Boken kap 3 del 2 Flashcards
What is Marginal tax rate?
the tax you would pay in percent if you earned one more unit of currency.
What is a flat-rate tax?
A tax with the same rate for all income levels. Then the marginal and average tax rate is always the same.
What does a firms cash flow comes from or goes to?
- operating activities CF(O)
- investing activities CF(I)
- financing activities CF(F)
How do you get NCF?
CF(O) + CF(I) + CF(F)
What is Operating cash flow?
The cash flow generated by business activities, like sales of goods and services and tax payments.
What is Cashflow from investing?
acquisition of non- current assets plus security investments – sales of non- current assets.
What is Cash flow from financing?
Buying back own shares, issuing new shares and increasing or decreasing borrowing.
What is Common-size statements?
financial statements in percentage instead of currency.
What is a good way of comparing companies in different sizes?
Compare financial ratios.
What is a problem with ratios?
That different People and different sources don’t compute them in exactly the same way, which leads to much confusion. If you’re going to compare you need to know that they are computed in the same way.
What are Short-term solvency or liquidity ratios focused on?
Provide information about liquidity which is called liquidity measures. Focus on Current assets and current liabilities.
What do we want our Current ratio to be?
At least 1. Less than one means net working capital is negative.
For who is it good with a high or low Current ratio?
The higher the current ratio the better for creditors, but for the company a too high current ratio means inefficient use of cash.
What are Long-term solvency or financial leverage ratios focused on?
Address long-run ability to meet obligations.
