Finance Ch3 0.0 / 5 ? EconomicsFinanceUniversityNone Created by: Nyle PatelCreated on: 04-05-17 16:23 How do you standardise a Balance Sheet compute all accounts as a % of TA 1 of 32 How do you standardise an income statement compute all account as a % of Total Sales 2 of 32 Current Ratio CA/CL, measures ST Liquidity, high value=high liquidity 3 of 32 Quick Ratio CA-Inventory/CL, ST Liquidity, high value=high liquidity 4 of 32 Cash Ratio Cash/CL, ST Liquidity, high value=high liquidi 5 of 32 Total Debt Ratio (TA-Total Equity)/TA, LT liquidity 6 of 32 Debt Equity Ratio Total Debt/Total Equity, LT Liquidity 7 of 32 Equity Multipler (EM) TA/TE=1+TD/TE, LT Liquidity 8 of 32 Times Interest Earned (TIE) EBIT/Interest, measures how easily interest on debt can be paid 9 of 32 Cash Coverage EBITDA/Interest, measures how easily interest on debt can be paid 10 of 32 Inventory Turnover Cost of Goods Sold/Inventory, measures how efficiently a firm uses its assets to generate sales 11 of 32 Days’ sales in Inventory 365/Inventory Turnover 12 of 32 Receivables Turnover Sales/Accounts Receivable, measures how fast they can sell the product 13 of 32 Days’ sales in Receivables 365/Receivables Turnover 14 of 32 Total Asset Turnover (TAT) Net Sales/TA, greater than 1 to create value 15 of 32 Profit Margin net income/sales 16 of 32 ROA Net income/TA 17 of 32 ROE Net Income/TE 18 of 32 EBITDA Margin EBITDA/Sales 19 of 32 Market Cap Share Price x Shares Outstanding, measures Total value of all a company’s shares 20 of 32 PE Ratio Price per share / Earnings per share, measures value of company 21 of 32 Market to Book Value Market Value per Share/Book Value per share…(Equity/Shares remaining) compares market value of investment to cost 22 of 32 Enterprise Value Market Cap + Market Value of Interest bearing Debt - Cash, measures how much it would cost to buy firm and pay off its debts 23 of 32 EV Multiple EV / EBITDA, allows for comparison between companies with diff capital structures, taxes, capital spending 24 of 32 What is the DuPont Identity ROE=PM x TAT x EM 25 of 32 What is DuPont Identity made up of ROE is a function of Operating Efficiency(PM), Asset Use Efficiency(TAT), Financial Leverage(EM) 26 of 32 DuPont Identity is used to… evaluate return 27 of 32 What are pro forma statements influenced by o Capital Budgeting decisions, Capital Structure Decisions, Dividend policy decisions, NWC decisions 28 of 32 What is EFN, how is it calculated Diff between forecast increase in Assets and forecast increase in liability and equity. 29 of 32 What is the Internal Growth Rate (IGN) Max growth by using only retained earnings 30 of 32 What is the Sustainable Growth Rate (SGN) How much firm can grow by using internal funds and issuing debt to maintain constant debt ratio 31 of 32 What are the determinants of the growth rates DuPont Identity and Dividend Policy 32 of 32
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