CHFP cheat sheet

Gross margin = (Revenue - COGS) / Revenue; a 1% margin gain on $10M revenue adds $100K to operating profit if fixed costs are unchanged.

Contribution margin per unit = Price - Variable cost per unit; break-even units = Fixed costs / Contribution margin per unit.

Operating leverage = Contribution margin / Operating income; higher leverage magnifies profit changes as sales change.

Current ratio = Current assets / Current liabilities; quick ratio excludes inventory and is the stricter liquidity test.

Cash conversion cycle = Days inventory outstanding + Days sales outstanding - Days payables outstanding; a shorter cycle frees working capital.

DuPont return on equity = Net margin x Asset turnover x Equity multiplier; each factor isolates profitability, efficiency, and leverage.

A cost is relevant to a decision only if it is future and differs between alternatives; sunk and allocated fixed costs are not relevant.

Customer lifetime value = Average margin per period x Retention periods; compare against customer acquisition cost to judge unit economics.

RACI assigns exactly one Accountable per deliverable; multiple accountable owners is the most common cause of decision stalls.

Team psychological safety, measured by Edmondson's survey items, predicts learning behavior and error reporting better than individual expertise.

Groupthink symptoms include illusion of unanimity and self-censorship; assigning a devil's advocate or using anonymous input reduces them.

The Thomas-Kilmann modes are competing, collaborating, compromising, avoiding, and accommodating; collaborating seeks a win-win and requires high assertiveness and cooperativeness.

Cross-functional conflict is often structural, not personal; clarifying decision rights and shared metrics addresses it at the source.

Social loafing increases with team size; making individual contributions identifiable reduces it.

Consensus is not unanimity; a decision rule such as 'consent' (no principled objection) lets teams move faster than full agreement.

Effective feedback is specific, timely, behavior-focused, and paired with a forward-looking request; general praise or criticism does not change behavior.

Net present value = Sum of cash flows discounted at the cost of capital; accept projects with NPV greater than zero.

Internal rate of return is the discount rate that sets NPV to zero; it can mislead when comparing projects of different scale or timing.

Weighted average cost of capital = (E/V x Cost of equity) + (D/V x Cost of debt x (1 - Tax rate)); use market values for weights.

Capital asset pricing model: Cost of equity = Risk-free rate + Beta x Market risk premium.

Modigliani-Miller without taxes says capital structure does not affect firm value; with taxes, debt creates a tax shield worth Tax rate x Debt.

Economic value added = Invested capital x (Return on invested capital - WACC); positive EVA means value creation above the cost of capital.

Payback period ignores cash flows after the cutoff and the time value of money; use it as a screening tool, not the primary decision rule.

A hedging program reduces cash-flow volatility; it does not create value unless it lowers expected taxes, distress costs, or agency costs.

Scenario planning builds several plausible futures rather than one forecast; the goal is robust strategy that performs across scenarios.

The technology adoption life cycle runs innovators, early adopters, early majority, late majority, laggards; the gap between early adopters and early majority is the chasm.

A leading indicator moves before the outcome it predicts; a lagging indicator confirms after the fact. Track both but act on leading ones.

PESTLE covers political, economic, social, technological, legal, and environmental forces; use it to scan the external environment systematically.

S-curve adoption: growth is slow at first, accelerates, then plateaus; investment timing matters most near the inflection point.

Disruptive innovation starts at the low end or in new markets with inferior but cheaper offerings, then improves until it displaces incumbents.

Real options value flexibility (defer, expand, abandon); a staged investment can be worth more than a single large commitment.

Base rate neglect causes forecasters to overweight vivid recent events; anchoring on historical base rates improves forecast accuracy.