FNAN 307 E1:1

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FNAN 307 E1:1
2015-09-22 07:16:39
FNAN 307
FNAN 307
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  1. number of years that the dollars have been left on deposit
  2. Interest rate earned on the account. It is entered as a whole number. It is never converted to a decimal and the percent sign is never used
  3. the beginning dollar amount. A lump sum placed on deposit which will earn interest. IT IS ALWAYS NEGATIVE. To enter the amount, press the dollar value, press the +/- key, and then press PV
    Present value (PV)
  4. the ending dollar amount. The amount you would have upon withdrawal of funds from the account. IT IS ALWAYS POSITIVE
    Future value (FV)
  5. used for payments. This is a series of dollars received or spent consecutively. Payments would take the opposite sign of either FV or PV depending on whether you are using FV or PV
    PMT (payment)
  6. What are the key words to look for when looking for payment?
    • each year
    • every year
    • per year
    • annually
    • income
    • payments or deposits
    • any phrase that indicates that dollars will be regularly deposited
  7. _____ mode is the default mode. All problems are in this mode unless specifically stated otherwise. In other words, all accounts earn interest at the end of the year.
    End Mode
  8. ______ mode is used when an account earns interest from day one. Clue words for this mode are _____.
    • Begin Mode
    • Annuity Due
    • Immediate Annuity
    • Beginning of the year
  9. If the interest is compounded more frequently than annually, divide interest by the frequency and multiply years by frequency.
    • Semi-annual
    • Quarterly
    • Monthly
    • Daily
  10. What are some Corporate/Managerial Occupations in Finance?
    • Financial Analyst
    • Capital Budgeting Analyst
    • Project Finance Manager
    • Cash Manager
    • Credit Analyst
    • Pension Fund Manager
  11. What are some Occupations in Financial Services?
    • Banking & Related Institutions
    • Personal Financial Planning
    • Investments
    • Real Estate
    • Insurance
  12. What are strengths of a sole proprietorship?
    • owner gets all the profits
    • low start-up costs
    • independence
    • secrecy
    • easiest to establish
  13. What are weaknesses of a sole proprietorship?
    • Unlimited liability
    • limited fund-raising power
    • owner must be jack-of-all-trades
    • lacks continuity when owner dies
  14. What are strengths of partnerships?
    • borrowing power is enhanced
    • more managerial skill
    • can retain good employees
    • taxed as personal income
  15. What are weaknesses of partnerships?
    • unlimited liability
    • partnership dissolved at death
    • difficult to liquidate or transfer
    • may not achieve large scale operation
    • need to cover debts/actions of partners
  16. What are strengths of corporations?
    • limited liability
    • can achieve large size
    • ownership transferable
    • expansion easy
    • tax advantages
    • not dissolved by death
  17. What are weaknesses of corporations?
    • more expensive to organize
    • taxes are higher
    • greater government regulation
    • employees lack personal interest
    • lacks secrecy - public information
  18. Balance sheet information is based on _____
    a single day
  19. Income Statement information is based on ______
    a specified period of time
  20. Assets on balance sheet recorded at ______
    book value
  21. Assets are capitalized on the balance sheet. What does this mean?
    recorded as an asset on the balance reduced by depreciation
  22. Accounts receivable should be reported at ________ since not all receivables will be collected.
    net realized value
  23. Furniture, fixtures & equipment is reported at _______. Does not account for depreciation.
    historical cost (acquisition basis)
  24. ______ accounting is used for stocks and bonds - adjusted for changes in price (called mark-to-market)
  25. Some elements of the balance sheet are based on _____
  26. (balance sheet)
    arbitrary changes to lives of fixed assets
    extending the life of an asset increases earnings
    decreasing the life of an asset decreases earning
    abusive earnings management
  27. (balance sheet)
    potential obligations from a past event - such as environmental contamination
    must be adequately reported.
    Not doing so would overstate company performance in the current period
    Loss contingencies
  28. Who are the users of the balance sheet?
    • the company itself
    • investors
    • lenders
    • SEC
    • Investment Analysts
    • Internal Revenue Service
  29. ____ is the most illiquid asset
  30. What are the three inventory accounts?
    • raw materials
    • work in progress
    • finished goods inventory
  31. What are the two types of leases?
    • operating leases (short-term)
    • capital leases (long-term)
  32. Money due to be paid but not yet paid
    accrued salaries & expenses
  33. What is the formula to determine the tax rate?
    tax paid/taxable income
  34. There are 3 sources of equity - owner's equity account
    • stock at par
    • additional paid in capital
    • stock at par + additional paid in capital = total $ received from the sale of stock
  35. what is the current ratio and should it be higher or lower?
