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anyone who acquires more than 5% of an issuers equity is required to notify the issuer, the exchange it's traded on, and the SEC w/i 10 days. 13G is used by institutional investors who have no interest to influence or control the company. |
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Quraterly filing req'd by institutional investment managers who manage over $100MM in equity securities. Regardless of whether registered with SEC. |
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Form req'd prior to IPO includes relevant info about the issuers business and relevant information. |
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"short form reg" the minimum requirement for an issuer to utilize an S-3 filing is $75MM. Used by well seasoned issuers |
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filed if securities are issued in connection with a merger. |
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Going Private Transactions |
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file a Schedule 13E-3 with the SEC to insure proper disclosure to shareholders |
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all goods and services produced by a national economy inside its borders as well as products produced overseas by a domestic company. |
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Goods and services produced by labor and property domestically w/o regard to origin of producer. Real GDP is adjusted for inflation. |
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rising interest rates as investors demand higher nominal rates. "too much money chasing too few goods" |
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Supply of goods is greater than their demand. |
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A reduction in the rate of inflation. |
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A prolonged period of high rate of inflation coupled with a high rate of unemployment. |
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Leading Economic Indicators |
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Average workweek for production workers in manufacturing. Average weekly initial claims for state unemployment insurance. New orders for consumer goods and materials. Vendor performance. Contracts and orders for plant and equipment. New building permits for private housing units. The prices for the S&P 500 common stocks. Money Supply (M2). Change in credit outstanding for businesses and consumer borrowing. |
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Coincident Economic Indicators |
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personal income(less: transfer payments) Employees on nonagricultural payrolls. Index of Industrial Production. Manufacturing and trade sales. |
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Lagging Economic Indicators |
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Average duration of unemployment. Relationship of inventories to sales, manufacturing, and trade. Labor cost per unit of output. Average prime rate. Commercial and industrial loans outstanding. CPI for services. |
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Large Cap Mid Cap Small Cap Micro Cap Nano Cap |
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More than $10BB Between $2BB and $10BB Between $300MM and $2BB Between $50MM and $300MM Below $50MM |
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government intervention is necessary for sustained economic growth. |
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reduction of taxes and size of government to stimulate economy. |
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Control of the supply of money to influence interest rates thus influencing economic activity. |
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Currency in circulation + demand depositis + other checkable securities. |
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=M1+: money market deposit accounts balances at money funds overnight repurchase agreements at banks |
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=M2+: large time deposits term repurchase agreements at banks and S&L Eurodollars |
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profitable in times of rising prices. |
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profitable in times of falling prices |
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Asset Turnover Receibles annd payables turnover Inventory Turnover |
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EPS Fully Diluted EPS EBITDA margin Equity Turnover Profit Margins ROA ROE Days Sales Outstanding |
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Debt-to-total capital debt-to-equity debt-to-EBITDA Dividend payout Interest Coverage |
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Sales/[(sales(t)+sales(t-1)/2]
measures how well the firm uses assets to generate sales. higher=better |
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Total Sales /[(A/R(t)+A/R(t-1)/2]
Measures how quickly the firm can collect payment of receivables. |
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Cost of Goods Sold/[(A/P(t)+A/P(t-1)/2]
measures how quickly the firm is paying its suppliers |
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Cost of Goods Sold/[(Inventorty(t)+ Inventory(t-1)/2]
measures how quickly the firm sells its goods. How long capital is tied up. |
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Current Assets/Current Liabilities |
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(Cash+Cash Equivalents+A/R)/Current Liabilities |
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(Net Income-Preferred Dividends)/Weighted Avg # Shares Common Stock Outstanding |
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(Net Income+Adj. for CSE & OPDS)/(Weighted Avg # of shares of Common Stock+Weighted Avg. CSEs and OPDS) |
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Income from Operations/Net Sales
Operating Income = EBIT |
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Operating Income+[(Depr(t)-Depr(t-1)]/Net Sales
Measures profitability between firms w/o effects of accounting and financing decisions (apples vs. apples) |
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Net Income/(Total Assets(t)+Total Assets(t-1)/2) |
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Return on Common Equity (ROE) |
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Net Income Avail. to CS/(Avg Common Eq.(t)+CE(t-1)/2) |
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Return on Invested Capital (ROIC) |
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EBIT*(1-tax rate%)/Invested Capital |
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Fixed Assets+Current Assets-Current Liabilities-Cash; or Fixed Assets+noncash Working Capital; or Total Assets-Noninterest-bearing current liabilities+excess cash |
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Days Sales Outstanding (DSO) |
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(A/R)/(Net Sales/365)
Decrease reps. an improvement and an increase reps. a deterioration in net sales. |
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EBIT/Bond Interest Expense |
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S-T+L-T Debt/EBITDA
High ratio means increased likelihood of default; low ration means potential ability to incur more debt w/o adverse affect. |
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dividing current market price by the trailing sum of the past 12 months' EPS. |
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dividing current market price by the projected EPS for the next 12 months. |
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Free cash flow from operations less capital expenditures(CAPEX) |
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Free Cash Flow from Equity (FCFE) |
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used to provide comparability between different firms |
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appropriate for use when valuing an unprofitable company, new company w/o earnings, or have low profit margins. |
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Price-to-Book Value (P/B) |
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Book Value = Shareholders Equity / # Shares Outstanding
P/B = Share Price / Book Value per Share |
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Market Capitalization of CS&PS + L-T&S-T Debt + Capital Leases + Minority Interest - Cash and Cash Equivalents.
Simply: Equity Value + Net Debt |
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Net Income + Interest and Taxes: to provide comparability between firms who may account for DS differently.
Depr and Amort are added back to neutralize the effects of different ways of accounting for them.
Effective for companies who have high depreciation and amortization expenses. |
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provides a valuation based on the value of the overall company rather than solely based on equity value.
a lower ratio could represent undervalued and vice versa. |
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eliminates the effects different methods of calculating operating expenses.
"Does the firm use its available capital to generate sales volume and revenues sufficiently to max profits?" |
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Discounted Cash Flow (DCF) |
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Definition
Values a firm based on PV of expected cash flows.
Req's Estimates of:
disc rate to apply to cash flows in order to calc PV
Est of given CFs for a given period.
Est of the ending or terminal value. |
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After-Tax Cost of Capital |
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Pretax Cost of Capital * (1- tax rate %) |
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analyzes the relationship of the risk free rate, the expected return in the market (S&P 500 Index), and the Firm's Beta.
Risk Free Rate+[(Mkt Rate-Risk Free Rate)*Beta] |
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Term
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Definition
expected rate of return on common stock investment through dividends and appreciation.
k*=(Dividend to be paid in current year/current mkt price)+ growth rate per year |
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Cost of Equity Created by a New Issue of Stock |
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k*=[D1/P0(1-F)]+g f = underwriting fees as % of sales price |
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Free Cash Flow to the Firm (FCFF) |
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EBIT*(1-tax rate) +Depr & Amort -Cap Exp +/- Changes in Working Capital |
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Free Cash Flow to Equity (FCFE) |
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Net Income +Depr & Amort -Cap Exp +/- changes in Working Capital |
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Firm Value = FCFF/(1+WACC)^t
Firm Value - Mkt Value of Debt = Equity Value |
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