measures how much systematic risk an asset has relative to
average risk
beta
-measure the volatility of an individual asset or portfolio relative to
the market as a whole
bond public debt of a corporation or government entity
would include both fixed assets and the variable costs needed to
COGS
generate the revenues
-listed first on balance sheet on left hand side
current assets
-most liquid
-creditors have no voting rights
-payment of interest on debt is a tax deductible expense
debt securities attributes
-unpaid debt is a liability, so default dubjects the firm to legal
action by its creditors
-interest and principal payments on debt have to be paid before
cash can be paid to stockholders
debt vs equity -the company's gains and losses are magnified as the company
increases the amount of debt in the capital structure
-use of debt is called financial leverage
EBIT often called operating income
usually below the current assets
fixed assets -can include but tangible and intangible assets
-not very liquid
the growth rate that the firm can mainatin without raising additional
internal growth rate
capital
-components of the first listed on the right-hand side
liabilities and equity
-indicate how the assets are paid for
-any asset can be converted to cash quickly if you are willing to
lower the price enough
liquidity
-liquid assets provide lower returns so too much liquidity can be
determinental
states that combining imperfectly correlated assets can produce a
principle of diversification
portfolio with less variability than the typical individual assets
measures operating efficiency
-tracks how well the firm controls the costs required to general the
profit margin
revneues
-it tells how much the firm earns for every dollar in sales
ROE will always be higher than ROA as long as the firm at has debt
relationship between ROE and -the greater the leverage, the higher the difference will be
ROA -ROE is a measure of how well a management is attaining a goal of
owner wealth maximization
average risk
beta
-measure the volatility of an individual asset or portfolio relative to
the market as a whole
bond public debt of a corporation or government entity
would include both fixed assets and the variable costs needed to
COGS
generate the revenues
-listed first on balance sheet on left hand side
current assets
-most liquid
-creditors have no voting rights
-payment of interest on debt is a tax deductible expense
debt securities attributes
-unpaid debt is a liability, so default dubjects the firm to legal
action by its creditors
-interest and principal payments on debt have to be paid before
cash can be paid to stockholders
debt vs equity -the company's gains and losses are magnified as the company
increases the amount of debt in the capital structure
-use of debt is called financial leverage
EBIT often called operating income
usually below the current assets
fixed assets -can include but tangible and intangible assets
-not very liquid
the growth rate that the firm can mainatin without raising additional
internal growth rate
capital
-components of the first listed on the right-hand side
liabilities and equity
-indicate how the assets are paid for
-any asset can be converted to cash quickly if you are willing to
lower the price enough
liquidity
-liquid assets provide lower returns so too much liquidity can be
determinental
states that combining imperfectly correlated assets can produce a
principle of diversification
portfolio with less variability than the typical individual assets
measures operating efficiency
-tracks how well the firm controls the costs required to general the
profit margin
revneues
-it tells how much the firm earns for every dollar in sales
ROE will always be higher than ROA as long as the firm at has debt
relationship between ROE and -the greater the leverage, the higher the difference will be
ROA -ROE is a measure of how well a management is attaining a goal of
owner wealth maximization
