PURDUE MGMT 310 EXAM 1 FORMULAS AND VOCAB
Balance Sheet Identity - Answers -Assets = Liabilities + Stockholders' Equity
Net Working Capital - Answers -= current assets - current liabilities
Book Value of Equity - Answers -= Total Assets - Total Liabilities
Represents the amount of money that would be returned to a company's shareholders if
all of the assets were liquidated and all of the company's debts were paid off
Market Value of Equity - Answers -Market Capitalization: The price at which the assets,
liabilities, or equity can be actually be bought or sold.
= market price per share * number of shares outstanding
Reflects the expectations of the investors about the firms future performance.
Income Statement Equation - Answers -Income = Revenues - Expenses
Earnings Per Share (EPS) - Answers -= Net Income / # of Shares
Shows how much money a company makes for each share of it's stock
Income statement structure - Answers -Net sales
-Cost of goods sold
-Depreciation
=Earnings Before Interest and Taxes
-Interest
=Earnings Before Tax(Taxable Income)
-Taxes(%)
=Net Income
-Dividends
=Addition to retained earnings
Average Tax Rate (ATR) - Answers -= Total taxes paid/total taxable income
Cash Flow from Assets - Answers -= cash flow to creditors + cash flow to stockholders
= Operating cash flow - Net Capital Spending - Change in Net Working Capital
Operating Cash Flow (OCF) - Answers -=EBIT + Depreciation - Taxes
The cash flow that results from the firm's day to day activities of producing and selling
Balance Sheet Identity - Answers -Assets = Liabilities + Stockholders' Equity
Net Working Capital - Answers -= current assets - current liabilities
Book Value of Equity - Answers -= Total Assets - Total Liabilities
Represents the amount of money that would be returned to a company's shareholders if
all of the assets were liquidated and all of the company's debts were paid off
Market Value of Equity - Answers -Market Capitalization: The price at which the assets,
liabilities, or equity can be actually be bought or sold.
= market price per share * number of shares outstanding
Reflects the expectations of the investors about the firms future performance.
Income Statement Equation - Answers -Income = Revenues - Expenses
Earnings Per Share (EPS) - Answers -= Net Income / # of Shares
Shows how much money a company makes for each share of it's stock
Income statement structure - Answers -Net sales
-Cost of goods sold
-Depreciation
=Earnings Before Interest and Taxes
-Interest
=Earnings Before Tax(Taxable Income)
-Taxes(%)
=Net Income
-Dividends
=Addition to retained earnings
Average Tax Rate (ATR) - Answers -= Total taxes paid/total taxable income
Cash Flow from Assets - Answers -= cash flow to creditors + cash flow to stockholders
= Operating cash flow - Net Capital Spending - Change in Net Working Capital
Operating Cash Flow (OCF) - Answers -=EBIT + Depreciation - Taxes
The cash flow that results from the firm's day to day activities of producing and selling
