Notes on Financial Lecture
Budgeting
Yearly Budgets
Capital Budgets
(These are for buying new equipment. These budgets fall outside of the year to year operational budgets)
Financial Statements
Balance Sheet
Income Statement
Cash Flow
Ratio Analysis
Liquidity Ratios
Current Ratio: Curr Assets /
Curr Liabilities
Acid Test Ratio: Liquid Assets /
Curr. Liabilities
Debt Ratios
Leverage Ratio: Total Liabilities /
Total Assets
Debt to Equity: Total Liabilities /
Total Equity
Capitalization Ratios
Long Term Liabilities /
Total Shares of Common Stock
Growth Measures
Growth of Revenue:
Curr period(mth,qtr,yr) Net Rev – Prev Per Net Rev /
Previous Period Net Revenue
Growth of Operating Income
Curr period(mth,qtr,yr) Net Inc– Prev Per Net Income /
Previous Period Net Income
Growth of Net Worth (Owner’s Equity)
Curr period(mth,qtr,yr) Net Worth– Prev Per Net Worth /
Previous Period Net Worth
Growth of Assets
Curr period(mth,qtr,yr) Total Assets– Prev Per Total Assets /
Previous Period Total Assets
Profitablility Measures
Return on Sales: Net Income/
Total Revenues
Return on Assets: Net Income/
Total Revenues
Return on Equity: Net Income/
Owner’s Equity
Price-Earnings (PE) Ratio: Market Price of a share of common stock /
Earnings Per Share
Profit Margins
Cash Flow Margin: Cash Flow (AfterTax Net Income+Interest/Deprecication/Amortization) /
Net Rev (Revenues – Operating Expenses)
Net Profit Margin: Net Income (Revenues – Expenses & Taxes) /
Net Rev (Gross Revenues Less Commissions)
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