NPAT cheat sheet

Accounting equation: Assets = Liabilities + Owner's Equity; every transaction preserves this balance.

Gross profit = Revenue − Cost of Goods Sold; Net profit = Gross profit − Operating expenses − Interest − Tax.

Current ratio = Current assets ÷ Current liabilities; a value below 1 signals short-term liquidity strain.

Quick (acid-test) ratio excludes inventory from current assets because inventory may be slow to convert to cash.

Double-entry rule: each transaction debits at least one account and credits at least one for equal amounts.

Working capital = Current assets − Current liabilities; it measures funds available for day-to-day operations.

Break-even units = Fixed costs ÷ (Selling price per unit − Variable cost per unit).

Trade discount is deducted before invoice value; cash discount is offered for early payment and recorded as a finance cost.

Law of demand: price and quantity demanded move inversely, ceteris paribus; supply curves slope upward.

Equilibrium occurs where quantity supplied equals quantity demanded; a price ceiling below equilibrium creates shortage.

Price elasticity of demand = %Δ quantity demanded ÷ %Δ price; |E| > 1 is elastic, |E| < 1 is inelastic.

GDP = C + I + G + (X − M); it counts final goods produced within a country's borders in a period.

Inflation erodes purchasing power; real interest rate ≈ nominal interest rate − inflation rate (Fisher approximation).

Opportunity cost is the value of the next best alternative forgone when a choice is made.

Comparative advantage favours trade even when one party is absolutely more productive in everything.

A central bank raises policy rates to curb inflation, which typically cools borrowing and aggregate demand.

A syllogism is valid when its conclusion follows necessarily from its premises; validity does not guarantee truth.

Fallacy of the undistributed middle: 'All A are B; all C are B; therefore all A are C' is invalid.

Correlation does not imply causation; alternative explanations include reverse causation and confounding variables.

Deductive reasoning moves from general premises to a specific conclusion; inductive reasoning generalises from cases.

In literary analysis, theme is the underlying idea, while plot is the sequence of events that conveys it.

Primary sources are original artefacts or documents; secondary sources interpret or summarise primary material.

Utilitarian ethics judges actions by consequences (greatest good); deontology judges by adherence to duty or rules.

A valid argument with true premises is sound; an argument can be valid yet unsound if a premise is false.

AIDA model: Attention → Interest → Desire → Action; each stage targets a distinct consumer response.

Unique Selling Proposition states a benefit competitors do not offer; it must be specific, defensible, and relevant.

Brand equity is the added value a brand name gives a product, often measured by awareness, associations, and loyalty.

Share of voice = brand advertising spend ÷ total category advertising spend; it is linked to share of market.

Reach × Frequency = Gross Rating Points (GRP); GRP measures total delivery of an advertising schedule.

Cost per thousand (CPM) = (Ad cost ÷ Impressions) × 1,000; it compares media efficiency across channels.

Positioning maps plot brands on two attributes to reveal perceptual gaps and white space in a category.

Cognitive dissonance after purchase is reduced by reassurance messaging, warranties, and post-purchase support.

Absolute advantage compares productivity levels; comparative advantage compares opportunity costs of production.

A tariff is a tax on imports; a quota is a quantitative limit on imports; both raise domestic prices.

Balance of payments = current account + capital/financial account + statistical discrepancy, and it must net to zero.

A currency depreciation makes exports cheaper abroad and imports dearer at home, improving the trade balance over time.

Purchasing power parity holds that identical goods should cost the same across countries once converted at the exchange rate.

Most-favoured-nation principle requires a WTO member to extend the same trade terms to all members.

Foreign direct investment involves control of assets abroad; portfolio investment is passive financial holding.

Hofstede dimensions (power distance, individualism, uncertainty avoidance) are used to compare national work cultures.

Functions of management: planning, organising, leading, and controlling, executed in a continuous cycle.

Span of control is the number of subordinates one manager supervises; wider spans flatten the hierarchy.

Maslow's hierarchy orders needs from physiological to self-actualisation; lower needs are satisfied first.

Herzberg separates hygiene factors (pay, conditions) that prevent dissatisfaction from motivators that drive satisfaction.

SMART goals are Specific, Measurable, Achievable, Relevant, and Time-bound.

SWOT analysis pairs internal strengths and weaknesses with external opportunities and threats.

Management by objectives aligns individual targets with organisational goals through joint goal setting and review.

A matrix structure gives dual reporting lines (function and project), increasing coordination but risking role conflict.