Transcript Corporate Finance 2003-2004 Using your Resources

Corporate Finance
2004-2005
Interview Prep - Accounting
Mark Pacyna / Manoj Ramnani
VP’s for Corporate Finance
Ross Business School Finance Club
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Corporate Finance
Intern Recruiting Roadmap
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Company Presentations and Events
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OCD Resume Reviews / Career Counseling
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October through early December – Start EARLY!
Finance Club Mock Interviews
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November 5
OCD Mock Interviews / Interview Preparation
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November
Corporate Finance Forum
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September & October
Meet The Interns
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Beginning September 20
Early January
Internship Interviews
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Beginning mid-January
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Interviewing Basics - Accounting
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Use this ONLY as a guideline
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Will not go into details of accounting and
finance
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This is provided to set expectations for technical
Interviews
Follow Accounting and Finance classes for best
results
Refer to Wet Feet, Vault guides for detailed
technical questions
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Ratio Analysis – Liquidity Ratios
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Current Ratio:
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Current Assets
Current Liabilities
Quick Ratio:
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Ability to meet short term financial obligations:
Relatively Liquid Securities: Cash + Marketable Securities + Receivables
Current Liabilities
Cash Ratio:
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Most Conservative Cash Ratio:
Cash + Marketable Securities
Current Liabilities
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Ratio Analysis – Turnover Ratios
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Receivables Turnover:
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Receivables Collection Period:
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Payables Turnover:
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Payables Collection Period:
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Inventory Turnover:
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Inventory processing Period:
Annual Sales .
Average Receivables
365
.
Receivables Turnover
COGS
.
Average Payables
365
.
Payables Turnover
COGS
.
Average Inventory
365
.
Inventory Turnover
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Ratio Analysis – Risk Ratios
Debt-Equity:
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Total Long Term Debt
Total Equity
Interest Coverage:
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EBIT (Net Income + Interest + Taxes)
Interest Expense
Cash Flow/Long Term Debt:
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Net Income + Depr. + Change in Deferred Tax
Book Value of LT Debt
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Ratio Analysis – Operating Ratios
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Total Asset Turnover:
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Net Fixed Asset Turnover:
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Equity Turnover:
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Average Equity:
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Net Sales
Average Total Assets
Net Sales
Average Fixed Assets
Net Sales
Average Equity
Includes
+ Common Stock
+ Preferred Stock
+ Retained Earnings
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Ratio Analysis – Profitability Ratios
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Gross Profit Margin:
Gross Profit (Sales – COGS)
Sales
Operating Profit Margin: Operating Profit (EBIT)
Sales
Net Profit Margin:
Net Profit
Sales
ROE:
Net Income
Average Total Equity
Return on Owners Equity: Net Income – Preferred Dividend
Average Common Equity
ROE:
Net Income
Average Common Equity
Net Income
X
Net Sales
X
Total Assets
Net Sales
Total Assets
Common Equity
Profitability X
Asset Turnover X
Leverage
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Ratio Analysis – Limitations
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Only useful when compared to other firms or
for the company's historical performance
Difficult to find comparable industry ratios
when analyzing companies that operate in
multiple industries
Must be viewed relative to one another
Best analyzed using a range of acceptable
values
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Income Statement
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=
+
=
+
=
=
Sales (Net)
Cost of Goods Sold
Gross Profit
R&D Expense
SG&A Expense
EBITDA
Depreciation & Amortization
EBIT
Interest Expense
Non-Operating Income (Loss)
EBT
Income Taxes
Minority Interest in Earnings
Other Income (Loss)
Net Income Before Ext. Items
Ext. Items & Disc. Ops.
Preferred Dividends
Net Income (available to common)
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Balance Sheet - Assets
+ Operating Cash and Market. Sec.
+
Receivables
+
Inventories
+ Other Current Assets
=
Total Current Assets
+
PP&E (Net)
+
Investments
+
Intangibles
+
Other Assets
=
Total Assets
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Balance Sheet - Liabilities
+
+
+
+
=
+
+
+
+
=
+
+
+
=
Current Debt
Accounts Payable
Income Taxes Payable
Other Current Liabilities
Total Current Liabilities
Long-Term Debt
Other Liabilities
Deferred Taxes
Minority Interest
Total Liabilities
Preferred Stock
Paid in Common Capital (Net)
Retained Earnings
Total Common Equity
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Other Questions
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Statement of Cash Flows
Statement of Shareholders Equity
Operating Leases, Capital Leases
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Advantages, Disadvantages
Depreciation
Taxation
Elective Classes
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ACC 564, ACC 712
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