    • current assets/current liabilities
  36. What is the quick ratio? Higher or lower?
    • current assets less inventories/current liabilities
  37. What is the debt-to-equity ratio? higher or lower?
    • total debt/shareholder's equity(total equity)
  38. What is the debt ratio? Higher or lower?
    • total debt/total assets
  39. What is the times interest earned ratio? Higher or lower?
    • EBIT/Interest expense
  40. What is the inventory turnover ratio? Higher or lower?
    • COGS/inventory
  41. What is the total asset turnover (capital turnover) ratio? Higher or lower?
    • sales/total assets
  42. What is the return on sales ratio? Higher or lower?
    • net profit after taxes/sales
  43. What is the Return on Investment (return on assets) ratio? Higher or lower?
    • net profit after taxes/total assets
  44. What is the return on equity ratio? Higher or lower?
    • net profit after taxes (EAT)/ shareholder's equity (common equity)
  45. What is the gross profit margin?
  46. What is the operating margin?
  47. The _____ is the sources and uses statement.
    statement of cash flows
  48. ______ provides an actual accounting of cash on hand
    Statement of Cash Flows
  49. What are the two types of cash flows?
    • direct
    • indirect
  50. What is the difference between the two types of cash flows?
    • direct - begins with revenues and then adjusts for cash received and spent
    • indirect - begins with EAT and then adjusts it for actual cash received and spent
  51. _____ uses percentage of sales method; determines a % increase in sales; utilizes the common size statement % and increases each account accordingly
  52. What are the three sections of the cash flow statement?
    • Net cash from OPERATIONS
    • Net cash from INVESTING
    • Net cash from FINANCING
  53. In the cash flow statement, source or use of cash from day-to-day operations; depreciation is added back in; indicated the success of the firm in generating cash from its regular operations; mature companies get most of their cash from this activity
    Net Cash from Operations
  54. In the cash flow statement, source or use of cash from selling & buying (including securities of other company); source of cash is dividend received by investing in another company; a company that is downsizing would receive cash from selling assets; this would be the largest source of cash.
    Net Cash from Investing
  55. In the cash flow statement, source and use of cash from selling securities or borrowing money or repaying debt; a growing company would get a sizable portion of its cash from this activity; a financially troubled company would get all of its cash from this activity
    Net Cash from Financing
  56. Stockholders are ____ averse
  57. reflect whether or not the company can pay its day-to-day expenses
    liquidity ratios
  58. What are the two liquidity ratios?
    • current ratio
    • quick ratio
  59. reflect whether or not the firm is productive; measure management efficiency
    activity ratios
  60. What are the 4 activity ratios?
    • asset turnover 
    • receivables turnover
    • average collection period (365/receivable turnover)
    • inventory turnover
  61. reflect whether or not the company has borrowed too much money
    leverage ratios
  62. What are the 3 leverage ratios?
    • debt ratio
    • debt/equity ratio
    • times interest earned
  63. measure whether or not the company is making money. Can the firm pay dividends?
    • gross profit margin
    • return on sales
    • return on assets
    • return on equity
  64. What is the P/E ratio?
    price of stock/earnings per share
  65. What is the formula for earnings per share?
    earnings available for common stockholders/# of shares of common stock outstanding
  66. A financial report is a listing of company's ___ & ____
    assets and liabilities
  67. A financial report follows the ____ procedure
  68. The financial report states ______ & ______
    • where a company has been
    • where it is going
  69. annual disclosure of financial info due 90 days following company's fiscal year-end.
  70. Balance sheet information is based on ___
    a single day
  71. Income Statement information is based on _____
    a specified period of time
  72. In the balance sheet, too much cash = ____
    takeover risk
  73. What are non-cash items?
    • depreciation
    • ammoritization
  74. (10-K)
    Item 1
    Business - description of business
  75. (10-K)
    Item 1A
    Risk Factors - most significant risks to the company or its securities
  76. (10-K)
    Item 7
    Management's Discussion and Analysis of Financial Condition and Results of Operations - company's perspective of business results of the past financial year