cheat cheat - 1.Partnership sole = Unlimited liability that...

This preview shows page 1 - 2 out of 3 pages.

1.Partnership + sole = Unlimited liability – that individual is personally liable for all of the firm’s liabilities (financial + legal) 2.Corporation: Taxation (firm profits + dividends) 3. Agency prob = separation of managers (agents) & owners (principals). 4. Security is a financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship with governmental body or a corporation (bond), or rights to ownership as represented by an option. 5. Financial leverage(equity) refers to the use of debt to acquire additional assets. 6.Historic cost – Accum. Depr. = Book Value 7. Market Value = DCF/TVM 8. Net Income is split between cash dividends and additions to retained earnings Closing Balance R/E Prior Year +Net Income -Dividends Paid (+-Add. To Ret, Earning) Closing Balance R/E Current Year **I/S shows revenue as it accrues, not nsrly when the cash comes in the door. **Expenses are based on the matching principle (accrual). 8. Depreciation is an application of the matching principle. (over a time) 9. Statement of cash flow = Cash flow identity (OA,IA,FA) CF Assets (Free Cash Flow)= CF Creditors + CF Stockholders Investing Decision Financing Decision 10. CF from assets = Operating cash flow (OCF) (interst expense not included bc it’s a flow to creditor) - Net capital spending (same) - Additions to NWC (takes accounts changes in assets & liab.) 1.Commonsize: % total asset(balance),%total sale(income) 2.Common-base-year 3. Combined common-size & base-year analysis eliminate the effect of the overall growth in total asset/sales Short-term solvency/liquidity ¿ Current ratio CA CL ¿ Quick ratio CA Inventory CL ¿ Cashratio Cash CL ¿ Net workingcapital NWC Total Assets Interval Measure CA Avrg Daily OPeratingCosts ¿ ¿ ¿ LongtermTotal Debt Ratio TA TE TA ¿ Debt Equity ratio Total Debt Total Equity ¿ Euity Mult TA TE ¿ Longtermdebt ratio Longtermdebt Longtermdebt + TE ¿ interest earned EBIT Interst Asset Utilization Turnover ¿ CashCoverage Ratio EBIT + Depr Interst ¿ ¿ ¿ Inventory turnover COGS Inventory * Days sale in invetory 365 days Inventory turnover Recievables Sales A / R * Days sale in receivables or inventory 365 days Receivables inventory turnover * NWC Sales NWC Net ¿¿ asset turnover Sales ¿ assets ¿ ¿ Totalasset turnover Sales Total Asset ||||| ¿ Profit Magin Net income Sales * Return on assets (ROA) Net income Total Assets * Return on equity (ROE) Net income Total Equity ||| Profitability Total Asset Turnover = (1/Capital intensity ratio) *

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture