Financial Reporting & Analysis Flashcards

1
Q

Amount at which an asset or liability is valued for tax purposes

A

Tax Base

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2
Q

Amount at which an asset or liability is valued according to accounting principles

A

Carry Amount

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3
Q

Asset Turnover

A

(Revenue/Average Assets) Measures the efficiency of a company’s assets in generating revenue or sales

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4
Q

EBITDA Margin

A

(EBITDA/Revenue) Measures a company’s operating profit, shown as a percentage of its revenue

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5
Q

EBIT Margin

A

(EBIT/Revenue) Measures the operating earnings over operating sales

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6
Q

EBITDA Multiple

A

(Enterprise Value/EBITDA) compares a company’s Enterprise Value to its annual EBITDA (which can be either a historical figure or a forecast/estimate). This multiple is used to determine the value of a company and compare it to the value of other, similar businesses.

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7
Q

Return on Common Equity

A

is a financial ratio that shows how well a company is managing the capital that common shareholders have invested in it.
(Net income - Preferred dividends)/Common Equity

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8
Q

Impairment

A

an unanticipated decline in the value of an asset, only occurs when carrying value > fair value

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9
Q

Intangible Assets

A

identifiable, non-monetary assets without physical substance

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10
Q

Operating Activity

A

Day to day business activity

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11
Q

Investing Activity

A

acquisition/disposal of non-current assets

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12
Q

Financing activities

A

obtaining/repaying capital

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13
Q

Assets

A

Economic resources (current and non-current)
Accounts: Cash, Inventory, Accts Receivables
Contra-Accounts: Depreciation
Equation:
= Liabilities + contributed capital + statement of retained earnings (aka. ending retained earnings)

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14
Q

Liabilities

A

creditor’s claim on resources (current and non-current)

Accounts: Accts Payable, Accrued Expenses

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15
Q

Equity

A

residual claim on resources
=Contributed Capital + Retained Earnings
Accounts: Paid-in-capital, retained earnings

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16
Q

Revenues

A

inflow of economic resources
Accounts: Sales
Contra-Accounts: Returns & Allowances

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17
Q

Expenses

A

outflow of economic resources

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18
Q

Basic Accounting Equation

A

Assets = Liability + Equity

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19
Q

Residual Claim

A

Owners equity, shareholder equity, net assets, net worth, net book value

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20
Q

Ending Retained Earnings equation

A

= beginning retained earnings + net income - dividends

= beg. retained earnings + Revenue - Expenses - Dividends

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21
Q

Double Entry Accounting

A

every transaction affects at least 2 accounts such that debits = credits

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22
Q

Unearned Revenue

A

(liability) get paid before delivery of goods/service

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23
Q

Accrued Revenue

A

(asset) not yet billed

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24
Q

Prepaid Expense

A

(asset) paid for but not yet used

25
Accrued Expense
(liability) incurred but not yet billed
26
Historical Cost
All transactions are recorded at
27
Adjustments
reflect items not reported reconcile IFRS/GAAP reconcile accounting policies
28
Primary purpose of financial reports
provide information and data about a company to see financial position to see performance (profitability & cash flows)
29
Statement of financial position
balance sheet (point in time)
30
Income statement
(over a period of time) -single statement Revenue + other income (typically gains) - (expenses + losses) = Net income
31
Statement of comprehensive income
all items that change owners equity (except transactions with owners)
32
Statement of changes in equity
reconciles beginning balances with ending balances
33
statement of cash flows
operating investing financing
34
Notes to the financial statements
methods, estimates, assumptions
35
MD & A
not audited, additional information
36
Audit
annual statement only opinion on - fair presentation - internal controls
37
Unqualified opinion
best or highest opinion
38
Qualified opinion
everything is fine except for a little thing
39
Adverse opinion
do not like what we see
40
Disclaimer of Opinion
cannot make opinion (not bad but nothing there)
41
Financial Statement Analysis Framework
1. purpose 2. collect data 3. process data 4. analyze/ interpret 5. communicate conclusions 6. follow up
42
Diluted EPS
Net Income - Preferred Share Dividend (PSD) | PSD = (P.S+ # of convertible shares) / (Weighted average common shares + new shares after preferred x conversion rate
43
intangible assets
non current asset which is identifiable, non-monetary assets without physical substance (copyright, patent, licenses, trademark) IFRS: cost model (cost - amortization - impairment (definite life only) or revaluation GAAP: cost model (cost - amortization - impairment (definite life only) (indefinite life - tested annually for life or impairment) internal developed intangible assets typically not recognized on balance sheet where costs during research are expensed and costs during development are capitalized if acquired capitalize on Balance sheet at cost
44
Capitlized
is to record a cost or expense on the balance sheet for the purposes of delaying full recognition of the expense.
45
Goodwill
excess over fair value of acquiring another company purchase price is allocated to FV of all A and L
46
EBITDAR
Earnings before interest taxes depreciation amortization rental payments
47
interest paid on a lease
IFRS: operating, investing, financing GAAP: operating
48
Current Ratio
current assets/ current liabilities current assets: cash, marketable securities (<1yr), accts receivables, inventory, prepaid expenses current liabilities: accts payable, current portion of LTD, line of credit
49
Current Ratio
current assets/ current liabilities current assets: cash, marketable securities (<1yr), accts receivables, inventory, prepaid expenses current liabilities: accts payable, current portion of LTD, line of credit, accrued liabilites
50
Interest or Dividends Recieved
IFRS: Operating or investing GAAP: Operating
51
Current Ratio
current assets/ current liabilities current assets: cash, marketable securities (<1yr), accts receivables, inventory, prepaid expenses current liabilities: accts payable, current portion of LTD, line of credit, accrued liabilities
52
Interest or Dividends Recieved
IFRS: Operating or investing GAAP: Operating
53
COGS
Beg Inventory + purchases - ending inventory
54
Purchases
Ending Inventory + COGS - Beginning Inventory
55
Purchases
Ending Inventory + COGS - Beginning Inventory
56
Beginning Inventory
Ending Inventory + COGS - Purchases
57
Ending Inventory
Beginning Inventory + Purchases - COGS
58
Income Statement
presents financial results over a period of time
59
Multi step income statement
``` Rev - COGS = gross profit Gross profit - operating expense = EBIT operating profit (or EBIT) - interest = EBT EBT - taxes = net income ```