CMA Part A

Question 1

Statement of Cash Flows

Answer 1

Cash from Operating Activities + Investing Activities + Financing Activities

Question 2

Assets

Answer 2

Liabilities + Equity

Question 3

Working Capital

Answer 3

Current Assets-Current Liabilities

Question 4

Current Ratio

Answer 4

Current Assets/Current Liabilities

Question 5

Current Assets

Answer 5

Cash + A/R + Trade Securities + Inventory + Prepaid Expenses

Question 6

Current Liabilities

Answer 6

A/P + Accrued Liabilities + Notes Payables <365 days

Question 7

Quick Ratio (Acid Test)

Answer 7

[Cash + Marketable Securities + A/R]/Current Liabilities

Question 8

Cash Ratio

Answer 8

[Cash + Marketable Sec]/Current Liabilities

Question 9

Cash Flow Rate

Answer 9

Operating Cash Flow/Current Liabilities

Question 10

Capital Structure

Answer 10

mix of Long term debt + Equity (mandatory interest on debt, discretionary div pay on equity

Question 11

Financial Leverage

Answer 11

Proper us of debt increase returns to owners

Question 12

Solvency

Answer 12

Long term ability to pay debt from capital structure/Degree of Leverage

Question 13

Days Purchases in A/P

Answer 13

[Average Accounts Payable balances/Credit Purchases]*365

Question 14

Debt to Asset Ratio

Answer 14

Total Debt/Total Assets

Question 15

Debt to Equity Ratio

Answer 15

Total Debt/Total Equity

Question 16

LT Debt to Equity Ratio

Answer 16

[Total Debt-Current Liability]/Equity

Question 17

Debt to Total Capital Equity

Answer 17

[Current Liability + Long Term Liability]/[Total Debt + Total Equity]

Question 18

Cash Flow to Fixed Charges Ratio

Answer 18

[Cash from Operations + Fixed Charges + Tax]/Fixed charges

Question 19

Fixed Charges Coverage Ratio

Answer 19

EBIT (Earning Before Fixed charges + Taxes)/Fixed Charges

Question 20

Financial Leverage Ratio

Answer 20

Assets/Equity

Question 21

Degree of Financial Leverage

Answer 21

[% change in Net Income]/[% change in EBIT (or Operating Inc)]

Question 22

Degree of Operational Leverage

Answer 22

[% change in EBIT]/[% change in Sales]

Question 23

A/R Turnover

Answer 23

Credit Sales/[average Gross A/R]

Question 24

Days Sales in Receivables

Answer 24

[average A/R/Credit Sales] * 365

Question 25

Inventory Turnover

Answer 25

COGS/[Average Inventory]

Question 26

Days Sales in Inventory

Answer 26

[Average Inventory/COGS] * 365

Question 27

Earning/Share

Answer 27

[Net Income - Preferred Div]/[Weighted average number of common shares O/S]

Question 28

Earnings Yield

Answer 28

EPS/Market Price

Question 29

Diluted Earning/Share

Answer 29

[Net Income - Preferred Div] Diluted common shares O/S (includes options, warrants)

Question 30

Price Earnings Ratio

Answer 30

[Market Price/Share]/EPS

Question 31

Dividend Payout Ratio

Answer 31

Common Dividend/Earnings avail to Common Shareholders

Question 32

Dividend Yield

Answer 32

[Dividend/Share]/[Market Price/Share]

Question 33

Sustainable Equity Growth

Answer 33

ROE (1-Div Payout Ratio)

Question 34

Return on Assets (ROA)

Answer 34

Net Income/Total Assets

Question 35

Gross Profit Margin %

Answer 35

[Sales - COGS]/Sales

Question 36

Operating Profit Margin

Answer 36

Operating Profit/Sales

Question 37

Net Profit Margin

Answer 37

Net Income/Sales

Question 38

DuPont Model

Answer 38

Net income/Sales * Sales/Avg Total Assets * Avg Total Assets/Total Equity

Question 39

Return on Common Equity

Answer 39

Net Income/Avg Equity=[Net Income/Avg Total Assets] * [Avg Tot Assets/Avg Equity]

Question 40

Economic Profit

Answer 40

Total Rev- (Explicit cost and Implicit Costs)

Question 41

Book Value/Share

Answer 41

[Total Shareholder Equity-Preferred Equity]/ Common Shares Outstanding

Question 42

Market/Book Value

Answer 42

Current Market Share Price/Book Value per Share

Question 43

Total Shareholder Equity

Answer 43

Total Stock Equity + Current Yr Net Income-Dividends-Preferred Equity