FI 3300 FINAL EXAM

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Assets

Current Assets

  • cash

  • net accounts receivable (gross - allowance for doubtful accounts)

  • Inventories

Long term assets

  • Net fixed assets (gross fixed assets - less accumulated depreciation)

= total assets

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Liabilities

Current liabilities

  • notes payable

  • accounts payable

  • accrued expenses

  • current portion long term debt

Long term liabilities

  • long term debt (less current portion)

= total liabilites

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Stockholder's equity

Common stock Preferred stock Additional paid in capital Retained earnings

= total equity

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Net accounts receivable

Gross accounts receivable - allowance for doubtful accounts

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Net fixed assets

net fixed assets = gross fixed assets - accumulated depreciation

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Annual addition to retained earnings

Annual addition to RE = Net income - dividend payout

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Year end Retained earnings

year end RE = beginning RE + annual addition to RE

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Cost of goods sold

COGS = Beginning inv + material purchases - ending inv

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Net sales

Gross sales - sales returns & allowances

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Debt to equity ratio

total liabilities / equity

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Income statement

Net sales

  • COGS = Gross profit

  • operating expenses (less depreciation if retail biz) = Operating profit (EBIT)

  • interest expense = EBT (earnings before taxes)

  • taxes = Net Income

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OpEx

  1. Management salaries

  2. R&D

  3. Lease payments

  4. Repairs & Maintenance

  5. General and admin expenses

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Common size income statement

Income statement item / net sales

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Common size balance sheet

Balance sheet item / total assets

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Tax equivalent yield

= tax free yield / (1 - tax rate)

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Required rate of return

R(equity) = R(risk free) + B(Rm - Rf)M

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Market risk premium

= Rm - Rf

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WACC

Weight of Debt ((1 - tax rate)(Rdebt) + Weight of equity (rate of equity)

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CFO - Cash flow from ops

Net income

  • Depreciation

  • increase in assets (AR/Inventories)

  • increase in liabilities (AP/accruals)

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CFI - Cash flow from investments

0 Change in Gross fixed assets (Change in net fixed assets + current year dep) +/-

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CFF - Cash flow from financing

0 +/- Change in notes payable, CLTD, LTD, Stock, additional paid in capital

  • Dividend (= NI - Change in RE)

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