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86 Cards in this Set
- Front
- Back
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What is the single most important number to tell you if a business is being run well or not
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ROIC is Return on Invested Capital
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If the ROIC number is going down, it means ...
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that the CEO is reinvesting the surplus cash and getting a smaller return on it than in previous years.
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The formula for ROIC is
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The Return on Invested Capital = NOPAT (Net Operating Profit After Taxes) / (Equity + Debt)
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Define NOPAT
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NOPAT is the Net Operating Profit After Taxes.
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NOPAT is equal to ...
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NOPAT is equal to the Operating Income x (1 tax rate).
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If you have trouble finding NOPAT or calculating this value, you can use ...
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Net Income as a proxy.
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On MSN Money, Sales are located at:
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MSN Money > Financial Results > Statements > 10 Year Summary
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What is the acronym EPS?
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EPS stands for Earnings per Share.
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On MSN Money, historical EPS number are at:
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MSN Money > Financial Results > Statements > 10 Year Summary > historical EPS numbers
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What word might Historical Equity might be as?
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Using the research tool of your choice, locate historical Equity (or BVPS) numbers
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What is the AKA for the Operating Cash Flow?
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The Operating Cash Growth Rate's aka is Cash Flow From Operations growth rate.
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What is the Operating Cash Flow?
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Operating Cash Flow is the long term rate of growth of operating cash, the money that is actually coming into the bank from business operations.
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How is Operating Cash Flow different that EPS?
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Operating Cash Flow can be substantially different than EPS since it is real money (as opposed to earnings which can be somewhat theoretical).
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When On MSN Money is Cash Flow statements?
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On MSN Money, Cash Flow Statements are located at Financial Results > Statements > Cash Flow. Look for the "Cash from Operating Activities" value
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What are the four calculated Growth Rates for Moat Analysis?
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Calculate Compounded Annual Growth Rate for Earnings Per Share (EPS), Operating Cash Flow Per Share (OCPS), Sales, and Book Value Per Share (BVPS)
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Where is EPS found?
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Earnings Per Share (EPS) is found on the Income Statement
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Define EPS
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EPS is the amount of the company's earnings allocated to each share of common
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Where is OCPS found?
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Operating Cash Flow Per Share (OCPS) is found on the Cash Flow Statement
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Define OCPS
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OCPS is the amount of cash from operations allocated to each share of common stock
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Where is Sales found?
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Sales is found on the Income Statement
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Where is BVPS found?
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Book Value Per Share is found on the Balance Sheet Book
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What is the formula for BVPS?
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BVPS is the Common Shareholder's Equity / Total Outstanding Shares
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Formula for ROE
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Return on Equity (ROE) = ROE is Net Income / Shareholder's Equity and the return achieved on sharholder's ownership
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Where is NOPAT found?
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Net Operating Profit After Taxes (NOPAT) is on the Income Statement.
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Where is Long Term Debt found?
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Long Term Debt is found on the Balance Sheet
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Where is Equity found?
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Shareholder's Equity is found on the Balance Sheet
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Define ROE
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ROE is the return that shareholders are recieving on their invested capital. (Shareholder's Equity).
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Be aware of companies that have a high ROE but low ______?
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Growth rates. This can mean that management is artificially supporting ROE, which is commonly used as a measure of management quality
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What two variables are needed for ROE?
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Return on Equity (ROE) needs Net Income and Equity
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Where is Net Income found?
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Net Income is found on the Income Statement
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Where is Equity found?
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Shareholder's Equity is found on the Balance Sheet
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The Debt to Earnings Ratio demonstrates the amount of years it would take the company to pay off its current Long Term Debt if it used ____?
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The current level of earnings
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How many years for Rule #1 Inveting to pay off debt?
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Companies that have a Debt to Earnings Ratio of less than 3 year are considered stable because they do not have a large amount of interest expense or debt to service
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Where is Long Term Debt found?
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Long Term Debt is found on the Balance Sheet
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Where is Net Income
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Net Income is found on the Income Statement
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For Sticker Price calculation, the earnings growth rate should be in line with ____
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In line with the Compounded Annual Growth Rates that were calculated for EPS, OCPS, Sales, and BVPS
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What are the 3 variables gathered to calculate the Sticker Price?
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EPS(TTM), Earnings Growth Rate, and Future PE Multiplier
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Where is EPS TTM found?
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EPSTTM is found on the Income Statement and is the EPS for the last 12 months
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Where is Sticker Price's Earnings Growth Rate found?
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Determine at what rate you think earnings for this company will grow year after year based on the Moat's Growth Rate numbers
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What is a Rule #1 Invester's MARR
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The Minimum Acceptable Rate of Return (MARR) is 15%
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What is a Rule #1 Invester's MOS %
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The Margin of Safety (MOS), especial for novice investors, is 50%
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What is the PayBack Time?
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PayBack Time Price (PBT Price) is the amount one can pay for a particular business to potentially recoup their initial investment within 8 years using the earnings of the company.
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What variables are used for the PayBack Time?
