Business Administration 2257 - Final April Exam Cheat Sheet.docx

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Western University
Business Administration
Business Administration 2257
Jaclyn Cairns

Analysis LIQUIDIDTY: Measures the ability to meet short-term debts. Differentials Industry: Concerned with the efficiency of working capital investments— - watch out for Lows and Highs receivables, inventory and payables. Competition (inc. Ratios): Diff Inflows Consumer: Sales, Food, Retail, etc. Corporate (Pro vs. Con): Diff Outflows (separate cogs from others) DL, Op costs, annual marketing, ins, ultil = Net Cash Flow Diff Invest A/R= (diff credit sales/360 x A/R days) A/P= (diff cogs/360x A/P days) *NEGATIVE Statement of Cash Flows INV= (diff cogs/360 x inv days) Increase Decrease Assets, one time promo costs, etc. Return on Investment: Asset Use Source =Diff Investment Liability Source Use Equity Source Use ROI= NCF/Diff Inv – relates size of investment to recurring cash flows expected Operations: How much cash did we generate (use) from PB= Diff Inv/NCF – compare to benchmark our regular operations? NCFFO is companys main source of financing (is it pos/neg/sustain) – what are large sources + uses – do they match – canextend a/p to get "Return" can be loosely defined as the internal fin? amount of money available to pay the investors. If one of the "investors" is a Net Income (from previous IS) Add: (amort from IS) creditor (such as a bank), then payments G/L on Assets: Investment Utilization: Measures the balance between are made by way of interest. If the return A/R, INV, Pre, A/P sales/profit and assets (particularly fixed assets and inventory). generated is not sufficient to make these =NCFFOP interest payments, then the decisionwill likely be turned down. Financing: How much cash was generated through financing activities (debt or equity financing)? MATCH Loans, stock, personal investment Dividends: COSTS Fixed Costs: supervisor’s salary, rent, loan Variable Costs: direct labor, commission, materials Unit contribution = selling price – Variable cost per unit Contribution Margin Rate = sellingprice – Growth: Measures improvement (or decline in performancevariable costs/selling price Investing: Do sources meet expectations – is comp 
from year to year). Stability: Measures the balance between debt and equity. - Debt, in growing – are assets being used efficiently manageable amounts is good. - Debt financing allows ownership to NON Current ASS: Land, equipment, marketable sec = be retained and is cheaper than equity (i.e., debt payments— net cap ass account payments—dividends—are not deductible). However, too muchy debt increases the risk of insolvency. Margin of Safety= proj sales-b/e sales/proj sales NCF =SUM of three Beginning Cash (previous yr B.S.) Ending Cash: Cash Budget Projected Income Statement – FTYE 2009 July Aug Sept Oct Nov Dec Total Revenue (% or $ given) Add: Diff Sales Inflows: Collect:(diff sales) ar60dys x x 250000 “ “ “ COGS (% of old sales + diff cogs) Total In: =Gross Outflows: Salary: 40000yr/12 3333 “ “ “ “ “ 20000 Op Expenses: COGS: A/P 60 days 9250 “ “ “ “ 37000 Wages (same % + diff wages) Equip: 270000 X X X X X 270000 Util (same $ + diff ultil) Inventory (INV DAYS) X X 92500 X X X 92500 Ad (same $ + diff promo) ADD Ttl Out: Int Ex (same $ + (int% x diff inv)) SUM: NCF Amort (same $ + (diff inv/yrs)) Open Bal ------- 1. 2. NIBT: Close Bal 1. 2. 3. 3. Subtract: TAX Net Earnings:
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