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Series 79 Chapter 1 > Solomon Ch 1 Deck 1 > Flashcards

Solomon Ch 1 Deck 1 Flashcards

1
Q

EPS

A

Earnings-per-shareEPS= (net income-preferred shareholders dividend)/ Common Shares outstandingprofitability

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2
Q

Fully diluted EPS

A

EPS(FD)= (net Income-preferred shareholders dividend)/ common shares + in the money options + convertibles (bonds, preferred stock, warrants)profitability

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3
Q

EPS error check

A

EPS always greater than fully diluted EPSprofitability

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4
Q

PE

A

Price per share / earnings-per-shareprofitability

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5
Q

Earnings yield

A

Annual EPS/ current PPSAllows comparison with coupon of bondsprofitability

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6
Q

Gross margin

A

Gross profit/ revenueprofitability

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7
Q

Operating margin

A

Operating profit/ revenueprofitability

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8
Q

Net margin

A

Net profit/Revenueprofitability

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9
Q

Equity turnover

A

Annual sales/average shareholders equityprofitability

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10
Q

Return on equity

A

Net income/ Book value of equity (common)profitability

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11
Q

Return on assets

A

Net income/ total assetsmeasures how efficient company is in using assets to generate profitDo no confuse with asset turnover ratioprofitability

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12
Q

Return on capital

A

NOPAT/ net debt + Book value of equityIf you are given a balance sheet interest bearing debt can be used in place of net debtNOPAT= EBIT(1-tax rate)Net operating profit after taxesprofitability

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13
Q

NOPAT

A

Net operating profit after taxesNOPAT=EBIT(1-tax rate)profitability

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14
Q

Total expense ratio

A

Total fund operating costs/ average total fund assetsUsed in fund management contextprofitability

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15
Q

Interest coverage ratio

A

Operating income (EBIT)/ interest expenseprofitability

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16
Q

Operating leverage

A

% change in EBIT / % change in salesmeasure of domination of fixed costshigher =higher fixed costsProfitability

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17
Q

Market equity value

A

Market Equity Value = PPS x Fully diluted sharesValuation

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18
Q

Equity Value

A

Equity Value = Market Cap + ITM Options & convertibles (bonds, preferred shares, warrants)Use forward value if given a choice between current market price and forward valueValuation

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19
Q

Price to sales

A

Market Cap/Sales Good for growth companies with no earningsValuation

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20
Q

Enterprise value

A

Enterprise value = Equity value + Net debt (+ preferred stock + minor interests)Valuation

