FIN 316 Study Guide
FIN 316 Study Guide FIN 316
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This 3 page Study Guide was uploaded by devinau Notetaker on Saturday April 2, 2016. The Study Guide belongs to FIN 316 at University of Oregon taught by Vineet Bhagwat in Spring 2016. Since its upload, it has received 37 views. For similar materials see Financial Management in Finance at University of Oregon.
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Date Created: 04/02/16
Chapter 2: Introduction to Financial Statement Analysis Financial Statements= Accounting reports issued by a firm periodically presenting past performance information and snapshot of firm’s assets and financing of those assets 10K= Annual report, Must send to shareholders each year 10Q= Quarter report GAAP= Generally Accepted Accounting Principles, Providing common set of rules and standards in reports Auditor= Neutral third party to check annual financial statements with GAAP consistency Balance Sheet= Statement of Financial Position, Lists firms assets and liabilities providing snapshot of firms financial position at a given point in time Assets= Liabilities + Stockholders’ Equity Current Assets= Market Securities (short term low risk investment maturing in one year), A/R, Inventories, Catchall category (prepaid expenses, rent, etc) Long Term Asset= Assets produce tangible benefits more than a year Current Liabilities= Liabilities satisfy in one year, A/P, N/P, short term debt, accrual items (taxes, salary, owed but not yet paid) Net Working Capital= Capital available in short term to run business NWC= Current Assets Current Liabilities Negative or Low NWC faces shortage of funds Long Term Liabilities= Liabilities extend beyond one year Book Value of Equity= Shareholders’ Equity, Net worth of firm from accounting perspective Liquidation Value= Value of firm after its assets are sold and liabilities paid Market Capitalization= Market price per share * Number of shares outstanding Market to Book Ratio= Price to Book Ratio, Ratio of firms market cap to book value of stockholders’ equity, Public expectation vs firms historic owned assets Market Value of Equity / Book Value of Equity Value Stocks= Low MtB ratio Growth Stocks= High MtB ratio Enterprise Value= Assess value of underlying business assets, What it cost to buy all equity of a firm and pay off its debt EV= Market Value of Equity + Debt Cash Income Statement= P&L Statement, Lists firms revenues and expenses over period of time Net Income= Earnings, Measure of profitability Gross Profit= Difference between sales revenues and costs of sales Operating Expenses= Expense of running business but not related to producing the goods being sold, Overhead, Admin expense, Salaries, Marketing cost Operating Income= Gross profit Operating expense EPS= Earnings Per Share Net Income / Shares Outstanding Stock Options= Right to buy shares by specific date at specific price Convertible Bonds= Form of debt that can be converted into shares of common stock Dilution= When more shares appear to divide the same earnings Diluted EPS= Shows earnings per share company would have if stock options were exercised EBITDA= Firms earnings before interest, taxes, depreciation, and amortization Statement of Cash Flows= Utilizes information from income statement and balance sheet to determine how much cash firm has generated and how cash has been allocated Operating Activities= Start with net income then add all noncash entries Deduct when A/R increases Add when A/P increases Deduct when inventory increases Add depreciation to net income before calculating operating cash flow Investment Activities= Lists cash used on investment Capital Expenditures= Purchase of new property, plant, and equipment Financing Activities= Show flow of cash between firm and its investors Retained Earnings= Net Income Dividends Payout Ratio= Dividends / Net Income Record any sale or buyback of its own stock Financial Statement Analysis Gross Margin= How profitable is the firm looking at GP, Largest margin of all Gross Profit / Sales Operating Margin= How profitable is the firm looking at OI Operating Income / Sales Net Profit Margin= How profitable is the firm looking at NI, Smallest margin of all Net Income / Sales Asset Efficiency Ratio= How good is firm generating sales with assets Asset Turnover= How efficient is firm generating sales with its total asset Sales / Total Assets FIxed Asset Turnover= How efficient is firm generating sales with its fixed asset Sales / Fixed Assets Return Ratios Return on Asset Net Income / Total Assets Return on Equity Net Income / Book Value of Equity DuPont Identity= Break down ROE Multiply Sales/Sales and Total Assets/Total Assets Net Profit Margin * Asset Turnover * Equity Multiplier= ROE Equity Multiplier= Total Assets / Total Equity Chapter 3:Time Value of Money: An Introduction Competitive Market= Market in which good be bought and sold at same price
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