CFA Level 1 Flashcards
1
Q
Equity
A
Total Assets - Total Debt
2
Q
Interest Coverage Ratio
A
EBIT / Interest Payments
3
Q
Net Profit Margin
A
Net income / Net Sales
4
Q
Current Ratio
A
Current Assets / Current Liabilities
5
Q
Operating Profit Margin
A
Operating Income / Revenue
(operating income = gross profit - operational costs, approx EBIT)
6
Q
Categories of Financial Ratios
A
Activity, Liquidity, Solvency, Profitability
7
Q
DuPont equation (3-stage decomposition)
ROE =
A
net profit margin × asset turnover × leverage
8
Q
Extended DuPont equation (5-stage decomposition)
ROE =
A
tax burden × interest burden × EBIT margin × asset turnover × leverage
9
Q
Working Capital
A
Current Assets - Current Liabilities
You can shuffle them around depending on what you try to calc.
E.G. CA = WC + CL
10
Q
Porter’s five forces analysis
A
- threat of substitute products
- intensity of industry rivalry
- bargaining power of suppliers
- bargaining power of customers
- threat of new entrants
