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106 Cards in this Set
- Front
- Back
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WORKING CAPITAL |
= ASSETS - LIABILITIES |
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ACCOUNTING EQUATION |
ASSETS - LIABILITIES = SHAREHOLDER'S EQUITY |
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COST OF GOODS SOLD |
BEGINNING INVENTORY + ADDITIONS TO INVENTORY = AMOUNT THAT COULD'VE BEEN SOLD - ENDING INVENTORY = COGS |
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GROSS PROFIT |
SALES - COGS |
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GROSS (PROFIT) MARGIN |
(SALES - COGS) / SALES |
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NET INCOME |
REVENUE - EXPENSES (INC. DEPRECIATION) + GAINS - LOSSES - TAXES |
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NET PROFIT MARGIN |
(GROSS MARGIN - EXPENSES) / SALES |
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A/R TURNOVER RATIO |
= CREDIT SALES / A/R |
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DAY SALES OUTSTANDING |
= 365 / A/R TURNOVER RATIO |
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ASSET TURNOVER RATIO |
= SALES / TOTAL ASSETS |
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INVENTORY TURNOVER RATIO |
= COGS / INVENTORY |
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NET PROFIT MARGIN |
= NET INCOME / SALES |
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R.O.A. |
= NET INCOME / TOTAL ASSETS |
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R.O.E. |
= NET INCOME / SHAREHOLDER'S EQUITY |
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DuPONT IDENTITY |
= (NET INCOME / SALES) X (SALES / TOTAL ASSETS) X (TOTAL ASSETS / EQUITY) |
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WORKING CAPITAL |
= CURRENT ASSETS - CURRENT LIABILITIES |
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CURRENT RATIO |
= CURRENT ASSETS / CURRENT LIABILITIES |
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ACID-TEST RATIO |
= (CASH + MARKETABLE SECURITIES + A/R) / CURRENT LIABILITIES |
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DEBT-TO-EQUITY RATIO |
= LONG-TERM DEBT / SHAREHOLDERS' EQUITY |
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DEBT-TO-ASSETS RATIO |
= TOTAL LIABILITIES / TOTAL ASSETS |
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ADMITTED ASSETS |
= LIABILITIES + POLICYHOLDERS' SURPLUS |
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POLICYHOLDERS' SURPLUS |
= ADMITTED ASSETS - LIABILITIES |
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PREMIUM-TO-SURPLUS RATIO |
(WRITTEN PREMIUMS - REINSURANCE) / POLICYHOLDERS' SURPLUS |
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RESERVES-TO-SURPLUS RATIO |
(UNEARNED PREMIUM RESERVE + LOSS & LAE) / POLICYHOLDERS' SURPLUS |
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LIQUIDITY RATIO |
(CASH + INVESTED ASSETS (MARKET VALUE)) / (UNEARNED PREMIUM RESERVE + LOSS & LAE) |
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LOSS RATIO |
(INCURRED LOSSES + LAE) / EARNED PREMIUMS |
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EXPENSE RATIO |
UNDERWRITING EXPENSES / WRITTEN PREMIUMS |
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COMBINED RATIO |
LOSS RATIO + EXPENSE RATIO |
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OPERATING RATIO |
COMBINED RATIO - INVESTMENT INCOME RATIO |
