FM (RATIOS) Flashcards
1
Q
CURRENT RATIO
A
CURRENT ASSETS
÷ CURRENT LIABILITIES
2
Q
QUICK RATIOS
A
(CURRENT ASSETS - INVENTORY)
÷ CURRENT LIABILITY
3
Q
Total Asset Turnover
A
Sales
÷ Total Avarage of Assets
4
Q
Inventory Turnover
A
Sales
÷ Average Inventory
5
Q
Fixed Asset Turnover
A
Sales
÷ Average Net Fixed Asset
6
Q
Days Sales Outstanding
(1)
A
Accouns Receivable
÷ (Net Sales / 365)
7
Q
Debt to Capital Ratio
A
Total Liability
÷ Total Capital
8
Q
Time Interest Earned
A
EBIT
÷ Interest Charge
9
Q
Operating Margin
A
EBIT
÷ Sales
10
Q
Profit Margin
A
Net Income
÷ Net Sales
11
Q
ROA
(1)
A
Net Income /
Avrage Total Assets
12
Q
ROA
(2)
A
Profit Margin
x Asset Turnover
13
Q
ROE
(1)
A
Net Income
÷ Average Common Equity
14
Q
ROE
(2)
A
ROA
x Equity Multiplier
15
Q
Dupont Equation
A
ROE = ROA x Equity Multiplier
PM x Asset Turnover x EM
NI S TA
S Total Asset CE
16
Q
Price Per Share aka
A
Market Price
17
Q
EPS AKA
A
Net Income - Pref. Dividend
÷ Outstanding Shares
18
Q
BOOK VALUE
A
Common Equity
÷ Outstanding Shares
19
Q
Market/Book Ratio
A
Market Price
÷ Book Value
20
Q
EV/EBITDA
A
EV
÷ EBITDA OR EBIT
21
Q
Enterprise Value
A
MV of Lia + MV of E + 0 - CCE
TOTAL CAPITAL
22
Q
MV OF LIA
A
DI KASAMA ANG CURRENT
23
Q
BEP
A
EBIT
÷ Total Assets
24
Q
DSO (20)
A
365
÷ ARTO
25
ARTO
(20)
Net Credit Sales
÷ Average AR (net)
26
STOCK PRICE AKA
MARKET
27
PM(11)
ROA
÷ Asset Turnover
28
CABRERA
ACID TEST
Total Quick Assets
÷ Total Current Liabilities
Total Quick Assets = Cash + Marketable Securities+ AR
29
CABRERA
WORKING CAPITAL TO TOTAL ASSETS
WORKING CAPITAL
÷ TOTAL ASSETS
30
CABRERA
WORKING CAPITAL
CURRENT ASSETS
- CURRENT LIABILITIES
31
CABRERA
CASH FLOW LIQUIDITY RATIO
(CASH + MARKETABLE SECURITIES+ CASH FLOW FROM OP ACTS)
÷CURRENT LIABILITIES
32
CABRERA
DEFENSIVE INTERVAL RATIO
QUICK ASSETS
÷ PROJECTED DAILY OPERATIONAL EXPENSES
33
CABRERA
TRADE RECEIVABLE TURNOVER
NET CREDIT SALES OR NET SALES
÷ AVERAGE TRADE RECEIVABLE (net)
34
CABRERA
AVE. COLLECTION PERIOD
Accounts Receivable
÷ (NET SALES / 360)
OR
365
÷ AR TURNOVER
35
CABRERA
MERCHANDISE TURNOVER
COGS
÷ AVE. MERCHANDISE INVENTORY
36
CABRERA
FINISHED GOODS INVENTORY
COGS
÷ AVE. FINISHED GOODS INVENTORY
37
CABRERA
GOODS IN PROCESS INVENTORY TURNOVER
COGM
÷ AVE. GOODS IN PROCESS INVENTORY
38
CABRERA
RAW MATERIALS TURNOVER
RAW MATERIALS USED
÷ AVE. RAW MATERIALS INVENTORY
39
CABRERA
DAYS SUPPLY IN INVENTORY
360
÷ INVENTORY TURNOVER
40
CABRERA
WORKING CAPITAL TURNOVER
NET SALES
÷ AVE. WORKING CAPITAL
41
CABRERA
PERCENT OF EACH CURRENT ASSET
AMOUNT OF EACH CA
÷ TOTAL CURRENT ASSETS
42
CABRERA
CURRENT ASSETS TURNOVER
(COS + OPEX + INC TAXES + OTHER EXP (EXCLUDING DEPRE & AMORT) )
÷ AVE. CURRENT ASSETS
43
CABRERA
PAYABLE TURNOVER
NET PURCHASES
÷ AVERAGE ACCOUNTS PAYABLE
44
CABRERA
OPERATING CYCLE
AVE. COVERSION PERIOD OF INVENT.+ AVE. COLLECTION PERIOD OF RECEIVABLES + DAYS CASH
45
CABRERA
DAYS CASH
AVE. CASH BALANCE
÷ (CASH OPERATING COST / 365)
46
CABRERA
FREE CASH FLOW
NET CASH FROM OPE ACTS
- CASH USED FOR INV ACTS AND DIVIDEND
47
CABRERA
INVESTMENT OR ASSET TURNOVER
NET SALES
÷ AVE. TOTAL INVESTMENT OR TOTAL ASSETS
48
CABRERA
SALES TO FIXED ASSETS (PLANT ASSETS TURNOVER)
NET SALES
÷ AVE. FIXED ASSETS (NET)
49
CABRERA
AR TURNOVER
NET SALES
÷ AVE. AR BALANCE
50
CABRERA
AVE. SALE PERIOD
365
÷ INVENTORY TURNOVER
51
CABRERA
CAPITAL INTENSITY RATIO
TOTAL ASSETS
÷ NET SALES
52
CABRERA
EQUITY RATIO
TOTAL EQUITY
÷ TOTAL ASSETS
53
CABRERA
DEBT TO EQUITY
TOTAL LIABILITY
