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CFA Level I (Joeker) > FSA > Flashcards

FSA Flashcards

1
Q

Characteristics of a Coherent

Financial Reporting Framework

A
  • Transparency
  • Consistency
  • Comprehensiveness
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2
Q

Fundamental Characteristics of Financial Statements

A

U.S. GAAP

  • Relevence
  • Faithful Representation

IFRS

  • Fair Presentation
  • Going Concern
  • Accrual Basis
  • Consistency & Materiality
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3
Q

Enhancing Characteristics of Financial Statements

A
  • V erifyability
  • C omparability
  • U nderstandability
  • T imeliness
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4
Q

Elements of

Financial Statements

A

Balance Sheet

  • Assets
  • Liabilities
  • Owners Equity

Income Statement

  • Revenues
  • Expenses
  • Gains & Losses
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5
Q

Factors that Contribute to Reliability in IFRS

A
  • Substance over Form
  • Faithful Representation
  • Nutrality
  • Prudence
  • Completeness

(SOFFR’N-PC)

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6
Q

Activity Ratios

A
  • Receivables Turnover, DSO
  • Inventory Turnover, DOH
  • Payables Turnover, DOP
  • Total Asset Turnover
  • Fixed Asset Turnover
  • Working Capital Turnover
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7
Q

Receivables Turnover

A

Revenue

————————————

Average Receivables

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8
Q

Days Sales Outstanding

DSO

A

365

————————————

Receivables Turnover

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9
Q

Inventory Turnover

A

COGS

———————————

Average Inventory

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10
Q

Days of Inventory on Hand

DOH

A

365

———————————

Inventory Turnover

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11
Q

Payables Turnover

A

Purchases

——————————

Average Payables

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12
Q

Number of days of Payables

DOP

A

365

——————————

Payables Turnover

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13
Q

Total Asset Turnover

A

Revenue

————————————

Average Total Assets

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14
Q

Fixed Asset Turnover

A

Revenue

——————————————

Average Net Fixed Assets

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15
Q

Working Capital Turnover

A

Revenue

—————————————

Average Working Capital

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16
Q

Liquidity Ratios

A
  • Current Ratio
  • Quick Ratio
  • Cash Ratio
  • Defensive Interval
  • Cash Conversion Cycle
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17
Q

Current Ratio

A

Current Assets

——————————

Current Liabilities

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18
Q

Quick Ratio

(Acid Test)

A

Cash + Marketable Securities + Receivables

————————————————————————

Current Liabilities

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19
Q

Cash Ratio

A

Cash + Marketable Securities

————————————————

Current Liabilities

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20
Q

Defensive Interval

A

Cash + Marketable Securities + Receivables

———————————————————————

Average Daily Expenditures

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21
Q

Cash Conversion Cycle

A

DSO + DOH - DOP

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22
Q

Solvency Ratios

A
  • Debt-to-Equity
  • Debt-to-Capital
  • Debt-to-Assets
  • Financial Leverage
  • Interest Coverage
  • Fixed Charge Coverage
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23
Q

