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11 Cards in this Set

  • Front
  • Back
What are the 3 equations for Degree of Combined Leverage?
= (%of change in net income)/(% of change in sales)
Marginal vs Average Tax Rates (define and know)
Mar- % paid on next dollar earned.
Avg- tax bill/ taxable income
What is common-size statement?
A standardized financial statement presenting all items in percentage terms. Balance sheet items are shown as a percentage of assets and income statement items as a percentage of sales.
5 Categories of financial ratios..
1. Liquidity ratios (short-term solvency)
2. Financial leverage ratios (long-term solvency)
3. Turnover ratios (asset management)
4. Profitability ratios
5. Market value ratios
List 6 limitations to ratio analysis.
1. Hard to compare against large firms that operate in multi-business (conglomerants).
2. Inflation distorts figures.
3. Seasonal factors
4. Window dressing techniques
5. Different account practices.
6. Hard to define a "good" of "bad" number
What is the Present Value equation?
PV= FV(1+r)^-t
What is the Future Value equation?
What is the Interest Rate equation?
What is the Time Period equation?
Value of any investment is the _____ of all future cash flows.
Present Value
What's the most important variable in any investment...