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INVESTMENT YIELD RATIO |
NET INVESTMENT GAIN(LOSS) / (TOTAL CASH + INVESTED ASSETS) |
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RETURN ON POLICYHOLDERS' SURPLUS |
NET INCOME / POLICYHOLDERS' SURPLUS |
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IRIS 1 -- GROSS PREMIUMS WRITTEN TO POLICYHOLDERS' SURPLUS RATIO |
MEASURES AN INSURER'S TOTAL EXPOSURE BEFORE RECOGNIZING THE EFFECT OF REINSURANCE CESSIONS (LESS THAN 900%) |
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IRIS 2 -- NET PREMIUMS WRITTEN TO POLICYHOLDERS' SURPLUS RATIO |
GAUGE OF THE INSURER'S RETAINED INSURANCE EXPOSURE AFTER REINSURANCE TRANSACTIONS (LESS THAN 300%) |
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IRIS 3 -- CHANGE IN NET WRITINGS RATIO |
PERCENTAGE CHANGE IN THE INSURER'S NET WRITTEN PREMIUMS DURING THE MOST RECENT YEAR (33% OR LESS) |
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IRIS 4 -- SURPLUS AID TO POLICYHOLDERS' SURPLUS RATIO |
COMMISSIONS ON REINSURANCE CEDED TO NON-AFFILIATED COMPANIES (LESS THAN 15%) |
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IRIS 5 -- TWO-YEAR OVERALL OPERATING RATIO |
INSURER'S COMBINED RATIO - INVESTMENT INCOME RATIO OVER THE PAST 2 YEARS (LESS THAN 100%) |
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IRIS 6 -- INVESTMENT YIELD RATIO |
NET INVESTMENT INCOME / (AVERAGE CASH + INVESTED ASSETS) (3% TO 6.5%) |
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IRIS 7 -- GROSS CHANGE IN POLICYHOLDERS' SURPLUS RATIO |
MEASURES THE PERCENTAGE CHANGE IN POLICYHOLDERS' SURPLUS OVER THE PAST YEAR (BETWEEN -10% AND 50%) |
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IRIS 8 -- CHANGE IN ADJUSTED POLICYHOLDERS' SURPUS RATIO |
MEASURES CHANGES IN SURPLUS FROM AN INSURER'S CORE OPERATIONS (BETWEEN -10% AND 25%) |
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IRIS 9 -- ADJUSTED LIABILITIES TO LIQUID ASSETS RATIO |
MEASURES AN INSURER'S ABILITY TO MEET ITS OBLIGATIONS WITH ITS MOST LIQUID ASSETS (LESS THAN 100%) |
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IRIS 10 -- GROSS AGENTS' BALANCES TO POLICYHOLDERS' SURPLUS RATIO |
DIVIDES AGENTS' BALANCES IN THE COURSE OF COLLECTION BY THE POLICYHOLDERS' SURPLUS (LESS THAN 40%) |
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IRIS 11 -- ONE-YEAR RESERVE DEVELOPMENT TO POLICYHOLDERS' SURPLUS RATIO |
MEASURES THE PERCENTAGE CHANGE IN THE CURRENT YEAR'S POLICYHOLDERS' SURPLUS ATTRIBUTABLE TO LOSS DEVELOPMENT OF PRIOR ACCIDENT YEAR RESERVES (20% OR LESS) |
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IRIS 12 -- TWO-YEAR RESERVE DEVELOPMENT TO POLICYHOLDERS' SURPLUS RATIO |
MEASURES THE PERCENTAGE CHANGE IN THE CURRENT YEAR'S POLICYHOLDERS' SURPLUS ATTRIBUTABLE TO LOSS DEVELOPMENT OF THE SECOND PRIOR ACCIDENT YEAR RESERVES (20% OR LESS) |
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IRIS 13 -- ESTIMATED CURRENT RESERVE DEFICIENCY TO POLICYHOLDERS' SURPLUS RATIO |
DIVIDES THE ESTIMATED CURRENT LOSS RESERVE DEFICIENCY BY POLICYHOLDERS' SURPLUS (LESS THAN 25%) |
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YIELD TO MATURITY |
THE REQUIRED RATE OF RETURN; INFLUENCED BY (1) REAL RATE OF RETURN, (2) INFLATION PREMIUM, AND (3) RISK PREMIUM |
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FINANCIAL THEORY OF STOCK PRICE VOLATILITY |
THE PRICE OF ANY INVESTMENT, INCLUDING STOCK, EQUALS THE DISCOUNTED PRESENT VALUE OF THE FUTURE CASH FLOWS IT GENERATES |
