| Cash Management | Valuation | Financial Ratios | Miscellaneous | Terminology and Calculations |
|---|---|---|---|---|
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What is a seasonal business?
A business that has a cyclical revenue pattern is called a ___ business.
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What is the breakeven point (in units)?
Fixed costs / (price - variable costs) will give you this point.
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What is net income over sales?
The formulate to calculate the profit margin ratio.
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What is trade credit?
A form of short-term financing whereby suppliers extend credit to a firm.
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What is yield to maturity?
The price of a bond increases, when this decreases.
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What is the degree of operating leverage?
The firm with higher fixed costs will have a higher degree of this leverage.
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What is $1000 (1+.1)^10?
The formula to calculate the value of $1,000 @10% in 10 years.
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What is the inventory turnover ratio (Sales / inventory).
This ratio tells you how quickly you are selling your inventory.
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What is prime?
This is the rate at which the Fed lends to its most credit worthy clients.
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What is a coupon?
The amount of interest paid on a bond is called a ___ payment.
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What are the investment, financing, and dividend decisions?
The three types of corporate finance decisions that a firm must make.
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What is the discount rate?
The present value increases when this rate decreases.
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What is (current assets - inventory) / current liabilities?
This formula calculates the liquidity of a company and is known as the quick ratio.
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What is LIBOR?
The lending rate set by a group of banks based in London.
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What is "=PMT()"?
The name of the function you use in Excel when calculating the number of payments on a 20-year mortgage of $100,000 at 10% interest.
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What is EBIT / (EBIT - interest)?
The formula to calculate the degree of financial leverage.
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What is a perpetuity?
A constant dividend to be paid indefinitely is called a...
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What is 2/10, net 30?
The way to express a 2% cash discount that is given to a firm if it pays within 10 days or no cash discount when paid thereafter up until 30 days.
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What is four or quarterly?
The number of times a public company files its earning report each year.
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What is a compensating balance?
This is the minimum balance that a bank requires a firm to maintain in its account to take a loan and makes the effective interest rate higher.
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What are carrying costs and ordering costs?
These two types of costs that constitute the total cost of inventory.
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What is the dividend / (required rate of return - dividend growth rate)?
The formula to calculate the price of a share of common stock that has a constant growth dividend.
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What is the profit margin ratio, asset turnover, and equity multiplier or (debt ratio)?
The Dupont Analysis is a combination of these three ratios and is used to determine what is driving ROE.
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What is the book value?
The term used to express the net worth of a company divided by the number of shares.
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What is (2 * # of periods * interest payment) divided by
(1+# of payments) * principal?
The formula to calculate the effective interest rate on a loan to be repaid on a monthly basis.
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