Chapter 4 - Financial Statement Analysis Flashcards
(20 cards)
What is the right hand side of the balance sheet called?
Capital structure, it finances the left hand side
Current Ratio
Current Assets/Current Liabilities
Quick Ratio
(Current Assets-Inventories)/Current Liabilities
Inventory Turnover
Sales/Inventories
DSO (ACP)
Receivables/Average Sales per day
If you get sales per year just /365
FA Turnover
Sales/Net Fixed Assets
TA Turnover
Sales/Total Assets
Debt Ratio
Total Debt/Total Assets
TIE Ratio
EBIT/Interest Charges
Operating Margin
EBIT/Sales
Profit Margin (ROS)
Net Income/Sales
Basic Earning Power
EBIT/Total Assets
P/E Ratio
Price/EPS
EPS
NI/# of shares on sale
ROA
NI/Total Assets
ROE
NI/Total Equity
DuPont Equation
NI/S x S/A x A/E
Equity Multiplier
Total Assets/Equity
What happens when a company buys back stock?
It goes into treasury stock. It reduces the equity section by the amount it bought back. The market reacts by causing an increase in the stock price. This happens because when they buy it back it sends a signal to the market saying that the company thinks that its stock is undervalued.
Market Book Ratio
How much investors are willing to pay for $1 of book value equity
MP/Book value per share