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FUNDAMENTAL ANALYSIS |
METHOD USED TO DETERMINE THE PRICE OF A STOCK BY ANALYZING DATA THAT ARE FUNDAMENTAL TO THE COMPANY |
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DIVIDEND PAYOUT RATIO |
DIVIDENDS PAID / EARNINGS |
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TECHNICAL ANALYSIS |
METHOD OF DETERMINING STOCK PRICES BY TRYING TO DETECT PATTERNS IN MARKET ACTIVITY STATISTICS, PAST PRICES, AND MARKET VOLUME; HISTORICAL PERFORMANCE OF A STOCK WILL REPEAT ITSELF IN PREDICTABLE TRENDS AND PATTERNS BASED ON PRIOR RESULTS |
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EFFICIENT MARKET HYPOTHESIS |
ASSERTS THAT STOCK PRICES REFLECT THE EXPECTATIONS OF ALL MARKET PARTICIPANTS AND THAT NO INDIVIDUAL INVESTOR HAS SUPERIOR KNOWLEDGE |
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WEAK FORM EFFICIENCY |
ASSERTS THAT THE CURRENT STOCK PRICE REFLECTS ALL HISTORICAL INFORMATION ABOUT THE STOCK'S PRICE FLUCTUATIONS; ASSUMES THAT SUCCESSIVE CHANGES IN A STOCK'S PRICE ARE INDEPENDENT OF EACH OTHER OR THAT MOVEMENTS ARE RANDOM - REJECTS TECHNICAL ANALYSIS |
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SEMI-STRONG FORM EFFICIENCY |
ASSERTS THAT THE CURRENT STOCK PRICE REFLECTS NOT ONLY ALL HISTORICAL DATA, BUT ALSO ALL CURRENT INFORMATION ABOUT THE STOCK - REJECTS FUNDAMENTAL ANALYSIS |
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STRONG FORM EFFICIENCY |
ASSERTS THAT STOCK PRICES REFLECT NOT ONLY HISTORICAL INFORMATION AND CURRENT PUBLIC INFORMATION, BUT ALSO INSIDER INFORMATION |
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ANNUAL RATE OF RETURN FOR A BOND |
= (INTEREST + CAPITAL GAIN) / BOND PRICE AT THE BEGINNING OF THE YEAR |
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ANNUAL RATE OF RETURN FOR A STOCK |
= (CAPITAL GAIN + DIVIDEND) / SHARE PRICE AT THE BEGINNING OF THE YEAR |
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VARIANCE |
SUM OF SQUARED DEVIATIONS / (N-1)
N = NUMBER OF ELEMENTS IN THE DATA SET |
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STANDARD DEVIATION |
MEASURE OF DIFFERENCES BETWEEN THE VALUES IN A SET AND THE MEAN OF THAT SET |
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COEFFICIENT OF VARIATION |
DISTRIBUTION'S STANDARD DEVIATION DIVIDED BY ITS MEAN |
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VALUE AT RISK (VaR) |
THRESHOLD VALUE SUCH THAT THE PROBABILITY OF LOSS ON THE PORTFOLIO OVER THE GIVEN TIME HORIZON EXCEEDS THIS VALUE |
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BETA |
MEASURE OF AN ASSET'S VOLATILITY RELATIVE TO THAT OF THE OVERALL MARKET FOR THAT TYPE OF ASSETS
BETA OF 1.0- IS LESS VOLATILE BETA OF 1.0 IS NORMAL BETA OF 1.0+ IS MORE VOLATILE |
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TAX SHIELD |
AMOUNT OF INCOME TAXES SAVED BECAUSE OF THE DEDUCTIBILITY OF INTEREST EXPENSE |
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INSURANCE LEVERAGE |
(RESERVES / POLICYHOLDERS' SURPLUS) = (PREMIUMS / POLICYHOLDERS' SURPLUS) X (RESERVES / PREMIUMS WRITTEN) |
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COST OF CAPITAL FROM INSURER OPERATIONS |
= [(1 - TAX RATE) X UNDERWRITING LOSS] / (LOSS & LAE + UNEARNED PREMIUM RESERVES) |
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DISCOUNTED CASH FLOW (DCF) MODEL |
= [(LAST ANNUAL DIVIDEND / CURRENT SHARE PRICE) X (1 + EXPECTED ANNUAL GROWTH)] + EXPECTED ANNUAL GROWTH |
