Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CMA Part 2 > Section A-C > Flashcards

Section A-C Flashcards

1
Q

Liquidity

Net Working Capital

A

Total Current Assets - Total Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Liquidity

Current Ratio

A

Current Assets / Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Liquidity

Quick/Acid Ratio

A

(Cash and Cash Equivalents + Marketable Securities + Net Accounts Receivable) / Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Liquidity

Cash Ratio

A

(Cash and Cash Equivalents + Marketable Securities) / Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Liquidity

Cash Flow Ratio

A

Operating Cash Flow / Period End Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Liquidity

Net Working Capital Ratio

A

Net Working Capital / Total Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Leverage

Financial Leverage Ratio

A

Total Assets / Total Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Leverage

Degree of Financial Leverage

A

% Change in Net Income / % Change in EBIT
or
EBIT / EBT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Leverage

Degree of Operating Leverage

A

% Change in EBIT going forward / % change in Sales going forward
or
Contribution Margin / EBIT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Leverage

Degree of Total Leverage

A

% Change in Net Income / % Change in Sales
or
Contribution Marign / EBT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Capital Structure and Solvency

Debt to Equity Ratio

A

Total Liabilities / Total Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Capital Structure and Solvency

Long-Term Debt to Equity Ratio

A

(Total Debt - Current Liabilities) / Total Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Capital Structure and Solvency

Debt to Total Assets Ratio

A

Total Liabilities / Total Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Earnings Coverage

Interest Coverage (Times Interest Earned)

A

EBIT / Interest Expense

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Earnings Coverage

Fixed Charge Coverage (Earnings to Fixed Charges)

A

(EBIT + Operating Lease pmts) / Fixed Charges (required interest and principal pmts on loans and capital leases, operating lease pmts)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Earnings Coverage

Cash Flow to Fixed Charges

A

Adjusted Operating Cash Flow (cash from operations + fixed charges [interest exp. and operating lease pmts]) / Fixed Charges (required interest and principal pmts on loans and capital leases, operating lease pmts)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Activity

Accounts Receivable Turnover Ratio

A

Net Annual Credit Sales / Average Gross Accounts Receivable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Activity

Days Sales in Receivables (Average Collection Period)

A

365 / Accounts Receivable Turnover

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Activity

Inventory Turnover Ratio

A

Annual COGS / Average Inventory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Activity

Days Sales in Inventory

A

365 / Inventory Turnover Ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Activity

Accounts Payable Turnover Ratio

A

Annual Credit Purchases / Average Accounts Payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Activity

Days Purchases in Accounts Payable

A

365 / Accounts Payable Turnover Ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Activity

Operating Cycle

A

Days Sales in Receivables + Days Sales in Inventory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Activity

Cash Cycle

A

Operating Cycle - Days Purchases in Accounts Payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Activity

Total Asset Turnover Ratio

A

Sales / Average Total Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Activity

Fixed Asset Turnover Ratio

A

Sales / Average Net Plant, Property, and Equipment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Profitability

Gross Profit Margin

A

Gross Profit / Net Sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Profitability

Operating Profit Margin

A

Operating Income / Net Sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Profitability

Net Profit Margin (Profit Margin on Sales)

A

Net Income / Net Sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Profitability

EBITDA Margin

A

EBITDA / Net Sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Return on Invested Capital

Return on Assets (ROA)

A

Net Income / Average Total Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Return on Invested Capital

Return on Equity (ROE)

A

Net Income / Average Total Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Return on Invested Capital

Return on Common Equity (ROCE)

A

(Net Income - Preferred Dividends) / Average Common Equity

34
Q

Market

Book Value per Share

A

(Total Stockholders’ Equity - Preferred Equity) / No. of Common Shares Outstanding at Balance Sheet Date

35
Q

Market

Market-to-Book Ratio

A

Market Price per Share / Book Value per Share

36
Q

Market

Basic Earnings Per Share (BEPS)

A

Income Available to Common Shareholders (IAC) / Weighted Average No. of Common Shares Outstanding (WANCSO)

37
Q

Market

Diluted Earnings Per Share (DEPS)

A

Adjusted Income Available to Common Shareholders / Weighted Average No. of Common and Potential Common Shares Outstanding

38
Q

Market

Price/Earnings Ratio or P/E Ratio

A

Market Price per Share / Basic Earnings Per Share (BEPS)

39
Q

Market

Price / EBITDA Ratio

A

Market Price per Share / EBITDA per Share

40
Q

Market

Earnings Yield

A

Basic Earnings per Share (BEPS annual) / Current Market Price per Common Share

41
Q

Market

Dividend Yield

A

Annual Dividends per Common Share / Current Market Price per Share

42
Q

Market

Dividend Payout Ratio

A

Total Common Dividends (annual) / Income Available to Common Shareholders (IAC)

43
Q

Market

Shareholder Return

A

(Ending Stock Price - Beginning Stock Price + Annual Dividends Per Share) / Beginning Stock Price

