FSA Flashcards
Inventory turnover
(Cost of goods sold) / (Avg inventory)
Days of inventory on hand (DOH)
365 / (Inventory turnover)
Receivables turnover
Revenue / (Average Receivables)
Days of sales outstanding (DSO)
365 / (Receivables Turnover)
Payables turnover
(Purchases) / (Average Trade Payables)
Number of days of payables
(365) / (Payables Turnover)
Working capital turnover
(Revenue) / (Average Working Capital)
Fixed asset turnover
(Revenue) / (Average Net Fixed Assets)
Total asset turnover
(Revenue) / (Average Total Assets)
Current ratio
(Current assets) / (Current liabilities)
Quick ratio
(Cash + Marketable securities + Receivables) / (Current liabilities)
Cash ratio
(Cash + Marketable securities) / (Current liabilities)
Defensive interval ratio
(Cash + Marketable securities + Receivables) / (Daily cash expenditures)
Cash conversion cycle
= Days of inventory on hand (DOH)
+ Days of sales outstanding (DSO)
– Number of days of payables
Debt to asset ratio
(Total debt) / (Total assets)
Debt to capital ratio
(Total debt) / (Total debt + Total shareholder’s equity)
Debt to equity ratio
(Total debt) / (Shareholder’s equity)
Financial leverage ratio
(Average total assets) / (Average total equity)
Interest coverage ratio
(EBIT) / (Interest payments)
Fixed charge coverage ratio
(EBIT + Lease payments) / (Interest payments + Lease payments)
Gross profit margin
(Gross profit) / Revenue
Operating profit margin
(Operating income) / Revenue
Pretax margin
EBT / Revenue
Net profit margin
(Net profit) / Revenue
Operating ROA
(Operating income or EBIT) / (Average total assets)
Return on assets (ROA)
(Net income) / (Average total assets)
Return on total capital
EBIT / (Short term debt + long term debt + equity)
Return on equity (ROE)
(Net income) / (Equity)
Return on common equity (ROCE)
(Net income – preferred dividends) / (Average common equity)
Break down ROE (dupont)
Dividend payout ratio
(Common share dividend) / (Net income attributable to common shares)
Capitalizing vs expensing on CFO and CFI
IFRS vs GAAP: Impairment of Property, Plant & Equipment and Intangible Assets
DTA
DTL is generated when “Pretax Income exceeds Taxable Income’
DTL
DTL is generated when “Pretax Income exceeds Taxable Income’
Inventory Costing Methods:
U.S. GAAP: Allows the use of specific identification, first-in, first-out (FIFO), and last-in, first-out (LIFO) methods for inventory costing.
IFRS: Permits the use of specific identification and FIFO but prohibits the use of the LIFO method.
Inventory Write-downs US GAAP vs IFRS
U.S. GAAP: Inventory write-downs to a lower market value are recognized as an expense in the period the write-down occurs. Once written down, inventories cannot be written back up in future periods.
IFRS: Inventories are written down to net realizable value (NRV), which is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Unlike U.S. GAAP, if the reasons for the write-down no longer exist, IFRS allows the amount of the write-down to be reversed up to the amount of the original write-down.
Net Realizable Value (NRV) vs. Lower of Cost or Market (LCM):
U.S. GAAP: Uses the lower of cost or market (LCM) method to value inventories. “Market” can mean replacement cost, net realizable value (NRV), or NRV less a normal profit margin.
IFRS: Requires inventory to be carried at the lower of cost and net realizable value (NRV), without the LCM method’s complexity and additional considerations.
IFRS vs GAAP on leases
Impact of tax rate changes
Income tax expense = Income tax payable + Change in DTL – Change in DTA
Basic EPS
Diluted EPS for prefered shares
Man lägger tillbaka prefered divs för man antar att dem blir converted och därmed behövs det ej betalas ut dividends till dem.
Diluted EPS with stock options
Treasury stock method
Cash flow components IFRS vs US GAAP
FCFF Basic
FCFF = Net Income + Net Non-Cash Charges + Interest Expense (1−Tax Rate) − Fixed Capital Investments − Working Capital Investments
FCFF from CFO
FCFF = Cash Flow from Operations + Interest (1 − Tax Rate) − Fixed Capital Investments
FCFE basic
FCFE = Net Income + Non-Cash Charges − Fixed Capital Investments − Working Capital Investments + Net Borrowing
FCFE from CFO
FCFE = Cash from Operations − Fixed Capital Investments + Net Borrowing
FCFE from FCFF
FCFE = FCFF − Interest ( 1 − Tax Rate ) + Net Borrowing
Capitlizing vs expensing effect on (everything)
Depreciation methods
A key difference between Cost vs Revaluation model
A key difference between the two models is that the cost model allows only decreases in the values of long-lived assets compared with historical costs but the revaluation model may result in increases in the values of long-lived assets to amounts greater than historical costs
When can Revaluation model be used?
The revaluation model may only be used if the fair value of the assets can be measured reliably. As a result, it can be used for classes of intangible assets only if an active market for the assets exists. It is rarely used either for tangible or intangible assets, but more so for intangible assets.
Financial reporting quality - The model
- Form 10-K
Description: Annual report filed by U.S. public companies with the SEC.
Contents: Comprehensive summary of financial performance, including audited financial statements, management discussion, risk factors, and corporate governance.
Form 10-Q
Description: Quarterly report filed by U.S. public companies with the SEC.
Contents: Unaudited financial statements, management discussion, and analysis of financial condition.
Form 8-K
Description: Current report to announce major events that shareholders should know about.
Contents: Information on significant events, such as acquisitions, bankruptcy, resignations of directors, changes in fiscal year, or other important corporate events.
Form 20-F
Description: Annual report filed by foreign private issuers with the SEC.
Contents: Similar to Form 10-K, including financial statements, management discussion, and analysis.
Frequency: Annually.
Form 40-F
Description: Annual report filed by certain Canadian companies with the SEC.
Contents: Similar to Form 10-K and Form 20-F, providing comprehensive information about financial performance.
Frequency: Annually.
Form 6-K
Description: Report filed by foreign private issuers to update investors on significant events.
Contents: Information on significant events similar to Form 8-K for U.S. companies.
Frequency: As needed.
Diluted EPS convertible debt
Lägg tillbaka interest som man egentligen hade behövt betala för lånet- viktigt med AFTER tax interest expense
Vad händer om Basic EPS är högre än diluted eps?
Då är det antidilutive och då använder man sig av basic eps istället
Diluted EPS vid call options
Treasury stock används
Cash conversion cycle
