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91 Cards in this Set
- Front
- Back
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EDGAR |
Section of the SEC's website where various required filings are made by reporting companies and accessible by the public. |
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financial statement |
a balance sheet, income statement, statement of cash flows, or other document showing various aspect's of a business's financial condition or results. Found in the 10K and other required reports of public companies
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fundamental analyst |
an analyst who makes securities investment decision based on studying the fundamentals of the issuer, including financial statements
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10Q |
QUARTERLY SEC report of public companies required by the Sec exchange act of 1934 |
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10K |
ANNUAL SEC report of public companies required by the Sec Exchange Act of 1934 |
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income statement |
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balance sheet |
financial statement of a corporation or individual showing financial condition (assets vs. liabilities) at a particular moment in time
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Securities Act of 1933 |
Securities legislation requiring non-exempt issuers to register securities and provide full disclosure
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SEC |
Securities Exchange Commission. Federal regulator of broad aspects of securities markets, empowered by passage of Securities Exchange Act of 1934 |
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Securities Exchange Act of 1934 |
Legislation the prevents fraud in the securities markets. No person and no security exempt from anti-fraud regulations. Created/empowered the SEC. Requires broker-dealers, exchanges, and securities associations to register with SEC. Requires public companies to report quarterly and annually to the SEC
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8K |
SEC report required by the Sec Exchange act of 1934 of public companies announcing unusual material events
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sales |
top line of the income statement, usually called
"revenue" |
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net revenue
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"net operating expense", "net sales", another name for revenue, accounting for any returns, refunds, or discounting
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cost of goods sold (COGS)
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the cost of material and direct labor going into the production of a company's products or delivery of its services, as opposed to general operating expenses and other costs/expenses listed on the income statement. A company subtracts COGS from revenue to arrive at its gross profit
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selling, general, and administrative expenses |
general operating expenses listed on the company's income statement. Expenses not directly related to the production of the company's product or delivery of its services. "Operating expenses" |
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depreciation |
a non-cash expense on the income statement listed in order to spread the cost of a fixed asset over its useful life. Also shown on the balance sheet, usually as "accumulated depreciation" next to fixed or long-term assets |
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amortization |
spreading the cost of an intangible item, e.g., a patent or trademark, over its useful life. |
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interest (rate) |
the cost for borrowing money. In a loan, the borrower pays some rate against the principal amount borrowed until the loan is retired. That rate is the interest rate on the loan.
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net income after tax |
(net profit).
revenue minus all expenses. Also known as a "profit" or "loss", depending on whether it's a positive or negative number. |
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gross profit |
a company's revenues minus their "cost of goods sold." |
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gross margin (of profit) |
gross profit divided INTO revenue, as a percentage
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operating profit |
(operating income, operating earnings). Measurement from a company's income statement, revenue minus COGS, operating expenses, and depreciation |
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operating margin |
operating income divided by revenue |
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EBIT |
Earnings Before Interest and Taxes. The profit that would be shown BEFORE interest and taxes are subtracted from revenue on the income statement
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times interest earned |
measurement from the income statement showing an issuer's ability to pay bond interest, EBIT divided by interest
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net (profit) margin |
A company's net income after tax divided by revenue, showing the percentage of each dollar of revenue making its way to the bottom line
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earnings available to common |
net income minus any preferred stock dividends. Dividing this amount by the shares outstanding arrives at the EPS for the company's common stock
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earnings per share (EPS) |
the amount of earning or "net income" available for each share of common stock. A major driver of the stock's price on the secondary market. Found by taking "earnings available to common" divided by the shares outstanding
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diluted earnings per share |
A company's EPS calculated as if all convertible securities have been converted to shares of common stock
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dividend payout ratio |
the amount of dividends paid divided b the earnings per share . Stocks with high
dividend payout ratios are typically found in "equity income" funds. |
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price-to-earnings ratio |
the market price of a common stock compared to the EPS of that stock
P/E ratio |
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cash flow |
net income plus depreciation/amortization. Or, "cash flow from operations" as shown on the company's sttement of cash flows
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statement of cash flows |
one of three financial statements included in a 10Q or 10K along with the balance sheet and income statement, showing how much cash was provided/used through operations, investing, and financing |
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cash flows from operating activities |
cash provided/used by running the business
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cash flow from investing activities |
cash provided/used by selling or purchasing assets
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cash flow from financing activities |
cash provided/used through issuing securities, paying interest/dividend, redeeming bonds, or repurchasing stock
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price-to-cash ratio |
the market price of a common stock compared to the cash flow per share |
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price-to-book ratio |
the market price of a common stock compared to the book value per share
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price-to-sales ratio |
the market price of a common stock compared to the revenue per share
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assets |
something that a corporation or individual owns, e.g., cash, investments, accounts receivable, inventory, etc. |
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liabilities |
what an individual or a company owes, e.g., credit card debt, bonds, mortgage balance, accounts payable
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stockholder's equity |
the difference between the company's assets and liabilities, (net worth)
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current assets |
cash or something to be converted to cash in the short-term, e.g., accounts receivable, inventory
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cash & equivalents |
a security that can readily be converted to cash, e.g., T-bills, CDs, and money market funds
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accounts receivable |
what customers owe a company in the short-term, a current asset
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inventory |
finished goods that have not yet been sold by a corporation. A current asset that is included in the current ratio but excluded in the quick ratio
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fixed assets |
long-term assets that generate revenue but are not intended to be sold. For ex: a printing press, real estate, furniture, etc...
