Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
55 Cards in this Set
- Front
- Back
|
FIFO Inventory |
LIFO inventory + LIFO Reserve |
|
|
FIFO COGS |
LIFO COGS - (end LIFO reserve - beg LIFO reserve) |
|
|
Compared to LIFO, FIFO results in: |
In a period of rising prices: FIFO results in lower COGS FIFO results in higher taxes FIFO results in higher net income FIFO results in higher inventory balances FIFO results in lower cash flow FIFO results in higher margins FIFO results in higher current ratio FIFO results in lower inventory turnover FIFO results in lower debt-to-equity |
|
|
Adjusting LIFO to FIFO |
Add LIFO reserve to current assets Subtract income taxes on LIFO reserve from current assets Add LIFO reserve (net of tax) to shareholders equity Subtract change in LIFO reserve from COGS Add income taxes on the change in LIFO reserve to income tax expense |
|
|
Depreciation Average age |
accumulated depreciation / annual depreciation expense |
|
|
average depreciable life |
ending gross investment / annual depreciation expense |
|
|
remaining useful life |
ending net investment / annual depreciation expense |
|
|
Differences between IFRS and US GAAP for treatment of intercorporate investments FX gains, goodwill |
Unrealized gains on available-for-sale securities are recognized on the income statement under IFRS and in other comprehensive income under GAAP IFRS permits partial goodwill or full goodwill methods while GAAP requires full goodwill |
|
|
Requirements for VIE |
if any of the following are met Insufficient at risk equity investment shareholders lack decision making rights shareholders do not absorb losses shareholders do not receive residual benefits |
|
|
PBO components |
current service cost, interest cost, actuarial gains/losses, benefits paid |
|
|
funded status of pension |
fair value of plan assets - PBO |
|
|
total periodic pension cost |
contributions - change in funded status |
|
|
periodic pension cost in P&L |
service cost + interest cost + amortization of actuarial gains + amortization of past service cost - expected return on plan assets |
|
|
reported pension expense |
service cost + past service cost + net interest expense |
|
|
discount rate for pension plan |
expected rate of return on plan assets |
|
|
net interest expense for pension plan |
discount rate * beginning funded status |
|
|
Cash flow adjustment from pension cost |
TPPC < firm contribution reclassify difference from CFF to CFO after tax TPPC > firm contribution difference = borrowing reclassify difference from CFO to CFF after tax |
|
|
choice of method for multinational operations |
functional currency is not presentation currency, use current rate method functional currency is presentation currency, use temporal method |
|
|
ending inventory |
beg inventory + purchases - COGS |
|
|
current ratio |
current assets / current liabilities |
|
|
quick ratio |
(cash + marketable securities + receivables) / current liabilities |
|
|
cash ratio |
(cash + short term marketable securities) / current liabilities |
|
|
defensive interval ratio |
(cash + short term marketable investments + receivables) / daily cash expenditures |
|
|
receivables turnover |
net annual sales / average receivables |
|
|
average receivable collection period |
365 / receivables turnover |
|
|
inventory turnover |
COGS / average inventory |
|
|
days of sales outstanding (DSO) |
365 / receivables turnover ratio |
|
|
days of inventory on hand (DOH) |
365 / inventory turnover |
|
|
payables turnover |
purchases / average payables |
|
|
days of payables |
365 / payables turnover |
|
|
total asset turnover |
net sales / average total assets |
|
|
fixed asset turnover |
net sales / average fixed assets |
|
|
outlay |
FCInv + NWCInv |
|
|
after tax operating cash flow |
(S-C-D)(1-T) + D (S-C)(1-T) + (D)(T) |
|
|
terminal net operating cash flow (TNOCF) |
SalT + NWCInv - T(SalT - BT) |
|
|
economic income |
cash flow + (end mkt val - beg mkt val) cash flow - economic depreciation |
|
|
economic profit |
NOPAT - $WACC |
|
|
market value added |
sum( economic profit / (1+WACC)^t ) |
|
|
residual income |
net income - equity charge |
|
|
project cost of equity |
RFR + beta project * (E(mkt return) - RFR) |
|
|
WACC |
cost of debt * (debt/assets) * (1-T) + cost of equity * (equity/assets) |
|
|
MM Proposition I (no taxes) |
Value levered = Value unlevered capital structure doesn't matter |
|
|
MM Proposition II (no taxes) |
required return of equity = total required return + (D/E) * (total required return - required return debt) the tax benefits from debt are exactly offset by the increasing cost of equity capital, capital structure doesn't matter |
|
|
MM Proposition I (taxes) |
value of levered = value of unlevered + (T*debt) value maximized when debt = 100% |
|
|
MM Proposition II (taxes) |
required return of equity = total required return + (D/E) * (total required return - required return debt) * (1-T) value maximized at all debt |
|
|
static trade off theory |
Value levered = value unlevered + (T*debt) - PV (cost of financial distress) there is an optimal capital structure with a mix of debt and equity |
|
|
change in price when stock goes ex dividend |
(Dividend*(1-Tax rate dividends)) / (1-Tax rate cap gains) |
|
|
effective tax rate |
corporate tax rate + (1-corporate tax rate)*(individual tax rate) |
|
|
expected dividend |
previous dividend + (expected increase in EPS * target payout ratio * adjustment factor) |
|
|
FCFE coverage ratio |
FCFE / (dividends + share repurchases) |
|
|
HHI
|
sum (Market share of firm * 100)^2 |
|
|
FCF |
net income + net interest after tax = unlevered net income + change in deferred tax = NOPAT + net non cash charges + net change in working capital - capex = FCF |
|
|
terminal value
|
FCFT*(1+g) / (WACCadjusted - g) FCFT * (P/FCF) |
|
|
post merger value of acquirer
|
Value acquirer + Value target + Synergy - cost
|
|
|
gain to acquirer |
synergy - gain to arget |
