Earnings per share net income or profit divided by the number of stock shares outstanding interest costs are eliminated on bonds, and preferred dividend payments are eliminated. Both eliminations will increase earnings. days receivable + days inventory + days payable profitability ratio; measures ability to translate sales into cash (with which to pay bills)

net income or profit divided by the number of stock shares outstanding

basic EPS debt ratio; measures the riskiness of the firm's capital structure in terms of the relationship between the funds supplied by creditors (debt) and investors (equity) used for companies with a simple capital structure - those that contain only common stock and/or nonconvertible senior securities (preferred stock or debt) interest costs are eliminated on bonds, and preferred dividend payments are eliminated. Both eliminations will increase earnings. net sales / average accounts receivable

used for companies with a simple capital structure - those that contain only common stock and/or nonconvertible senior securities (preferred stock or debt)

How do dilutive securities decrease EPS increasing the number of common shares outstanding 12/12 measures ability to translate sales into profit after consideration of operating expense measure of the overall performance of a firm and its efficiency in managing assets, liabilities and equity

increasing the number of common shares outstanding

dilutive securities evaluate the relative worth of a company in the border market activity ratio; a measure of firms efficiency in managing its inventory (12 - N) / 12 warrants, convertible bonds, convertible preferred stock, stock options

warrants, convertible bonds, convertible preferred stock, stock options

exercise price earnings figure increases by more than the increase in the number of shares upon conversion. This causes EPS to increase, and because of this characteristic, it cannot be included in reported EPS - a firm cannot report potential growth predetermined price for convertible stock and warrant holders to purchase common stock at this price NIFCO / net sales interest costs are eliminated on bonds, and preferred dividend payments are eliminated. Both eliminations will increase earnings.

predetermined price for convertible stock and warrant holders to purchase common stock at this price

when stocks are converted, common stock is diluted but... net income or profit divided by the number of stock shares outstanding interest costs are eliminated on bonds, and preferred dividend payments are eliminated. Both eliminations will increase earnings. activity ratios; helps gauge the liquidity of accounts receivable and may help provide information about a company's credit policies activity ratio; a measure of firms efficiency in managing its inventory

interest costs are eliminated on bonds, and preferred dividend payments are eliminated. Both eliminations will increase earnings.

Financial Analysis & Investment Concepts

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Finance - Personal Finance

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Cards in this deck(100)

Earnings per share

How often does SEC require companies to report EPS?

basic EPS

How do dilutive securities decrease EPS

T or F: GAAP requires firms to state potential decreases in EPS by reporting diluted EPS

dilutive securities

exercise price

convertibles ________ in value as the common stock price of the company increases

if the market value is ____ the exercise price, the investor will probably convert to common stock

when stocks are converted, common stock is diluted but...

antidilutive securities

weighted average number of shares

Basic EPS formula

multiplier at the beginning of the year

multiplier for issued stock at the end of the month formula

multiplier for repurchased stock at the end of the month formula

stock dividends

stock split

convertible preferred stock

convertible bonds

convertible preferred stock EPS formula

convertible bonds EPS formula

stock options and warrants

treasury stock method

Net shares issues formula for treasury stock method

net share issued alternative formula for treasury stock method

treasure stock method EPS formula

Earnings available to common shareholders

common size analysis

common size analysis in the income statement

common size analysis in the balance sheet

percentage change analysis

liquidity ratios

activity ratios

leverage ratios

profitability ratio

market - value ratios

Limitations of ratios

current ratio

current ratio formula

net working capital

net working capital formula

quick / acid-test ratio

quick / acid-test ratio formula

cash flow liquidity ratio

cash flow liquidity ratio formula

accounts receivable turn over (ARTO)

ARTO formula

average collections period (days receivables)

Days relievable formula

average collection period formula

inventory turnover (ITO)

ITO formula

days inventory formula

days inventory held

days inventory held formula

accounts payable turnover (APTO) ratio

APTO ratio formula

Days payable formula

days payable outstanding

days payable outstanding formula

cash conversion (CCC)

CCC formula

fixed asset turnover

fixed asset turnover ratio formula

total asset turnover (TATO)

TATO formula

debt ratio

debt ratio formula

long-term debt to total capitalization

long-term debt to total capitalization formula

debt to equity ratio

debt to equity ratio formula

times interest earned (TIE)

TIE formula

cash interest coverage

cash interest coverage formula

cash flow adequacy

cash flow adequacy formula

gross profit margin

gross profit margin formula

operating profit margin

operating profit margin formula

net profit margin

net profit margin formula

NIFCO

cash flow margin

cash flow margin formula

levered return on assets (LORA)

LORA formula

unleveraged return on assets (UROA)

UROA formula

return on common equity (ROCE)

ROCE formula

ROCE formula pt 2

financial leverage

return on equity (ROE)

ROE formula

three way DuPont method for ROE

5 way DuPont method for ROE

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