Things purchased not in order to be sold, but could be converted to cash. |
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intangible assets |
an asset not easily valued or converted to cash.
e.g, patent, trademarks, brand name or "Good will", etc. |
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goodwill |
intangible asset representing the price paid to acquire a company above its hard, tangible value |
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total assets |
currents assets plus fixed assets plus intangible assets
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current liability |
a debt to be paid in the short-term, usually one year or sooner |
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accounts payable |
what a company owes its vendors in the short-term, a current liability.
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accrued wages |
wages that are owed by a company over the short-term, a current liability
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accrued taxes |
taxes that are owed by a company over the short-term, a current liability
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long-term liability |
a debt to be repaid in the long-run, e.g., the principal value of an outstanding bond issue
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total liabilities |
current liabilities plus long-term liabilities
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paid-in-surplus |
amount above the par value that investors paid when purchasing the company's initial public offering
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retained earnings |
a balance sheet account showing accumulated net income, from which any dividends are first declared. Can be thought of as all the profits of the business that have not been paid out as dividends but, rather, reinvested into the business as reflected by other balance sheet accounts, e.g., capital equipment, new stores, etc.
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asset coverage |
a measure of how strong a company's balance sheet is relative to its obligations to bond holders
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working capital |
(net working capital) difference between a company's current assets and current liabilities measuring short-term liquidity. Related term "current ratio."
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liquidity |
the ease of being able to convert assets to cash |
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current ratio |
short-term measure of a corporation's liquidity found by dividing current assets by current liabilities; the higher the number, the more liquid the corporation.
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quick assets |
current assets that are easily liquidated; cash & equivalents and accounts receivable MINUS inventory. Quick assets are used to calculate the company's quick ratio from the balance sheet
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quick ratio |
"acid test".
More stringent measure of liquidity than the current ratio. Inventory is excluded from current assets before comparing them to the company's current liabilities. |
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inventory turnover ratio
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a measure of how effectively a company deploys its capital, found by taking cost of goods sold from the income statement and dividing that amount by the average inventory over the period
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debt-to-equity ratio |
measure of long-term solvency found by dividing a company's total liabilities by shareholder equity. The higher the ratio, the more leveraged the company
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debt ratio |
measure of a company's long-term solvency found by comparing total liabilities to total assets. The higher the percentage, the more leveraged the company |
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bond ratio |
a measure of an issuer's long-term solvency, found by comparing long-term debt to total capitalization (long-term debt plus shareholder's equity).
Shows bondholder's the company's risk of defaulting. Above 33% is generally high |
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book value per share |
The hard, tangible asset value associated with each share of common stock. Calculated by taking stockholder's equity minus preferred shares, divided by the number of shares outstanding
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return on equity |
a measure showing how much in profits each dollar of common shareholder's equity generates for the company.
Net income / shareholder equity |
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inventory turnover ratio |
a measure of how effectively a company deploys its capital, found by taking cost of goods sold from the income statement and dividing that amount by the average inventory over the period
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footnotes |
explanatory notes provided to explain financial statements more clearly. For ex: accounting methods for inventory or one-time expenses might require further explanation after the numbers are presented in the company's 10K
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top-down analysis |
a type of fundamental analysis starting with the overall economic trends and then moving down to industry sectors and particular companies
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bottom-up analysis |
a type of fundamental analysis involving a look at particular companies rather than the overall economy
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fundamental analysis |
studying companies in terms of their competitive position and financial strength to determine the advisability of investing in their securities |
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A company with $100 million in revenue and cost-of-goods-sold of $70 miilion has a _________ of $30 million |
Gross profit |
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A company with $100 million in revenue and a cost-of-goods-sold has a gross margin of |
30% |
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Revenue - Cost of Goods Sold = |
Gross Profit 10,000 - 3,000 = 7,000 |
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Gross Profit / Revenue = |
Gross Margin 7,000 / 10,000 = 70% |
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Operating Income / Revenue = |
Operating Margin 5,860 / 10,000 = 58.6% |
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Net Income / Revenue = |
Net Profit Margin 5,800 / 10,000 = 58% |
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Earnings Per Share = |
Earnings Available to Common / Shares Outstanding 5,000 / 1,000 = $5 |
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Dividend Payout = |
Annual Dividend / Earning Per Share $1 / $5 = 20% |
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P/E ratio = |
Market Price / Earnings Per Share $10 / $5 = 2 |
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Working Capital = |
Current Assets - Current Liabilities 640 - 160 = 480 |
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Current Ratio = |
Current Assets / Current Liabilities 640 / 160 = 4:1 For every dollar of short-term debt, you have $ of liquid assets to cover it |
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Quick Ratio = |
(Current Assets - Inventory) / Current Liabilities The "i" in quIck and acId remind us to subtract Inventory first before comparing to liabilities |
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Debt to Equity Ratio = |
Total Liabilities / Shareholder's Equity The higher the ratio, the more leveraged the company is. Similar to Debt Ratio |
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Debt Ratio = |
Total Liabilities / Total Assets
The higher the ratio, the more leveraged the company is. Similar to Debt to Equity Ratio |
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Book Value per Share = |
Stockholder's Equity / Share's Outstanding |
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Return on Equity = |
Net Income / Stockholder's Equity |
