University:
York University
Course:
ADMS 2541 | Introduction to Personal Finance
Academic year:

2021
Views:

100

Pages:

3
Author:

Niklas

8/29 Chapter 2 •Financial Statements •Publicly traded companies must File regular reports with SEC -10-k(annias), 10-0 (Quarterly) Reporis include financial Statements, matters to be voted on, important events, etc. Balance Sheet •Provides Snapshot of firm's status (assets + liabilities) I at a given point in time *Assets = Liabilities + Shareholders Equity •Fissets What company owns. •Liabilities. What company owes Equity Difference between the two -Current assets = cash for expected)in the next year -cash, marketable securities, accounts receivable, inventories -long term assets Asseis property, Plant, equipment Foctories or real estate کے Current Long Torm -Goodwill and Intangible assets -brand valve or patents current liabilities = Due to be paid within the next year -Accounts payable, Short-term debt, current maturines of long-term debt, taxes wages payable Liabilities -Long-term liabilities -long term delor and Capital leases. Current Long Term -Book value of equity (could be negative) =BV assets BV liabilities. -If company shuts down, must sell all assets + pay off debt 1st Whatever remains goes to shareholders = "residual claimanis goes Total Value of ASBETS Total Value of Liabilities + Shareholders Equity Current Assets Current Liabilities Fixed Assets Long-term dest 1) tangible 2) Intangible Shareholders' Equity New Balance Sheet (Afer year one 1) cash after year = Starting + TCF 2) Inventory Replinished + added 3) Fixed Assets = worth + gnd worth 4) Goodwill = Stays same 5) Liabilities Ratios-allow for better comparison over time or between companies • Liquidity Ratios & Short term solvency -current ratio: CA/CL -Quick: (CA-Inventory)/CL -Cash: (Cash und ST Investments)/CL If Firm cant Pay Interest expense • Leverage Ratios long term solvency -Total Debt: TD/TA -Debt/Equity (DIE): TD/TE -Equity multiplier: TA/TE = 1+DIE Coverage Ratios -Times Interest Carned (TIE): EBIT/Interest - Cash Coverage: EBITDA/Interest •Total Asser Turnover: Sales/Total Assets • Profitability Ratios "Net Profit Margin: Net Income/sales BANKRUPT A Return on Assets: Net Income / Total Assers - Return on Equity. Net Income / Total Equity •Dupont Identity: ROE depends on 1) Asset turnover -Efficiency of asset use 2) Net Profit Margin Operating efficiency 3) Equity Multiplier -Use of debt equity: HCAP = Price per share x Market Value Measures •Marker Capitalization (MCAP) AKA Market value of #Shares •Enterprise Valve (EV): EV-MCAP+ Debt Pref. Stocks (cosh marretable outstanding • Securities) - minority | interest •Price to Earnings (P/E): P/E • P/E price per share or MCAP/wet Income •Enterprise Valve to EBITDA: EV/EBITDA Growth: Sales must go up ↑ SGR Sustainable Growth Rate Assets must go up ↑ ROEb 1-ROEb bretention IGR Internal Growth Rate ROA 1-ROA*b route x Sales Sales NI Sales X Sales Assets. Need additional Capital External Raising capital inith additional debr or equity Internal Retention from eamings Memorize ROM Net Income Assets IGR: ROAXb 1-ROA SGR: ROE X6 1-ROEXb ROE: NI X Sales Sales ASSCIS Assets Equity ROA.08 ROE.12 b=.9 Retention Pate 42 Sales Assets Assets Equity Sales I/Y: Interest Rate