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CFA Level 1: FR & A > Techniques > Flashcards

Techniques Flashcards

0
Q

Vertical common size income statement ratios

A

Income statement acct / sales

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1
Q

Vertical common size balance sheet ratios

A

Balance sheet acct / total assets

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2
Q

Activity ratios

A

How well a firm uses various assets

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3
Q

Liquidity ratios

A

Ability to pay short term obligations

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4
Q

Solvency ratios

A

Info on firms financial leverage and ability to meet longer term obligations

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5
Q

Profitability ratios

A

How well company generates operating profits and net profits from sales

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6
Q

Valuation ratios

A

Used to compare relative valuation of companies

Sales per share, eps, price to cash flow per share

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7
Q

Receivables turnover

A

Annual sales / ave receivables

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8
Q

Days of sales outstanding

A

365 / receivables turnover

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9
Q

Inventory turnover

A

COGS / ave inventory

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10
Q

Days of inventory on hand

A

365 / inventory turnover

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11
Q

Payables turnover

A

Purchases / ave accts payable

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12
Q

Number of days of payables

A

365 / payables turnover

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13
Q

Cash conversion cycle

A

= days of sales outstanding
+ days of inventory on hand
+ number of days of payables

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14
Q

Current ratio

A

Current assets / current liabilities

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15
Q

Quick ratio

A

(Current assets - inventories) / current liabilities

16
Q

Gross profit margin

A

= (rev - cogs) / rev

= gross profit / revenue

17
Q

Operating profit margin

A

= EBIT / revenue

EBIT = operating income

18
Q

Net profit margin

A

= net income / revenue

19
Q

Return on assets (ROA)

A

Net income / ave total assets

20
Q

Return on equity

A

Net income / ave equity

21
Q

DuPont analysis

A

ROE =

Gross profit margin
+ total asset turnover
+ financial leverage multiplier

22
Q

Total asset turnover

A

Revenue / assets

23
Q

Financial leverage multiplier

A

Assets / equity

Aka equity multiplier

24
Q

Operating leverage

A

% change EBIT / % change sales

25
Q

Debt to assets

A

Total debt / total assets

26
Q

Debt to equity

A

Total debt / stockholders equity

27
Q

Working capital

A

Current assets - current liabilities

28
Q

Working capital turnover

A

Revenue / ave working capital

29
Q

Sustainable growth rate

A

(Earnings retention rate) • (ROE)

30
Q

Earnings retention rate

A

= 1 - payout ratio

31
Q

Payout ratio

A

= common div / (net inc - pref div)

32
Q

Interest coverage ratio

A

EBIT / interest payments

CFA Level 1: FR & A (7 decks)

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