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647 Formulas > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

(NI/Avg SHE) = (NI/Avg total assets) * (Avg total assets/Avg SHE)
? = ROA * FL

A

Return on Equity (ROE)

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2
Q

(NI - preferred dividends) / (Avg SHE - Avg preferred equity)

A

Return on Capital Employed (ROCE)

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3
Q

NI/Avg total assets = (NI/sales) * (Sales/Avg total assets)

A

Return on Assets (ROA)

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4
Q

Sales/Avg total assets

A

Asset Turnover

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5
Q

(Revenue - COGS)/Revenue

Profitability

A

Gross Proft Margin

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6
Q

Net Income/Revenue
where Net Income is revenue - COGS - operating expenses - other expenses - taxes
Net Income usually given
Profitability

A

Profit Margin

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7
Q

Sales/Avg AR

Productivity

A

AR Turnover

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8
Q

COGS/Avg Inventory

Productivity

A

Inventory Turnover

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9
Q

COGS/Avg AP

Productivity

A

AP Turnover

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10
Q

DSO + DIO - DPO

Productivity

A

Cash Conversion Cycle

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11
Q

365/AR turnover

Productivity

A

DSO

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12
Q

365/Inventory Turnover

Productivity

A

DIO

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13
Q

365/AP turnover

Productivity

A

DPO

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14
Q

Sales/Avg PPE

Productivity

A

PPE turnover

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15
Q

Avg total assets/Avg SHE

A

Financial Leverage

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16
Q

Total liabilities/total equity
Financial leverage
A solvency ratio

A

Total liabilities to equity

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17
Q

EBIT/interest expense, gross

Financial Leverage

A

Times Interest Earned

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18
Q

NI+(Net interest expense*(1-statutory tax rate))/Avg total assets

A

Adjusted ROA

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19
Q

NOPAT/Avg NOA = (NOPAT / Sales) * (Sales / Avg NOA)

? = NOPM * NOAT

A

Return on Net Operating Assets (RNOA)

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20
Q

Do total assets - non operating items like cash & cash equivs and short term investments THEN subtract your second part which you find by doing total liabilities - current debt - short term debt - LT debt

A

Find NOA

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21
Q

Nonoperating liabilities - non operating assets

A

Net Nonoperating Obligation (NNO)

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22
Q

NOPAT/Sales

Part of RNOA

A

Net Operating Profit Margin (NOPM)

23
Q

Sales/Avg NOA

Part of RNOA

A

Net Operating Asset Turnover (NOAT)

24
Q

Nonoperating liabilities - non operating assets

A

Net Nonoperating Obligations

25
Q 
NOA = Nonoperating liabilities - non operating assets + SHE
NOA = NNO + SHE
A

Invested Capital

26
Q

= NNO + SHE

= Nonoperating liabilities - non operating assets + SHE

A

Non-operating Assets (NOA)

27
Q

NOPAT / Invested Capital

A

Return On Invested Capital (ROIC)

28
Q

= NOPBT aka operating income - tax on operating profit
Tax on operating profit = (tax expense + (pretax non-operating expense * statutory tax rate))
Tax shield part is after the plus

A

Net Operating Profit After Tax (NOPAT)

29
Q

Operating income - (income tax expense + (pretax net non operating expense * statutory tax rate))
IN PARENTHESIS IS THE TAX SHIELD

A

Net Operating Profit After Tax (NOPAT)

30
Q

Operating return (via RNOA) + Nonoperating returns

A

ROE

31
Q

ROA * FL

A

ROE

32
Q

PM * AT

A

ROA

33
Q 
Financial Leverage (FLEV) * Spread
((Average Net Nonoperating Obligations (Avg NNO) / Average SHE) * (RNOA-NNEP)
A

Nonoperating Return

34
Q

RNOA + FLEV * Spread

A

ROE

35
Q

Average NNO/Average equity

A

FLEV

36
Q

RNOA - NNEP

A

Spread

37
Q

NNE/Average NNO

A

Net Nonoperating Expense Percent (NNEP)

38
Q

[RNOA+(FLEV*Spread)] * NCI ratio

A

ROE

39
Q

Chance of default * loss given default

A

Expected credit loss

40
Q

EBITDA/Interest Expense, gross

Always higher that TIE ratio

A

EBITDA Coverage Ratio

41
Q

Cash from operations/short-term debt + long-term debt

A

Cash from operations to total debt

42
Q

(cash from operations-CAPEX) / (short term debt + long term debt)

A

Free operating cash flow to total debt

43
Q

Current assets / current liabilities

Liquidity ratio

A

Current ratio

44
Q

(Cash + marketable securities + AR) / current liabilities

Liquidity ratio

A

Quick ratio

45
Q

(LT debt including current portion + ST debt) / SHE

A solvency ratio

A

Debt-to-equity ratio

46
Q

Any credit rating above Ba1 (Moody’s) or BB+, need to be above BBB or Baa3

A

Investment Grade

47
Q

Cost - salvage value

A

Depreciation Base

48
Q

1 / useful life

A

Depreciation rate

49
Q

(Cost - salvage) / useful life

A

Straight line depreciation

50
Q

Machine at cost - depreciation

A

Book value

51
Q
  • Records depreciation according to asset use.
  • The depreciation base is cost less salvage value.
  • The depreciation rate is the units produced and sold during the year compared with the total expected units to be produced and sold.
A

Units-of-production method

52
Q

an accelerated method, is required by the U.S. IRS to calculate taxable income.

A

Modified Accelerated Cost Recovery System (MACRS)

53
Q

Tax expense/Income before tax

A

Average (effective) tax rate

54
Q

Recognize revenue as a proportion of total costs incurred to fulfill the contract.
For example, if 15% of the total expected cost to create the product are incurred in the current period, 15% of contract is recognized as revenue.

A

Cost-to-cost method

647 Formulas (2 decks)

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