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Using Earnings pe Share (EPS) growing at the Earnings Growth Rate (EGR)
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What is the single most important number to tell you if a business is being run well or not
|
ROIC is Return on Invested Capital
|
|
|
If the ROIC number is going down, it means ...
|
that the CEO is reinvesting the surplus cash and getting a smaller return on it than in previous years.
|
|
|
The formula for ROIC is
|
The Return on Invested Capital = NOPAT (Net Operating Profit After Taxes) / (Equity + Debt)
|
|
|
Define NOPAT
|
NOPAT is the Net Operating Profit After Taxes.
|
|
|
NOPAT is equal to ...
|
NOPAT is equal to the Operating Income x (1 tax rate).
|
|
|
If you have trouble finding NOPAT or calculating this value, you can use ...
|
Net Income as a proxy.
|
|
|
On MSN Money, Sales are located at:
|
MSN Money > Financial Results > Statements > 10 Year Summary
|
|
|
What is the acronym EPS?
|
EPS stands for Earnings per Share.
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On MSN Money, historical EPS number are at:
|
MSN Money > Financial Results > Statements > 10 Year Summary > historical EPS numbers
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What word might Historical Equity might be as?
|
Using the research tool of your choice, locate historical Equity (or BVPS) numbers
|
|
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What is the AKA for the Operating Cash Flow?
|
The Operating Cash Growth Rate's aka is Cash Flow From Operations growth rate.
|
|
|
What is the Operating Cash Flow?
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Operating Cash Flow is the long term rate of growth of operating cash, the money that is actually coming into the bank from business operations.
|
|
|
How is Operating Cash Flow different that EPS?
|
Operating Cash Flow can be substantially different than EPS since it is real money (as opposed to earnings which can be somewhat theoretical).
|
|
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When On MSN Money is Cash Flow statements?
|
On MSN Money, Cash Flow Statements are located at Financial Results > Statements > Cash Flow. Look for the "Cash from Operating Activities" value
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What are the four calculated Growth Rates for Moat Analysis?
|
Calculate Compounded Annual Growth Rate for Earnings Per Share (EPS), Operating Cash Flow Per Share (OCPS), Sales, and Book Value Per Share (BVPS)
|
|
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Where is EPS found?
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Earnings Per Share (EPS) is found on the Income Statement
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Define EPS
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EPS is the amount of the company's earnings allocated to each share of common
|
|
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Where is OCPS found?
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Operating Cash Flow Per Share (OCPS) is found on the Cash Flow Statement
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Define OCPS
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OCPS is the amount of cash from operations allocated to each share of common stock
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Where is Sales found?
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Sales is found on the Income Statement
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Where is BVPS found?
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Book Value Per Share is found on the Balance Sheet Book
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What is the formula for BVPS?
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BVPS is the Common Shareholder's Equity / Total Outstanding Shares
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Formula for ROE
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Return on Equity (ROE) = ROE is Net Income / Shareholder's Equity and the return achieved on sharholder's ownership
|
|
|
Where is NOPAT found?
|
Net Operating Profit After Taxes (NOPAT) is on the Income Statement.
|
|
|
Where is Long Term Debt found?
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Long Term Debt is found on the Balance Sheet
|
|
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Where is Equity found?
|
Shareholder's Equity is found on the Balance Sheet
|
|
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Define ROE
|
ROE is the return that shareholders are recieving on their invested capital. (Shareholder's Equity).
|
|
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Be aware of companies that have a high ROE but low ______?
|
Growth rates. This can mean that management is artificially supporting ROE, which is commonly used as a measure of management quality
|
|
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What two variables are needed for ROE?
|
Return on Equity (ROE) needs Net Income and Equity
|
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Where is Net Income found?
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Net Income is found on the Income Statement
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Where is Equity found?
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Shareholder's Equity is found on the Balance Sheet
|
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The Debt to Earnings Ratio demonstrates the amount of years it would take the company to pay off its current Long Term Debt if it used ____?
|
The current level of earnings
|
|
|
How many years for Rule #1 Inveting to pay off debt?
|
Companies that have a Debt to Earnings Ratio of less than 3 year are considered stable because they do not have a large amount of interest expense or debt to service
|
|
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Where is Long Term Debt found?
|
Long Term Debt is found on the Balance Sheet
|
|
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Where is Net Income
|
Net Income is found on the Income Statement
|
|
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For Sticker Price calculation, the earnings growth rate should be in line with ____
|
In line with the Compounded Annual Growth Rates that were calculated for EPS, OCPS, Sales, and BVPS
|
|
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What are the 3 variables gathered to calculate the Sticker Price?
|
EPS(TTM), Earnings Growth Rate, and Future PE Multiplier
|
|
|
Where is EPS TTM found?
|
EPSTTM is found on the Income Statement and is the EPS for the last 12 months
|
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Where is Sticker Price's Earnings Growth Rate found?
|
Determine at what rate you think earnings for this company will grow year after year based on the Moat's Growth Rate numbers
|
|
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What is a Rule #1 Invester's MARR
|
The Minimum Acceptable Rate of Return (MARR) is 15%
|
|
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What is a Rule #1 Invester's MOS %
|
The Margin of Safety (MOS), especial for novice investors, is 50%
|
|
|
What is the PayBack Time?
|
PayBack Time Price (PBT Price) is the amount one can pay for a particular business to potentially recoup their initial investment within 8 years using the earnings of the company.
|
|
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What variables are used for the PayBack Time?
|
Using Earnings pe Share (EPS) growing at the Earnings Growth Rate (EGR)
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