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46 Cards in this Set

  • Front
  • Back
Current ratio
(Current assets)/(Current liabilities)

Liquidity
Quick ratio
(Current assets less inventory)/(Current liabilities)

Liquidity
Net working capital
(Current assets) - (Current liabilities)

Liquidity
Debt to asset ratio
(Total debt)/(Total assets)

Debt
Debt to equity ratio
(Long-term debt)/(Stockholders' equity)

Debt
Times interest earned ratio
EBIT/(required interest payments)

Coverage
Inventory turnover
Sales/(Average inventory)

Efficiency
Average age of inventory (days sales in inventory)
(Average inventory)/(Sales per day)

Efficiency
Average collection period (days sales outstanding)
(Average accounts receivable)/(Sales per day)

Efficiency
Asset turnover
Sales/(Total assets)

Efficiency
Payables turnover
COGS/(Average payables)

Efficiency
Gross margin
(Sales - COGS)/Sales

Profitability
Operating margin
EBIT/Sales

Profitability
Net margin
(Net income)/(Sales)

Profitability
Return on assets (simple form)
(Net income)/(Total assets)

Profitability
Return on assets (two variations)
(Net income/Sales) x (Sales/Assets)

(Net margin) x (Asset turnover)
Return on equity (simple form)
(Net income)/(Stockholders' equity)

Profitability
Return on equity (two variations)
(Net income/Sales) x (Sales/Assets) x (Assets/Equity)

(Net margin) x (Asset turnover) x (Equity multiplier)
Cash flow (when making estimates using capital budgeting)
(Net income) + (Non-cash expenses)
Accounting rate of return (ARR)
(Average cash flow)/(Average investment)
Net present value (NPV)
(PV of estimated cash flows) - (PV of investment)
Benefit cost ratio
(PV of estimated cash flows)/(PV of investment)
Internal rate of return (IRR)
Rate such that (PV of estimated cash flows) = (PV of investment)
Economic value added (EVA)
(Net operating profit after taxes) - [(Capital in dollars x (Cost of capital)]
Market value added (MVA)
(Market value of equity) - (Book value of equity)
Cost of long-term debt
(Pretax cost) x (1 - tax rate)
Cost of preferred stock
(Dividend per share)/(Current price per share)
Cost of retained earnings (3 methods)
Capital asset pricing model (CAPM): (Risk-free rate) + {(Beta) x [(Return on the market) - (Risk-free rate)]}

Bond yield plus risk premium: (Cost of firm's long-term bonds) + (Equity risk premium)

Dividend discount model: (D1/Market price per share) + g, where D1 = next period's forecasted dividend, and g = forecasted growth rate in dividends and earnings
Cost of common stock
[D1/(Market price per share - flotation cost per share)] + g, where D1 = next period's forecasted dividend, and g = forecasted growth rate in dividends and earnings
Cash conversion cycle
(Average inventory age) + (Average A/R age) - (Average A/P age)
Cash turnover
365/(Cash conversion cycle)
Minimum cash balance
(Estimated annual cash expenditures)/(Cash turnover)
Opportunity cost of holding minimum cash balance
(Minimum cash balance) x (Cost of capital)
Economic order quantity (EOQ)
Square root of [2 x (# of units used annually) x (fixed order cost)/(variable cost of carry per unit)]
Reorder point
[(Shipping time) x (Daily usage)] + (Safety stock)
Nominal interest rate (in terms of real interest rate and expected inflation rate)
[(1 + real rate) x (1 + inflation rate)] - 1
APR
(Periods per year) x (Stated rate per period)
Financial leverage ratio
(Change in net income)/(Change in EBIT)

Leverage
Operating leverage ratio
(Fixed costs)/(Total costs)

Leverage
Value of preferred stock investment
D/K

(Dividend)/(Required rate of return)
Value of bond investment
(PV of interest payments) + (PV of face value at maturity)
Value of common stock investment: 3 methods
Constant growth dividend discount model

Supernormal growth dividend discount model

P/E model
Value of common stock investment: Constant growth DDM
D1/(K-G)

(Next period's forecasted dividend)/[(Required rate of return) - (Forecasted growth rate)]
Value of common stock investment: P/E model
[EPS x (payout rate)]/(K-G)
Current yield on bond
(Coupon payment)/(Current price of bond)
Firm's sustainable growth rate in EPS
ROE x (retention rate)