÷ TOTAL EQUITY
54
CABRERA
FIXED ASSET TO TOTAL EQUITY
FIXED ASSET (NET)
÷ TOTAL EQUITY
55
CABRERA
BV PER ORD SHARE
ORDINARY SHAREHOLDERS EQUITY
÷ NO. OF OUTSTANDING SHARES
56
CABRERA
TIE
EBIT
÷ ANNUAL INTEREST CHARGE
57
CABRERA
TIMES PREFERRED DIVIDEND REQUIREMENT EARNED
NET INCOME AFTER TAX
÷ PREFERRED DIVIDEND REQ.
58
CABRERA
TIMES FIXED CHARGES EARNED
EBIT
÷ FIXED CHARGES
FIXED CHARGES= RENT + INTEREST + SINKING FUND PAYMENT BEFORE TAXES
59
CABRERA
GP MARGIN
GP
÷ NET SALES
60
CABRERA
OPERATING PROFIT MARGIN
OPERATING PROFIT
÷ NET SALES
61
Net Profit Margin or Return on sales
Net Income
÷ Net Sales
62
CABRERA
CASH FLOW MARGIN
CF FOR OP ACTS
÷ NET SALES
63
CABRERA
ROA
NET INCOME
÷ AVE. TOTAL ASSETS
or
ASSET TURNOVER X NET PROFIT MARGIN
64
CABRERA
ROE
NET INCOME
÷ AVE. ORD EQUITY
65
CABRERA
EPS
(NET INCOME - PREF DIVIDEND)
÷ AVE. ORD SHARES OUTSTANDING
66
CABRERA
PRICE/EARNING RATIO
MV / EPS
67
CABRERA
DIVIDEND PAYOUT
DIVIDEND PER SHARE
÷ EPS
68
CABRERA
DIVIDEND YIELD
ANNUAL DIVIDEND PER SHARE
÷ MV
69
CABRERA
DIVIDEND PER SHARE
DIVIDEND PAID/DECLARED
÷ ORD SHARES OUTSTANDING
70
CABRERA
RATE OF RETURN ON AVE. CURRENT ASSETS
NET INCOME
÷ AVE. CURRENT ASSETS
71
CABRERA
RATE OF RETURN PER TURNOVER OF CURRENT ASSETS
RATE OF RETURN ON AVE. CURRENT ASSETS
÷ CURRENT ASSETS TURNOVER
72
CM Ratio
CM / Sales
73
Break-even point (units)
Total Fixed Costs /
CM per unit
74
Break-even point (pesos)
Total Fixed Costs/
1- (Variable Cost / Sales)
75
Break-even sales for multi products firm (combined units)
Total Fixed Costs/
Weighted Average CM
76
Weighted CM per unit
(Unit CM x No. of units per mix) + (Unit CM x No. of units per mix) /
Total no. of units per sales mix
77
Break-even sales for multi products firm (combined pesos)
Total Fixed Costs/
Weighted CM ratio
78
Weighted CM ratio
Total Weighted CM (pesos) /
Total Weighted Sales (pesos)
79
(Target ) Sales in units
Total Fixed Costs + Desired Profit/
CM Per unit
80
(Target ) Sales in peso
Total Fixed Costs + Desired Profit/
CM ratio
81
Variable Expense Ratio
Variable Expense/ Selling Price
82
Expected increase in CM
Increase in sales x CM Ratio
83
Degree of Operating Leverage
CM / Net Operating Income
84
Degree of Operating Leverage
(alternative)
Percent change in operating income /
Percent change in unit volume
85
Margin of safety (peso)
Total sales - Break-even sales
86
Margin of safety (percentage)
Margin of safety in peso / Total sales
87
Expected increase in operating income
Expected increase in sales x degree of operating leverage
88
Degree of Financial Leverage
Percent change in EPS / Percent change in EBIT
89
Degree of Financial Leverage
(computation)
EBIT / EBIT - 1
90
Degree of combined leverage
Percent Change in EPS /
Percent Change in sales (or vol)
91
Degree of combined leverage
(compu other)
Quantity ( SPrice per unit - VC ) /
Quantity ( SPrice per unit - VC ) - FC - Interest
92
Sales Budget
Units x price per unit = total sales revenue
93
Production Budget
Units to be sold
+ Desired ending inventory
Total
- Beginning inventory
= units to be produced
94
Direct Labor Budget
No. units to be produced x Direct labor cost per unit
95
GP MARGIN
GP ÷ SALES
96
COSTS (Cash outflows) include:
Purchase price of the asset, net of any related cash discount
Incidental project-related expenses such as freight, insurance, handling, installation, test-runs
Additional working capital needed to support the operation of the project at the desired level.
