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MBA > Financial Statements > Flashcards

Financial Statements Flashcards

1
Q

Simply, what goes on an income statement?

A

Revenue - Expenses = Net Income

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2
Q

Simply, what is on a balance sheet?

A

Share Holder Equity + Liabilities = Assets

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3
Q

how do you use income statements and balance sheets to analyze a business

A

Profitability analysis - IS
Asset Analysis - BS
Debt Analysis - BS
Investor Return Analysis - BS

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4
Q

for profitability analysis what are the three main areas to look at?

A

Revenues
Expenses
Margins

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5
Q

for profitability analysis of revenues, what do you look at?

A

revenue growth year over year
revenues by segment

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6
Q

for profitability analysis of expenses, what do you look at?

A

expense growth year over year
expense as a percent of revenue,
vertical anslysis
segment expenses

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7
Q

for profitability analysis of margins, what do you look at?

A

Gross Margin % of revenue
Operating margin % of revenue
EBITA % of revenue
Net Income % of revenue
Segment Margins

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8
Q

What do you look at on a balance sheet analysis for assets?

A

Working Capital analysis
Asset Productivity

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9
Q

what is working capital analysis

A

Current Ratio
Free Cash Flow
AR Turns/Days
Inventory Turns/days
AP Days
Cash Conversion Cycle

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10
Q

What is asset productivity

A

Fixed asset turnover
asset utilization (Turnover)
Return on Assets (ROA)

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11
Q

what do you look at on a balance sheet analysis for liabilities

A

Long Term Debt
Cost of Debt

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12
Q

what id long term analysis

A

total liability to total assets
total liability to total equity
financial leverage

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13
Q

how do you analyze cost of debt?

A

interest coverage ratio

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14
Q

how do you analyze a balance sheet for shareholders equity?

A

stock price
stockholder returns

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15
Q

what do you look at when evaluating stock price

A

P/E Ratio

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16
Q

what do you look at when analyzing stockholder returns?

A

dividend yield
earnings per share
Return on Equity (ROE)

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17
Q

From a balance sheet analysis, what items link to the income statement?

A

Fixed asset turnover
Asset utilization (turnover)
Return on Assets (ROA)
Interest Coverage Ratio
Earnings per share
Return on Equity

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18
Q

how do you calculate profitability?

A

Net Profit % of Revenue

Net Income / Net Revenue

19
Q

how do you calculate revenue Growth

A

((Current sales - previous sales) / (previous sales))

20
Q

how do you do a common-sized statement?

A

calculate all costs as a % of revenues

21
Q

how do you a segment analysis

A

compare segment costs to segment revenues in a common-sized analysis

22
Q

how do you calculate gross profit % (Gross Margin)

A

Gross Profit / Sales

23
Q

How do you calculate Operating Earnings % (Operating Margin)

A

Operating Earnings / Sales

24
Q

what is EBITA

A

Earnings Before Incomes Taxes Depreciation and Amortization

25
Q

how do you calculate Net Income ( Net Margin)

A

Net Income / Sales

26
Q

How do you calculate working capital for asset efficiency?

A

Current Assets - Current Liabilities

27
Q

How do you calculate the Current Ratio for asset efficency

A

Current Assets / Current Liabilities

(Ideally 1.5 or better)

28
Q

How do you calculate Accounts Receiveable Turnover?

A

Sales on account / Accounts Receivable = AR Turnover

29
Q

how do you calculate day’s receivables

A

365 / AR Turnover

30
Q

How do you calculate inventory turnover?

A

COGS / Inventory = Inventory Turnover

31
Q

how do you calculate day’s inventory

A

365 / Inventory Turnover

32
Q

how do you calculate Payable Turnover

A

COGS / Accounts Payable

33
Q

How do you calculate Day’s Payable

A

365 / Payable Turnover

34
Q

What is the cash conversion cycle?

A

Days inventory + Day’s Receivable - Day’s payables

35
Q

How to calculate Asset Utilization

A

Sales / Total Assets

36
Q

How to calculate Return on Assets

A

Net Income / Total Assets

37
Q

How do you do a Debt Analysis?

A

Total labilities / Total Assets

38
Q

What are the green and yellow lights for Debt Analysis

A

Liab/Asset of less than 60% is fine

liab/Asset of more than 80 is not

39
Q

how do you calculate interest coverage for debt analysis and what is the floor?

A

EBIT / Interest Expense

2:1 is the floor

40
Q

How do you calculate Earnings per share (EPS)?

A

Net Income / Average Shares Outstanding

41
Q

How do you figure out the Price Earnings Ratio (P/E)

A

Market Price Per Share / EPS

larger is better

42
Q

how do you determine dividend yield?

A

Dividend per share / market price per share

43
Q

how do you calculate Return on Equity (ROE)?

A

Net Income / Total Stockholders Equity

44
Q
A

MBA (41 decks)

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