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10 Cards in this Set

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CURRENT RATION

Provides the measure of the short-term solvency of the firm

PRICE-EARNINGS RATIO (PE)

=P/EPS


The market price per share of common stock divided by the earnings per share of common stock.




-A corporation with a high price earnings ratio is expected to have above average increases in its future earnings per share.

MARKET VALUE OF AN ASSET

What an item is actually worth if sold and must always be a positive value

MARGINAL TAX RATE

The tax rate payable on the next dollar earned and, due to deductions and credits, the marginal tax rate is ALWAYS HIGHER than the Average Tax Rate

TOTAL ASSET TURNOVER

=Sales/Assets


How much in sales is generated by each dollar of firm assets

TIMES INTEREST EARNER or INTEREST COVERAGE RATIO

Relative measure of how well the firm's operating earnings can cover the current interest obligations

QQQ- Are Companies required by law to have their bonds rated by agencies like Moody's?

No.

THE FISHER EFFECT

Relationship between nominal returns, real returns, and inflation

QQQ- Do investors require higher yields on unsecured bonds than on secured bonds?

YES

CONVERTIBLE BONDS

Can be swapped for a fixed number of shares of stock before maturity at the holder's option