TCU Investments: Peckham Final Exam – Accurate
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Terms in this set (81)
major financial statements income statements, balance sheet, statement of
cash flows
accounting earnings earnings of a firm as reported on the income
statement
economic earnings real flow of cash that a firm could pay without
impairing the productive capacity
profitability measures return on assets, return on capital, return on equity,
economic value added
, return on assets (MOST IMPORTANT EBIT/total assets
FOR ASSET-HEAVY COMPANIES) - how efficiently a company uses its assets to
generate profits
- for every dollar of assets that a company has, how
much profit does it produce?
- HIGH: better at turning assets into profit
- LOW: the company may be asset-heavy or not
generating enough profit from what it owns
- profitability ratio
COMPANIES: airlines, hotels, mining, transport
return on capital EBIT/long-term capital
- measures how efficiently a company uses all
capital invested (both debt and equity) to generate
profit
- HIGH: the company is efficiently using its capital
- COMPANIES: energy/oil and gas, real estate,
manufacturing
return on equity Net Income/ Shareholders' Equity
- measures how effectively a company uses its
shareholders' equity to generate net income
- HIGH: strong profitability and efficient equity use
- COMPANIES: publicly traded companies, banks
and financial institutions, tech and consumer goods
what to look at when analyzing ratios - what are the important ratios for that industry?
- if the company is in financial trouble, will they be
able to cover it?
- what can I tell about the way that the business
spends capital before taking to anyone who works
in the company
debt in relation to the business cycle - if we're in the top of the business cycle and the
company is adding debt, that's a bad sign,
- should be adding debt at the bottom of the cycle
and paying debt off at the top of the cycle
- WHEN BUSINESS IS GOOD, IT CAN COVER A LOT
OF POOR CHOICES
Answers To All Questions
Add to calendar
Play your way to mastery with fun games
Match Blocks Charms NEW
Terms in this set (81)
major financial statements income statements, balance sheet, statement of
cash flows
accounting earnings earnings of a firm as reported on the income
statement
economic earnings real flow of cash that a firm could pay without
impairing the productive capacity
profitability measures return on assets, return on capital, return on equity,
economic value added
, return on assets (MOST IMPORTANT EBIT/total assets
FOR ASSET-HEAVY COMPANIES) - how efficiently a company uses its assets to
generate profits
- for every dollar of assets that a company has, how
much profit does it produce?
- HIGH: better at turning assets into profit
- LOW: the company may be asset-heavy or not
generating enough profit from what it owns
- profitability ratio
COMPANIES: airlines, hotels, mining, transport
return on capital EBIT/long-term capital
- measures how efficiently a company uses all
capital invested (both debt and equity) to generate
profit
- HIGH: the company is efficiently using its capital
- COMPANIES: energy/oil and gas, real estate,
manufacturing
return on equity Net Income/ Shareholders' Equity
- measures how effectively a company uses its
shareholders' equity to generate net income
- HIGH: strong profitability and efficient equity use
- COMPANIES: publicly traded companies, banks
and financial institutions, tech and consumer goods
what to look at when analyzing ratios - what are the important ratios for that industry?
- if the company is in financial trouble, will they be
able to cover it?
- what can I tell about the way that the business
spends capital before taking to anyone who works
in the company
debt in relation to the business cycle - if we're in the top of the business cycle and the
company is adding debt, that's a bad sign,
- should be adding debt at the bottom of the cycle
and paying debt off at the top of the cycle
- WHEN BUSINESS IS GOOD, IT CAN COVER A LOT
OF POOR CHOICES