Debt-to-Equity Ratio

A

Total Debt

———————

Total Equity

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24
Q

Debt-to-Capital Ratio

A

Total Debt

—————————————

Total Debt + Total Equity

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25
Debt-to-Assets Ratio (Debt Ratio)
Total Debt ——————— Total Assets
26
Financial Leverage Ratio
Avg Total Assets / Avg Total Equity or ROE / ROA
27
Interest Coverage Ratio
EBIT —————————— Interest Payments
28
Fixed Charge Coverage Ratio
EBIT + Lease Payments ———————————————————— Interest Payments + Lease Payments
29
Profitability Ratios
* Net Profit Margin * Gross Profit Margin * Operating Profit Margin * Pretax Margin * ROA * Operating Return on Assets * Return on Total Capital * Return on Equity * Return on Common Equity
30
Net Profit Margin
Net Income ——————— Revenue
31
Gross Profit Margin
Gross Profit ——————— Revenue
32
Operating Profit Margin
EBIT —————— Revenue
33
Pretax Margin
EBT —————— Revenue
34
Return on Assets ROA
Net Income ———————————— Average Total Assets or Net Income + Interest Expense (1 - t) ——————————————————— Average Total Assets
35
Operating Return on Assets
EBIT ———————————— Average Total Assets
36
Return on Total Capital ROTC
EBIT ———————————— Average Total Capital
37
Return on Common Equity ## Footnote
Net Income - Pref Div ————————————— Average Common Equity
38
Performance Ratios
* Cash Flow-to-Revenue * Cash Return-on-Assets * Cash Return-on-Equity * Cash-to-income * Cash Flow Per Share
39
Cash Flow-to-Revenue Ratio
CFO ———————— Net Revenue
40
Cash Return-on-Assets Ratio
CFO ———————————— Average Total Assets
41
Cash Return-on-Equity Ratio
CFO ———————————— Average Total Equity
42
Cash-to-Income Ratio
CFO —————————— Operating Income
43
Cash Flow Per Share
CFO - Preferred Dividends ——————————————— WASO
44
Coverage Ratios
* Debt Coverage Ratio * Interest Coverage Ratio * Reinvestment Ratio * Debt Payment Ratio * Dividend Payment Ratio * Investing and Financing Ratio
45
Debt Coverage Ratio
CFO —————— Total Debt
46
Reinvestment Ratio
CFO ————————————————— Cash Paid for Long Term Assets
47
Debt Payment Ratio
CFO —————————————————— Cash Long-Term Debt Repayment
48
Dividend Payment Ratio
CFO ———————— Dividends Paid
49
Investing and Financing Ratio
CFO ———————————————————————————— Cash Outflows from Investing and Financing Activities
50
Return on Equity ROE
Net Income ———————————— Average Total Equity
51
Original DuPont Equation
ROE = ROA \* Financial Leverage or ROE = Profit Margin \* Asset Turnover \* Leverage Ratio Net income Revenue Assets ——————— X —————— X ————— Revenue Assets Equity (NRAE)
52
Extended DuPont Equation
ROE = Tax Burden \* Interest Burden \* EBIT Margin \* Asset Turnover \* Financial Leverage NI EBT EBIT Revenue Assets ——— X ——— X ————— X ————— X ————— EBT EBIT Revenue Assets Equity (NeERAE)
53
Free Cash Flow to the Firm FCFF from CFO
CFO + Interest Expense(1 - t) - Fixed Captial Investment
54
Free Cash Flow to the Firm FCFF from Net Income
Net Income + Non-Cash Charges to Income + Interest Expense(1 - t) - Fixed Capital Investment - Working Capital Investment
55
Free Cash Flow to Equity FCFE from CFO
CFO + Net Borrowing - Fixed Capital Investment
56
Basic EPS
Net Income - Preferred Dividends —————————————————— WASO
57
Diluted EPS
NI - Pref Div + Conv Debt Int(1 - t) + Conv Pref Div ———————————————————————————— WASO + Debt Shares + Pref Shares + Option Shares
58
Purchases
COGS + End Inv - Beg Inv
59
FIFO from LIFO
FIFO Inv = LIFO Inv + LIFO Reserve
60
FIFO COGS from LIFO COGS
FIFO COGS = LIFO COGS - Change in LIFO Reserve
61
Income Tax Expense
Taxes Payable + Net ► DTA & DTL
62
Working Capital
Current Assets - Current Liabilities
63
CFO Indirect Method
Net Income - Cash Gains from Investing & Financing + Non-Cash Charges to Income (Dep,Amort) - Non-Cash Components to Revenue - Increases in Asset Accounts + Increases in Liability Accounts
64
Average Age of Assets
Accumulated Depreciation ———————————————— Annual Depreciation Expense
65
Fraud Triangle
* R ationalizations * I ncentives * O pportunities (Blame it on Rio)
66
Cash Paid to Suppliers
Purchases + Inc in A/P
67
Impairment Loss Under IFRS
Carrying Value - Recoverable Amount Recoverable Amount = The greater of the value in use or the fair value less costs to sell.
68
Price to Earnings Ratio P/E
Dividend Payout Ratio ———————————— Required ROE - g

CFA Level I (Joeker) (10 decks)

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