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CMA Part 2 > Section A-C > Flashcards

Section A-C Flashcards

(80 cards)

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1
Q

Liquidity

Net Working Capital

A

Total Current Assets - Total Current Liabilities

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2
Q

Liquidity

Current Ratio

A

Current Assets / Current Liabilities

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3
Q

Liquidity

Quick/Acid Ratio

A

(Cash and Cash Equivalents + Marketable Securities + Net Accounts Receivable) / Current Liabilities

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4
Q

Liquidity

Cash Ratio

A

(Cash and Cash Equivalents + Marketable Securities) / Current Liabilities

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5
Q

Liquidity

Cash Flow Ratio

A

Operating Cash Flow / Period End Current Liabilities

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6
Q

Liquidity

Net Working Capital Ratio

A

Net Working Capital / Total Assets

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7
Q

Leverage

Financial Leverage Ratio

A

Total Assets / Total Equity

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8
Q

Leverage

Degree of Financial Leverage

A

% Change in Net Income / % Change in EBIT
or
EBIT / EBT

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9
Q

Leverage

Degree of Operating Leverage

A

% Change in EBIT going forward / % change in Sales going forward
or
Contribution Margin / EBIT

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10
Q

Leverage

Degree of Total Leverage

A

% Change in Net Income / % Change in Sales
or
Contribution Marign / EBT

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11
Q

Capital Structure and Solvency

Debt to Equity Ratio

A

Total Liabilities / Total Equity

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12
Q

Capital Structure and Solvency

Long-Term Debt to Equity Ratio

A

(Total Debt - Current Liabilities) / Total Equity

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13
Q

Capital Structure and Solvency

Debt to Total Assets Ratio

A

Total Liabilities / Total Assets

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14
Q

Earnings Coverage

Interest Coverage (Times Interest Earned)

A

EBIT / Interest Expense

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15
Q

Earnings Coverage

Fixed Charge Coverage (Earnings to Fixed Charges)

A

(EBIT + Operating Lease pmts) / Fixed Charges (required interest and principal pmts on loans and capital leases, operating lease pmts)

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16
Q

Earnings Coverage

Cash Flow to Fixed Charges

A

Adjusted Operating Cash Flow (cash from operations + fixed charges [interest exp. and operating lease pmts]) / Fixed Charges (required interest and principal pmts on loans and capital leases, operating lease pmts)

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17
Q

Activity

Accounts Receivable Turnover Ratio

A

Net Annual Credit Sales / Average Gross Accounts Receivable

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18
Q

Activity

Days Sales in Receivables (Average Collection Period)

