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Board of Directors - ✔✔Hold management accountable and make board-level decisions about corporate strategy. Company Management - ✔✔Measure performance and make strategic, operating and finan... cial decisions Creditors - ✔✔Measure creditworthiness, liquidity and bankruptcy Investors - ✔✔Make decisions on buying or selling equity investments Acquirers - ✔✔Determine valuation and make investment decisions Regulators - ✔✔Determine whether the company is opertating according to regulations and the law Revenue (or Sales) - ✔✔The amount charged for the delivery of goods or services Cost of Sales or Goods Sold - ✔✔The direct cost of producing revenue (like raw materials, direct wages) Gross Profit - ✔✔Revenue (less) cost of sales; indicates how efficiently labor and supplies are used in the production processOperating Expenses - ✔✔All other expenses required to run the business (management salaries, marketing, travel) Operating Income (or EBIT) - ✔✔Revenue (less) [COGS (plus) Operating Expenses]; indicates a company's earning power from ongoing operations Non-Operating Expenses - ✔✔Expenses or income not related to the regular business of the company (interest expense, restructuing expenses, etc) Corporate Taxes - ✔✔Local and federal income taxes the company incurs Net Income or Earnings - ✔✔Revenue (less) all company expenses; indicates the increase in shareholders' value resulting from operations Cash - ✔✔Current assests comprising currency or currency equivalents that can be accessed immediately Accounts Receivable - ✔✔The amount owed to an organization from the sale of its products of services Fixed Assets - ✔✔The value of assets and property that cannot easily be converted to cash and has a useful life of greater than one year (example: Property, Plant, and Equipment) Accounts Payable - ✔✔The amount owed to an organization's vendorsDebt - ✔✔Amount of obligations owed to creditors Equity - ✔✔Cumulative shareholder investment (plus) cumulative net income Non-Cash Current Assets - ✔✔Represent all assets besides cash that are expected to be converted into cash within one year and appear on a company's balance sheet as accounts receivable, inventory, prepaid expenses, and other assets Non-Debt Current Liabilities - ✔✔All obligations besides short-term debt that are due within one year and appear on a company's balance sheet as accounts payable, accrued liabilities, and other obligations Debt vs. Equity - ✔✔Debt is generally a less expensive form of capital, as it is less risky. Equity is more expensive, as equity holders are not guaranteed to get their investment back if the company goes bankrupt. Debt owners typically have priority claims on a company's assets if the company goes bankrupt. Therefore, investors require a higher rate of return to mitigate their risk. Net Debt - ✔✔Total Debt (less) Cash; primarily used in credit analysis, as creditors assume a company's cash balance could be applied to debt repayment in the event of a liquidity crunch or bankruptcy— If cash were used to pay down debt, _______ would be the resulting amountCash from Operating Activities - ✔✔The amount of cash generated by an organization's normal business operations, the most common of which includes net earnings, depreciation and amoritization, and change in working capital accounts Cash from Investing Activities - ✔✔Cash flow related to the acquisition and disposal of an organization's long-term investments, including PP&E and mergers and acquisitions; the most common line items include are CapEx and acquisitions Cash from Financing Activities - ✔✔Cash flow between an organizations and its owners and creditors, which includes common items like debt and equity issurances and repayments, and dividends and share repurchases Beginning cash balance - ✔✔Ending cash balance for the previous period of time Change in Cash - ✔✔Sum of cash from Operating, Investing and Financing Activities Ending Cash Balance - ✔✔Resulting cash balance for the selected period of time that is reflected on the balance sheet Depreciation & Amortization - ✔✔A method of allocating the cost of an asset over its useful life for both accounting and tax purposes. While this amount is an expense on the income statement, it does not actually represent cash leaving the company because cash only leaves when the asset is initially purchased (classified as CapEx)— This is why __________________ is a source of cash on the cash flow statement, due to it being a noncash expenseCapital Expenditures - ✔✔Funds used by a company to purchase or upgrade physical assets such as plants, property and equipment Change in Working Capital - ✔✔The impact to cash resulting from all non-cash current asset accounts and all non-debt current liability accounts— A decrease in ______________ represents a source of cash and would be represented on the cash flow statement as a positive number; an increase in ______________, however, represents a use of cash and would be represented on the cash flow statement as a negative number Share Repurchase - ✔✔The reacquisition by an organization of its own stock, which is either retired or kept as treasury stock; a form of returning capital to shareholders that can be instituted irregularly rather than a normal dividend program— When ________ are __________________, the remaining shareholders have a higher ownership recentage and portion of earnings Dividends - ✔✔Distribution of cash to current shareholders; unlike share repurchases, this does not affect ownership percentages and represents a pure "check" to shareholders— This value is most often derived from a ____________ per share amount as directed by an organization's board of directors.....Companies with stable cash flows might choose to institute a _____________ program to constantly return cash to shareholders, but this become "sticky" and expected.... Downgrading or removing a _______________ program can signal trouble for a company.... Change in Debt - ✔✔Represents any debt inssurances or repayments EBITDA - ✔✔Gives an indication of a company's current operational profitability; widely used when comparing profitability between companies in a wide range of industries to determine performance Free Cash Flow - ✔✔Most commonly calculated as