Security Analysis Focus Flashcards
Which of the below would form “Current Assets”
Non-Current Assets.
Revenue
Trade Receivables
Inventory
Dividends
Costs
Cash
Securiteis for trading
Long-term liabilities
Current liabilities
Trade receivables
Inventory
Cash
Securities for trading
What are trade receivables
Debtor balances that arise from the company providing its customers with credit
On Balance Sheet
What is Purchased Goodwill?
Arises when the price paid by an acquiring company exceeds the value of the target company’s net assets.
On Balance Sheet
What is Net Realisable Value (NRV)?
Estimated selling price of each stock item, less costs brining the stock/raw material to saleable condition.
On Balance Sheet
What is Depreciation?
Applied to tangible non-current assets such as plant and machinery. The Depreciation charge allocates the fall in the book value of an asset.
On Income Statement
What is Operating Profit?
Gross profit, less operating expenses.
Profit before interest and tax (PBIT)
On Income Statement
What are Finance Costs?
The interest the company has incurred on its borrowings
On Income Statement
What is Net Income?
A company’s total earnings or profit. Profit after tax.
On Income Statement
What is Capital V Revenue Expenditure?
Capital Expenditure = money spent to buy non-current assets (eg property)
Revenue Expenditure = money spent that immediately impacts Income Statement (eg wages, audit fees)
On Income Statement
Another term for Income Statement?
Statement of Profit and Loss
Another term for Balance Sheet?
Statement of Financial Position
What is the relevance of the Statement of Cash Flows to investors?
As companies typically use accrual accounting, the Income Statement will not necessarily reflect changes in their cash position. The statement of Cash Flows is a deeper look at simply whether a company is generating more cash than its spending.
While a company can be earning a profit from an accounting perspective, it may actually end up with less cash than when it started the quarter.
