2 - Financial Statements & Valuation Flashcards Preview

Series 79 Top-Off Exam > 2 - Financial Statements & Valuation > Flashcards

Flashcards in 2 - Financial Statements & Valuation Deck (150)
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1

Gross Profit

Gross Profit = Revenue - Cost of Goods Sold

2

Gross Profit Margin

Gross Profit Margin = Gross Profit / Revenue

3

Operating Profit (EBIT)

Operating Profit (EBIT) = Gross Profit - SG&A

4

Operating Profit Margin

Operating Profit Margin = Operating Profit (EBIT) / Revenue

5

Effective Tax Rate

Effective Tax Rate = Income Taxes / Earnings Before Tax

6

Net Income Margin

Net Income Margin = Net Income / Revenue

7

EBITDA

EBITDA = EBIT + D&A

8

EBITDA Margin

EBITDA Margin = EBITDA / Revenue

9

LIFO vs. FIFO in an inflationary environment

FIFO results in lower COGS, higher gross profit and more taxes

10

PIK Interest - Impact in Income Statement

PIK interest is treated as interest expense on the Income Statement

11

PIK Interest - Tax consequences for recipient

PIK interest is taxed as ordinary income to the recipient when accrued

12

Adjusting Net Income for a one-time pre-tax expense

When adjusting Net Income for a one-time, pre-tax charge, Net Income will increase by (amount of expense) x (1 - tax rate)

13

Adjusting Net Income for a one-time, net, charge

When adjusting Net Income for a one-time, net charge, Net Income will increase by the amount of the charge

14

Adjusting EBIT or EBITDA for a one-time, pre-tax charge

When adjusting EBIT or EBITDA for a one-time, pre-tax charge, EBIT or EBITDA will increase by the amount of the charge

15

Adjusting EBIT or EBITDA for a one-time, net charge

When adjusting EBIT or EBITDA for a one-time, net charge, EBIT or EBITDA will increase by (amount of the charge) / (1 - tax rate)

16

Calculation of net new shares issued under Treasury Stock Method

New Shares Issued = (Stock Price - Strike Price) / Stock Price x Number of Options

17

P/E Ratio

P/E = Stock Price / Earnings Per Share OR Equity Value / Net Income

18

Equity Value (Using P/E)

Equity Value = Net Income x P/E Ratio

19

PEG Ratio

PEG Ratio = (P/E Ratio) / Expected Earnings Growth

20

Best Value using PEG Ratio

Best Value using the PEG Ratio is the company with the LOWEST ratio

21

Dividend Payout Ratio

Dividend Payout Ratio = Annual Dividend / BASIC EPS

22

Earnings Retention Ratio

Earnings Retention Ratio = 1 - Dividend Payout Ratio

23

Book Value of Equity

Book Value of Equity = Shareholders' Equity = Assets - Liabilities

24

Price/Book Value

Price/Book Value = Stock Price / Book Value

25

Application of Price/Book Value

P/B multiple is most often applied for financial services companies, such as banks, broker dealers and insurance companies.

26

Enterprise Value using Total Debt

EV = Equity Value + Total Debt + Preferred Stock + Noncontrolling Interest - Cash

27

Net Debt

Net Debt = Total Debt - Cash

28

Enterprise Value using Net Debt

EV = Equity Value + Net Debt + Preferred Stock + Noncontrolling Interest

29

Earnings Yield

Earnings Yield = Earnings Per Share / Stock Price OR 1 / PE Ratio

30

Goodwill

Created when an asset is purchased for a price in excess of either its market value (for a public company) or book value (for a private company)