SFCPA Deck 2 Flashcards
When a company acquired a building paying a portion of the purchase price in cash and issuing a mortgage note payable what amount is included in investing activities?
Cash Payments
Items that are included in the financing activitives
- issurance of stock
- payments of dividends
- treasury stock transactions
- issuance of debt
- obtaining cash from creditors and repayment or other settlement of debt obgligations
- excercise of share options resulting in excess tax benefits
- receiving resources that are donor restricted to long term use
Formula for TOTAL DEBT RATIO?
FORMULA - TOTAL LIABILITIES / TOTAL ASSETS
PURPOSE - How much of our assets are financed by debt
Formula for Debt to Equity Ratio ?
FORMULA - TOTAL LIABILITIES / TOTAL EQUITY
PURPOSE - HOW CALC HOW MUCH DEBT A COMPANY FINANCING
Formula for Price to Earnings P/E Ratio
Stock Price / Earnings per Share (EPS)
Formula and purpose for EBITDA
EBITDA meaning Earnings before interest expense, taxes, depreciation and amortization
Formula is Net Income + Interest expense, taxes, Depreciation & Amortization
Purpose - measures a companies profitable and it also helps asses operational performance without financing and accounting decisions
Formula for P/E Ratio and purpose?
Formula is Stock price / EPS
Step 1 - Net Income / Common Stock EPS
Step 2 - Stock price / EPS
Purpose - how much investors are wiling to pay for each dollar. High P/E ratio shows that they have a high future growth where a lower would the stock is undervalued
Formula for Dividends payout ratio and purpose?
Formula - Dividends Paid / Net Income x 100
Purpose - how much dividends paid out of net income. How much profit a company is able to return
Formula and purpose for asset turnover ratio?
Formula - Revenue / AVG Net Assets
Purpose - how well an asset is using their revenue to generate sales
For the Formula EBITDA when your not given Net Income and additional pieces need to calc the ratio. How would we calc it?
Revenue - COGS - Selling General Admin Expense
What does exercising share options do to the debt to equity ratio?
it improves the ratio by decreasing the debt to equity ratio
For varience questions what is the formula?
Actual Net Income - budgeted Net Income
What is Favorable Variances?
favorable variance occurs when actual results are better than budgeted expections such as higher revenue or lower expenses
What is unfavorable variances?
actual results are worse than budgeted expection such as lower revenue or higher expenses
Does the statement of financial position provide profitability and assessing past performance?
No, the statement of financial position can be useful in assessing liquidity, financial flexibility, profitability, and risk
Is interest expense and advertising included in general and administrative expenses?
No for both interest and adversing
Proper analysis for bank statement and general ledger questions?
we need to check whether the deposits and checks matches and see what is missing
What happens to avoided check for bank statements and general ledger?
They are never recognized bc they are never withdrawal from the bank
General ledger they cause a added back since the payment wasn’t taken out
What impact does NSF checks cause to the general ledger?
it decreases it bc they never received the payment
What happens to avoided check for general ledger?
They would have to make adjustment such as never including that check
What affect does NSF have bank statement and general ledger balance?
bank statement has no affect since they withdrawal the fee
While the general ledger would reduce by $35 since that adjustment wasn’t made
When no adjustment are made for the general ledger for NSF and check deposit what will be the result for the balance for the ledger?
since no adjustment are made the balance would higher by the the amount of NSF and check
Calc, the book value per share of common stock for the consolidated balance sheet?
50,000 shares issued
5,000 reacquired held in treasury
45,000
TOTAL STOCKHOLDERS EQUITY = 2,200,000 / 45,000 = 49 BOOK VALUE PER SHARE OF COMMON STOCK
Examples of Vertical Common size analysis?
A statement that current adversing expense is 2% of Sales
When we calc the Net Cash balance after the reconciliation?
Those type of calc we need to just calc the bank recon so we would add deposits transit and subtract the checks outstanding
