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SPM 5506 > Module 9 > Flashcards

Module 9 Flashcards

1
Q

4 financial statements

A

income statements
balance sheet
statement of retained earnings
statement of cash flows

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2
Q

private companies

A

not required to release financial statements

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3
Q

sports franchices

A

generally do not release financial statements

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4
Q

public university athletic depts

A

must disclose financial statements

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5
Q

why might pro sports financial statement not tell whole story?

A

move profits in pace w/ lower tax rate
reporting additional expenses can lower tax liability
obscure profit to generate support for public financing of arenas or lower salary demands of players

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6
Q

how do pro sports do this on their financial statements?

A

transfer of profits within conglomerate
pay family members “salary” - reported as expense
RDA

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7
Q

income statement

A

gives financial summary of firms operating results during specific period

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8
Q

income

A

money/funds received

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9
Q

net income

A

revenue - expenses = profit q

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10
Q

balance sheets

A

firms financial position at given point

shows assets and liabilities

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11
Q

assets

A

cash, securities, inventories, capital, etc.

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12
Q

liabilities

A

accounts payable, debt, etc.

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13
Q

assets =

A

liabilities + capital

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14
Q

capital =

A

assets - liabilities (stockholder equity)

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15
Q

fixed assets

A

least liquidity (long term)

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16
Q

long term liabilities

A

obligations that will not be paid completely within 1 year

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17
Q

current assets

A

expected to be converted to cash within 1 year or less

most liquid listed 1st

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18
Q

current liabilities

A

obligations that must be paid in 1 year or less

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19
Q

net working capital =

A

current assets - current liabilities

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20
Q

statement of cash flows

A

summary of firms operating investment and financing cash flows
positive or neg

21
Q

statement of retained earnings

A

reconciles net income earned during given year and any cash dividends paid
shows change in retained earnings
important for stockholders

22
Q

operating cash flows

A

related to sale and production of goods and services

23
Q

investment cash flows

A

associated with fixed assets and business interests

24
Q

financing cash flows

A

from debt and equity financing

25
Q

firm borrows money

A

positive cash flow

26
Q

firm pays back debt

A

negative cash flow

27
Q

short term cash flows

A

needed to pay operating expenses

within 2 years

28
Q

long term cash flows

A

for strategic considerations and/or purchases

generally longer than 2 years

29
Q

cash forecast

A

predicts cash flow

30
Q

pro forma statements

A

predicted income statements or balance sheets

31
Q

cross sectional analysis

A

comparison of diff firms and ratios at certain point

32
Q

time series analysis

A

evaluate firms financial performance over time

33
Q

panel data

A

qualities of both cross sectional and time series analysis

34
Q

ratio analysis

A

involves method of calculation and interpreting financial ratios to analyze and monitor firms performance

35
Q

liquidity ratios

A

measure firms ability to meet short term financial obligations

36
Q

current ratio

A

total current assets / total current liabilities

37
Q

current ration < 1

A

firm likely not covering current expenses

38
Q

quick ratio

A

measures how much of firms assets tied up in inventory

(current assets - inventory) / current liabilities

39
Q

net working capital

A

current assets - current liabilities

amount of cash and liquid assets available to firm if they had to pay off all current liabilities in short period

40
Q

activity ratios

A

measure how effectively firm manages assets

41
Q

inventory turnover ratio

A

measures how many times during year inventory purchased and sold

42
Q

financial leverage ratios

A

give info on extent to which business relies on debt rather than equity

43
Q

debt-equity ratio

A

measures leverage but from standpoint of owner equity

44
Q

net profit

A

profit after paying taxes interest and overhead

45
Q

return on equity

A

measures profitability thru profits earned on investments thru stockholders assets only

46
Q

negative stockholder equity

A

when firms liabilities exceed assets

47
Q

market value

A

estimate of what firm would sell for in open marketplace

price per share * # of shares outstanding

48
Q

book value

A

based on cost of firms assets minus accumulated depreciation

SPM 5506 (11 decks)

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