Module 7 - Financial Statements, Cost Estimating Flashcards
What are the 3 main financial statements?
Balance Sheet
Income Statements
Cash Flow Statements
What does a balance sheet show?
Assets (Equipment, bldgs, inventory)
Liabilities (payroll, loans, rent)
Owners Equity (stock, paid-in capital, retained earnings)
Current vs Non-Current Assets
Current: will/can be sold within a year
Non-Current: will not/cannot be sold within a year
Current vs Long-Term Liabilities
Current: due/will be paid within a year (accounts payable, accrued expenses)
Long-Term: Bonds, Loans
What is Owner’s Equity?
The worth of the company
Paid-In capital (money from seeking stocks)
Retained earnings: Cumulative Net Income of firm minus total dividends paid
What is net working capital?
Current Assets - Current Liabilities
What are the limitations of balance sheets?
- Assets recorded with historical value
- Only has assets that can be expressed in money
- Owners Equity < Market Value
What is an income sheet?
Measures profit of company over a time period (net income/loss)
What’s included in an income statement?
Revenue - Expenses = Taxable Income
What’s included in Revenues?
Money received for delivering goods/services (gross sales - returns)
What’s included in expenses?
Cost of goods sold, operating expenses, extra expenses (interest in loans, currency charges, depreciation)
What is income tax calculated with?
Taxable income x Tax Rate
What is a cash flow statement?
Shows company’s use of cash over reporting period (operations, investment activities, financing activities)
What are the classification in cash flow statements?
Op Acts: transactions and events that enter into net income
Investing: purchase and sale of securities, property, plant, equipment, other non-resale assets
Financing/ transactions of resources from or repaid to owners and creditors
Asset, Liability, or Equity?
Cash, Equipment, Retained Earnings, Accounts Payable, Long Tern investments, Building, Long Term debt, Net deficit, pension benefits
Asset, Asset, Equity, Liability, Asset, Asset, Liability, Equity, Liability
Where to find the following Info?
Company’s profit during fiscal period
Cash spent and generated
Financial position
Income statement
Cash Flow Statement
Balance Sheet
What is the debt ratio?
Describes relationship between liabilities and assets (ratio = 1 means all assets financed with debt)
What is debt management?
Measure of companies ability to meet financing commitments - analyzing earnings before interest and taxes to see if interest can be paid
What is the current ratio? The quick ratio?
Current ratio asks if liabilities are rising faster than assets
Quick ratio asks if company could pay liabilities if they were due now
What is inventory turnover?
How many times per year was inventory sold and replaced
What is Days Sales Outstanding?
What the average collection period (how long after a sale does it take to get paid)
What is total assets turnover?
How effectively company is using its assets
What is the return on assets?
How successful company is at using assets to generate profit
Return on Equity
How much income is earned per dollar of shareholder investment
What is the price-to earnings ratio?
How many times earnings is company trading at
What is the book value per share?
How much money would be distributed to each shareholder if all assets were sold and liabilities paid
What is top-down vs bottom up cost estimating?
Top-Down: Use historical data
Bottom-Up: more detailed
What is a work breakdown structure?
Framework for defining project work elements
What is a cost and revenue structure?
Used to identify and categorize costs and revenues needed for analysis
What are some estimating techniques?
Order-of-Magnitude estimates (+/-30%)
Semi-detailed or budget (+/-15%)
Definitive Estimates (+/-5%)
What are some sources for cost estimating?
Accounting records, other sources inside firm, Sources outside firm, R&D
What are indexes in cost estimating?
Using historical costs to predict current costs
If the index for a pump increased from 212 to 286 and the original price was $112,000, what is the estimated price now?
$151,094
What is the factor technique for cost estimating?
Extension of unit technique where products of quantities are summed than added to components estimated directly
What is parametric cost estimating?
Use of historical cost data and statistical techniques to predict future costs
What is power sizing in cost estimating?
Using exponential model to predict costs of different sized products
The learning rate for assembly is 75%, what is the time to assemble the 8th unit, and the total time to assemble the first 6 units if the first unit took 3 hours to assemble?
Z8=1.27hr
T6=11.8hr
What are the 4 steps in developing a cost estimate relationship?
- Problem definition
- Data collection and normalization
- CER equation development
- Model validation and documentation
