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57 Cards in this Set

  • Front
  • Back
Retained earnings/# shares
earnings before taxes - pre-tax profit
As interest rates go up what happens to cash values?
cash values go down
As inflation goes up what happens to interest rates
interest rates go up
3 advantages of P/E ratio analysis
one assumption, math is easy, more applicable
Round lots
the usual amount of trading (100 shares)
odd lots
trading at different amounts of shares
specialists/dealers are...
-charged with maintaining an orderly market
- buy at the "bid" price and sell at the "ask" price
ticker that is 3 letters or less
listed on an exchange
Coverage ratio
EBIT/interest expenses
Fixed asset turnover
NI/Stockholder's Equity
Discounted cash flow analysis
The value of any asset can be determined by the sum of the present values of all its future cash flows
coupon =
par value X coupon rate (divide by 2 to adjust for semiannual)
Receivables turnover
Total Asset Turnover
Profit Margin
NI/Sales (return on sales)
Current yield =
annual coupon/current bond price
Level 3 Nasdaq
allows you to enter a price or "make a market" in a stock;available to dealers only
Commodity Business
Companies that are price-takers (Airline Industry)
Franchise Value Companies
Companies that are price setters (American Express, Starbucks)
5 things to evaluate quality of management
tenure with company, relationship with company, compensation, stock ownership, past performance
4 things that can create "walls" or economic motes
high switching costs, economies of scale, patents, network effect
3 main ways to buy stocks
full service brokers, discount brokers, online broker
market order
order to be executed immediately at best possible price
limit order
order to be executed at a specified price or better
NI/total assets
stop order
order that has a trigger price which, when hit, triggers a market order
Current ratio =
benchmark =
current assets/current liabilities

benchmark = 2
As interest rates go up what happens to bond price
Bond price goes down
If YTM is greater than CPN then rate of the bond...
trades at a discount
Quick ratio =

Benchmark =
(current assets - inventory)/current liabilities
If YTM is less than CPN then the bond
trades at a premium
Level 1 Nasdaq
best bid and offer prices; available to all investors
bond trades at par value
As interest rates go up, what happens to yields
Yields go up
EPS (E) =
NI/# of shares
As rating goes up, the what happens to risk?
Risk goes down
As rating goes down, then what happens to expected return?
Expected return goes up
Ticker is 4 or 5 letters
OTC stock
Level 2 Nasdaq
All bid and offer prices; avaiable to brokers and some very active trackers
Leverage Ratio =
total assets/stockholder's equity
As CPN goes up, what happens to interest rate risk?
interest rate risk goes down
Marketability risk
The difference to fair value due to popularity at a given time

variability of price to value
Dividends/# of shares
Inventory turnover
As rating goes down, what happens to risk?
Risk goes up
As rating goes down what happens to the likelihood of a special provision?
Likelihood of a special provision goes up
2 reasons that the yield curve is positively sloped
liquidity, inflation is positive
As interest rates go up, what happens to bond values?
Bond values go down
Worth =
What we own - What we owe
Net Working Capital (NWC)=
Current assets - current liabilities
Profitability Ratios
how much a company generated with what they have
Liquity is important to...
short term creditors
Efficiency is important to...
stockholder's interest
Debt utilization
measure of how much debt the company has and how they are using that debt
2 advantages of leverage
tax advantage, magnify gains