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CAPM |
= RISK-FREE RATE + (BETA X (EXPECTED RETURN ON THE MARKET - RISK-FREE RATE) |
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COST OF DEBT |
= (RISK-FREE RATE + RISK PREMIUM) X (1 - TAX RATE) |
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COST OF PREFERRED STOCK |
= DOLLAR AMOUNT OF DIVIDEND PAID PER SHARE / MARKET PRICE OF ONE SHARE OF PREFERRED STOCK |
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WACC |
= (COST OF EQUITY X PERCENTAGE EQUITY) + (COST OF DEBT X PERCENTAGE DEBT) |
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RBC - NO ACTION REQUIRED |
CAPITALIZATION LEVEL IS ABOVE 200% |
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RBC - COMPANY ACTION LEVEL |
CAPITALIZATION LEVEL IS BETWEEN 150% AND 200% |
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RBC - REGULATORY ACTION LEVEL |
CAPITALIZATION LEVEL IS BETWEEN 100% AND 150% |
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RBC - AUTHORIZED CONTROL LEVEL |
CAPITALIZATION IS BETWEEN 70% AND 100% |
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RBC - MANDATORY CONTROL LEVEL |
CAPITALIZATION LEVEL FALLS BELOW 70% |
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MARKET VALUE SURPLUS (MVS) |
= FAIR VALUE OF ASSETS - FAIR VALUE OF LIABILITIES |
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MERGER |
TWO+ BUSINESS ENTITIES ARE COMBINED INTO ONE; TARGET CEASES TO EXIST |
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ACQUISITION |
PURCHASE OF ONE COMPANY'S STOCK BY ANOTHER COMPANY; TARGET MAY OR MAY NOT CONTINUE TO EXIST |
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CONSOLIDATION |
COMBINATION OF 2+ BUSINESS ENTITIES INTO A NEW ENTITY; BOTH BUYER AND TARGER CEASE TO EXIST |
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TAKEOVER |
CHANGE IN THE CONTROL OF A COMPANY |
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PROXY CONTEST |
OBTAINING THE VOTING RIGHTS OF THE TARGET'S SHAREHOLDERS |
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TENDER OFFER |
PURCHASE OFFER MADE DIRECTLY TO THE SHAREHOLDERS OF THE TARGET, TYPICALLY AT AN OFFER PRICE GREATER THAN THE CURRENT MARKET PRICE |
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DIVESTITURE |
DISPOSAL OR SALE OF PART OF A COMPANY |
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SPIN-OFF |
CREATION OF A NEW COMPANY FROM PART OF AN EXISTING COMPANY |
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HORIZONTAL ACQUISITION |
COMBINATION OF 2+ COMPANIES IN THE SAME LINE OF BUSINESS |
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VERTICAL ACQUISTION |
COMBINATION OF 2+ COMPANIES INVOLVED IN RELATED LINES OF BUSINESS BUT DIFFERENT STAGES OF PRODUCTION |
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CONGLOMERATE ACQUISITION |
COMBINATION OF 2+ COMPANIES IN UNRELATED LINES OF BUSINESS |
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VALUE OF ECONOMIC GAIN |
= VALUE OF THE TWO COMPANIES COMBINED - (VALUE OF COMPANY A + VALUE OF COMPANY B) |
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COST OF DEBT CAPITAL |
= DEBT INTEREST RATE - (DEBT INTEREST RATE X TAX RATE) |
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STAKEHOLDER |
ANYONE WITH A FINANCIAL INTEREST IN THE CORPORATION |
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SARBANES-OXLEY ACT OF 2002 |
