final exam- cash flow performance ratios Flashcards

1
Q

cash flow to revenue definition

A

operating cash generation per dollar of revenue. of there is an increase, look if cash and sales increase. the higher the better. How much cash is the company generating?

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2
Q

cash flow to revenue equation

A

CFO/net revenue

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3
Q

cash flow on assets definition

A

Operating cash generated per dollar of asset investment. If increasing, then assets are becoming more efficient and compare with the ROE ratio

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4
Q

cash flow on assets equation

A

CFO/total assets

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5
Q

cash flow on equity definition

A

Operating cash generated per dollar of own investment. Take total equity figure. Compare with ROE ratio

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6
Q

cash flow to income definition

A

Cash generating ability of operations. Take operating profit from the income statement. This ratio is important because it goes back from the fluctuation of cash. If there is a lot of discrepancy (lower than 1) between the numerator and the denominator, it means there is a liquidity problem = lots of accruals. It indicates the quality of earnings when the ratio is close or bigger than 1 and management and investors will see this as a good thing

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7
Q

cash flow to income equation

A

CFO/operating Income (ANSWER IS IN TIMES – NOT %)

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8
Q

cash flow per share definition

A

Operating cash flow on a per-share basis. Compare this with EPS. If EPS went down and this ratio increases, look for an explanation of the boost in cash decide whether to adjust this.

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9
Q

cash flow per share equation

A

CFO - preferred dividends/no. of common shares outstanding (look at average weighted no. of shares number)

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