-
interest burden ratio
EBIT/EBT
-
-
-
-
DTA when
- Asset: T>B
- tax expense > tax payable
- taxable income > book
-
double declining balance technique
- 1. 1/useful life *2 = dpn rate
- 2. residual value not considered initially, but considered during dpn
-
for a mature company, its operating cash flow compared to NI is
higher
-
diluted EPS technique
- 1. [NI-preferred dividend+ convertible int (1-t)]/ weighted average shares
- 2.stock option assume outstanding for whole period and account for subsequent stock repurchase
- 3. warrant = (market - exercise) / market * no. of warrant
- 4. time factor!
-
ROE =
- tax burden * interest burden * EBIT margin * asset turnover * financial leverage
- first 3 component is net profit margin
-
Fixed charge coverage (FCC) ratio
(EBIT + lease payment)/(interest payment + lease payment)
-
fifo cogs =
lifo cogs - change in lifo reserve
-
fifo inventory =
lifo inventory + lifo reserve
-
for leasee in finance lease, NI and ROE is xx in early years and gradually rise during lease life; working capital and asset turnover is XX; D/E is XX
lower; lower; higher;
-
capitalising an expenditure change cash flow classification ...; net income, asset and equity is XX; D/E and D/A is XX
- from operating cash outflow to investing cash outflow; income variability is XX
- higher; lower; lower
-
advantage of lease for lessee
lower finance cost than buying the asset
-
advantage of lease for lessor
- interest expense tax benefits
- economies of scale in servicing the asset
-
completed contract method, percentage of completion method and installment method
- 1. only when entire project completed and outcome cannot be reliably estimated
- 2. recognise according to cost incurred as % of total estimated cost and payment assured
- 3. recognise according to cash received if collectibility cannot be reliably estimated
-
US GAAP cash flow recognise interest income/divdend received as XX, and dividend paid is XX
operating, financing
-
IFRS cash flow recognise income/divdend received as XX
operating or investing
-
current ratio > 1 implies
CA > CL
-
finance lease results in XX current ratio
lower
-
during rising price, LIFO reports
higher COGS, lower earnings, lower tax and lower inventory
-
to increase earnings, management may
capitalise an expense
-
under US GAAP, an asset is impaired when
book value greater than sum of undiscounted cash flows
-
CCC
- days sales + days inventory - days payable
- days sales = 365 / receivable turnover (credit sales / receivable)
-
financial service firms typically have
high dividend payout
-
Free cash flow to the firm
cash from operation + interest expense net of tax - capex
-
past service cost of defined benefit plan under IFRS and US GAAP
- IFRS: PL
- US: OCI and amortised to PL
-
restructuring cost results in DTX
DTA because the expense is not deducted until a later date
-
intangible asset renewable at minimal cost is regards as having
indefinite life
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