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

Solomon Ch 1 Deck 1 Flashcards

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Series 79 Top-Off Exam 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
Q

Book Value

A

Total Assets-Total Liabilities= Shareholders EquityValuation

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26
Q

Tangible book value

A

Tangible book value = total assets- total liabilities-intangible assetsValuation

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27
Q

Price to Book

A

Price to Book = market cap/book ValueValuation

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28
Q

Price to Cash Flow

A

Market Cap/Operating cash flowValuation

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29
Q

Dividend yield

A

Annual dividend per common share/ Price per shareDon’t confuse with dividend payout ratioValuation

30
Q

Dividend payout ratio

A

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
Q

CAGR

A

Compound annual growth rateCAGR=[(value at end/ value at beginning)^(1/#yrs)]-1

32
Q

WACC

A

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
Q

Cost of Equity

A

Risk free rate of return + Beta(market return - risk-free rate of return)This uses capital asset pricing model

34
Q

IRR

A

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
Q

NPV

A

Net present valueNPV= - Initial investment + sum (discounted cash flows)

36
Q

Forward Value

A

Principal(1-R)^T

37
Q

Present Value

A

Present Value = Forward Value/(1+R)^tThis is called discounting

38
Q

Discounting

A

Finding present value of a forward value Present Value = Forward Value/(1+R)^t

39
Q

DCF

A

Discounted cash flow methodDiscount future cash flows (FCF) by weighted average cost of capital (WACC)

40
Q

DDM

A

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
Q

Asset turnover ratio

A

Revenue/average total assetsdo not confuse with return on assets

42
Q

Bond conversion ratio

A

Par value of bond/ conversion price

43
Q

Conversion parity Price

A

Market value of bond/conversion ratio

44
Q

Current Yield

A

Annual Interest/Market Price of Bond

45
Q

Bond seesaw

A

PremiumParDiscountCR CYYTMYTCCoupon RateCurrent YieldYield to maturityYield to call

46
Q

YTM

A

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
Q

Yield to call

A

Same as YTM but:Use Call Value not Par ValueUse Call Date not Maturity Date

48
Q

Discount Yield

A

Discount Yield = (Discount/Face Value) x (365/Days to maturity)Use for zero coupon bonds

49
Q

Dividend Dates

A

DERPDeclaration Date (Announcement Date)Ex Date (2 days before Record Date)Record Date (must be owner on this date)Payment Date

50
Q

Cash Dividend Accounting

A

Declaration Date”Dividends Payable” liability createdRetained Earnings ReducedPayment DateDividends payable liability reducedCash reduced

51
Q

Stock dividend accounting

A

Declaration dateRetained earnings reducedPaid in capital increasedEx DatePrice per share lowered by dividend amount

52
Q

Balance Sheet Equation

A

Assets-Liabilities=Shareholder’s Equity

53
Q

Balance Sheet Contents

A

ASSETSCurrent AssetsLong Term AssetsTotal AssetsLIABILITIESCurrent LiabilitiesLong Term LiabilitiesTotal LiabilitiesSHAREHOLDER’S EQUITY

54
Q

Current Assets Balance Sheet

A

Cash and Cash EquivalentsAccounts ReceivableInventory

55
Q

Long Term Assets Balance Sheet

A

Prepaid ExpensesGoodwill Patents

56
Q

Current Liabilities Balance Sheet

A

Accounts PayableOther Current Liabilities

57
Q

Long term liabilities Balance Sheet

A

Long Term debt

58
Q

Shareholder’s Equity Balance Sheet

A

Paid in Capital (Actual-Par Value)Retained Earnings

59
Q

Goodwill

A

Fair Market Value - Asset Value

60
Q

10K Filing Deadline

A

60-90 from end of fiscal year

61
Q

10Q Filing Deadline

A

40-45 days after end of company’s first three fiscal quarters

62
Q

8K Filing Deadline

A

4 days from triggering event

63
Q

13D Filing Deadline

A

10 Days after purchase

64
Q

13G Filing Deadline

A

45 days after end of calendar year of purchaseWithin 10 days for non-institutional investors

65
Q

13F Filing Deadline

A

45 days after end of each calendar quarter

66
Q

14 A Filing Deadline

A

in advance of shareholder meeting

67
Q

Form 3 filing deadline

A

within 10 days of becoming insideror by effective date of registration if company registering securities for the first time

68
Q

form 4 filing deadline

A

within 2 business days of transaction resulting in change

69
Q

Form 5

A

within 45 days of end of company’s fiscal year

70
Q

Paid in Capital

A

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
Q

Why am I doing This

A

Best guess at the moment

72
Q

Another stupid guard

A

Just to see if I can make a random mix

Series 79 Chapter 1 (9 decks)

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