A

365 / Accounts Receivable Turnover

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19
Q

Activity

Inventory Turnover Ratio

A

Annual COGS / Average Inventory

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20
Q

Activity

Days Sales in Inventory

A

365 / Inventory Turnover Ratio

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21
Q

Activity

Accounts Payable Turnover Ratio

A

Annual Credit Purchases / Average Accounts Payable

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22
Q

Activity

Days Purchases in Accounts Payable

A

365 / Accounts Payable Turnover Ratio

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23
Q

Activity

Operating Cycle

A

Days Sales in Receivables + Days Sales in Inventory

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24
Q

Activity

Cash Cycle

A

Operating Cycle - Days Purchases in Accounts Payable

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25
Activity Total Asset Turnover Ratio
Sales / Average Total Assets
26
Activity Fixed Asset Turnover Ratio
Sales / Average Net Plant, Property, and Equipment
27
Profitability Gross Profit Margin
Gross Profit / Net Sales
28
Profitability Operating Profit Margin
Operating Income / Net Sales
29
Profitability Net Profit Margin (Profit Margin on Sales)
Net Income / Net Sales
30
Profitability EBITDA Margin
EBITDA / Net Sales
31
Return on Invested Capital Return on Assets (ROA)
Net Income / Average Total Assets
32
Return on Invested Capital Return on Equity (ROE)
Net Income / Average Total Equity
33
Return on Invested Capital Return on Common Equity (ROCE)
(Net Income - Preferred Dividends) / Average Common Equity
34
Market Book Value per Share
(Total Stockholders' Equity - Preferred Equity) / No. of Common Shares Outstanding at Balance Sheet Date
35
Market Market-to-Book Ratio
Market Price per Share / Book Value per Share
36
Market Basic Earnings Per Share (BEPS)
Income Available to Common Shareholders (IAC) / Weighted Average No. of Common Shares Outstanding (WANCSO)
37
Market Diluted Earnings Per Share (DEPS)
Adjusted Income Available to Common Shareholders / Weighted Average No. of Common and Potential Common Shares Outstanding
38
Market Price/Earnings Ratio or P/E Ratio
Market Price per Share / Basic Earnings Per Share (BEPS)
39
Market Price / EBITDA Ratio
Market Price per Share / EBITDA per Share
40
Market Earnings Yield
Basic Earnings per Share (BEPS annual) / Current Market Price per Common Share
41
Market Dividend Yield
Annual Dividends per Common Share / Current Market Price per Share
42
Market Dividend Payout Ratio
Total Common Dividends (annual) / Income Available to Common Shareholders (IAC)
43
Market Shareholder Return
(Ending Stock Price - Beginning Stock Price + Annual Dividends Per Share) / Beginning Stock Price
44
Other Sustainable Growth Rate
Return On Common Equity (ROCE) x (1 - Dividend Payout Ratio)
45
DuPont Analysis ROA
(Net Income / Sales ) x (Sales / Average Total Assets) = Net Income / Total Assets = ROA
46
DuPont Analysis ROE
(Net Income / Sales ) x (Sales / AverageTotal Assets) x (Average Total Assets / Average Total Equity) = ROE ROE is affected by three things 1) Operating Efficiency - Net Profit Margin 2) Asset use Efficiency - Total Asset Turnover 3) Financial Leverage - Financial Leverage Ratio
47
CAPM Capital Asset Pricing Model
R = Rf + B(Rm - Rf)
48
Real Rate
[(1 + Nominal Rate) / (1 + Inflation Rate)] - 1
49
Duration
The sum of the Proportion of Present Value of cash flow x Time (number of years)
50
Modified Duration
Duration / (1 + Yield to Maturity) Answer means a 1% change in YTM will change the bond's price by the modified duration percentage calculate
51
Zero Growth Dividend Model
P0 = Annual Dividend / Investors' Required Rate of Return
52
Dividend Growth Model
P0 = D1 / (R - g)
53
Dividend Growth Model + Expected Capital Gain
P0 = (D1 + P1) / (1 + R)
54
Stock w/o Dividend
P0 = EPS1 / (R - g)
55
Valuing Stock - Rights-On
Vr = (Po - Pn) / (r + 1)
56
Valuing Stock - Ex-Rights
(Market value of stock, ex-rights - Subscription price) / Number of rights needed to buy one new share
57
Option Valuation
Total option premium = Intrinsic value + Extrinsic Value (Time Value)
58
Put-Call Parity Theorem
Call Premium + PV of Exercise Price = Put Premium + Stock Price or C + X/(1+Rf)T = P + S0
59
WACC
Weighted average cost of capital according to the percentage each component represents in the firms capital structure at market values
60
Cost of Debt
Cd = C(1-t) Where C = Interest expense / cash received from sale of debt
61
Cost of Preferred Stock
Existing: Annual dividends / Current market value of preferred stock Newly-Issued: Cnp = Annual dividends / Net proceeds of issue
62
Cost of Common Equity Existing / Retained Earnings
Cre = (D1 / P0) + g or CAPM = Rf + B(Rm - Rf)
63
Cost of New Common Equity
Cns = (D1 / Net proceeds of the issue) + g
64
Breakpoint
Point where marginal cost of capital changes Breakpoint = Limit / Proportion of Total Capital
65
Cost of not taking cash discount (Opportunity cost)
Cost = [360 / (Total period for pmt - Period of discounted pmt)] x [Discount % / (100% - Discount %)]
66
T-Bill Effective Interest Rate
(Interest earned / Discounted basis) x (360 / Days to Maturity)
67
Baumol Cash Management Model
OC = (2bT / i)^1/2
68
Economic Order Quantity (EOQ)
EOQ = (2aD / k)^1/2
69
Effective Interest Rate (Compensating Balances)
Annualized Net interest cost / Effective Cash Received
70
Effective Rate of Discounted Interest
Interest / (Principal amount - interest withheld)
71
Free Cash Flow
EBIT(1-tax rate) - Capital Expenditures - Depreciation +/-Change in Non-Cash Working Capital
72
PV of Cash Flows in Perpetuity at Horizon Date
Expected Free Cash Flow of Next Year / (Cost of Capital from CAPM - Expected Growth Rate
73
Growth Rate
Reinvestment Rate x Return on Capital Invested or (Capital Expenditures - Depreciation +/-Change in Non-Cash WC) / Total Assets
74
Reinvestment Rate
(Capital Expenditures - Depreciation +/-Change in Non-Cash WC) / EBIT(1-tax rate
75
Return on Capital Invested
EBIT(1-tax rate) / Total Assets
76
Breakeven in Units
Total Fixed Costs / Unit Contribution Margin
77
Breakeven in Revenue
Total fixed costs / Contribution margin ratio
78
Price Elasticity of Demand - Midpoint Method
Ed = {[Q2-Q1] / [(Q2+Q1) / 2]} / [P2-P1] / [(P2+P1) / 2]}
79
Price Elasticity of Demand - Percentage Method
Ed = Change in Quantity / %Change in Price
80
Depreciation Tax Shield
Full cost of asset x Annual depreciation rate x Tax Rate

CMA Part 2 (1 decks)

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