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OACIQ > Finance > Flashcards

Finance Flashcards

1
Q

How do you calculate the Equivalent Rate?

A

1- Find effective rate
2- Change compounding, keep effective rate and find nominal rate

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2
Q

Simple or general annuity?

A

Simple: CY = PY
General: CY =/= PY

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3
Q

Two purposes of Amort table?

A

1- Break down payment into two parts, interest and pmt
2- obtain balance at given pmt

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4
Q

Amortization vs term

A

Amort: period of time required to pay loan in full
Term: Period of time during which a borrower pays a certain rate

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5
Q

NOI
PGI
EGI

A

Rent amount minus operating expenses (and related service incomes, if applicable)

Max amount of rent that can be collected if occupancy is 100%

Takes into account vacancy and bad debt rates

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6
Q

Return of shareholder’s equity

A

Profitability ↑

(net earnings after tax)/(shareholders’ equity) * 100

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7
Q

Net Profit Margin

A

Profitability ↑

(net earnings after tax)/(net sales) * 100

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8
Q

Gross Profit from sales margin

A

Profitability ↑

(Gross earnings)/(net sales) * 100

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9
Q

Operating margin

A

Profitability ↑

(EBIT)/(Net sales) * 100

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10
Q

operating efficiency

A

Profitability ↓

(Operating expenses)/(Net Sales) * 100

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11
Q

Return of total assets

A

Profitability ↑

(net earnings after tax)/(Total assets) * 100

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12
Q

Total assets turnover

A

Management ↑

Net sales/total assets

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13
Q

Accounts receivable recovery

A

Management ↓

Accounts receivable/Net sales * 365 days

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14
Q

Inventory turnover

A

Management ↓

Inventory/Net sales * 365 days

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15
Q

Fixed assets turnover

A

Management ↑

Net Sales/Net Fixed Assets

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16
Q

Accounts payable delay

A

Management ↑↓

Accounts Payable/(purchase of goods+Operating expenses (no depreciation) * 365 days

17
Q

Financing ratio (leverage effect)

A

Financial Structure ↓

Total assets/Shareholders’ equity

18
Q

Debt-to-equity ratio

A

Financial Structure ↓

Total liabilities/Shareholders’ equity

19
Q

Debt-to-assets ratio

A

Financial Structure ↓

Total liabilities/Total assets * 100

20
Q

Interest coverage ratio

A

Financial Structure ↑

EBIT/interest

21
Q

Working capital ratio

A

Liquidity ↑

Current Assets/Current liabilities

22
Q

Acid test or quick ratio

A

Liquidity ↑

(Current assets - (inventory+prepaid fees))/current liabilities

23
Q

Defensive interval ratio

A

Liquidity ↑

Total annual expenses = Cost of sales + Operating expenses except amortization

Daily Operating costs = Total annual expenses/365 days

(Cash flow + Accounts receivable + Marketable securities)/Daily operating costs

24
Q

Debt Coverage Ratios

A

Goal is to determine whether NOI is sufficient to cover annual debt service (ADS) of mortgage loan

DCR = NOI ÷ ADS(pmt*12months)

25
Q

Opex ratio

A

Gives overview of immovable’s opex in comparison with EGI

Opex ratio = opex/EGI*100

26
Q

Break even ratio

A

Minimum occupancy rate/vacancy tolerance

Need opex and ads to calculate

Ratio = (OPEX + ADS)/EGI*100

27
Q

Bad debts

A

Expressed as $ or % of PGI
Result of lessees not paying
Comes from market, not specific immovable

28
Q

Overall Capitalization rate (OCR)

A

Variation of income approach

Value = NOI ÷ avg. OCR

OCR% = NOI/Sales price * 100

29
Q

Types of depreciation

A

Physical: wear and tear, age, poor maintenance

Functional obsolescence: Outdated layout no longer up to today’s standards (e.g. fuses vs circuit breaker)

Economic obsolescence: Due to external factors outside of owner’s control

30
Q

Simple Interest Formula

A
  • Total int ($) = PiN
    • P=prn$, i=int%, N=# periods (years or part years)
  • S (total amount) = P + Total int
  • P = Total int. / i*N
  • i = Total int / P*N
  • N = Total int / P*i
31
Q

GST & QST?

A

Exempt:
Residential, not new build and has not undergone substantial renos i
More than 50% used as place of res
Residential multiplex, as rents are not taxable

Apply:
Exclusively comm
New immovable or more than 90% renovated

50% or less is residential: Comm is taxable, res is not

32
Q

GAAP

A

Business personality
- Financial statements only reflect transactions associated with that particular business

Acquisition cost
- Record property at its acquisition cost, or at the price paid to acquire the asset

Business continuity
- Implies that a business operates for an indefinite term and has acquired assets for the purpose of using them rather than selling them

Objectivity
- Transaction accounting is based on fact
- Amounts indicated in financial statements must be objective and verifiable

33
Q

Accounting Equation

A

Asset — liability = Owner’s equity

OACIQ (8 decks)

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