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9 Cards in this Set
- Front
- Back
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Market Value vs. Book value of assets.
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GAAP: Lowest of Cost or Market (LOCOM).
EX. Coors has their land on the balance sheet at the cost paid a long time ago. - The current market value is significantly higher. |
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Market Value vs. Book Value of Equity
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Book value of equity=Book value of assets - Liabilities
Market value of equity=# of shares X price per share. Market value is usually more important. |
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Book to Market
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Book value/market value
Companies expected to grow have lower book to market. Value company - company with a higher bm. |
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Depreciation
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Not actually cash spent during the period. - Cash allocated for the period when the asset was purchased.
Lowers taxable income for the period. |
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Cash Flows
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Everything!
Net cash flows=Money in-money out. cf=ni+dep |
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Operating Cash Flow
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Cash flows from running the firm's basic business.
Not from buying and selling PPE or financing. |
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EBIT
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Earnings before interest and taxes.
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EBITDA
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Earnings before interest, taxes, depreciation, and amortization.
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Net working capital
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Assets-liabilities
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