Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
58 Cards in this Set
- Front
- Back
|
net working capital
|
assets-liabilities
|
|
|
corporation
|
distinct legal entity
can acquire and exchange property, enter contracts, sue or be sued |
|
|
partnership
|
general and limited
all partners agree to provide fraction of work and cash and share in profits and losses |
|
|
timing of cash flows
|
one dollar received today is more valuable than a dollar received a year from today
|
|
|
goal of financial management
|
maximize the current value per share of existing stock
|
|
|
value of stock
|
equal to the value of the owner's equity
|
|
|
agency problem
|
conflict of interest between the principal and the agent
|
|
|
agency costs
|
costs of the conflict of interest between stockholders and management
|
|
|
capital budgeting
|
what long term investments should the firm take
|
|
|
capital structure
|
where will the firm get the long term financing to pay for its investments?
|
|
|
balance sheet
|
accountant's snapshot of a firm's accounting value on a particular date (firm frozen at a moment in time)
|
|
|
assets
|
equals liabilities + stockholder's equity
|
|
|
liquidity
|
ease and quickness with which assets can be converted to cash
|
|
|
current assets
|
most liquid, include cash and assets that will be turned into cash within a year from the date of the balance sheet.
|
|
|
accounts receivable
|
amounts not yet collected from customers for goods and services sold to them (-adj for pot. bad debts)
|
|
|
inventory
|
raw materials to be used in production, WIP, and finished goods
|
|
|
fixed assets
|
least liquid assets, include property, plant, and equipment
|
|
|
intangible fixed assets
|
patent, trademark minus depreciation
|
|
|
liabilities
|
obligations of the firm that require a payout of cash within a stipulated period
|
|
|
market value
|
price at which willing buyers and sellers would trade the assets
|
|
|
accounting value
|
carrying value or the book value of assets
|
|
|
income statement
|
measures performance over a specific period, say a year
|
|
|
income
|
equals revenue - expenses
|
|
|
noncash items
|
expenses against revenues but do not affect cash flow, like depreciation, which is negative cash flow incurred over life of the asset
|
|
|
average tax rate
|
tax bill divided by taxable income
|
|
|
marginal tax rate
|
tax you would pay (percent) if you earned one more dollar
|
|
|
flat rate tax
|
tax rate is the same for all income levels
|
|
|
cash flows from firm's assets
|
must equal cash flows to the firm's creditor's and equity investors
|
|
|
cash flow from operations
|
cash flow generated by business activities such as sales of goods and services. reflects tax payments, but not financing, capital spending, or changes in net working capital
|
|
|
operating cash flow
|
EBIT(earnings before interest) plus depreciation minus taxes...cash generated from operations
|
|
|
total cash flow of the firm
|
includes adjustments for capital spending and additions to net working capital
|
|
|
cash flow from operating activities
|
net income plus noncash expenses and adjust for changes in current assets and liabilities
|
|
|
cash flow from investing activities
|
involves change in capital assets: acquisition of fixed assets(negative) and sales of fixed assets(positive)
|
|
|
cash flow from financing activities
|
cash flows to and from creditors and owners include changes in equity and debt
|
|
|
net capital spending
|
increase in property, plant, and equipment + increase in tangible assets
|
|
|
net capital spending
|
increase in property, plant, and equipment + increase in tangible assets
|
|
|
current ratio
|
current asset/current liabilities
|
|
|
quick ratio
|
CA-inv/CL
|
|
|
total debt ratio
|
Total assets - total equity / total assets
|
|
|
debt-equity ratio
|
total debt / total equity
|
|
|
equity multiplier
|
total assets / total equity
|
|
|
inventory turnover
|
cost of goods sold / inv
|
|
|
total asset turnover
|
sales / total assets
|
|
|
profit margin
|
net income / sales
|
|
|
return on assets
|
net income / total assets
|
|
|
return on equity
|
net income / total equity
|
|
|
dupont ROE
|
PM x TAT x Eq Mult
NI / Sales x Sales / Total Assets x Total Assets / Total Equity |
|
|
P/E Ratio
|
price per stock / earnings per stock
|
|
|
net working capital
|
change in Curr Ass - Curr Liab from one year to the next
|
|
|
Operating Cash Flow
|
EBIT + depreciation - taxes
|
|
|
Capital Spending
|
Purchase of fixed assets - sales of fixed asset (negative cash flow)
|
|
|
Cash flow to creditors
|
interest + retirement of debt - long term debt financing (outflow)
|
|
|
cash flow to shareholders
|
dividends + repurchase of equity - new equity financing
|
|
|
cash flow from operations
|
net income + non cash items + adjust for changes in curr liab and curr assets other than cash
|
|
|
cash flow from investing activities
|
acquisition of fixed assets - sales of fixed assets (negative/outflow)
|
|
|
cash flow from financing activities
|
changes in equity and debt includes retirement of debt (+ notes) + l/t debt sales - dividends - repurchase of stock + proceeds from stock issue
|
|
|
FV
|
Co * (1+r)
|
|
|
PV
|
C1 / 1+r
|
