Intro to finance 2

22 flashcards · Other · by Daniel F.

1. Total cash flows come from

   operating activities investing activities financing activities

2. Cash flow from assets

   Operating cash flow - cash flow from investing activities

3. Cash flow from investing activities

   capital expenditures +- change in other investing activities

4. capital expenditures

   net fix assets (t) - net fixes assets (t-1) + depreciation (t)

5. Net fixed assets

   Gross FA (t) - Accumulated depreciation (t) Can be buildings machienery vehicles land furniture equipment

6. other investing activities

   Goodwill and intangible assets other long term assets

7. Cash flow from financing activities

   CF from/to creditors + CF from/to Shareholders

8. CF from/to creditors

   change in long term debt - interest expense

9. CF from/to Shareholders

   change in common stock - dividends

10. Cash flows from assets + cash flows from financing activities

    0

11. Cash flow map

12. Financial ratios - book values

    liquidity ratios financial leverage ratios turnover ratios profitability ratios market value ratios

13. market value vs book value

    book value accounting figures drawn from accounting standards market value value based on prices or market valuations

14. market value ratios

    PE ratio market-to-book ratio

15. market value of shareholders equity

    share price * no. outstanding shares

16. how to choose a benchmark

    peer group analysis compare ratios with similar firms compare ratios in the same industry time trend analysis look at the same ratio over years look at sames ratio over year in peer group

17. DuPont identity

    Return on equity = Net income / Total equity ROE = Net income / sales * Sales / assets * assets / total equity = profit margin* how much is profit from one sale -> higher number better profit total asset turnover* how efficiently can you utilize assets -> higher number better utilization equity multiplier how a firm finances assets: is it coming from debt or assets -> lower number less leverage allows you to compare firms from different industries

18. time value of money principal

    money now is better than money later

19. time money evaluations - types

    future value - single cashflow future value - preiodic interst rate present value single cashflow future value - annuity present value - annuity perpetuity

20. Effective annual rate of return (EAR) vs nominal

    Nominal: 6% per year compounding m = 4 times Effective: (1+annualpercentageratem)m−1(1+\frac{annual percentage rate}{m})^m-1(1+mannualpercentagerate​)m−1

21. Excel functions for present and future values

    PV Present Value FV Future Value EFFECT Effective interest rate RATE Nominal interest rate NPER Number of periods NPV Net Present Value PMT Payment

22. perpetuities

    receiving a fixed payment every period goes on forever, no compounding PV=PMTrPV=\frac{PMT}{r}PV=rPMT​