(NOTE: At the end of the project’s life, additional working capital shall be recaptured as part of the
project’s terminal cash flow, along with any salvage value of the project)
Market value of existing idle assets to be used in the operation of the proposed capital project.
Training cost, net of related tax
97
SAVINGS (Cash inflows) include:
Proceeds from sale of an old asset disposed, net of related tax
Trade-in value of the old asset (in case of replacement)
Avoidable cost of immediate repairs on the old asset to be replaced, net of related tax
98
Capital Budgeting
Non-discounted methods
Payback Period
Payback Reciprocal
Bail-out Payback
ARR
99
Capital Budgeting
Discounted methods
NPV
Probability Index
IRR
Discounted Payback
100
Net Returns aka & computation
Net Income (Accrual basis)
Net Cash Flows (Cash basis)
Direct Method (Net Cash Inflows):
Cash Inflows - CashOut flows
Indirect Method (Net Cash Inflows):
Net income + Noncash Expenses (e.g., depreciation)
101
the ___ the payback period, the less risky the project and the greater the liquidity
shorter
102
Advantage of Payback Period
simple to compute, easy to understand, useful in evaluating liquidity of the project, a good surrogate
for risk -- a quick or short payback period indicates a less risky project.
103
Disadvantage of Payback Period
ignores time value of money, ignores salvage value and cash flows after payback period, more
emphasis on return OF investment instead of ROI, maximum payback period may be arbitrary
104
is a payback method wherein cash recoveries include not only the annual net cash inflows but also the estimated salvage value realizable at the end of each year of the project life.
BAIL-OUT PAYBACK PERIOD
105
book rate of return, simple rate of return, unadjusted rate of return,
financial statement rate of return, measures the profitability from accounting standpoint by relating the required investment to the future annual net income.
ACCOUNTING RATE of RETURN
106
ARR formula
Average Annual Income
÷ Original or Average Investment
107
NPV
CASH INFLOWS include
annual net cash inflows infused by the capital investment project and any cash
realizable at the end of the project life (e.g., salvage value, return of working capital requirements).
108
NPV
CASH OUTFLOWS is usually based on the
net investment cost required at the inception of the project.
109
Advantage of NPV
emphasizes cash flows, considers time value of money, computes the true return of the projec
110
Disadvantage of NPV
cult to compute for uneven cash flows, requires estimation of cash flows over a long period of
time, assumes IRR as reinvestment rate, may not be meaningful if a project has negative earnings.
NOTE: Determination of a project’s exact IRR may require an interpolation process. Trial and error
technique and the payback reciprocal method may also be used to approximate the IRR.
111
Indirect Method CF
Depreciation Expense & Amortization
Add
112
Indirect Method CF
Decrease Liability
Minus
113
Indirect Method CF
Decrease Asset
Add
114
Indirect Method CF
Increase Asset
Minus
115
Indirect Method CF
Increase Liability
Add
116
Indirect Method CF
Gain on sale of equipment (mga Gain)
Minus
117
Indirect Method CF
Expenses e.g Interest, Income Tax
Minus
118
Cost of Preference
Dividend per share
÷ IP - Floatation Cost
119
Cost of Common Equity
CAPM
risk free
+ beta x market rate - risk free
120
Cost of new ordinary equity
Kn
Current Dividend per share
÷ (Current stock price - FC)
+ Growth Rate
