FINA 350 Exam 1

CA

Current Assets, short‑term assets like cash, inventory, receivables

CL

Current Liabilities, short‑term debts like accounts payable

TA

Total Assets, everything the company owns

TL

Total Liabilities, everything the company owes

TE

Total Equity, owner value in the company

NI

Net Income, profit after all expenses

Div

Dividends, money paid out to shareholders

RE

Retained Earnings, profit the company keeps

Sales

Revenue, total money earned from selling goods

Shares Out

Shares Outstanding, number of shares held by investors

NWC

Net Working Capital, CA – CL

NOWC

Net Operating Working Capital, (CA – Excess Cash) – (CL – Notes Payable)

TE

Total Equity, TA – TL

RE

Retained Earnings, NI – Div

EPS

Earnings Per Share, NI ÷ Shares Out

DPS

Dividends Per Share, Div ÷ Shares Out

BVPS

Book Value Per Share, Total Common Equity ÷ Shares Out

CR

Current Ratio, CA ÷ CL

QR

Quick Ratio, (CA – Inventory) ÷ CL

Debt Ratio

TL ÷ TA, percent of assets financed by debt

PM

Profit Margin, NI ÷ Sales

ROA

Return on Assets, NI ÷ TA

ROE

Return on Equity, NI ÷ TE

P/E

Price/Earnings Ratio, Price ÷ EPS

M/B

Market/Book Ratio, Price ÷ BVPS

N

Number of periods, years or months

I/Y

Interest rate per year

PV

Present Value, money today

FV

Future Value, money later

PMT

Payment, equal payment each period

FV

PV × (1 + r)^n

PV

FV ÷ (1 + r)^n

FV Annuity

PMT × ((1+r)^n – 1) ÷ r

PV Annuity

PMT × (1 – (1+r)^(-n)) ÷ r

Negative

money you pay (PV when investing, PMT when depositing)

Positive

money you receive (FV when receiving money later)

Rule

one value must be negative and one positive in PV/FV problems

USD Appreciates

imports cheaper, exports decrease

USD Depreciates

imports expensive, exports increase