series 86 Flashcards
What is the least impact on an unlevered dcf?
interest expense
A company has been involved in channel stuffing, where on balance sheet do you check?
accounts receivable increases and inventory decreases
A RA uses consensus to calculate P/E but doesnt cite? Is this right or wrong?
has to cite consensus and firms estimates
Return on Common Equity
Net income/shareholder equity - preferred dividends
Three components of ROE (du pont)
profit margins (NI/Sales) * asset turnover (sales/avg assets) *leverage (assets/Shareholder equity)
What company would be the best to normalize earnings and adj. for changes in interest rates?
1. machine tool company
2. retail
3. tobacco
4. etc.
machine tool company
who would be least to most impacted by pandemic (travel, pharma, consumer retail, discretionary retail)
pharma, consumer retail, discretionary retail, travel.
what has the biggest impact on ROE?
1. capital spending
2. gross margin
3. asset turnover
4. debt/equity
asset turnover
sum of the parts formula if 1/3 of company business is credit card processing valued at 10x and 2/3 valued at 25x.
(1/3 * 10) + (2/3 *25) = 15x
quick ratio
current assets - inventory - other current assets
company has q3 sales of 4.1% and inventory increase of 11% yoy but then in q4 some special sales event happened and sales and gm only grew by 1%. what would an analyst be most concerned with?
1. avg cost of inventory is lower
2. cogs will decrease in future
3. sales will be strong in future
4. gross margin will be weak.
gross margin will be weak
which of these will cause cash flow to increase?
1. depreciation decreasing
2. accrued payable vacation days
3. something related to working capital
accrued payable vacation
if a company uses an ATM overnight offering to cover anticipated capital maintenance in the Q, what will be the impact on valuation?
valuation will decrease because increased number of shares and increased capex?
If a RA is using P/E because of earnings growth and supervisor says no we should use EV/EBITDA bc they have high levels of debt who is right?
both are right
Us dept of commerce?
makes seasonal adjustments
