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23 Cards in this Set
- Front
- Back
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Income Statement |
Records the revenues, expenses, and the net provit of a business over a specific period of time. |
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Revenue |
The amount of money a company has earned through the sale of goods or services. |
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Cost of goods sold (COGS) |
The expenses required to make goods or provide services. This includes the cost of materials and labor needed to make the good or provide the service. Gross Profit = Revenue - COGS |
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Gross Margin |
The percentage of total sales revenue that the company retains after COGS has been accounted for. Gross Margin = Gross Profit / Revenue |
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Selling, General and Administrative (SG&A) |
The expenses associated with selling goods and running a business, excluding COGS. Marketing, advertising, rent, utilities, insurance, legal fees, salaries of employees not included in COGS, etc. |
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Operating Profit |
The profit left over from revenues after COGS and SG&A and all operating expenses have been accounted for. Operating Margin = Operating Profit / Revenue |
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Eearnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) |
Measures a company's profitability before the impact of financing and investing decisions. EBITDA = EBIT + Depreciation + Amortization EBITDA Margin = EBITDA / Revenue EBITDA represents earnings strictly from operations. |
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Earnings Before Tax |
The figure used to calculate taxes owed to the gov't, also known as Profit Before Tax. Earnings Before Tax = Operating Profit - Interest Expense |
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Principal |
The original amount of a loan. |
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Interest |
The amout a creditor charges for a loan. Principal x Interest Rate |
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Effective Tax Rate |
The average rate at chich a corporation's earnings are taxed. Effective Tax Rate = Taxes / Earnings Before Tax |
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Net Income |
A firm's earnings after paying all expenses. Net Income = Operating Profit - (Interest + Taxes) |
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Net Margin |
The percentage of revenue remaining after all expenses have been deducted. Net Margin = Net Income / Revenue |
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Cash Flow Statement |
A summary of all cash transactions during a given period. |
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The Indirect Method |
Describes how cash has moved in and out of a company, focusing on operating, financing, and investing activities. |
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Operating Activities |
Include day-to-day transactions such as buying and selling inventory, paying vendors and employees, etc. |
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Investing Activities |
Investment in capital expenditures as well as the sale and purchase of other companies (or the stocks and bonds of other companies). |
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Financing Activities |
Activities between the company and its investors and lenders. It is a cash inflow when money is received from investors but an outflow when cash is paid to investors. |
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Capital Expenditures |
Acquisitions of long-term assets that will enhance a business. These tend to depreciate over time. |
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Debt Issuance |
Occurs when a company borrows money from lenders. This is an inflow. |
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Debt repayment |
An outflow that occurs when a company pays back a debt. |
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Dividend |
A cash payment (outflow) to shareholders. |
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Share Repurchase |
A cash outflow when a company buys back shares from its own stockholders. |