A FEDERAL STATUTORY LAW GOVERNING CORPORATE DIRECTORS IN THE AREAS OF INVESTOR PROTECTION, INTERNAL CONTROLS, AND PENALTIES, BOTH CIVIL AND CRIMINAL. |
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WORKING CAPITAL |
A LIQUIDITY MEASURE THAT IS CALCULATED BY SUBTRACTING CURRENT LIABILITIES FROM CURRENT ASSETS. IT IS USED TO DETERMINE A COMPANY'S ABILITY TO FINANCE IMMEDIATE OPERATIONS (TO BUY INVENTORY, FINANCE GROWTH, AND OBTAIN CREDIT) |
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CAPITAL STRUCTURE |
A CORPORATION'S MIX OF LONG-TERM DEBT AND EQUITY |
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CAPITAL BUDGETING |
THE PLANNING AND MANAGING OF A CORPORATION'S LONG-TERM INVESTMENTS |
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IFRS |
FINANCIAL STANDARDS DEVELOPED BY ISAB |
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SAP |
THE ACCOUNTING PRINCIPLES AND PRACTICES THAT ARE PRESCRIBED OR PERMITTED BY AN INSURER'S DOMICILIARY STATE AND THAT INSURERS MUST FOLLOW |
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FAIR VALUE |
THE MARKET VALUE, EITHER ACTUAL OR ESTIMATED, OF AN ASSET OR A LIABILITY. |
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ACCOUNTING |
THE CLASSIFICATION, ANALYSIS, AND DETERMINATION OF THE APPROPRIATE METHOD OF REPORTING THE EFFECTS OF THE BOOKKEEPING RECORDS IN AN ORGANIZATION'S FINANCIAL STATEMENTS |
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BALANCE SHEET |
THE FINANCIAL STATEMENT THAT REPORTS THE ASSETS, LIABILITIES, AND OWNERS' EQUITY OF AN ORGANIZATION AS OF A SPECIFIC DATE |
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CURRENT ASSETS |
A BALANCE SHEET ASSET CLASSIFICATION THAT INCLUDES CASH AND OTHER ASSETS THAT ARE EXPECTED TO BE CONVERTED INTO CASH, SOLD, OR EXCHANGED WITHIN THE BUSINESS'S NORMAL OPERATING CYCLE, USUALLY ONE YEAR |
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MARKETABLE SECURITIES |
AN ASSET CLASSIFICATION THAT INCLUDES TEMPORARY INVESTMENTS THAT CAN EASILY BE CONVERTED INTO CASH |
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RECEIVABLES |
AN ASSET CLASSIFICATION THAT CONSISTS OF THE AMOUNTS OWED TO A COMPANY BY CUSTOMERS AND OTHER OUTSIDERS |
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INVENTORY |
AN ASSET CLASSIFICATION THAT CONSISTS OF GOODS AVAILABLE FOR SALE TO CUSTOMERS; FOR A MANUFACTURING COMPANY, ALSO INCLUDES RAW MATERIALS AND FINISHED GOODS |
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PREPAID EXPENSES |
AN ASSET CLASSIFICATION THAT REPRESENTS THE AMOUNT THAT HAS ALREADY BEEN PAID FOR SERVICES THAT HAVE NOT BEEN RECEIVED OR USED |
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CURRENT LIABILITIES |
A BALANCE SHEET LIABILITY CLASSIFICATION THAT INCLUDES OBLIGATIONS WHOSE PAYMENTS ARE REASONABLY EXPECTED TO REQUEST THE USE OF CASH OR THE CREATION OF OTHER CURRENT LIABILITIES WITHIN ONE YEAR |
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RETAINED EARNINGS |
THE CUMULATIVE NET INCOME THAN AN ORGANIZATION HAS RETAINED, AFTER PAYMENT OF DIVIDENDS, FOR REINVESTMENT IN THE ORGANIZATION'S OPERATIONS |
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REVENUE |
THE INFLOW OF ASSETS, USUALLY CASH OR ACCOUNTS RECEIVABLE, RESULTING FROM THE SALE OF PRODUCTS OR THE RENDERING OF SERVICES TO CUSTOMERS |
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GROSS PROFIT |
AN INCOME STATEMENT VALUE THAT REPRESENTS SALES OR OPERATING REVENUE MINUS THE COST OF GOODS SOLD |
