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CFA L1 > FR&A Analysis Techniques > Flashcards

FR&A Analysis Techniques Flashcards

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CFA flashcards
1
Q

Activity Ratios

A

Ratios that measure how efficiently a company performs day-to-day tasks, such as the collection of receivables and management of inventory

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2
Q

Asset Utilization Ratios

A

Ratios that measure how efficiently a comparing performs day to day tasks such as the collection or receivables and the management of inventory in the

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3
Q

Basic EPS

A

Net earnings available to common shareholders (net income - preferred dividends) divided by the weighted average of shares outstanding

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4
Q

Cash conversion cycle

A

DOH + DOS - Days in Payables

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5
Q

Credit Analysis

A

The evaluation of credit risk; the evaluation of the creditworthiness of a borrower or counterparty

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6
Q

Credit risk

A

The risk of loss caused by a counterparties or debtors failure to make a promised payment

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7
Q

Debt to Assets Ratio

A

A solvency ratio calculated as total debt divided by total assets

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8
Q

Debt to capital ratio

A

A solvency ratio calculated as total debt divided by capital (debt + oe)

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9
Q

Debt to Equity Ratio

A

A solvency ratio calculated as total debt divided by shareholders equity

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10
Q

Defensive interval ratio

A

Liquidity ratio that estimates say an entity could meet cash needs. Cash + Marketable securities + receivables/ divided by daily cash expense

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11
Q

Dividend Payout Ratio

A

The ratio of cash dividends paid to earnings for a given period

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12
Q

DuPont Analysis

A

Decomposing ROE as the product of other financial ratios

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13
Q

Financial Leverage

A

Operating income / Debt

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14
Q

Financial Leverage Ratio

A

Avg Total assets/ average total equity

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15
Q

Fixed charge coverage

A

Solvency ratio: EBIT + lease payments / interest payments + lease payments

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16
Q

Gross profit margin

A

The ratio of gross profit to revenues

17
Q

Horizontal Analysis

A

Common size analysis that involves comparing a specific financial statement with that statement in prior or future time periods; also cross-sectional analysis between companies

18
Q

Interest coverage

A

Solvency ratio; EBIT/ interest payments

19
Q

Liquidity Ratios

A

Financial ratios measuring the company’s ability to meet its short term obligations

20
Q

Net profit margin

A

Net income / revenue

21
Q

Operating efficiency ratios

A

Ratios that measure how efficiently a company performs day to days tasks, such as the collection of receivables and management of inventory

22
Q

Operating Leverage

A

The use of fixed cost in operations

23
Q

Operating profit margin

A

A profitability ratio calculated as operating income (income before interest and taxes ) divided by revenue

24
Q

Pretax margin

A

A profitability ratio calculated as EBT/ revenue

25
Q

Price to Book value

A

A valuation ratio calculated as price per share divided by book value per share

26
Q

Price to cash flow

A

Price per share / cash flow per share

27
Q

Price to earnings ratio

A

Valuation ratio: price per share / earnings per share

28
Q

Price to sales

A

A valuation ratio calculated as price per share divide by sales per share

29
Q

Profitability ratio

A

Ratios that measure a companies ability to generate profitable sales from its resources (assets)

30
Q

ROA

A

Net income / average total assets

31
Q

ROE

A

Net income / average equity

32
Q

Return on total capital

A

EBIT / sum of short/long term debt and equity

33
Q

Solvency

A

The ability of a company to fulfill its long term obligations.

34
Q

Solvency ratios

A

Ratios that measure a companies ability to meet its long term obligations

35
Q

Sustainable growth rate

A

The rate of dividend (and earnings) growth that can be sustained over time for a given level of ROE, keeping the capital structure constant without issuing common stock

36
Q

Valuation ratios

A

Ratios that measure the quantity of an asset or flow (earnings) in relation to the price associated with a specific claim

37
Q

Vertical analysis

A

Period analysis using only one reporting period or base statement; for ex an income statement in which all items are stated as a percentage of sales

38
Q

Working capital

A

CA-CL

CFA L1 (50 decks)

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