Financial Statements Flashcards
Simply, what goes on an income statement?
Revenue - Expenses = Net Income
Simply, what is on a balance sheet?
Share Holder Equity + Liabilities = Assets
how do you use income statements and balance sheets to analyze a business
Profitability analysis - IS
Asset Analysis - BS
Debt Analysis - BS
Investor Return Analysis - BS
for profitability analysis what are the three main areas to look at?
Revenues
Expenses
Margins
for profitability analysis of revenues, what do you look at?
revenue growth year over year
revenues by segment
for profitability analysis of expenses, what do you look at?
expense growth year over year
expense as a percent of revenue,
vertical anslysis
segment expenses
for profitability analysis of margins, what do you look at?
Gross Margin % of revenue
Operating margin % of revenue
EBITA % of revenue
Net Income % of revenue
Segment Margins
What do you look at on a balance sheet analysis for assets?
Working Capital analysis
Asset Productivity
what is working capital analysis
Current Ratio
Free Cash Flow
AR Turns/Days
Inventory Turns/days
AP Days
Cash Conversion Cycle
What is asset productivity
Fixed asset turnover
asset utilization (Turnover)
Return on Assets (ROA)
what do you look at on a balance sheet analysis for liabilities
Long Term Debt
Cost of Debt
what id long term analysis
total liability to total assets
total liability to total equity
financial leverage
how do you analyze cost of debt?
interest coverage ratio
how do you analyze a balance sheet for shareholders equity?
stock price
stockholder returns
what do you look at when evaluating stock price
P/E Ratio
what do you look at when analyzing stockholder returns?
dividend yield
earnings per share
Return on Equity (ROE)
From a balance sheet analysis, what items link to the income statement?
Fixed asset turnover
Asset utilization (turnover)
Return on Assets (ROA)
Interest Coverage Ratio
Earnings per share
Return on Equity
how do you calculate profitability?
Net Profit % of Revenue
Net Income / Net Revenue
how do you calculate revenue Growth
((Current sales - previous sales) / (previous sales))
how do you do a common-sized statement?
calculate all costs as a % of revenues
how do you a segment analysis
compare segment costs to segment revenues in a common-sized analysis
how do you calculate gross profit % (Gross Margin)
Gross Profit / Sales
How do you calculate Operating Earnings % (Operating Margin)
Operating Earnings / Sales
what is EBITA
Earnings Before Incomes Taxes Depreciation and Amortization
