What is the Bardahl Formula and how is it calculated

What is the Bardahl Formula and how is it calculated -...

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What is the Bardahl Formula and how is it calculated? The Bardahl formula is one the primary tools to defend against the accumulated earnings tax. It was created in the 1960s to determine what the reasonable needs or the corporations are for the business cycle. This formula would add up inventory and receivables turnover, subtract payables turnover, and multiplies the result by a corporation’s total operating costs for the year. So the
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Unformatted text preview: formula is: (Inventory turnover accounts receivable turnover accounts payable turnover) * operating expenses. Lets say X corporation has inventory turnover of 36, receivables turnover of 90, and payables turnover of 60, and total operating expenses is $100,000 the working capital will be (36+90-60)/ 360 * 100,000 = $18,333....
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This note was uploaded on 03/05/2012 for the course INCOME TAX 4404 taught by Professor Bulie during the Spring '11 term at University of Minnesota Duluth.

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