F2 (Notes, SEC Reporting, Ratios) Flashcards
Notes to FS disclosures (relevant to decision makers & integral part of FS)
- change in SE
- contingency
- off BS contracted obligations
- pension plan
- post BS but before FS issued
- related party
- significant est/risk
- products, customers’ geography
Firm PC’s:
- legally enforceable agreements to purchase a specific amount of goods at some time in the future
- must be disclosed in FS or notes
- if price > MV and expected that loss will occur when purch is made, the loss should be recog’d at time of decline in price (conservatism)
disclosures for depreciable assets and DE should be made in FS or notes:
- DE for period
- balance of major classes of depreciable assets
- AD allowances y classes/total
- methods used by major classes in computing DE
key financial ratios are:
- liquidity ratio (WC, QR, CaR)
- activity ratio (AR TO, A TO, Inv TO, days sales AR & Inv TO in days, days in Inv, AP TO, etc)
- coverage ratio (DER, times int earned, Op CF/total debt, equity multiplier)
- profitability ratios (not key); return on sales, ROA, ROE, NPM
- investor ratios (EPS, PER, div payout ratio)
liquidity ratios:
- WC = CA - CL
- WC ratio = CA/CL
- QR (acid) = CA-inv/CL [no PPD/inv]
- CaR (most liquid) = (CA - inv - AR)/CL
Activity ratios:
- AR TO = NS/ avg AR
- AR TO days = 365/AR TO
- days sales in AR = EB AR/(NS/365)
- Inv TO = COGS/avg Inv
- Inv TO days = 365/inv TO
- days in Inv (#days to sell) = EI/(COGS/365)
- AP TO = COGS/avg AP
- days payable o/s = EB AP/(COGS/365)
- Cash conversion cycle = days in AR + days in inv + days in AP (lower the better)
- operating cycle = AR TO days + inv TO days (less is better)
- WC TO = NS/avg WC
- total A TO = NS/avg A
Activity ratios:
- AR TO = NS/ avg AR
- AR TO days = 365/AR TO
- days sales in AR = EB AR/(NS/365)
- Inv TO = COGS/avg Inv
- Inv TO days = 365/inv TO
- days in Inv (#days to sell) = EI/(COGS/365)
- AP TO = COGS/avg AP
- days payable o/s = EB AP/(COGS/365)
- Cash conversion cycle = days in AR + days in inv + days in AP (lower the better)
- operating cycle = AR TO days + inv TO days (less is better)
- WC TO = NS/avg WC
- total A TO = NS/avg A
Profitability ratios:
- return on sales = EBIT/NS
- ROA = NI/avg A
(DuPont same thing; NPM * total A TO) - ROE (ROCE) = NI/ SE
- NPM = NI/NS
Coverage Ratios:
- DER = L/SE
- DAR = L/A
- times int earned (int coverage ratio) = (EBIT + int exp)/int exp
- op CF/L = op CF/L
- Equity multiplier = A/E
Investor ratios:
- EPS = (NI-PD)/WACSO
- PER = price per share/ basic EPS
- div payout ratio = CD/NI
in notes (1st/2nd), summary of significant AP’s should include:
methods, policies, & criteria (LIFO, FIFO, SL)
market cap = CS o/s * mkt price:
Large accel > 700M
Accel > 75 < 700
small < 75
filing deadlines for 10K & 10Q:
[10K]
60-75-90
(large, accel, other)
[10Q]; unaudited & reviewed
40-40-45
(large, accel, other)
Form 8K & 3-4-5:
8K = major corp event reporting (acquisitions/disposals, change in sec’s, change in accountants/FS’s, and changes in corp governance/mgt.
3-4-5 = to be filed by directors, officers, or beneficial owners for more than 10% of class of ES’s of a registered company