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fidelity > Analysis > Flashcards

Analysis Flashcards

1
Q

Economic output=

A

Gross domestic product(GDP)/gross national product (GNP)

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2
Q

Straight line depreciation:

A

Writes off value of the assets evenly over the assets life.

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3
Q

Accelerated depreciation:

A

Front load deductions, increasing the early year amounts but reducing later year amounts

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4
Q

Intangible assets:

A

Trademarks and goodwill

  • company acquires another firm for more than its book value
  • excess purchase price over book value is termed “goodwill”
  • illiquid
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5
Q

Tangible assets

A

Tangible assets= total assets-intangibles

Assets without intangible assets

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6
Q

Retained earnings:

A

If not all paid out in dividends, the company will have retained earnings.
-earnings belong to the common stockholders equity

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7
Q

Bond ratio=

A

Long term debt/total long term capital

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8
Q

Preferred stock ratio

A

Preferred stock/total long term capital

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9
Q

Common stock ratio=

A

Capital at par + capital in excess of par + retained earnings/total long term capital

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10
Q

If company were to liquidate what will the common shareholders receive.

A

*to see if the stock is overvalued or undervalued:

Book value per common share=
Common equity-intangibles/#of common shares outstanding

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11
Q

The funds that would be available to pay off bond holders in a liquidation

A

Bond holders gave claim over general creditors.

Net tangible asset value per bond=
Tangible assets-current liabilities/number of $1000 par bonds outstanding

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12
Q

What increases retained earnings?

A

Net income

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13
Q

What decreases retained earnings?

A

Dividend distributions

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14
Q

Ratios used to measure “profitability” are:

A
  • Operating margin of profit
  • times interest earned
  • net profile ratio
  • return on assets
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15
Q

Operating margin of profit=

A

Operating profit/net sales

*compares operating margin to net sales

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16
Q

Bond interest coverage=

A

Total operating and non-operating income/ bond interest expense

*measures the ability of corporation to meet its bond interest expenses

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17
Q

Net profit ratio=

A

Net income after tax/net sales

*the final profitability of the company after all expenses are deducted

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18
Q

Return in assets ratio=

A

Net income after tax/ total tangible assets

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19
Q

Earnings per common share=

A

Earnings available for common/common shares outstanding

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20
Q

Return in common equity=

A

earnings available for common/common equity

21
Q

Dividend payout ratio:

A

Common dividends paid\earnings for common

22
Q

Value line:

A

Follows the 1,700 stocks in its value line investment surgery and produces research reports on each of these
-rating if 1-5, 1 being the best rating

23
Q

Standard and likes corporation

A

Produces individual research reports on widely held stocks

24
Q

Member firm in house research department

A

Produce reports on the stocks that they follow, usually rating them as “accumulate”, “hold”, or “sell”

25
Q

Moodys investors services

A

Primarily a bond rating firm that produces reports on the creditworthiness of issuers
*does not provide individual research reports on stocks.

26
Q

Morningstar:

A

A rating service that rates the performance of mutual funds.

  • ratings 1-5 (1 being the best)
  • also rates individual stocks, but minor part of their business
27
Q

Accounting method used for bookkeeping purposes by publicly traded companies?
Corporate financial records

A

Accrual accounting

28
Q

Accrual accounting:

A

A method that attempts to match revenues and expenses

29
Q

Book value:

A

The theoretical value of the company that remain if all the assets of the company were liquidated at the values carried on the balance sheet.

30
Q

Net working capital:

A

Current (liquid) assets - current liabilities

31
Q

Current ratio=

A

Current assets\current liabilities

32
Q

“Acid test” or “quick” ratio=

A

Current assets-inventories and prepaid expenses/ current liabilities

33
Q

Defensive interval ratio:

A

Current assets/ daily operating expenses

*find the number of days that a company can continue to run if it were not able to bring in anymore current assets

34
Q

Accounts receivable turnover ratio=

A

Annual sales/year end accounts receivable

35
Q

Inventory turnover ratio=

A

Annual cost of sales/year end inventory

36
Q

Ratios that measure a companies liquidity:

A

Current ratio
Acid test ratio
Cash assets ratio

37
Q

Method of valuing inventories:

A

FIFO (more profit)

LIFO (lowest profit)

38
Q

Methods of depreciation:

A
  • Double declining balance
  • Sum of years digits
  • Straight line
39
Q

Straight line depreciation:

A

Method of depreciation.

-for tangible and real assets that pro rates the depreciation deduction EVENLY over the assets life.

40
Q

Double declining balance:

A

Method of depreciation

  • accelerated
  • increase expenses in early years
  • decrease expenses in later years

-for tangible assets such as equipment that, in essence, “doubles up” on the depreciation amounts allowed in early years of an assets life with the deductions reduced proportionately in the later years.

41
Q

Sum of years digits:

A

Method of depreciation

  • accelerated
  • increase reported expenses in early years,
  • decrease reported expenses in later years

-adds up all of the years of an assets depreciable life, and then front loads the depreciation deductions into earlier years and reduces the deviations in later years

42
Q

Components of Total long term capital:

A

Common at par
Capital in excess of par
Long term bonded debt
Preferred stockholders equity

43
Q

Components of common stockholders equity:

A

Common at par
Capital in excess of par
Retained earnings

44
Q

Net tangible asset value per share is the same as?

A

Book value per share

45
Q

What item would be found on a companies income statement?

A

Taxes paid
All sales made by the company
Interest income revenue
Sales of fixed assets

46
Q

What info would would be shown on a companies balance sheet?

A

Retained earnings

47
Q

What info would be shown on a companies statement of retained earnings?

A

Dividend sales

48
Q

Net income before tax:

A

Gross sakes

fidelity (12 decks)

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