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20 Cards in this Set
- Front
- Back
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What is a dividend?
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Partial distribution of profits from the company to shareholders by paying shareholders cash.
Usually paid quarterly (3 months) |
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Gross Profit
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Revenue (Sales)
- Cost of goods sold (cogs) _______________________ Gross Profit |
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Net Income
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Revenue - All Expenses
or Gross Profit - selling general and administrative (SG&A) expenses |
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Inventory
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Goods held in stock for sale.
Think Jedi and his bag |
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Common Sized Income Statement
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Income Statement with all numbers presented as percentage of sales.
Useful for comparing different sized companies. Also called a vertical analysis |
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Common Sized Balance Sheet
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Asset numbers are shown as a percentage of total assets
Useful for comparing different sized companies. Also called a vertical analysis |
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Pro Forma Income Statement
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A forecasted income statement
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Return on Equity (ROE)
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ROE = NI / Total Equity
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Return on Assets (ROA)
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ROA = NI / Total Assets
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Debt to Equity
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Debt / Equity
Measure of financial leverage. Higher usually means riskier |
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Dupont Formula for ROE
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ROE = PM * Asset Turnover * Equity Multiplier
Useful for isolating strengths or weaknesses of a firm by comparing to other firms in the same industry |
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Profit Margin (PM)
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Amount of profit (net income) the firm makes for each dollar of sales
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Asset Turnover
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Sales / Assets
Measure of how many times the firm sells through its Assets |
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Inventory Turnover
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Cogs / Inventory
Measure of how many times inventory is solt through |
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Dividend Payout Ratio
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Dividend / NI
Typically should not exceed .5 (50%) |
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Retention Ratio (RR)
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RR = 1-Dividend Ratio
RR = (NI-Dividend) / NI Denoted by b |
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Internal Growth Rate
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The rate a firm can grow at without any external funding
IGR = ROExb / (1-ROExb) |
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Sustainable Growth Rate
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The rate a firm can grow at if it keeps the same capital structure
SGR = ROAxb / (1-ROAxb) |
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Capital Structure
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The ratios of debt and equity the firm uses for financing
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Equity Multiplier (EM)
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Another measure of financial leverage.
EM = 1+D/E EM = A/E |
