Lecture on Financial Metrics and Analysis

Flashcards covering key financial concepts and metrics from the lecture notes.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization; a key indicator of a company's financial performance.

Leverage

The use of fixed costs to amplify the potential returns or losses in a business.

Financial Leverage

Involves fixed costs in the form of interest expenses that can affect a company's volatility.

Operating Leverage

Involves fixed costs in manufacturing, affecting overhead and administrative costs.

Price to Sales Ratio

A valuation ratio that compares a company's stock price to its revenues.

Minority Interest

Ownership share in a company that is less than 50%, impacting the calculation of equity.

Financial Lease

A type of lease that is both an asset and a liability on the balance sheet.

Operating Lease

A lease considered only a liability, with no asset recorded on the balance sheet.

Discounted Cash Flow (DCF)

A valuation method that estimates the value of an investment based on its expected future cash flows.

Enterprise Value (EV)

The total market value of a company's financial claims against it, including equity and debt.

WACC

Weighted Average Cost of Capital; it measures a firm's cost of capital in which each category of capital is proportionately weighted.

CAPM

Capital Asset Pricing Model; a model used to determine the expected return on an asset based on its risk.

Run Rate

The current annualized cash flow generation potential of a company based on its latest performance.