Ch 1-4 Flashcards

(33 cards)

1
Q

What are the 5 Liquidity ratios?

A

Current Ratio = Current Assets ÷ Current Liabilities

Quick Ratio = (Current Assets − Inventory) ÷ Current Liabilities

Average Collection Period = AR ÷ Daily Credit Sales

AR Turnover = Credit Sales ÷ AR

Inventory Turnover = COGS ÷ Inventory

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2
Q

What are the 3 Efficiency ratios?

A

Total Asset Turnover = Sales ÷ Total Assets

Fixed Asset Turnover = Sales ÷ Fixed Assets

OIROI = Operating Income ÷ Total Assets

*The OIROI ratio can be used as both an efficiency and a profitability ratio.

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3
Q

What are the 2 Financing/solvency ratios?

A

Debt Ratio = Total Debt ÷ Total Assets

Times Interest Earned = EBIT ÷ Interest Expense

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4
Q

What are the 5 profitability ratios?

A

ROA = Net Income ÷ Total Assets

ROE = Net Income ÷ Total Equity

Gross margin = Gross Profit ÷ Sales

Operating margin = EBIT ÷ Sales

Net margin = Net Income ÷ Sales

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5
Q

What is the dupont formula?

A

Return on Equity = Net Income/Equity
=Net Income/(Assets − Liabilities)
=Net Profit Margin×Total Asset Turnover
×Leverage Multiplier

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6
Q

Economic Value Added

A

NOPAT − (WACC × Costly Capital)

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7
Q

Free Cash Flow to the Firm ratio

A

EBIT − Cash Tax Payments + Depreciation − CAPEX − Increases in NWC

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8
Q

Free Cash Flow to Equity Holders ratio

A

NI + Depreciation − CAPEX − Increases in NWC + Increases in Net Long-Term Debt

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9
Q

Current Ratio

A

Current Assets ÷ Current Liabilities

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10
Q

Quick Ratio

A

(Current Assets − Inventory) ÷ Current Liabilities

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11
Q

Average Collection Period

A

Accounts Receivable ÷ Daily Credit Sales

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12
Q

Accounts Receivable Turnover

A

Credit Sales ÷ Accounts Receivable

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13
Q

Inventory Turnover

A

COGS ÷ Inventory

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14
Q

Total Asset Turnover

A

Sales ÷ Total Assets

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15
Q

Fixed Asset Turnover

A

Sales ÷ Fixed Assets

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16
Q

OIROI

A

Operating Income ÷ Total Assets
*The OIROI ratio can be used as both an efficiency and a profitability ratio.

17
Q

Debt Ratio

A

Total Debt ÷ Total Assets

18
Q

Times Interest Earned

A

EBIT ÷ Interest Expense

19
Q

ROA ratio

A

Net Income ÷ Total Assets

20
Q

ROE ratio

A

Net Income ÷ Total Equity

21
Q

Gross Margin

A

Gross Profit ÷ Sales

22
Q

Operating Margin

A

EBIT ÷ Sales

23
Q

Net Margin

A

Net Income ÷ Sales

24
Q

Balance Sheet equation

A

Assets= Liabilities + Equity

25
Net Income =
Dividends + Retained Earnings
26
Sustainable Growth Rate=
ROE(1-b)= NI/S x S/A x A/E x (1-b)
27
What is b in the Sustainable Growth Rate?
dividend payout ratio = Dividends / Net Income
28
Debt to Equity Ratio
Total Debt/ Total Equity
29
New RE=
Old RE + Sales × Net Margin × (1 − Payout Ratio) = old RE + NI - Dividends
30
DFN=
Projected total assets- projected total liabilities - projected total equity
31
Capex=
New PP&E-Old PP&E + depreciation expense
32
Increase in NWC=
This year’s (current assets - current liabilities) - last year’s (current assets -current liabilities)
33
Non-spontaneous accounts examples and other names
Aka Discretionary accounts Notes payable, long term debt, common stock, fixed assets(usually)