Earnings

Question 1

What does EBIT stand for

Answer 1

Earnings Before Interest and Taxes

Question 2

What does EBITDA stand for

Answer 2

Earnings Before Interest, Taxes, Depreciation and Amortisation

Question 3

What is amortisation

Answer 3

1. the action or process of reducing or paying off a debt with regular payments.
2. the action or process of gradually writing off the initial cost of an asset.

Question 4

Which companies is the EBITDA measure usually used for

Answer 4

Companies/industries with a high level of fixed assets

Question 5

What does EPS stand for

Answer 5

Earnings per share

Question 6

How is EPS calculated

Answer 6

A company’s total earnings/the number of outstanding shares

Question 7

How is a P/E (price to earning) ratio calculated

Answer 7

Share price/EPS

Question 8

How is the P/E ratio normally used

Answer 8

It is used to find the relative values for the earnings of companies in the same industry.

Companies with high P/E compared to industry peers is considered overvalued and vice versa

Question 9

How is the earnings yield calculated

Answer 9

EPS for 12 month period/Share price

Inverse of P/E ratio

Question 10

What form should you use to get the good info on an earnings report

Answer 10

the form 10-Q

Question 11

What financial statements of the 10Q form should be monitored

Answer 11

Balance sheet
Income sheet
Cash flow statement
Check any law suits as well

Question 12

What are consolidated financial statements

Answer 12

Combination of the financial statements of the parent company’s subsidiaries