Identities and Ratios Flashcards
(37 cards)
Cash flow identity
Cash flow from assets = Cash Cash flow from assets=cash flow to creditors + Cash flow from stockholders
What does the cash flow identity tell us?
How much money we have left over to give to creditors and investors
Cash flow from assets
Cash flow from assets =
Operating cash flow
- Net capital spending
- change in NWC
Operating cash flow =
EBIT+Deprec-Taxes
Net Capital Spending =
Ending NFA-Beg NFA +depreciation
Change in NWC =
End NWC - Beg NWC
Cash flow to creditors =
Interest paid - net new borrowing
Cash flow to stockholders =
Dividends - net new equity raised
What are the 3 short-term solvency or liquidity ratios?
- Current ratio
- Quick Ratio
- Cash ratio
Current ratio
CA/CL
Quick Ratio
CA-INVT/CL
Cash ratio
Cash/CL
What are the long-term solvency or financial leverage ratios?
- Total Debt Ratio
- Debt-equity multiplier
- Equity Multiplier
- Times interest eared ratio
- Cash coverage ratio
Total debt ratio
TA-TL/TA
Debt-equity ratio
Total debt/total equity
Equity multiplier
Total Assets/Total Equity
Times interest earned ratio
EBIT/Interest
Cash coverage ratio
EBIT+deprec/interest
Asset ulitization, or turnover, ratios
- Inventory turnover
- Days’ sales in inventory
- Receivables turnover
- Payables turnover
- Days’ sales in receivables
- Days’ costs in payables
- Total Asset turnover
- Capital intensity
Inventory turnover
COGS/Invt
Days’ sales in inventory
365/Invt turnover
Receivables turnover
Sales/Acct Recievable
Payables turnover
COGS/Accounts payable
Days’ sales in receivables
365/Receivables turnover