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21
Q

EV/ EBITDA

A

Independent of capital structure, and ITDAValuation

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22
Q

EBITDA error check

A

EBIT never greater than EBITDA EV/EBITDA never greater than EV/EBITValuation

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23
Q

EV/EBITDA and pre-tax synergies

A

Add pre tax synergies to EBITDAValuation

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24
Q

PEG Ratio

A

PE/Growth rate (%)Garp investors look for lowest PEG ratioValuation

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25
Book Value
Total Assets-Total Liabilities= Shareholders EquityValuation
26
Tangible book value
Tangible book value = total assets- total liabilities-intangible assetsValuation
27
Price to Book
Price to Book = market cap/book ValueValuation
28
Price to Cash Flow
Market Cap/Operating cash flowValuation
29
Dividend yield
Annual dividend per common share/ Price per shareDon't confuse with dividend payout ratioValuation
30
Dividend payout ratio
Annual dividend per common share/ earnings-per-share% of earnings given out in dividendshow well a company's earnings support its dividend payments.Don't confuse with dividend yieldValuation
31
CAGR
Compound annual growth rateCAGR=[(value at end/ value at beginning)^(1/#yrs)]-1
32
WACC
Weighted Average Cost of CapitalWACC = Cost of Equity(Equity/Total Value) + Cost of Debt(debt/total value)(1-Tax Rate)Measures company's cost to borrow money given proportional amount of debt and equity taken onHigher wacc = more expensive borrowing costs to overcome to make a profitif no debt, WACC=Cost of Equity
33
Cost of Equity
Risk free rate of return + Beta(market return - risk-free rate of return)This uses capital asset pricing model
34
IRR
Internal rate of returnNet present value equals zero at the discount rateIf internal rate of return is greater than the cost of borrowing, it is a good investment
35
NPV
Net present valueNPV= - Initial investment + sum (discounted cash flows)
36
Forward Value
Principal(1-R)^T
37
Present Value
Present Value = Forward Value/(1+R)^tThis is called discounting
38
Discounting
Finding present value of a forward value Present Value = Forward Value/(1+R)^t
39
DCF
Discounted cash flow methodDiscount future cash flows (FCF) by weighted average cost of capital (WACC)
40
DDM
Dividend discount modelValue of Stock = Annual Dividend/Discount rate-growth rate of dividendcan use desired rate of return instead of discount rateProcedure for valuing price of a stock by using predicted dividends discounted to present value. If DDM value higher than trading value, stock undervalued.
41
Asset turnover ratio
Revenue/average total assetsdo not confuse with return on assets
42
Bond conversion ratio
Par value of bond/ conversion price
43
Conversion parity Price
Market value of bond/conversion ratio
44
Current Yield
Annual Interest/Market Price of Bond
45
Bond seesaw
PremiumParDiscountCR CYYTMYTCCoupon RateCurrent YieldYield to maturityYield to call
46
YTM
Yield to maturity[Annual coupon payment - (premium / years to maturity)] / Average of par value and market price[Annual coupon payment + (discount / years to maturity)] / Average of par value and market price]Net present value equals current price at Yield to MaturityYTM is the IRR of the Bond
47
Yield to call
Same as YTM but:Use Call Value not Par ValueUse Call Date not Maturity Date
48
Discount Yield
Discount Yield = (Discount/Face Value) x (365/Days to maturity)Use for zero coupon bonds
49
Dividend Dates
DERPDeclaration Date (Announcement Date)Ex Date (2 days before Record Date)Record Date (must be owner on this date)Payment Date
50
Cash Dividend Accounting
Declaration Date"Dividends Payable" liability createdRetained Earnings ReducedPayment DateDividends payable liability reducedCash reduced
51
Stock dividend accounting
Declaration dateRetained earnings reducedPaid in capital increasedEx DatePrice per share lowered by dividend amount
52
Balance Sheet Equation
Assets-Liabilities=Shareholder's Equity
53
Balance Sheet Contents
ASSETSCurrent AssetsLong Term AssetsTotal AssetsLIABILITIESCurrent LiabilitiesLong Term LiabilitiesTotal LiabilitiesSHAREHOLDER'S EQUITY
54
Current Assets Balance Sheet
Cash and Cash EquivalentsAccounts ReceivableInventory
55
Long Term Assets Balance Sheet
Prepaid ExpensesGoodwill Patents
56
Current Liabilities Balance Sheet
Accounts PayableOther Current Liabilities
57
Long term liabilities Balance Sheet
Long Term debt
58
Shareholder's Equity Balance Sheet
Paid in Capital (Actual-Par Value)Retained Earnings
59
Goodwill
Fair Market Value - Asset Value
60
10K Filing Deadline
60-90 from end of fiscal year
61
10Q Filing Deadline
40-45 days after end of company's first three fiscal quarters
62
8K Filing Deadline
4 days from triggering event
63
13D Filing Deadline
10 Days after purchase
64
13G Filing Deadline
45 days after end of calendar year of purchaseWithin 10 days for non-institutional investors
65
13F Filing Deadline
45 days after end of each calendar quarter
66
14 A Filing Deadline
in advance of shareholder meeting
67
Form 3 filing deadline
within 10 days of becoming insideror by effective date of registration if company registering securities for the first time
68
form 4 filing deadline
within 2 business days of transaction resulting in change
69
Form 5
within 45 days of end of company's fiscal year
70
Paid in Capital
Represents the funds raised by the business from equity, and not from ongoing operationsAmont paid in by investors during common or preferred stock issuances including the par value of the shares themselves.
71
Why am I doing This
Best guess at the moment
72
Another stupid guard
Just to see if I can make a random mix

Series 79 Chapter 1 (9 decks)

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