Term
| Important aspects of a company's business strategy can be revealed by... |
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Definition
| trends in its financial ratios and differences between its financial ratios and those of its competitors or industry average ratios |
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Term
| A company's future income and cash flows can be projected by... |
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Definition
| forecasting sales growth and using estimates of profit margins and the increases in working capital and fixed assets necessary to support the future sales growth |
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Term
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Definition
| a firm's financial statements to assess its credit quality |
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Term
| Indicators of a firm's creditworthiness include... |
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Definition
-its scale and diversification
-operational efficiency
-margin stability
-use of financial leverage |
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Term
| Potentially attractive equity investments can be identified by... |
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Definition
| screening a universe of stocks, using minimum or maximum values of one or more ratios. Which (and how many) ratios to use, what minimum or maximum values to use, and how much importance to give each ratio all present challenges to the analyst. |
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Term
| When companies use different accounting methods or estimates relating to areas such as inventory accounting, depreciation, capitalization, and off-balance-sheet financing, |
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Definition
| analysts must adjust the financial statements for compatibility. |
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