Search
Browse
Create
Log in
Sign up
Log in
Sign up
Upgrade to remove ads
Only $2.99/month
FIN 450: Midterm
STUDY
Flashcards
Learn
Write
Spell
Test
PLAY
Match
Gravity
Key Concepts:
Terms in this set (37)
Sales Growth Rate
(Sales now - Sales before) / Sales before
Profit Growth Rate
(Profit now - Profit before) / Profit before
Profit Margin
Net income / Sales
ROA
Net income / Assets
ROE
Net income / Equity (NW)
Return on Capital
EBIT / (D + E)
Current Ratio
Current A / Current L
Quick Ratio
(Current A - Inventory) / Current L
Total A. Turnover
Sales / Net PP&E (total A)
Inventory Turnover
COGS / Inventory
Avg. Collection Period
Avg. daily sales / AR
Days Payable
AP / COGS per day
Debt-to-Capital
Debt / (D + E)
Equity Multiplier
Assets / Equity
Interest Coverage
EBIT / Interest expense
Profit Margin
How much of every dollar of sales a company keeps in earnings
(NI / Sales)
ROA
How efficient assets are used to generate earnings
(NI / Assets)
Current Ratio
Ability to pay short-term and long-term obligations(
(Current A / Current L)
Quick Ratio
Indicates short-term liquidity
((Current A. - Inventory) / Current L)
Total Asset Turnover
Indicator of efficiency in turning assets into revenue, the larger it is the more performance.
(Sales / Total assets)
Avg. Collection Period
Amount of time it takes to receive money.
(Avg. daily sales / AR)
Interest Coverage
How easily a firm can pay interest on outstanding debt.
(EBIT / Interest expense)
Debt-to-Capital
For ever dollar in capital, $X in debt. It's a measurement of leverage.
(Debt / (D + E))
Fixed Assets
Forecast using: (Current FA + CAPEX - Depreciation)
Retained Earnings
Forecast using: (RE last year + EBIT now - Dividends now)
Tax Rate
Expect the tax rate to stay constant. Forecast using: (Tax expense / EBIT)
Dividend Rate
Expect this to stay constant. Forecast using: (Dividends / EBIT)
External Funding Required
This can be calculated using: Total Assets - (L + E)
ROE
(PAT / Equity) or (Profit margin x Asset turnover x Equity multiplier)
PAT: profits after tax
Profit Margin
(PAT / Sales)
PAT: profits after tax
ROE = (Profit margin x Asset turnover x Equity multiplier)
Asset Turnover
(Sales / Assets)
ROE = (Profit margin x Asset turnover x Equity multiplier)
Equity Multiplier
(Assets / Equity)
ROE = (Profit margin x Asset turnover x Equity multiplier)
Degree of Operating Leverage
This is an elasticity measure.
DOL = (ΔEBIT / EBIT) * (Sales / ΔSales)
Degree of Financial Leverage
Elasticity of net income with respect to operating income.
DFL = (ΔNI / NI) * (EBIT / ΔEBIT)
ΔNI = (1 - T) * ΔEBIT
Degree of Total Leverage
Percentage change in NI due to a percentage change in sales.
DTL = (ΔNI / ΔSales) * (Sales / NI)
Value of Levered Firm
VL = VU + Tax savings - Financial distress
VU: value of levered firm
Magnitude of Tax Shield
TS = PV(TC
Interest) = TC
PV(Interest)
With perpetual debt: TS = TC * Debt
TC: corporate tax rate
YOU MIGHT ALSO LIKE...
Fin 201 Exam 1
26 terms
CMA (Certified Management Accountant) - Part II SU6
52 terms
Corporate Finance
39 terms
CPA 2013 FAR-6.3: Financial Statement Analysis
19 terms
OTHER SETS BY THIS CREATOR
MGMT 300: Quiz 1
59 terms
IBUS 300: Final
76 terms
Farsi
94 terms