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21 Terms
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Current Assets - cash - net accounts receivable (gross - allowance for doubtful accounts) - Inventories Long term assets - Net fixed assets (gross fixed assets - less accumulated depreciation) = total assets
Current liabilities - notes payable - accounts payable - accrued expenses - current portion long term debt Long term liabilities - long term debt (less current portion) = total liabilites
Stockholder's equity
Common stock Preferred stock Additional paid in capital Retained earnings = total equity
Net accounts receivable
Gross accounts receivable - allowance for doubtful accounts
Net fixed assets
net fixed assets = gross fixed assets - accumulated depreciation
Annual addition to retained earnings
Annual addition to RE = Net income - dividend payout
Year end Retained earnings
year end RE = beginning RE + annual addition to RE
Cost of goods sold
COGS = Beginning inv + material purchases - ending inv
Net sales
Gross sales - sales returns & allowances
Debt to equity ratio
total liabilities / equity
Income statement
Net sales - COGS = Gross profit - operating expenses (less depreciation if retail biz) = Operating profit (EBIT) - interest expense = EBT (earnings before taxes) - taxes = Net Income
1. Management salaries 2. R&D 3. Lease payments 4. Repairs & Maintenance 5. General and admin expenses
Common size income statement
Income statement item / net sales
Common size balance sheet
Balance sheet item / total assets
Tax equivalent yield
= tax free yield / (1 - tax rate)
Required rate of return
R(equity) = R(risk free) + B(Rm - Rf)M
Market risk premium
= Rm - Rf
Weight of Debt ((1 - tax rate)(Rdebt) + Weight of equity (rate of equity)
CFO - Cash flow from ops
Net income + Depreciation - increase in assets (AR/Inventories) + increase in liabilities (AP/accruals)
CFI - Cash flow from investments
0 Change in Gross fixed assets (Change in net fixed assets + current year dep) +/-
CFF - Cash flow from financing
0 +/- Change in notes payable, CLTD, LTD, Stock, additional paid in capital - Dividend (= NI - Change in RE)