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BUS 1301 Test 2 Review

BUS 1301 Test 2 Review - Day in history Walmart announces...

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Day in history Walmart announces its first ever quarter with profits that exceed $2 billion. The earnings were $2.004 billion on sales of $56.560 billion Steve Jobs Adopted by family in Mountain View, California 1955 March 3, 1998 – William H. Gates, chairman of Microsoft Corporation, testifies before Congress about anti-trust concerns. “Will the United States continue its breathtaking technological advances?” “I believe the answer is yes – if innovation is not restricted by the government” Bill Gates Arthur Anderson Got indicted in federal court 2002 for obstructing justice by shredding documents and deleting computer files relating to its ex- client Enron March 17, Inventor of the word “capitalism” Karl Marx. He was buried in London’s Highgate Cemetery. March 23, 1880. The flour mill is patented by John Stevens of Neenah, WI. Crushing wheat moved from stone rollers to steel rollers. John Stevens’ device not only increased production by 70%, it Produced superior flour… March 24, 1883 Andrew W. Mellon is born in Pittsburgh and by the age of 27 was running his father’s bank. He would grow up to become Secretary of the Treasury and cut income taxes from 77% to 25% (“Mellon Plan”) Formulas Market capitalization = stock price x shares outstanding What is the relationship between ROS, turnover, and ROA? (first page of Foundation Fasttrack) ROA=ROS x Turnover What is the relationship between ROA, leverage, and ROE? (first page of Foundation Fasttrack) ROE=ROA x leverage ROS= Return on sales ROS=profit/ sales How many pennies on the sales are we keeping Asset turnover= Sales/assets ROA= Profit/assets Leverage= Assets/equity ROE= Profit/equity Free Cash Flow (Cash From Operating activities)-(Capital expenditures or plant improvements) Stock price = (present value of all future dividends)/(number of shares outstanding)
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Yield = (Dividend)/(stock price) What percentage of the stock price will the company return to you in dividends? Fundamentals The purpose of business is to Create a customer The short term goal of business is to Make a profit Great businesses have Great margins The long term goal of a business is to increase shareholders value Profit is a matter of __. Cash is a matter of __ Profit is a matter of opinion. Cash is a matter of fact . Other notes Svalbard Global Seed is in Svalbard in the Artic Circle. It is a global seed bank, funded by a lot of people. The point from the story is that you need to watch for polar bears (new products What is the key driver for raising stock price? profit and then market share James B Stewart (WSJ) “I didn’t want to be distracted by interesting but extraneous issues of global finance, focusing instead on the bread-and-butter of stock investing: revenue and earnings Which is arguable your most important driver in sustaining profitability Contribution margin Fixed cost on Income Statement Whether you make money or not, this will always be the same Ie – depreciation, SGA, EBIT, interest, taxes,
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BUS 1301 Test 2 Review - Day in history Walmart announces...

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