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Flashcards in Exam Deck (16)
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1
Q

What are the categories of the Operating Activities on Statement of Cash Flow

A
  • Depreciation +
  • Loss + (or Gain -) on Disposal of Equipment
  • Accounts Receivable -
  • Inventory -
  • Prepaid Expenses -
  • Accounts Payable +
  • Income Tax Payable +
  • Other liabilities +
2
Q

What are the categories of the Investing Activities on Statement of Cash Flow

A
  • Long Term Investments +
  • Purchase of Equipment -
  • Purchase of Furniture -
3
Q

What are the categories of the Financing Activities on Statement of Cash Flow

A
  • Payment to Bank Loans -
  • Common Shares Issued +
  • Dividends -
4
Q

Vertical Analysis

A
  • (Analysis) / Base Amount = Vertical Percentage
  • So total sales is 100% and a single sale is percentage of that.
  • Applies to total assets and liabilities
5
Q

Working Capital

A

Current Assets - Current Liabilities
Higher is better
Make sure to check notes for relevant information

6
Q

Current Ratio

A

Current Assets / Current Liabilities
Higher is better, but too high suggests frozen or stagnant cash
Expressed as a ratio
319,000 / 185,000 = 1.72 : 1

7
Q

Receivables Turnover

A

Net Credit Sale / Average Gross Receivables
Measures how often the company collects the receivables
Higher is better
Look for an allowance for doubtful accounts and add if necessary
900,000 x 75% / (95,000 + 5,000) + (90,000 + 4,000)/2
675,000 / 97,000 = 6.958 days

8
Q

Average Collection

A

365 / Receivables Turnover

Lower is better (because you want quick receivable turnover)

9
Q

Inventory Turnover

A

Cost of Goods Sold / Average Inventory

Higher is better

10
Q

Debt To Total Assets

A

Total Liabilities / Total Assets

Lower is better

11
Q

Times Interest Earned

A

Interest Before Taxes / Interest Expense
(Net income + Interest Expense + Income Tax Expense Interest Before Taxes) / Interest Expense
Ability to meet interest payments as they come due

12
Q

Free Cash Flow

A

Net Cash Provided By Operating Activities - Net Capital Expenditures - Dividends Paid

13
Q

Asset Turnover

A

Net Sales / Average Total Assets

Higher is better

14
Q

Price Earnings Ratio

A

Market Price Per Share / Basic Earnings Per Share

Higher numbers indicate an expectation of investors of profitability

15
Q

Payout Ratio

A

Cash Dividends Declared / Net Income

Higher is better for investors seeking dividend income

16
Q

Benchmarking

A

If your are a public company, you must compare with the industry