positive predictions - → See: Business Analytics, Session 6

False Positive Rate: FPR = FP / (FP + TN) - When to use: Measure the rate of false alarms - → See: Business Analytics, Session 6

Multicollinearity Diagnostic Variance Inflation Factor: VIF_i = 1 / (1 − R_i²) - VIF > 5 = warning, VIF > 10 = severe multicollinearity - When to use: Detect whether independent variables are too correlated with each other - → See: Business Analytics, Multicollinearity

Global Economics¶

Lesson 1: Competitive Markets Price Elasticity of Demand: Eᵈ = %ΔQᵈ / %ΔP - When to use: Measure how sensitively quantity demanded responds to price changes - → See: Global Economics, Lesson 1

Price Elasticity of Supply: Eˢ = %ΔQˢ / %ΔP - When to use: Measure how sensitively quantity supplied responds to price changes - → See: Global Economics, Lesson 1

Consumer Surplus: CS = area below demand curve, above equilibrium price - When to use: Measure total buyer gains from market participation - → See: Global Economics, Lesson 1

Producer Surplus: PS = area above supply curve, below equilibrium price - When to use: Measure total seller gains from market participation - → See: Global Economics, Lesson 1

Lesson 4: Taxes Tax Wedge: Price buyers pay − Price sellers receive = t (per-unit tax) - When to use: Analyze how a tax divides between buyers and sellers - → See: Global Economics, Lesson 4

Tax Revenue: TR = t × Q_after-tax - When to use: Calculate government revenue from a per-unit tax - → See: Global Economics, Lesson 4

Deadweight Loss: DL = Total Surplus without tax − (Total Surplus with tax + Tax Revenue) - When to use: Measure efficiency cost of a tax (lost gains from trade) - → See: Global Economics, Lesson 4

Lesson 5: Macroeconomic Equilibrium Nominal GDP: Nominal GDP = P × Y - When to use: Measure output at current prices - → See: Global Economics, Lesson 5

Real GDP Growth: Real GDP Growth = (Y_t − Y_{t−1}) / Y_{t−1} - When to use: Measure economic expansion/contraction at constant prices - → See: Global Economics, Lesson 5

GDP Expenditure Identity: Y = C + I + G + NX - C = consumption, I = investment, G = government spending, NX = net exports - When to use: Decompose GDP by spending component - → See: Global Economics, Lesson 5

Inflation Rate: π = (P_t − P_{t−1}) / P_{t−1} - When to use: Measure the rate of change in the general price level - → See: Global Economics, Lesson 5

Unemployment Rate: Unemployment Rate = Unemployed / Labor Force - When to use: Measure the share of the labor force without jobs - → See: Global Economics, Lesson 5

Fisher Equation: rᵉ = i − πᵉ (expected); r = i − π (realized) - i = nominal rate, πᵉ = expected inflation, r = real rate - When to use: Convert between nominal and real interest rates - → See: Global Economics, Lesson 5

Lesson 6: Monetary Policy Real Policy Rate: rᵉ_policy = i_policy − πᵉ - Expansionary when < r, contractionary when > r - When to use: Assess the stance of monetary policy - → See: Global Economics, Lesson 6

Lesson 7: Fiscal Policy Government Budget Constraint: G + Tr + iB_{t−1} = T + ΔB - G = spending, Tr = transfers, iB_{t−1} = interest on debt, T = tax revenue, ΔB = new borrowing - When to use: Analyze government fiscal sustainability - → See: Global Economics, Lesson 7

Primary Deficit: Primary Deficit = G + Tr − T - When to use: Measure fiscal deficit excluding interest payments - → See: Global Economics, Lesson 7

Overall Deficit: Overall Deficit = G + Tr − T + iB_{t−1} - When to use: Measure full fiscal deficit including interest on existing debt - → See: Global Economics, Lesson 7

Lesson 8: Exchange Rates Real Exchange Rate: Real Exchange Rate = E × (P / P) - E = nominal exchange rate (domestic per foreign), P = foreign price level, P = domestic price level - When to use: Measure true competitiveness of domestic goods - → See: Global Economics, Lesson 8

Real Exchange Rate Change (Approximation): %Δ RER ≈ %ΔE + π* − π - When to use: Quick estimate of real exchange rate movement - → See: Global Economics, Lesson 8

Lesson 9: Balance of Payments Balance of Payments Identity: Current Account + Financial Account = 0 - When to use: Understand that capital flows and trade flows are two sides of the same coin - → See: Global Economics, Lesson 9

Competitive Strategy¶

Session 4: Value Creation and Capture Value Created: Value Created = Willingness to Pay (WTP) − Cost - When to use: Measure total value a firm creates for society - → See: Competitive Strategy, Session 4

Buyer's Surplus: Buyer's Surplus = WTP − Price - When to use: Measure value captured by the customer - → See: Competitive Strategy, Session 4

Firm's Margin: Firm's Margin = Price − Cost - When to use: Measure value captured by the firm - → See: Competitive Strategy, Session 4

Entrepreneurship 1¶

Sessions 6-7: Financing the Venture Post-Money Valuation: Post-Money = Pre-Money Valuation + New Investment - When to use: Calculate total company value immediately after a funding round - → See: Entrepreneurship 1, Session 6

Investor Ownership: Investor % = New Investment / Post-Money Valuation - When to use: Determine equity share given to new investors - → See: Entrepreneurship 1, Session 6

Runway: Runway = Cash on Hand / Monthly Burn Rate - When to use: Estimate months of survival before next funding needed - → See: Entrepreneurship 1, Session 6

Entrepreneurship 2¶

Session 9: Unit Economics CLV (Venture Context): CLV = (Avg Revenue per Period − Avg Cost to Serve) × Avg Customer Lifespan - Or with discount rate: CLV = Margin per Period × [1 / (1 + Discount Rate − Retention Rate)] - When to use: Test whether a venture's business model is viable - → See: Entrepreneurship 2, Session 9

CAC: CAC = Total Sales and Marketing Spend / New Customers Acquired - When to use: Measure cost efficiency of customer acquisition - → See: Entrepreneurship 2, Session 9

CLV/CAC Ratio: Target > 3:1; CAC Payback < 12 months - When to use: Fundamental viability test for any venture - → See: Entrepreneurship 2, Session 9

Leadership¶

No formulas -- frameworks-based course. Key models include Perez Lopez's Three Motivations (extrinsic, intrinsic, transcendent), Situational Leadership, the Anthropological Model of Organizations, and Schein's Organizational Culture Formation.

Communication¶

No formulas -- performance-based course. Key structures include Logos (rational), Problem-Solution, Storytelling, Ethos (credibility), and Pathos (emotional) speech types.

Business Ethics¶

No formulas -- frameworks-based course. Key frameworks include the Three Lenses (utilitarian, deontological, virtue ethics), See-Judge-Act decision cycle, and the seven-question ethical protocol.

Analysis of Business Problems (ABP)¶

No formulas -- frameworks-based course. Key methodology is the six-step problem-solving process: Define the Problem, Diagnose, Set Criteria, Generate Alternatives, Evaluate Alternatives, Recommend and Implement.