CTP Flashcards
Current Asset Turnover
Revenues
________________
Current Assets
Cash Flow to Debt.
Net Inc+Depreciation
________________
Ttl shr trm debt + Ttl long-trm debt
Current Ratio
Current Liabilities
Current Ratio
Total Current Assets/Total Current Liabilities
Debt Management Ratios
Used for?
Measure firm’s degree of indebtedness and its ability to service debt
Debt to Tangible Net Worth
Total Debt
____________________
Total Equity - Intangible Assets
EBITDA Profit Margin
EBITDA
________________
Revenues
Efficiency or asset management ratios used to?
Measure how effectively assets are being utilized
Fixed Asset Turnover
Revenues
_________________
Net PP & E
$ generated per $ invest in PP & E.
Fixed Charge Ratio
EBIT+Lease Pmts
__________________
Int. Exp.+Lease Pmts
FV
FV = PV(1+i)n
Gross Profit Margin
Gross Profit
_______________
Revenues
Long-Term Debt to Capital
Long Term Debt
____________________
Long-Term Debt + Equity
Liquidity Ratio or Working Capital Ratio Used for?
Measure
1) firm’s ability to meet payment obligations on short term debt,
2) If firm is using cash effectively
Net Profit Margin
Net Income
_________________
Revenues
NPV of Cash Flows
PV of cash inflows - PV of cash outflows
Operating Profit Margin
EBIT
__________
Revenues
Performance Ratios used to?
Measure profitability in relation to revenue and investment.
Present value
PV = FV[1/(1+I)n]
Quick Ratio
Total Current Liabilities
Return on Common Equity
Earnings Avail to Common Equity
_________________
Total Equity
ROTA
Net Income
________________
Total Assets
TIE Ratio
EBIT or EBITDA
_________________
Interest Expense
Total Asset Turnover
Revenues
_______________
Total Assets
($ Revs generated per $ invest in Assets.)
Total Liabilities to Total Assets
Ttl Liabilities
________________
Ttl Assets
Unit Break-Even =
fixed costs
————————————-
selling price per unit - variable cost per unit
Unit Break-Even
Working Capital
Current Assets - Current Liabilities
Call provision
Provisions that give issuing entity the right to call in a bond or other issue for redemption prior to original maturity. As compensation to investors for early redemption a call premium is set on a sliding scale the larger premiums for earlier redemption.
Arbitrage
The process by which an asset is purchased in one market and sold in another market to produce a risk less profit which is not usually a treasury objective.
Call option
Gives contract owner the right, but not the obligation. To buy (call) the underlying asset from the contract writer at a fixed price through the delivery date.
Bank capital requirements
Capital requirements determine how much capital (usually defined as equity funds) the owners of a bank must contribute to the business. Typically in the form of a capital to at-risk assets. The higher the ratio, the lower the risk on the part of the bank
Check conversion
Process of converting a paper check to an electronic form other than an image exchange item
CAMELS rating system
Capital adequacy, assets quality, management capability, Earnings, Liquidity, and Sensitivity to mkt risk.
International system by which bank authorities assign a rating to the strength of banks based on six factors noted.
Central bank (monetary banking authority)
In a payment clearing process (in some countries), the organization that runs the clearing system, effectively linking the banks operating in that country.
Asset-liability management
When an investment portfolio utilizes borrowed funds as part of overall strategy, issue of asset-liability management arises. Particularly a problem for Financial Institutions that fund investments with borrowed funds. Often problem is expressed in terms of maturities mis-matched as in borrowing in CP market to fund long-term assets.
Bank for International Settlements
BIS
An organization that fosters monetary and financial cooperation and serves as a central bank for banks. BIS is sponsoring organization for Basel Committee on Banking Supervision.
Clearing Float
Time delay between the day a check is deposited by payee and the day the payor’s account is debited.
Capital asset pricing model
CAPM
One possible relationship between risk and the required rate of return on an asset. In case of common stock it is based on concept that a sensible investor holds a diversified portfolio of stocks to mitigate risk.
Automated Clearing House (ACH) credit transaction
Electronic message that instructs originating depository financial institution to move funds from originator’s account to receiver’s account at receiving depository institution.
Bank of Canada
Canada’s central bank
Five C’s of credit
Character Capacity Capital Collateral, and, Conditions of potential borrower.
Eurobond
These are bonds sold simultaneously in many countries outside the country of the borrower. Usually a Eurobond is issued by an international syndicate and categorized by currency in which it is denominated.
Countertrade
A trade payment used by companies that do not have sufficient hard currency to pay for imports from other countries
Project acceptance criteria
NPV>0
PI (profitability index)>1
IRR>WACC
RADR
Risk-Adjusted Discount Rate
When risk of project under consideration is greater or lower than WACC
Financial statements
Accounting Reports that summarize company’s operating results and financial position providing insights into:
1) How well Co. has managed its liquidity position.
2) How effectively it used its financial assets
3) Whether it has a proper balance between debt and equity
4) How well it controlled operating and financing costs, and,
5) whether profit it earned was satisfactory in relation to revenue and investment in assets.
Discount Rate
Used in valuation of discount investments like Treasury bills, CP, and Banker’s acceptances,
It is the rate used to determine the present value or purchase price of the instrument.
In calculations: dollar discount / par or maturity value then annualized using 360 day yr.
Continuous Linked Settlement
CLS
Process that allows simultaneous exchange of both sides of financial transactions which eliminates counter party risk. (F/X, NDF, over-the-counter credit derivative contracts)
Financial Accounting Foundation
FAF
Selects members, provides funds and exercises general oversight for both Governmental Accounting Standards Board and the Financial Accounting Standards Board.
CBES
Commercial Book Entry System
Multi-tiered system for holding and transferring marketable securities
Delivery system that provides for the simultaneous transfer of securities against settlement funds.
Securities owners receive interest and redemption payments wired directly yo their accounts.
Financial Supply Chain
Purchase-to-pay cycle is crucial to financial viability following a disaster. Treasury area plays key role in managing company’s supply chain through: working capital mgmt, and ensuring adequate liquidity sources.
Dividend Capture
Tax motivated, short-term investment strategy available to tax-paying US corporations, who can exclude 70-80% of dividends received in another corp. if it owns its stock for at least 45 days. Despite requiring an equity position it is considered short-term because stock is held only long enough to capture the dividend and qualify for dividend exclusion.
