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FINM > Analysis & Interpretation > Flashcards

Analysis & Interpretation Flashcards

1
Q

What is EVA?

A

A measure of a company’s financial performance based on residual wealth, calculated by deducing its cost from its operating profit

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2
Q

What is the formula of EVA?

A

Net Operating Profit after Tax - Investment Capital * WACC

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3
Q

What are the limitations of relationship analysis?

A

Various entities
Different financial periods
Inflation
Manipulation of financial data

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4
Q

Liquidity ratios

A

Analyse the company’s ability to pay its current liabilities as they become due & payable

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5
Q

Current ratio

A

Current assets : Current liabiities

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6
Q

quick ratio

A

(Current assets - Inventory) : Current Liabilities = x times

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7
Q

Creditors payment period

A

Accounts payable / Credit purchases x 365 = days

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8
Q

Debt management ratios

A

Measure a company’s ability to sustain operations indefinitely by comparing debt levels with equity, assets & earnings.

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9
Q

Debt/Asset Ratio

A

Total debt / Total assets x 100 = %

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10
Q

Debt-Equity Ratio

A

Total debt / Total equity x 100 = %

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11
Q

Interest coverage

A

EBIT / Interest = x times

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12
Q

Asset management

A

Measure how well companies use their assets to generate revenue

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13
Q

Inventory turnover

A

Cost of Sales / Inventory = x times

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14
Q

Average collection period

A

Accounts receivable / Total credit sales x 365 = days

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15
Q

Fixed asset turnover

A

Sales / Fixed Assets x 100 = %

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16
Q

Total asset turnover

A

EBIT / Sales x 100 = %

17
Q

Profitability ratios

A

Show a company’s ability to generate profits from its operations. They focus on a company’s return on investment in inventory & other assets

18
Q

Gross Profit margin

A

Gross Profit / Sales x 100 = %

19
Q

Net Profit margin

A

Net Profit / Sales x 100 = %

20
Q

Return on total assets

A

EBIT / Total assets x 100 = %

21
Q

Return on equity

A

Net Profit / Total equity x 100 = %

22
Q

Market value

A

Measure the company’s actual performance in relation to its market value

23
Q

Dividend yield

A

Dividend per share / Market price per share x 100 = %

24
Q

Earnings return

A

Earnings per share / Market price per share x 100 = %

25
Q

Price earnings ratio

A

Price per share / Earnings per share = x times

26
Q

Dividend coverage

A

Earnings per share / Dividend per share = x times

27
Q

Cash flow

A

Core of the business & its best measure of financial distress

FINM (4 decks)

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