44
Q

Other

Sustainable Growth Rate

A

Return On Common Equity (ROCE) x (1 - Dividend Payout Ratio)

45
Q

DuPont Analysis

ROA

A

(Net Income / Sales ) x (Sales / Average Total Assets) = Net Income / Total Assets = ROA

46
Q

DuPont Analysis

ROE

A

(Net Income / Sales ) x (Sales / AverageTotal Assets) x (Average Total Assets / Average Total Equity) = ROE

ROE is affected by three things

1) Operating Efficiency - Net Profit Margin
2) Asset use Efficiency - Total Asset Turnover
3) Financial Leverage - Financial Leverage Ratio

47
Q

CAPM

Capital Asset Pricing Model

A

R = Rf + B(Rm - Rf)

48
Q

Real Rate

A

[(1 + Nominal Rate) / (1 + Inflation Rate)] - 1

49
Q

Duration

A

The sum of the Proportion of Present Value of cash flow x Time (number of years)

50
Q

Modified Duration

A

Duration / (1 + Yield to Maturity)

Answer means a 1% change in YTM will change the bond’s price by the modified duration percentage calculate

51
Q

Zero Growth Dividend Model

A

P0 = Annual Dividend / Investors’ Required Rate of Return

52
Q

Dividend Growth Model

A

P0 = D1 / (R - g)

53
Q

Dividend Growth Model + Expected Capital Gain

A

P0 = (D1 + P1) / (1 + R)

54
Q

Stock w/o Dividend

A

P0 = EPS1 / (R - g)

55
Q

Valuing Stock - Rights-On

A

Vr = (Po - Pn) / (r + 1)

56
Q

Valuing Stock - Ex-Rights

A

(Market value of stock, ex-rights - Subscription price) / Number of rights needed to buy one new share

57
Q

Option Valuation

A

Total option premium = Intrinsic value + Extrinsic Value (Time Value)

58
Q

Put-Call Parity Theorem

A

Call Premium + PV of Exercise Price = Put Premium + Stock Price

or

C + X/(1+Rf)T = P + S0

59
Q

WACC

A

Weighted average cost of capital according to the percentage each component represents in the firms capital structure at market values

60
Q

Cost of Debt

A

Cd = C(1-t)

Where C = Interest expense / cash received from sale of debt

61
Q

Cost of Preferred Stock

A

Existing: Annual dividends / Current market value of preferred stock

Newly-Issued: Cnp = Annual dividends / Net proceeds of issue

62
Q

Cost of Common Equity

Existing / Retained Earnings

A

Cre = (D1 / P0) + g
or
CAPM = Rf + B(Rm - Rf)

63
Q

Cost of New Common Equity

A

Cns = (D1 / Net proceeds of the issue) + g

64
Q

Breakpoint

A

Point where marginal cost of capital changes

Breakpoint = Limit / Proportion of Total Capital

65
Q

Cost of not taking cash discount (Opportunity cost)

A

Cost = [360 / (Total period for pmt - Period of discounted pmt)] x [Discount % / (100% - Discount %)]

66
Q

T-Bill Effective Interest Rate

A

(Interest earned / Discounted basis) x (360 / Days to Maturity)

67
Q

Baumol Cash Management Model

A

OC = (2bT / i)^1/2

68
Q

Economic Order Quantity (EOQ)

A

EOQ = (2aD / k)^1/2

69
Q

Effective Interest Rate (Compensating Balances)

A

Annualized Net interest cost / Effective Cash Received

70
Q

Effective Rate of Discounted Interest

A

Interest / (Principal amount - interest withheld)

71
Q

Free Cash Flow

A

EBIT(1-tax rate) - Capital Expenditures - Depreciation +/-Change in Non-Cash Working Capital

72
Q

PV of Cash Flows in Perpetuity at Horizon Date

A

Expected Free Cash Flow of Next Year / (Cost of Capital from CAPM - Expected Growth Rate

73
Q

Growth Rate

A

Reinvestment Rate x Return on Capital Invested
or
(Capital Expenditures - Depreciation +/-Change in Non-Cash WC) / Total Assets

74
Q

Reinvestment Rate

A

(Capital Expenditures - Depreciation +/-Change in Non-Cash WC) / EBIT(1-tax rate

75
Q

Return on Capital Invested

A

EBIT(1-tax rate) / Total Assets

76
Q

Breakeven in Units

A

Total Fixed Costs / Unit Contribution Margin

77
Q

Breakeven in Revenue

A

Total fixed costs / Contribution margin ratio

78
Q

Price Elasticity of Demand - Midpoint Method

A

Ed = {[Q2-Q1] / [(Q2+Q1) / 2]} / [P2-P1] / [(P2+P1) / 2]}

79
Q

Price Elasticity of Demand - Percentage Method

A

Ed = Change in Quantity / %Change in Price

80
Q

Depreciation Tax Shield

A

Full cost of asset x Annual depreciation rate x Tax Rate

CMA Part 2 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions