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36 Cards in this Set
- Front
- Back
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ROA
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tells us how profitable company is without regard to how we finance the business
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liquidity ratios
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measure the ability of a firm to meet financial responsibilites due in the next year with current assets or cash flow that will be generated in the next year
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Profitability
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Analyzing and interpreting changes in operating profitability
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Effiency
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Maximizing the firm’s investment in assets
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Risk: Liquidity
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Near-term ability to generate cash to satisfy needs
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Risk: Solvency
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The longer-term ability to generate cash to satisfy needs
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Market & Timing Measures
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Used to tell if a stock is cheap or expensive.
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ROA
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Measures the firm’s success in using assets to generate earnings.
Net Income+(1-Tax Rate)(Int Exp)/Avg Total Assets |
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Profit Margin
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Measure of the ability to generate income
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Asset Turnover
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Efficiency measure
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Current Assets/Current Liabilities
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Current Ratio
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(Cash + Mkt Securities + Receivables)/Current Liabilities
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Quick Ratio
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Cash Flow from Operations/Average Current Liabilities
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Operating Cash Flow Ratio
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Sales/Average A/R
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Accounts Receivable Turnover
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COGS/Average Inventory
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Inventory Turnover
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Purchases/Average Accounts Payable
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Accounts Payable Turnover
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Receivables+Inventory-Payable
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Cash Conversion Cycle
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Debt market
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Secured creditors have senior claim over unsecured creditors. Both have seniority over preferred or common shareholders.
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Circumstances
Cashflow Collateral Capacity Contingencies Character Conditions |
Credit Risk- 7 C's
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Acquistion cost
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Amount paid initially to acquire the asset. Includes costs required to prepare the asset for its intended use.
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adjusted acquistion Cost
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Consumption of service potential occurs over time.
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Statement of Cash Flows
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reports the relationship between income flows and cash flows.
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Statement of Cash Flows
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reports the relationship between income flows and cash flows.
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Statement of Cash Flows
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reports the relationship between income flows and cash flows.
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Strategy Analysis
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allows the analyst to understand the economics of the firm such that the subsequent accounting and financial analysis is grounded in reality.
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Value Chain Analysis
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Separates the activities of the company into a sequential chain.
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Common Size Statements
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Express all terms as a percentage of a common base.
Typically total assets for Balance Sheet Typically sales for Income Statement. |
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Percent Change Statements
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Delta between periods. Compound growth between periods.
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Base Year Trend
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Compares amounts of a more recent year to a base year. The base year is the earliest year being studied.
The analysis measures the percentage of change from the base year. |
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Porter – Five Forces Classification
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forces that influence the profitability of a firm within an industry.
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Economic Attribute Framework
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Ties analysis to financial statements.
Demand, Supply, Manufacturing, Marketing, Financing. |
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Acquisition Cost
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Amount paid initially to acquire the asset. Includes costs required to prepare the asset for its intended use.
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Adjusted Acquisition Cost
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Consumption of service potential occurs over time.
Amortization or Depreciation booked to show decline in service potential. |
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Financial Leverage
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Using lower cost creditors to increase return to common shareholders
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ROCE
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incorporates the results of operating, investing, and financing decisions. Relates to:
Ability to generate return on assets Ability to leverage the return |
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EPS
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Ratio often used by investors to assess profitability. Investors also use multiples of EPS, referred to as PE or price-earnings ratio.
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