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A Simple Process Known as the PREP Formula Can Help

question 24

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A simple process known as the PREP formula can help when you are called on to speak extemporaneously. Using it, you can break your answer into the following four parts:


Definitions:

Operating Expenses

Regular costs for operating a business, including rent, utilities, payroll, and materials, but excluding costs associated with the production of goods sold.

Corporate Tax Rate

The percentage of a corporation's taxable income that it must pay to the government as tax.

Earnings Per Share

A financial ratio that measures the amount of net income earned per share of stock outstanding.

Cash Dividends

Cash payouts by a company to its stock owners, regularly as a sharing of profits.

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