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26 Cards in this Set
- Front
- Back
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Balance Sheet
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Financial statement showing a firm's accounting value on a particular date
Assets = Liabilities + S/H Equity |
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Net Working Capital
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Current assets less current liabilities plus depreciation
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-Liquidity
-Debt vs Equity -Market Value vs Book Value |
Three important aspects to keep in mind when examining a Balance statement
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Liquidity
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Refers to the speed and ease with which an asset can be converted to cash. (Typically, turned to cash within 90days)
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-Ease of conversion
vs -Loss of value |
Liquidity has two dimensions
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Financial leverage
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The use of debt in a firm's capital structure
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Generally Accepted Accounting Principles (GAAP)
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The common set of standards and procedures by which audited financial statements are prepared
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Income Statement
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Financial statement summarizing a firm's performance over a period of time, typically a quarter or year
Revenues-Expenses=Income |
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Earnings per share (EPS)
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Net Income/Total Shares Outstanding
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Dividends per share (DPS)
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Total dividends/Total shares outstanding
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Noncash Items
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Expenses charged against revenues that do not directly affect cash flow, such as depreciation
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Average Tax Rate
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Total taxes paid divided by total taxable income.
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Marginal tax rate
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Amount of tax payable on the next dollar earned
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Cash Flow From Assets
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The total of cash flow to creditors and cash flow to stockholders, consisting of the following: operating cash flow, capital spending, and change in NWC
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Operating Cash Flow
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Cash generated from a firm's normal business operations
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Net Capital Spending
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Money spend on fixed assets less money received from the sale of fixed assets plus depreciation
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Change in NWC
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End NWC - Beg. NWC =
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Free cash flow
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Another name for cash flow from assets
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Cash flow to creditors
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A firm's interest payments to creditors less net new borrowings
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Cash flow to stockholders
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Dividends paid out by a firm less net new equity raised
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Cash Flow Identity; Cash Flow from assets
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Cash flow to creditors + cash flow to stockholders
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Cash flow from assets
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Operating Cash Flow - Net Capital Spending - Change in NWC =
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Operating Cash Flow
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Earnings before interest and taxes (EBIT) + Depreciation - Taxes
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Net Capital Spending
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Ending net fixed assets - Beginning net fixed assets + Depreciation
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Cash flow to creditors
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Interest paid - net new borrowing
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Cash flow to stockholders
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Dividends paid - net new equity raised
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