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Accounting Review
Ratios
Forecasting
Time Value of $$
Misc.
100
=Liabilities + Stockholder's Equity
What is "assets"?
100
This is calculated by taking total assets over total equity.
What is the leverage ratio?
100
Based on the return on equity and the dividend payout rate, this tells how quickly a company's sales can grow without changing its financial ratios and without issuing more equity.
What is the SGR (sustainable growth rate)?
100
This is what you do to evaluate what the value of a future sum would be worth today in the present.
What is discounting?
100
These are the names of all 3 of our TAs.
Who are: Andrew, Dallin, and Julie?
200
An asset that is planned to be used within one year.
What is a "current" asset?
200
This liquidity ratio does not consider changes in inventory.
What is the quick ratio?
200
This type of "forecasting" is used to identify short term operational cash needs - usually for the next month or up to a year.
What is cash budgeting?
200
This is a stream of equal, regular cash flows that occur at the end of the year.
What is an ordinary annuity?
200
These are the three areas of finance we have covered in class.
What are corporate finance, institutional finance, and investments?
300
As we discussed in class, due to this method of matching revenues with expenses, the net income balance may not always equal the cash flows of the firm.
What is accrual accounting (or the matching principle)?
300
These are the three areas that the DuPont decomposes the return on equity into.
What is profitability (net margin), financing (leverage), and efficiency (asset turnover)?
300
This is the purpose of creating pro forma financial forecasts according to the reading.
What is to predict future financing needs?
300
This one of the reasons that money is worth more today than in the future.
What is one of the following: risk, opportunity cost, inflation, investment opportunities?
300
The dean of the Marriott School.
Who is Lee Perry?
400
These three cash flows sum to equal the change in cash year over year.
What are operating, investing, and financing cash flows?
400
This ratio represents how much a firm retains each year from its net income to put back into the firm.
What is the retention rate or plowback ratio?
400
This is how we can calculate a firm's payout ratio.
What is calculating the dividends paid for the year and dividing it by the net income for the year? Dividends paid for the year are calculated by net income for the year minus addition to retained earnings for the year (End RE - Beg RE).
400
These are the inputs areas (i.e. interest rate input) for $5000 and 8 in the question below. KingVideos wants to purchase a machine using a loan for $5,000 that it will repay over the next 8 years at $800 per year. What is the interest rate on the loan?
What are present value (5000) and periods (8)? (If you were to calculate the interest rate you would find it to be: 5.84%)
400
This is the reason General Motors had a positive return on equity in 2008 even though it had a negative net margin.
What is that its equity balance was also negative? (Two negatives make a positive).
500
This is the equation to calculate the new retained earnings balance for the year.
What is the following: New RE = Old RE + Net income - Dividends
500
This is the loss of potential gain from other alternatives when one alternative is chosen. (And what you are giving up by being in the Tanner today).
What is an opportunity cost?
500
This is one way a firm could reduce its discretionary financing needed.
What is one of these: 1. Slow growth 2. Defer having to bring on new capacity (Ask itself if it is really at capacity?) 3. Lower its dividend payout 4. Increase net margin
500
This is solved for with the following equation: = (1+i/m)^m - 1
What is the effective yield?
500
This is the ratio that analysts made up to understand the revenue of Facebook and other social media companies.
What is ARPU (average revenue per user)?