Corporate Finance page 2

Corporate Finance page 2 - Operating expenses = expenses...

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- Operating expenses = expenses relating to running the business (salaries, marketing, r&d, depreciation, amortization, etc); operating income subtracts operating expenses from gross profit EBIT = earnings before interest and taxes Earnings/Share = Net Income/Shares Outstanding Stock options give the holder the right to buy a certain number of shares by a specific date at a specific price Convertible bonds – form of debt that can be converted into shares Dilution – when there is more total shares to divide the same number of earnings Operating Margin = Operating Income/ Total Sales Net Profit Margin = Net Income/Total Sales Accounts Receivable Days = Accounts Receivable/Average Daily Sales. An increase in this shows that you are unable to collect your money on time from your customers. EBITDA – earnings before interest, taxes, depreciation, and amortization Leverage Ratio – calculated by seeing the interest coverage ratio. If it is high that
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