FPAC Part II cheat sheet

Gross profit margin = (Revenue − COGS) ÷ Revenue; measures direct cost efficiency before operating expenses.

Current ratio = Current assets ÷ Current liabilities; a value below 1.0 signals working capital shortfall.

Quick ratio = (Cash + Marketable securities + Receivables) ÷ Current liabilities; excludes inventory and prepaids.

DuPont: ROE = Net profit margin × Asset turnover × Equity multiplier, isolating profitability, efficiency, and leverage.

Cash conversion cycle = DIO + DSO − DPO, where each is (balance ÷ COGS or Revenue) × 365.

Free cash flow = Operating cash flow − Capital expenditures; positive FCF funds debt service and distributions.

Horizontal analysis compares line items across periods as percent change; vertical analysis expresses each item as a percent of a base (revenue or total assets).

Interest coverage = EBIT ÷ Interest expense; a ratio below 1.0 means operating earnings cannot cover interest.

Under IFRS, development costs are capitalized when feasibility criteria are met; under US GAAP, R&D is expensed as incurred.

Data governance assigns ownership (stewards), defines quality rules, and enforces access controls across the data lifecycle.

ETL extracts, transforms, then loads to a target warehouse; ELT loads raw data first and transforms inside the warehouse.

A primary key uniquely identifies each row; a foreign key references a primary key in another table to enforce referential integrity.

SQL JOIN types: INNER returns matches only; LEFT returns all left rows plus matches; FULL returns all rows from both sides.

Data validation controls include range checks, format checks, completeness checks, and reconciliation to source systems.

The CIA triad - confidentiality, integrity, availability - structures information security controls and risk assessment.

Segregation of duties in ERP systems requires that the same user cannot both create a vendor and approve its payment.

A system of record is the authoritative source for a data element; downstream systems should not independently overwrite it.

Audit trails are immutable logs of who changed what and when; they support reconstruction of transactions and detective controls.