CFO (less) CapEx; a way of looking at a company's cash flow to see what is available for distribution to creditors and shareholders Liquidity Ratios - ✔✔Indicates a company's ability to meet its short-term financial obligations; umbrella term to describe Current and Cash ratios Efficiency Ratios - ✔✔Indicate how effectively a company utilizes its assets; umbrella term to describe Days Receivable and Asset Turnover Profitability Ratios - ✔✔Provides insight into the profits made by a company relative to its assets, equity, or revenue; umbrella term to describe Gross Margin, Operating Margin, Net Margin, and Return on EquityCredit Ratios - ✔✔Measures a company's ability to meet its long-term obligations and benchmark its overall capital structure; umbrella term used to describe Total Leverage, Net Leverage, Debt-to-Equity, and EBITDA Interest Coverage Ratio Market Ratios - ✔✔Measure investor response to owning a company's stock Current Ratio - ✔✔Current Assets (divided by) Current Liabilities; indicates whether a company's short term assets are readily available to pay off its short-term liabilities (1.50 and 3.00 is considered normal) Cash Ratio - ✔✔Total Cash (divided by) Current Liabilities; indicates a company's ability to use cash to pay off its current liabilities (0.20 and 1.00 is considered normal) Days Receivables - ✔✔[Accounts Receivable (divided by) Annual Revenue] (multiplied by) 365; the average number of days an invoice is in accounts receivable before collection— ______ ______________ of 60.0 means a company's invoices are on average paid down in 60 days Asset Turnover - ✔✔Total Revenue (divided by) Total Assets; defined as the amount of revenue generated per dollar of assets and measures the efficiency of a company's use of assets in generating sales revenue—An ________ _____________ of 2.50 means that for every dollar in assets, a company generates $2.50 in revenue Gross Margin - ✔✔Gross Profit (divided by) Revenue; indicates how efficiently labor and supplies are used in the production process relative to revenue— A __________ ___________ of 35.0% means that for every $1.00 of revenue, $0.35 is converted into gross profit Operating Margin - ✔✔Operating Income (divided by) Revenue; indicates a company's earning powers from ongoing operations relative to revenue— An ____________ __________of 15.0% means that for every $1.00 of revenue, $0.15 is converted into operating income Net Margin - ✔✔Net Income (divided by) Revenue; indicates the increase in shareholders' equity from earnings, relative to revenue— A _________ of 10.0% means that for every $1.00 of revenue, $0.10 is converted into net income Return on Equity - ✔✔Net Income (divided by) Shareholders' Equity; measures profits earned for each dollar invested in a company's equity A _______________ of 17.0% means that $0.17 of net income is produced from $1.00 of equity investedTotal Leverage - ✔✔Total Debt (divided by) EBITDA; used to assess the probability on defaulting on debt A ________________ _________of 2.5x means that it will take approximately 2.5 years to pay off the debt Net Leverage - ✔✔Net Debt / EBITDA; used to assess the probability on defaulting on debt when adding in a cash balance account that could be used— A _____________ ________of 2.5x means that it will take approximately 2.5 years to pay off the debt Debt-to-Equity - ✔✔Total Debt (divided by) Total Equity; indicates the relative proportion of debt and equity used to finance a company's assets— A _____________ ________of 25% means that for every $1.00 owned by shareholders, $0.25 is owed to creditors EBITDA Interest Coverage Ratio - ✔✔EBITDA (divided by) Interest; indicates how easily a company can pay interest on outstanding debt— An ______________ of 2.0x means that the company is producing approximately two times the cash flow needed to satisfy interest expense requirementsEnterprise Value (Firm Value or EV) - ✔✔Equity Value (Plus) Net Debt; shows the sum of all claims on a company (the entire firm's value) and is independent of capital structure— An ____________ _______of $150 million means that the sum of all claims (debt and equity) on a company total to $150 million Equity Value (Market Value or Market Capitalzation) - ✔✔Enterprise Value (less) Net Debt OR Share Price (multiplied by) Shares Outstanding; __________ _______ is the value of the equity shareholders' portion of the company, or the value of all the shares outstanding Price/Earnings (P/E) - ✔✔Market Value (divided by) Net Earnings; shows how much investors are willing to pay per dollar of earnings and is affected by leverage— A _____________ of 15.0x means that investors are willing to pay $15.00 for every $1.00 of net income Earnings per Share (EPS) - ✔✔Net Earnings (divided by) Shares Outstanding; Shows the amount of earnings attributable to a share of common stock— An _____ of $2.45 means that $2.45 was earned for every share of stock outstandingDividend Yield - ✔✔Dividend per Share (divided by) Market Price per Share; shows the return on a share of common stock— A ____________ of 20% means that for every $1.00 in stock price value, $0.20 was distributed to shareholders as dividends Enterprise Value/EBITA - ✔✔Enterprise Value / EBITDA; measures the value of common stock in a way that enables comparison of companies across different industries— An ________________ multiple of 4.5x means that for every $1.00 of EBITDA, the company is worth $4.50 Enterprise Value/Revenue - ✔✔Enterprise Value (divided by) Revenue; compares the total value of a company to its revenue; An _____________ multiple of 1.5x means that for every $1.00 of revenue the company is worth $1.50 Positive Net Income - ✔✔Impact to Financial Statements: both Cash and Equity increases Pay Debt - ✔✔Impact to Financial Statements: both Cash and Debt decreases Submit an invoice to a customer - ✔✔Impact to Financial Statements: both Revenue and Accounts Receivable increasesReceive payment for an invoice - ✔✔Impact to Financial Statements: Accounts Receivable decreases, but Cash increases Pay a bill - ✔✔Impact to Financial Statements: both Cash and Accounts Payable decreases Purchase equipment - ✔✔Impact to Financial Statements: Fixed Assets increase but Cash decreases [Show More]

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