finance cheat sheat

finance cheat sheat - Chapter 1 Primary Markets: original...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 1 Primary Markets : original sale of securities by governments and corporations. Public offerings (IPO) and Private Placements (negotiate sale with buyer) Secondary Markets : Those in which securities are sold after the original sale. Dealer Markets : buy and sell over counter at your own risk, after orginal sale, NASDEQ Auction Markets- physical location, math those who want to buy and sell, NYSE, AMEX Goal of Corporation : To max shareholder value Proxy Fight : unhappy stockholders can act to replace existing anagement. Stakeholder: someone other than stockholder or creditor who potentially has claim on CF’s of firm. Agency Relationship : Principal hires an agent to represent his/her nterest, Stockholders (principals) hire managers (Agents) to run the company. Managerial Compensation: 1)incentives can be used to align management and stockholder interests, 2) the incentives need to be structured carefully to make sure that they achieve their goal, 3) the threat of a takeover may result in better management Chapter 2 Assets = Liabilities + Stockholder’s Equity Net Working Capital (NWC) = CA – CL RE end= RE beg+ NI- Dividends Gross Profit= Net Sales- COGS Gross Profit Margin= Gross Profit/Net Sales Liquidity : Speed and ease to convert asset into cash. Financial Leverage: The use of debt in a firm’s capital structure. Income Statement: Performance over time Filing Requirements : Publicly traded companies must file reports with SEC, Annual filing=10K, quarterly=10Q, filed electronically. Market Value : the price at which the assets, liabilities, or quity can actually be bought or sold MV=Market Cap= stock price x # of shares outstanding Small cap < 1 billion, Large cap > 5 billion Book Value : Book Value of Equity Revenues – Expense = Income Net Sales - COGS - Depreciation EBIT - Interest Paid Taxable Income - Taxes Net Income - Dividends = Addition to Retained Earnings Average Tax Rate = Tax expense / Taxable Income Marginal Tax Rate: The Rate of the extra tax you would pay if earned $1 more. Cash Flows Identity Cash Flow from Assets = Cash flow to Creditors+ Cash flow to Stockholders Cash flow from Assets = Operating Cash Flow- NCS- ΔNWC Operating Cash Flow = EBIT + Depreciation - Taxes Net Capital Spending = Ending Net Fixed Assets - Beginning Net Fixed Assets + Depreciation Change in Net Working Capital = Ending NWC- Beginning NWC Cash Flow to Creditors = Interest Paid - Net New Borrowings Cash Flow to Stockholders = Dividends Paid - Net New Equity Raised Chapter 3 Statement of Cash Flows : Summarizes uses of cash. Operating, Financing and Investing activities. Common Size Statements based % whole Source Of Cash : ↑ in liability or ↓ in assets (A/R, inventory, net plant and equip, dividends, and new loan proceeds Use of Cash: ↑ in assets or ↓ in liabilities (A/P, common stock, RE) No Effect : ↓ bad debt expense, ↑ in depreciation Liquidity Ratios – ability to pay bills in short run Current Ratio = CA/CL Quick Ratio (acid test) = (CA – Inventory)/CL
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/05/2008 for the course HIST 142 taught by Professor Wink during the Spring '08 term at Wisconsin.

Page1 / 2

finance cheat sheat - Chapter 1 Primary Markets: original...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online