FRA Flashcards
What is a classified balance sheet?
Grouped by current/non
Unreal gains/losses for trading assets?
P/L
Unreal gains/losses for available for sale assets?
OCI
Unreal gains/losses for held to maturity assets?
Not recognized. Only when realized.
What is the quick ratio formula?
(Cash + Marketable securities + Receivables) / Liabilities
What is the financial leverage ratio?
Total Assets / Total Equity
What is the cash ratio formula?
(Cash and marketable securities) / Current liabilities
How is interest expense classified on CF stmt in GAAP, IFRS?
IFRS: Either operating or financing
GAAP: Always operating
How are dividends received/ paid treated under GAAP vs IFRS?
Div Rec: IFRS: Either op or inv. GAAP: Operating Div Paid: IFRS: Op or fin GAAP: Financing
How are cash flows from taxes on income disclosed on IFRS vs GAAP?
Both show as separate item
How do you calculate Free CF to the Firm?
FCFF= OP CF + after-tax interest expense - Cap Exp.
What is the Inventory turnover ratio?
COGS / Avg. Inventory
How to calculate Days of Sales Outstanding? (DSO)
DSO = (A/R) / (Avg. Sales per day)
How to calculate Return on Assets? (ROA) from Net profit margin?
ROA = Net profit margin X Total Asset turnover
How to calculate Return on Equity? (ROE) from ROA?
ROE = ROA x Financial Leverage
How to calculate the tax burden?
Tax burden = 1 - Tax Rate
What is the LIFO Reserve?
FIFO Inventory - LIFO Inventory
How do you adjust COGS for FIFO to LIFO
COGS (FIFO) = COGS (LIFO) - Increase in LIFO Reserve
Does the residual value factor into the calc for units of production?
Yes
How to calculate estimated remaining useful life?
Net PPE / Annual dep’n exp.
For Assets: what does difference in tax base and CV result in?
CV > TB = Deferred Tax Liability
CV < TB = Deferred Tax Asset
For Liabilities: what does difference in tax base and CV result in?
CV > TB = Deferred Tax Asset
CV < TB = Deferred Tax Liability
What is a valuation allowance? What does a change mean?
Reserve that offsets deferred tax assets based on likelihood of deferred asset use
Decrease = higher likelihood of deferred asset use
What should happen if a deferred tax liability is NOT expected to reverse?
Treat it as equity
How to calculate income tax provision?
Provision = Current tax - Deferred Liability (or + deferred asset
How to calculate effective tax rate?
Effective Tax = Provision / EBIT
What are aggressive accounting choices?
Enhance performance by inflating revenue/CF
What are conservative accounting choices?
Decrease performance in current period
How to calc average asset age?
Avg. asset age = Accum Dep / Dep Expense
How to calc avg dep life?
Avg. Dep’able life = Ending investment / Dep exp.
