Innovation Financing
Words
Words
Profitability Ratios
Profitability is the net result of a number of policies and decisions.
The ratios examined so far provide useful clues about the effectiveness of a firm’s operations, but the profitability ratios go on to show the combined effects of liquidity, asset management, and debt on operating results.
Profit Margins (Ratio)
Net profit margin (PM) gives the profit per dollar of sales.
MIT JEDEM DOLLAR IM SALES MACHT DIE FIRMA DIESEN %-SATZ GEWINN/VERLUST!
Operating profit margin (Ratio)
Operating profit margin (OM) shows performance of operations before impact of interest expenses:
Basic Earning Power (BEP)
Raw earning power of the firm’s assets before the influence of taxes and leverage.
Useful for comparing firms with different tax situations and different degrees of financial leverage.
DAMIT KANN DIE ROHE VERDIENKRAFT EINER UNTERNEHMUNG BESTIMMT WERDEN: DER EINFLUSS VON STEUERN UND ZINSEN IST NICHT INKL, SOMIT KANN MIT FIRMEN VERGLICHEN WERDEN, DIE NICHT DEN SELBEN STEUERSATZ ODER DIE SELBE FINANZIERUNGSART HABEN!
Return on Assets (ROA)
ROA measures the return on total assets after interest and taxes.
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ROA is lowered by debt--interest expense lowers net income, which also lowers ROA.
Return on Equity (ROE)
Stockholders invest to earn a return on their money, ROE tells how well they are doing in an accounting sense.
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However, the use of debt lowers equity, and if equity is lowered more than net income, ROE would increase.
EIGENKAPITALRENDITE, WIRD VON INVESTOREN ANGESCHAUT UM ZU SEHEN WIE DAS INVESTIERTE GELD VERMEHRT WIRD!
Market Value Ratios
Market value ratios incorporate the:
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High current levels of earnings and cash flow increase market value ratios
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High expected growth in earnings and cash flow increases market value ratios
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High risk of expected growth in earnings and cash flow decreases market value ratios
Price/Earnings Ratio
How much investors are willing to pay per dollar of reported profits.
Price/earnings ratios are higher for firms with strong growth prospects, other things held constant, but they are lower for riskier firms.
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P/E: How much investors will pay for $1 of earnings. Higher is better.
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P/E and M/B are high if ROE is high, risk is low.
Price/Cash Flow Ratio
Stock prices depend on a company’s ability to generate cash flows. Consequently, investors often look at the price/cash flow ratio, where cash flow is defined as net income plus depreciation and amortization.
Market/Book Ratio
Indication of how investors regard the company.
Companies with relatively high rates of return on equity generally sell at higher multiples of book value than those with low returns.
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M/B: How much paid for $1 of book value. Higher is better.
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P/E and M/B are high if ROE is high, risk is low.
The Du Pont System
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The Du Pont system focuses on:
- Expense control (PM)
- Asset utilization (TATO)
- Debt utilization (EM) -
It shows how these factors combine to determine the ROE.
Limitations of Ratio Analysis ...
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Comparison with industry averages is difficult if the firm operates many different divisions.
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Seasonal factors can distort ratios.
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Window dressing techniques can make statements and ratios look better.
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Different accounting and operating practices can distort comparisons.
Qualitative Factors
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There is greater risk if:
- revenues tied to a single customer
- revenues tied to a single product
- reliance on a single supplier?
- High percentage of business is generated overseas? -
What is the competitive situation?
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What products are in the pipeline?
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What are the legal and regulatory issues?
attempt
der Versuch
pursued
etwas verfolgen / anstreben
occur
eintreten / auftreten / geschehen
concerned
beunruhigt / betroffen
estimated
geschätzt
receivables
Forderungen (Debitoren)
yield to maturity
YTM is the rate of return earned on a bond held to maturity. Also called “promised yield.”
It assumes the bond will not default.
valuable
wertvoll
quarterly
quartalsweise
scarcity of land
die Knappheit des Bodens
semiannually
halbjährlich
require
benötigen
fewer
weniger
Abschreibung
Inventories
das Lager einer Firma
gross amount
der Gesamtbetrag
assets
Aktivposten der Bilanz
liabilities
Passivseite der Bilanz
accounts payable
Kreditoren (auf Passivseite der Bilanz)
retained earnings
Ergebinsvortrag aus letzter Periode
notes payable
kurzzeiteige Kredite
long-term dept
langfristige Kredite
to suffer
ertragen, leiden
assed swop
Aktiventausch
dept
Schulden
creditworthiness
Bonität, Kreditwürdigkeit
estimate
die Schätzung
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Flashcards
spreadsheet
Aufschlag
mortage
Hypothek
to measure
abschätzen, abmessen, ermessen
to consider
beachten, berücksichtigen
investment return
Anlagerendite
Investiert & dann z.b. 1 Jahr später Gewinn gemacht.
probability distribution
Wahrscheinlichkeitsverteilung
to go bust
pleite gehen
standard deviation
Standartabweichung
standart deviation of returns for each alternative….
venture capital
Risikokapital
commensurate with
proportional
a return commensurate with its risk
to bear
tragen
to bear the market risk
volatility
Preisschwankungen
stock's volatility relative to the market
regression
Rückgang
slope
Anstieg, Steigung
slope of the regression line
to establish
etablieren
establishthe regression line
to confirm
bestätigen
to refute
widerlegen
retention
Selbstbehalt
earnings retention model
marginal cost
Grenzkosten
"Neue kosten"
differed taxes
verzögerte Steuern
NPV = net present value
Aktueller Nettowert
to lessen
verhindern
personal taxes lessen the advantage of corporate debt
to deduct
abrechnen
corporate tax laws allow interest to be deducted
distress
Not
financial distress cost
Insolvenzkosten
financial distress cost
Insolvenzkosten
noncash revenues
Einkommen aus nicht Barbezahlung
noncash charges
Kosten für nicht Barbezahlung
depreciation
Abschreibung
to have something to your disposal
etwas zu deiner Verfügung haben
mutual fond
Fond where a lot of people pay their money in so they can buy together expensive shares, made by an expert
at issuance
bei der Ausgabe / Auszahlung
perpetuity
is an annuity (yearly payment) with an infinite number of payments
determine
bestimmen
consider
etwas berücksichtigen
accounting profit
Bilanz-Gewinn
receivables
Debitoren (Forderungen)
Operating current assets are...
current assets witch are needed to support operations.
Op CA include: cash, inventory, receivables (Debitoren aka wird mir geschuldet)
Op CA exclude: short-term investments, because these are not a part of operations
Operating current liabilities are ...
current liabilities witch resulting as a normal part of operations.
- Op CL include: accounts payable (Kreditoren aka schulde ich anderen) and accruals (Rückstellungen).
- Op CL exclude: notes payable, because this is a source of financing, not a part of operations
incoporate
enthalten
