Managerial Finance

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Author:
dsubs99
ID:
197480
Filename:
Managerial Finance
Updated:
2013-02-03 12:30:22
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Ratio
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Exam 1
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  1. Current Ratio
    Liquidity Ratio that measures a companies ability to satisfy it's short term obligations as they come due.

    • Current Assets     
    • Current Liabilities
  2. Quick Ratio
    Liquidity ratio that is similar to the current ratio but this takes into consideration the inventory

    • Current Assets - Inventory 
    • Current Liabilities
  3. Inventory Turnover
    Provides a measure of how quickly a firm sells its goods  

    • COGS    
    • Inventory
  4. Average Collection Period
    Useful in evaluating the credit policies of a firm.

    • Accounts Receivable
    • Average Daily Sales
  5. Average Payment Period
    Measures the length of time that it takes a firm to pay its suppliers  

    • Accounts Payable      
    • Average Daily Purchases
  6. Fixed Asset Turnover
    Measures the efficiency with which a firm uses its fixed assets 

    • Sales                
    • Net Fixed Assets
  7. Total Asset Turnover
    Indicates the efficiency with which a firm uses all its assets to generate sales 

    • Sales          
    • Total Assets
  8. Debt Ratio
    Measures the proportion of total assets financed by creditors

    • Total Liabilities
    • Total Assets
  9. A/E (Assets to Equity Ratio)
    Also called the Equity Multiplier 

    • Total Assets        
    • Common Stock Equity
  10. Debt to Equity Ratio
    • Long Term Debt     
    • Stockholders Equity
  11. Times Interest Earned
    Measures the firms ability to make contractual interst payments 

    • EBIT                 
    • Interest Expense
  12. Gross Profit Margin
    Measures percentage of each sales dollar remaining after a firm has paid for its goods

    • Gross Profit 
    • Sales
  13. Operating Profit Margin
    Measures the percentage of each sales dollar remaining after deducting all costs and expenses other than interest and taxes

    • Operating Profit 
    • Sales
  14. Earnings Per Share
    Investing public considers this ratio to be an indicator of success

    Represents nuumber of dollars earned on behalf of each outstanding share

    • Earnings Avail. for Common Stockholders 
    • # of Shares of Common Stock
  15. Return on Total Assets
    Often called the ROI (Return on Investment)

    It measures a firms overall effectiveness in using assets to generate returns to common stockholders

    • Earnings Avail. for Common Stockholders 
    • Total Assets
  16. Return on Common Equity
    Measure of profitability that captures the return earned on the common stockholders investment

    • Earnings Avail. for Common Stockholders 
    • Common Stock Equity
  17. P/E Ratio (Price/Earnings)
    Measures the amount investors are willing to pay for each dollar of the firms earnings

    • Market Price Per Share of Common Stock 
    • Earnings Per Share
  18. M/B Ratio (Market/Book)
    Book Value

    •               Common Stock Equity              
    • # Shares of Common Stock Outstanding

    Market Value

    • Market Value Per Share Of Comm. Stock 
    • Book Value Per Share of Comm. Stock
  19. 4 Key Financial Statements
    Balance Sheet

    Income Statement

    Statement of Retained Earnings

    Statement of Cash Flows
  20. A firms total cash flow categories
    Operating Flows

    Investment Flows

    Financing Flows
  21. FCF
    • Free Cash Flows is the amount of cash available to investors
  22. 4 Legal Forms of Business
    Sole Proprietorship

    Corporation

    Partnership

    LLC
  23. Corporate Financing Activities
    Capital Budgeting

    Risk Management

    Corporate Governance

    Financial Management

    Financing Function
  24. 5 Principles Of Corporate Finance
    Time Value of Money

    Trade off Between Risk and Return

    Diversification

    Efficient Markets

    No Arbitrage
  25. Net Working Capital
    Measures firms Overall Liquidity

    Current Assets - Current Liabilities
  26. Balance Sheet
    A snapshot of a companies financial position at a given time

    • 3 Sections
    • Assets

    Liabilities

    Shareholder Equity

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