What is investment banking in one line
Investment banking is a type of financial services that helps corporations, governments, and institutions
raise capital and manage complex financial transactions.
Deferred tax assets in one line
Deferred tax assets are a non-current asset that represent a future tax benefit due to temporary differences
between a company's taxable income and its pre-tax accounting income.
What is Adjusted EBIDTA
Remove the effect of non-operating item. Such as one time gain or losses.
EBIDTA = EBIDTA – Non operating Item
how to fund free cash flow deficit?
Issuing new Debt, Equity, reducing operating exp, Increasing Sale, Selling Assets.
how to adjust debt for off balance sheet leases
Identify off-balance sheet leases.
Gather lease data.
Calculate lease liabilities.
Record lease liabilities.
Record lease expense
Disclose lease information:
What is best way to value a company having no cash profit in one line
DCF Approach, Assets Base approach.
What are Financial Markets or capital markets? What is reconciliation? Debentures? Bonds?
What do you know about company? Money Markets? What are financial instruments? What are
Securities? What if some other company will offer you better Package what you will do?
Financial Markets or capital markets
Financial markets, also known as capital markets, are marketplaces where financial instruments, such as
stocks, bonds, currencies, and derivatives, are traded.
Reconciliation
Reconciliation refers to the process of matching and verifying financial records to ensure their accuracy
and completeness.
Debentures
Debentures are unsecured debt instruments issued by companies or governments to raise capital.
Bonds
Bonds are debt securities that represent a loan from an investor to a company or government.
Company
A company is a legal entity created and organized to engage in a particular business activity.
Money Markets
Money markets are financial markets that deal with short-term debt securities, typically maturing within a
year.
Financial instruments
Financial instruments are contracts that represent a financial obligation or ownership right. They come in
various forms, including stocks, bonds, options, futures, swaps, and derivatives.
Securities
Securities are fungible financial instruments that represent ownership or debt.
Ratio Formula Use
Liquidity Ratios
Measures a company's ability to
Current ratio Current assets / Current liabilities
pay its short-term obligations.
Measures a company's ability to
Quick ratio (Current assets - Inventories) / Current liabilities pay its short-term obligations
without relying on inventory.
Measures a company's ability to
Cash ratio Cash and equivalents / Current liabilities pay its short-term obligations with
cash and equivalents.
Solvency Ratios
Measures a company's leverage, or
Debt-to-equity
Total debt / Total equity how much debt it uses to finance its
ratio
assets.
Debt-to-asset Measures a company's reliance on
Total debt / Total assets
ratio debt to finance its operations.
Measures a company's ability to
Interest coverage cover its interest expense with its
EBIT / Interest expense
ratio earnings before interest and taxes
(EBIT).
Profitability
Ratios
Measures the percentage of
Gross profit
(Net sales - Cost of goods sold) / Net sales revenue that remains after the cost
margin
of goods sold has been deducted.
Measures the percentage of
Operating profit (Net sales - Cost of goods sold - Selling expenses revenue that remains after all
margin - General and administrative expenses) / Net sales operating expenses have been
deducted.
Measures the percentage of
revenue that remains after all
Net profit margin Net income / Net sales
expenses, including taxes, have
been deducted.
Return on equity Measures a company's profitability
Net income / Average shareholders' equity
(ROE) relative to its equity investments.
Return on assets Measures a company's profitability
Net income / Average total assets
(ROA) relative to its total assets.
Efficiency
Ratio in days
Measures the average number of days it
(Average
Inventory takes a company to sell its inventory. A lower
Inventory *
Turnover Ratio ratio indicates that the company is selling its
365) / Cost of
in Days inventory more quickly, which is generally
Goods Sold
better for efficiency.
Measures the average number of days it
(Average
Accounts takes a company to collect its accounts
Accounts
Receivable receivable. A shorter ratio indicates that the
Receivable *
Turnover Ratio company is collecting its receivables more
365) / Net Credit
in Days quickly, which is generally better for cash
Sales
flow.
Measures the average number of days it
(Average takes a company to pay its accounts payable.
Payables Accounts A longer ratio indicates that the company is
Turnover Ratio Payable * 365) / taking longer to pay its suppliers, which can
in Days Cost of Goods improve its cash flow in the short term but
Sold may damage its relationships with suppliers
in the long term.
Measures the average number of days it
(Average
Days Sales takes a company to collect its sales. A
Accounts
Outstanding shorter DSO is generally better, as it
Receivable *
(DSO) indicates that the company is collecting its
365) / Net Sales
cash from customers more quickly.
Measures the efficiency of a company's
Net Sales / working capital management. A higher ratio
Working Capital
Average indicates that the company is generating
Turnover Ratio
Working Capital more sales per dollar of working capital,
which is generally better.