CAM ratios Flashcards
What is sales growth?
(Current Period -Prior Period Sales )/prior period sales * 100
Annual rate change in sales
Starting point assessing financial risk and cash flow
Rapidly increasing sales require higher levels of operating assets and more cash is required to support those expanding assets
What is gross margin?
(Gross Profit/sales) *100
What is operating expense ratio?
(Operating expenses - interest - tax - amortization)/sales) * 100
Represents portion of sales relating to selling, general and admin expenses
Calculated as total selling, general and admin expenses/net sales
Lower ratio is better
Business does better job controlling expenses, cash flow improves and risk declines
What is debt service coverage ?
A measure of cash available to service current and proposed debt obligations
EBITA - corporate distribution (dividends) to total interest expense and scheduled principle payments in respect to funded debt
1.25 EBITA to debt obligation minimum required
What is funded debt/EBITA?
For any fiscal period the ratio of funded debt to EBITA less Corporate distribution (dividends) divided by adjusted EBITA. Shows how reliant the business is on others to operate
What is funded debt leverage ratio?
Uses for under 1 million
Means funded debt divided by total assets
What is current ratio?
Means for any fiscal period, the ratio of current assets to current liabilities
Prepaid stay in current assets for current ratio
this ratio is rated highest for under 1 million
What is debt to tangible net worth?
Total liabilities/tangible net worth
Equity - unpostponed shareholder loans and intangibles and intangibles = tangible net worth
Subtract prepaid expenses, questionable receivable, leasehold improvement from TNW as they are not tangible
Postponed shareholder loans would not be added as liability
What is EBITA ?
Earnings before interest, tax,, depreciation, amortization or
Net income from continuing operations (excluding extraordinary gains or losses) plus to extent deducted in deterring net income, interest, income taxes accrued during, and depreciation, depletion and amortization expenses deducted for period
What is EBITA margin?
Assessment firms operating profitability as percentage of total revenue
What is corporate distribution?
Means any payment to any shareholder, director, or to any associate or holder of subordinated debt of the borrower, including without limitation, bonuses, dividends, salaries to officers or other employees in the ordinary course of business
What is equity?
Total of share capital, (excluding preferred shares redeemable within one year) contributed surplus and retained earnings plus postponed debt
What is funded debt?
For fiscal period - all obligations for borrowed money which bears interest or to which or to which interest is imputed plus without duplication all obligations for the deferred payment of purchase of property, all capital lease obligations, the net present value of all operating lease obligations and all indebtedness secured by purchase money security interests, but excluding postponed debt
What is net present value of operating lease obligation?
Sum of discounted present values of lease obligations calculated using implied interest rate of lease. An approximation is to apply a multiple of 3.5 to annual lease obligation
What is interest expense?
For fiscal period the aggregate cost of advances of credit outstanding during that period including without limitation interest charges, capitalized interest, the interest component of capital leases, fees payable in respect to letters of credit, letters of guarantee and discounts incurred and fees payable in respect to banker acceptances
What is postponed debt?
Indebtedness that is fully postponed and subordinated, both as to principal and interest on terms satisfactory to bank to obligations owing to bank
