Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
36 Cards in this Set
- Front
- Back
|
NOPAT (formula)
|
EBIT x (1-Tax Rate)
(net operating profit after taxes) |
|
|
NOPAT (Functional Def)
|
(net operating profit after taxes)
Calculation to see how a firm would perform after taxes if it had no debt and no interest expense. - Use to interpret a companies performance in operations form its performance in Financing |
|
|
Net Cash Flow (Functional Def)
|
The amount of cash that is generated by after tax profits.
|
|
|
Net Cash Flow (formula)
|
Net Cash Flow = Net Income + depreciation expense
|
|
|
Operating Cash Flow (Functional Def)
|
The amount of cash that is generated by after tax profits, excluding the effect of interest expense.( after tax operating profits)
|
|
|
Operating Cash Flow (formula)
|
Operating Cash Flow = Nopat + depreciation expense
|
|
|
Free Cash Flow (Functional Def)
|
The Amount of cash that is generated by after tax operating profits, and including the investment that is made in fixed and current assets in order to support future growth.
- Cash that is available to pay investors after covering operations, taxes, and asset investment |
|
|
Free Cash Flow (formula)
|
Free Cash Flow = Nopat - net investment in fixed and current assets
|
|
|
Working Capital
|
The Amount of resources that a firm will have to work with the short run ( One Year or less)
|
|
|
Operating Working Capital
|
Just Current assets
|
|
|
Total Operating capital (formula)
|
Total Operating Capital = (Net operating working Capital) + (Net fixed assets)
|
|
|
EBIT
|
Earnings before interest and Taxes
|
|
|
EBITDA
What does it measure? Another name? |
EBITDA = Revenue minus all expenses except Interest, Taxes, Depreciation, and amortization.
-Measure of Core profitability -Also called Operating Income |
|
|
MVA (functional def)
|
(Market Added Value) => Measures difference between stock value and equity that shareholders have invested in the stock.
|
|
|
MVA (formula)
|
(Market Value Added)
MVA = Value of Stock held - Equity Invested |
|
|
EVA
Functional Def. and Formula |
(Economic Value Added) = Measures the amount of Market Value Added that is assessed in one year.
EVA= Nopat - Capital supplied for Nopat |
|
|
Straight Line Depreciation (accounting Purposes)
|
{Original Cost of Asset - Est. Salvage Value} / (Est. useful life)
|
|
|
Straight Line Depreciation (Tax Purposes)
|
(Original Cost of Asset) / (statutory life of Asset)
|
|
|
MACRS
|
(Modified Accelerated Cost Recovery System)
=Process of Calculating accelerated depreciation for Tax purposes |
|
|
ITC
|
(Investment Tax Credit) -yrs past- granted for investments of fixed assets other than buildings.
-Could subtract up to 10% of the cost from its tax bill as a credit |
|
|
Carry Back / Carry Forward
|
If companies incur an operating loss than they can amend taxes and receive refund for previous two years and carry that loss for the next 20 years
|
|
|
Annual Report...
|
is a report issued annually by a corporation to its stockholders. It contains basic financial statements as well as management’s analysis of the firm’s past operations and future prospects
|
|
|
Balance sheet...
|
is a statement of the firm’s financial position at a specific point in time
|
|
|
Income statement...
|
is a report summarizing the firm’s revenues and expenses during an accounting period, generally a quarter or a year
|
|
|
Statement of cash flows...
|
is a statement reporting the impact of a firm’s
-operating, -investing, -and financing activities on cash flows over an accounting period |
|
|
Statement of retained earnings...
On balance sheet how is the retained earnings reported? |
is a statement reporting how much of the firm’s earning were retained in the business rather paid as dividends. The balance sheet number reported for retained earnings is the sum of the annual retained earnings for each year of the firm’s history
|
|
|
Common stockholders' equity, or net worth...
|
is the capital supplied by common stockholders:
-common stock -paid-in capital -retained earnings -certain reserves |
|
|
Retained earnings...
|
is the portion of the firm’s earnings that has been saved rather than paid out as dividends
|
|
|
Net operating working capital...
|
= (current assets) - (current liabilities)
* It is frequently used measure of liquidity |
|
|
Depreciation...
|
is the charge to reflect the cost of assets used up in the production process. Depreciation is not a cash outlay
|
|
|
Tangible assets...
|
are physical assets such as plant and equipment
|
|
|
EBITDA...
|
is earnings before interest, taxes, depreciation, and amortization
|
|
|
What does the statement of cash flows distinguish?
|
The the different effect on cash as related to
1) operating 2)investing 3)financing |
|
|
Operating Assets
|
assets that a firm needs in order to operate each day.
Include: -current assets -fixed assets that are needed daily in order to provide goods or service |
|
|
4 Basic financial statements
|
-Balance sheet
-Income statement -Statement of cash flows -Statement of retained earnings |
|
|
Segments of Balance sheet
|
Assets
-current assets -long term assets Liabilities -current liabilities -long term liabilities Shareholders Equity -common stock -retained earnings |
